Methods for performing price analysis

There are many ways to analyze the pricing of a product or service. The only way to avoid this requirement for an analysis would be if there was adequate price competition leading to the award or if the procurement was for goods or services whose price was set by law or regulation e.

This "total cost of acquisition" is the real cost that must be compared.

The Fundamentals of Price and Cost Analyses

In these situations, it may be necessary to rely on a technical analysis. And do you have to negotiate if the price offered is below the independent cost estimate? The BPPM is somewhat misleading in beginning the discussion of in-house cost estimates with a reference to "major procurements.

However, both steel and concrete are being sold at a premium at this time. We would not consider your "provisional sum" funding modification a "procurement action" requiring a cost or price analysis.

Financial Services

We are piggybacking on the Akron, Ohio bus contract. The lowest bid may not always represent the lowest cost.

Similar products have been procured by other light rail transit agencies. Comparison of Prior Quotations In some circumstances, it may be most effective to compare recent with the past 24 months quotations for the same product or service to determine the viability of the current quotation.

In this case the PPI might be one data point in your analysis. As to the differences in cost estimates, we would think that obtaining competitive price quotes from a number of companies would give you a legitimate basis for doing price analysis instead of cost analysis.

Again, an explanation of the similarities must accompany this analysis. The assumption is that each requisitioning department will have performed some estimating effort prior to budget development that was independent of future bidders and contracts and procurement department.

In his article, Woods cites the example of sheet steel for an auto company as a direct cost. Similar Item Comparison When an item or service is fairly unique, it is possible to compare items that are similar to those being purchased.

Price analysis would not be suitable, for example, for research and development items, or for one-of-a-kind items for which there was no basis of comparison. Cost analysis, a more complex process, is a thorough assessment of the direct and indirect costs leading to the final price of the product or service.

You are not required to perform a cost analysis for micro-purchases. Our agency is processing a sole source, follow-on procurement of software systems for 31 buses.Identifying the best price involves using the price analysis strategy, which requires performing a marketplace competition comparison.

Loyola University Chicago

Cost analysis, a more complex process, is a thorough assessment of the direct and indirect costs leading to the final price of the product or service. Abstract This paper will discuss the various methods for performing price analysis and describe which method is the best for the widest variety of situations.

In performing a price analysis, that is, determining a price to be fair and reasonable without examining the individual components of the price, a buyer has a wide selection of methods.

Which method is used and its suitability depends on the facts or information of the individual purchase. Price Analysis is the process of deciding if the asking price for a product or service is fair and reasonable, without examining the specific cost and profit calculations the vendor used in arriving at the.

How to Perform Effective Price Analyses on Subcontractors Jeffery A. White, C.P.M J.A.

Cost/Price Analysis

White & Associates, Inc. Analysis/Explanation of Analytical Method Describe the type of data being used for analysis (other than Competitive Analysis) •Where data was derived.

Cost and Price Analysis in Government Contracts. Home > Programs > Accounting, Costs and Pricing > Course Details. Public. comparison of the proposed prices will usually satisfy the requirement to perform price analysis, and a cost analysis need not be performed.”3.

Method: Group-Live.

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Methods for performing price analysis
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