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Overview |
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In
this section we will walk through the steps needed to
obtain a project cost for the Sample RFP. You must recognize
that the material presented in this module is a fairly
simple example of the very complex process of estimating
a total project cost. For example, as specified in Attachment
#1, the Panel Flutter Analysis project is to be 24 months
in duration. For this example we will not consider escalation,
which would be appropriate for a project of this duration.
In addition, the overhead rates and labor rates used here
should in no way be construed as representing actual rates
in industry today. They are presented here to illustrate
their application in arriving at a total project cost.
Actual overhead and labor rates are dependent on many
factors, such as the skill level of the personnel assigned
to the project, how the company is organized, and how
the company discloses its rates. These factors will be
different for a small business, a college or university,
a non-profit organization, or a large manufacturing firm.
Your firm will have a financial or other cost estimating
organization, whose responsibility includes establishing
the overhead rates and labor rates required to develop
a cost proposal.
Examples of representative labor rates can be found for
the General Services Administration (GSA) Schedule at
the GSA website.
This site will give you a list of companies that have
schedules available. You can then research these companies
to obtain their rates. Note that these are totally "loaded"
rates, which include all the appropriate indirect rates
(overheads and general administrative costs) and hoped-for
profit (fee).
In addition, the Panel Flutter Analysis project is entirely
an engineering analysis activity with the final product
being a computer program delivered to the customer. Thus
the example presented here does not include the influence
of overtime, fabrication, materials, testing, subcontractors,
etc., on the total project cost.
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