**PREFACE**

This *Handbook* is intended to be used as a general guide for
implementing and evaluating parametric based estimating systems, and as
the text material for a basic course in parametric estimating
techniques. The information contained in this *Handbook* complements and
enhances the guidance provided by DCAA Cost Audit Manual (CAM),
FARs/DFARs, and other government regulations or public laws relating to
cost estimating. The *Handbook* is structured so each chapter can be
used as a stand alone guide and reference. If the reader is interested
in only one subject, then one chapter can be read without reading any
other. Expected users of this *Handbook* include cost model developers,
analysts, auditors, and all levels of cost management.

Every phase of the government's procurement process is being reviewed
and changed to reflect the realities of today's cost conscious
environment. Among the many aspects of the procurement process under
scrutiny is the use of traditional cost estimating tools and processes.
These tools and processes, at times, have proven expensive to maintain
and operate and did not always provide realistic or timely results.
Today's Acquisition Reform mind-set dictates that the cost estimating
community consider a different set of tools and processes which are less
labor intensive to operate and result in credible cost estimates.

It is partly from the impetus of Acquisition Reform that this document
has been created. All of us in the cost estimating community need to
find ways to perform our work more cost effectively. Pushed by the
common goal of reducing proposal preparation cost, contractor and
oversight management are pursuing a cooperative approach to problem
solving. This *Handbook* is an example of such a cooperative effort. If
the *Handbook* succeeds to help produce better estimates, analyses, or
audits, then the process has been successful.

This *Handbook* is just one of several by-products of a joint
Industry/Government Parametric Cost Estimating Initiative. The
Initiative Steering Committee and implementation team includes
representation from contractors, buying activities, Defense Contract
Management Command and Defense Contract Audit Agency. The Initiative's
far reaching action items include working with pilot contractor sites to
test the expanded use of parametric cost estimating techniques and
tools, developing parametric cost estimating training, and preparing and
distributing this *Handbook*.

This is the first edition of the *Handbook*. It will be used and tested
at pilot contractor sites. The Initiative Steering Committee will be
responsible for receiving and incorporating any comments for improving
the *Handbook* from the pilot sites and others, and publishing the
second edition of the *Handbook*. The second edition will be issued in
the summer of 1996. A user reply sheet is provided in this Preface to
facilitate submission of your suggestions. An Order Form for this
*Handbook* is included at the end of the Preface.

The preparation of this *Handbook* included the review of nearly four
thousand pages of documentation. Some of that total is included here.
The material has come from many sources, both individual and
organizational contributors. There is no way all of the contributors can
be acknowledged, since most of them are anonymous. There are, however
two who should be mentioned at this time, besides those acknowledged
later in the test. First, the Parametric Estimating Initiative Steering
Committee for authorizing this *Handbook* and specifically, NAVSEA for
funding the *Handbook's* development.

Thanks to the rest of the Committee for their inputs, reviews and
critiques of the draft. And, especially, the Space Systems Cost Analysis
Group (SSCAG) who supported the initial concept of the Handbook, and the
may individuals within that organization who conceptualized, critiqued,
and developed much of the material.

Bill Brundick,

General Editor

**PARAMETRIC ESTIMATING INITIATIVE STEERING COMMITTEE**

**[Executive Chairman]{.underline}**

**Bob Scott** **Bob Spiker**

Executive Director of Contract Management Controller, Financial and
Government Accounting

Defense Contract Management Command - AQC Westinghouse Electric
Corporation - ESG

Cameron Station P.O. Box 17319, Mail Stop A585

Alexandria, Virginia, 22304-6190 Baltimore, Maryland 21203-7319

703-274-0821 phone 410-765-2913 phone

703-274-0823 fax 410-765-6038 fax

**Michael Thibault**

Deputy Director

DCAA Headquarters

Cameron Station

Alexandria, Virginia 22304-6178

703-274-7281 phone

703-617-7450 fax

**[Co-Chairman]{.underline}**

**Jim Collins** **David Eck**

Parametric Estimating Specialist Chief, Policy Formulation Division

Westinghouse Electric Corporation D61-ESG DCAA Headquarters

P.O. Box 1693, Mail Stop 1293 Cameron Station, Room 4A250

Baltimore, Maryland 21203 Alexandria, Virginia 22304-6178

410-765-8033 phone 703-274-7314 phone

410-765-5289 fax 703-617-7452

**[Members]{.underline}**

**Jim Balinskas** **Dean Boyle**

Contract Pricing & Finance Division Deputy Technical Assessment Manager

NASA Headquarters, Code HC DPRO - Northrup Grumman

300 E Street SW Defense Logistics Agency, DCMC

Washington, DC 20546 Bethpage, New York 11714-3593

202-358-0445 phone 516-575-9742 phone

202-358-3082 fax 516-575-6527

**Gary Constantine** **Marty Deutsch**

Manager, Parametric Estimating Chief, Estimating Policy Review &
Compliance

E-Systems - Greenville Martin-Marietta Astronautics

P.O. Box 6056, CBN93 P.O. Box 179, Mail Stop DC 2503

Greenville, TX 75403-6056 Denver, Colorado 80201-0179

903-457-5666 phone 303-971-6060 phone

903-457-4619 fax 303-971-5143 fax

**Mel Eisman** **Jim Gleason**

Senior Research Associate Procurement Analyst

Rand Corporation US Army Material Command, AMCAQ-E

P.O. Box 2138, Mail Stop HMRP/5 5001 Eisenhower Avenue, Room 9N15

Santa Monica, California 90407-2138 Alexandria, Virginia 22333-0001

310-393-0411 x6704 phone 703-274-4437 phone

310-451-7032 fax 703-274-3198 fax

**Virgil Hertling** **Paul Lubell**

Directorate of Pricing and Finance Senior Engineer, Technical Estimating

US Air Force Headquarters, AFMC/PKF Westinghouse Electric Corporation -
ESG

Building 262, 4375 Chidlaw Road, Suite 6 P.O. Box 1693, Mail Stip 1293

Wright Patterson AFB, Ohio 45433-5006 Baltimore, Maryland 21203

513-257-6861 phone 410-765-6163 phone

513-476-2435 fax 410-765-5289 fax

**Bernard Rudwick** **Marcia Rutledge**

Professor - Financial Management Contracting Officer, ASW & Mine Systems
Branch

Defense Systems Management College US Navy, Naval Sea Systems Command

Fort Belvoir, Virginia 22060-5426 2531 Jefferson Davis Highway, NC-3,
Room 5E08

703-805-3783 phone Arlington, Virginia 22242-5160

703-805-3184 fax 703-602-0951 x639 phone

703-602-7023 fax

**George Salantai** **Amir Tarmohamed**

Manager, Estimating Proposal Anaysis & Definitization Team

McDonnell Douglas Aircraft Company Defense Logistics Agency, DCMC-AQCOD

Building 305, Post 2E, Room 232, Mail Code 306-5485 Cameron Station,
Room 8A454

St. Louis, Missouri 63166 Alexandria, Virginia 22304-6190

314-233-8461 phone 703-274-4130 phone

314-232-7171 fax 703-617-0944 fax

**USER REPLY SHEET**

[Parametric Cost Estimating Handbook]{.smallcaps}

**Please send comments to:**

Marcia Rutledge

Contracting Officer, ASW & Mine Systems Branch

US Navy, Naval Sea Systems Command

2531 Jefferson Davis Highway, NC-3, Room 5E08

Arlington, Virginia 22242-5160

703-602-0951 x639 phone

703-602-7023 fax

We would appreciate specific comments such as the suggested alternative
language and rationale to support the language, additional information
that would add value to the *Handbook*, or existing information that can
be deleted. Specific examples that enhance the *Handbook* are welcome.

Comment \# \_\_\_\_\_\_\_ Chapter \_\_\_\_\_\_\_ Page \# \_\_\_\_\_\_\_

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**ORDER FORM**

**for the**

**PARAMETRIC COST ESTIMATING HANDBOOK**

**YES**, please send me \_\_\_\_\_ copies of the Parametric Cost
Estimating Handbook.

There is no charge for the Handbook. Requestors are encouraged to limit
requests to one copy per organization.

**Please send the Handbook to:**

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All orders should be sent to:

Naval Sea Systems Command

2351 Jefferson Davis Highway

NC-3, Room 5E08

Arlington, VA 22242-5160

Attn: M. Rutledge, SEA 0263

Contracting Officer, ASW & Mine Systems Branch