This module is the third part of a three-part series on proposal writing. In "Writing Winning Proposals: An Introduction," you were introduced to the processes and procedures for writing winning proposals. "The Technical Proposal" discusses writing the technical proposal, and presents techniques on how to make sure your proposal is responsive to your customer needs, is easy to follow, and builds on the strengths of your company. This part presents the aspects of developing the financial information for your cost proposal. The cost estimates must reflect the proposed approach of your technical proposal. If you identify individuals by name to perform various specific tasks in your technical volume, their costs (direct labor) must be correctly reflected in the cost volume. The two proposals (cost and technical) are not independent of each other, but must be prepared in unison.

The presentation here is a very top-level discussion of various aspects of the things you will need to consider when developing information for a cost volume. These discussions deal with responding to a competitive request for proposal (RFP), which has been issued by an agency of the federal government. This situation is entirely different from the case of establishing the selling price of a commercial product, such as a washing machine.

In addition, the contractual requirements can be very complicated and may influence the resulting cost estimates, and the way costs are established and reported. Also, different types of organizations (large manufacturing companies, small business, non-profit organizations, etc.) all conduct their business in a different way. These business approaches will affect how these organizations arrive at their estimates of the cost for performing a specific job.

The point here is to introduce you to a number of the things that will help you understand what goes into estimating the cost to complete a project. Understanding these cost elements will help you estimate the cost of completing an in-house project, in addition to being involved in the response of a competitive proposal.

Approach to Module

In the first portion of the module, a review of the types of contracts that might result from a competitive procurement is presented. This is followed by a discussion of various techniques that may be used to estimate your project costs. Finally, the various elements that are included in determining total cost are summarized.

The second part of the module presents an example of estimating the costs associated with performing a specific job. These costs are based on an engineering firm responding to a competitive RFP from the federal government.

Request for Proposal

The discussion in this module is based on a hypothetical firm, Ace Aerospace Corporation (AAC), responding to a sample Request for Proposal for a Panel Flutter Analysis project. The RFP asks for both a technical proposal and a cost proposal, but only elements of developing the cost information for the cost volume are covered here. Aspects of developing your technical volume are covered in the Technical Proposal module.

The RFP defines a two-year project in which the contractor is to develop and validate an analytical panel flutter prediction technique (computer program). The RFP statement of work (SOW) defines three tasks required to accomplish this project. The RFP contains sections providing instructions on proposal preparation and submittal, and on how proposals will be evaluated.

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