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The Benefits of Electronic Vertical and Horizontal Integration of Cost and Pricing Data

The Benefits of Electronic Vertical and Horizontal Integration of Cost and Pricing Data. Breakout Session # 805 Name Scott Clayton, MBA Principal Consultant Executive Business Services, Inc. Date April 9, 2009 Time 9:45 – 11:15. Agenda. Applications survey System Features

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The Benefits of Electronic Vertical and Horizontal Integration of Cost and Pricing Data

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  1. The Benefits of Electronic Vertical and Horizontal Integration of Cost and Pricing Data Breakout Session # 805 Name Scott Clayton, MBA Principal Consultant Executive Business Services, Inc. Date April 9, 2009 Time 9:45 – 11:15

  2. Agenda • Applications survey • System Features • Estimate & Data Integration • Horizontal Integration • Vertical Integration • Estimating System Workflow Mgmt • Continuous Process Improvement

  3. Estimating System Applications ProPricer / Executive Business Services PPAS / Mainstay WinEst eTeam / Winestimator Success Enterprise / U.S. Cost Timberline Estimating Extended / Sage

  4. Modern System Features Multiple concurrent users enter data to the same database Verification and validation at input Automatic application of forward pricing rate table from a library of tables Relational database – WBS, CLIN, …

  5. Integration of Estimates & Cost and Pricing Data Within the organization Within the company Within the supply chain Within the project office With outside audit organization

  6. Environment

  7. Environment Benefits of electronic integration of cost and pricing data: Within The Organization Within the Company Within the Supply Chain Within the Project Office Outside Audit & Cost Analysis

  8. Engineering Quality Finance Program Management Manufacturing Materials Management Procurement Within the Organization – Horizontal Integration • Multiple concurrent users • Direct functional input Relational Database • Database stores: • Labor, material, ODC estimates • Detailed Basis of Estimate • Cost and Pricing data – files, analyses, etc.

  9. Within the Organization – Estimating System Workflow Management COTS proposal pricing applications or the use of third party add-ons enable estimating system workflow management Organizational estimate review, approval, electronic signatures, change tracking Estimate status by task & organization E-mail notification of status changes & user assignments

  10. Engineering Quality Finance Program Management Engineering Quality Finance Program Management Manufacturing Materials Management Procurement Manufacturing Materials Management Procurement Relational Database Within the Company – Vertical Integration • Organizations under common control Summarized Data Packet Supplier Integrator • Automated process • Full disclosure • Monthly data, fee bearing and • no-fee cost, and labor hours • by function, by SCLIN • Local assist audit • Excel or COTS transfer file

  11. Engineering Quality Finance Program Management Engineering Quality Finance Program Management Manufacturing Materials Management Procurement Manufacturing Materials Management Procurement Relational Database Within the Supply Chain – Vertical Integration • Subcontractors – not adequate competition, • non commercial item Summarized Data Supplier Integrator • Essentially the same • requirements as-if under • common control

  12. Mixed Estimating System Environment Teammates, JVs, competitive selection Spreadsheets, in-house and COTS Disclosure ranges from full to none Cost proposal planning – Suggestion: offer alternative data submittals, e.g. defined Excel format or COTS application file Engineering Quality Finance Program Management Manufacturing Materials Management Procurement Within the Supply Chain – Vertical Integration

  13. From Vendor to Project Office Current Practice Supposition • Cost proposals are submitted as hardcopy, PDFs and other files • A “Functional Cost Model” is little more than a big worksheet with links • Analysts burdened by excessive spreadsheeting, struggle to find time for analysis

  14. Source Selection Cost Analysis COTS Software ProPricer Government Edition, Mainstay PPAS/CLAAS, others ? Competitors submit defined spreadsheets or COTS application file Normalize direct and indirect cost elements from different bidders Use system utilities for rate and technical analysis Generate briefing reports, change logs, and procurement file documentation COTS applications help reduce excessive spreadsheeting From Vendor to Project Office

  15. Post-award Change Orders & Follow-on Contracts COTS Software ProPricer Audit Edition, Mainstay PPAS/CLAAS, others ? Contractors submit COTS application file System utilities assist rate and technical analysis Generate briefing reports, change logs, and procurement file documentation From Vendor to Project Office

  16. Motivational Tools Government sets a standard for electronic submission of data – not just bigger spreadsheets Carrots & sticks: weighted guidelines / award fee From Vendor to Project Office

  17. From Vendor to Outside Auditor Current Practice Supposition • Similar or the same as from Vendor to Project Office • Analysts burdened by excessive spreadsheeting, ‘Functional Cost Models’ are fancy worksheets Exception • Pricing and Forecasting Group, UK MOD DPA • Vendor analysts and auditors use common COTS software • Tender data transferred using application utilities • Auditors perform rate & technical analysis using COTS application

  18. Summary Electronic integration of cost and pricing data using COTS is possible, Within the organization, Within the company, Within the supply chain From vendor to customer From vendor to audit offices

  19. Summary The benefits of electronic integration of cost and pricing data… Eliminates excessive spreadsheeting Eliminates non-value added efforts – data reformatting and reconciliation Enables analysts to do real proposal and program analysis Improves productivity, accuracy and reduces analytical cycle times

  20. Electronic Integration of Cost & Pricing Data “I come not to praise Excel but to bury it” … paraphrasing Mark Anthony in Shakespeare’sJulius Caesar

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