Introduction

With the complexities involved, it is not surprising that many business managers consider pricing an art. Having the right intelligence information on customer cost budgets and competitive pricing would certainly help. However, the reality is that whatever information is available to one bidder is generally available to the others. Even more important, intelligence sources are often unreliable. The only thing worse than missing information is wrong or misleading information. When it comes to competitive pricing, the old saying still applies: "Those who talk don't know; and those who know don't talk!" It is true, partially, that pricing remains an art. However, a disciplined approach certainly helps one to develop all the input for a rational pricing recommendation. A side benefit of using a disciplined management process is that it leads to the documentation of the many factors and assumptions involved at a later point in time. These can be compared and analyzed, contributing to the learning experiences that make up the managerial skills needed for effective business decisions.

Estimates are not blind luck. They are well -thought-out decisions based on either the best available information, some type of cost estimating relationship, or some type of cost model. Cost estimating relationships (CERs) are generally the output of cost models. Typical CERs might be:

• Mathematical equations based on regression analysis

• Cost-quantity relationships such as learning curves

• Cost-cost relationships

• Cost-noncost relationships based on physical characteristics, technical parameters, or performance characteristics

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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