Contractor Costs for Life Cycle Cost Estimating
The purpose of this study is to analyze contractor costs and develop cost estimating relationships (CERs) in order to increase the fidelity and defendability of costs associated with contractors as part of life-cycle cost and program office cost estimates. At this time we are not aware of any developed methodology to estimate contractor costs for various position types or seniority levels and believe that this type of information could significantly impact the development of cost estimates throughout the DoD and IC. In order to conduct this analysis we will collect contractor cost data, identify and analyze the dependent and independent variables associated with contractor costs (labor rates), and provide justifiable benchmarks across multiple job categories for future estimating requirements.
In most cases, cost estimates are performed with a limited amount of input information and/or incomplete knowledge of the product or service to be estimated. This holds true for the development of costs associated with contractors within a given cost estimate. Information available may include the contractors’ position type, years of experience, level of education, professional certifications, and work location. Having some or all of this information should allow us to better estimate costs for specific positions or within specific estimates. At this time, government agencies do not utilize a contractor cost estimating methodology based on defined labor categories or requirements such as minimum education and experience levels. All contractor positions, regardless of available information on some of the potential variables identified above, are estimated at a flat rate of $200K or $250K per year. This rate provides little fidelity and may not be accurate or defendable when compared to the varying costs across the spectrum of contractor positions. The result is a cost estimate that presents contractor cost numbers which may not be reliable or represent the best available information. Our hypothesis is that there are independent variables that significantly impact contractor rates, and through statistical analysis we will be able to identify these variables to assist in the development of contractor cost benchmarks for use in the development of cost estimates.
Samuel B. Hendrix graduated from George Mason University with a B.S. in Business Administration and has recently completed his Masters in Business Administration at Liberty University in Lynchburg, VA. Samuel Hendrix is currently a Cost Analyst within the Management Consulting Division of Northrop Grumman Information Technology / TASC and since 2004 he has supported multiple DoD and Civilian agencies including the Defense Intelligence Agency (DIA), the Department of State (DoS), the Transportation Security Administration (TSA), and the Federal Emergency Management Association (FEMA) where his jobs have included cost estimating and analysis, systems analysis, technical research analysis, and business continuity analysis, among others. In his current role as a cost analyst for NGIT/TASC, Samuel Hendrix is responsible for managing and developing Independent Life Cycle Cost Estimates (I-LCCEs), Intelligence Capability Baseline Descriptions (ICBDs), Independent Cost Estimates/Assessments (ICEs/ICAs), Affordability Assessments, Ad Hoc Cost/Risk Analysis, cost planning tools and general cost/risk support for government clients within the Intelligence Community.
Lew S. Messing holds a B.S. in Finance from Clemson University and graduated from the University of California, Ivine with a Masters in Business Administration (MBA) in 2003. In addition, Mr. Messing has earned a Graduate Certificate in Procurement and Contracts Management through the University of Virginia. Upon completion of his masters degree, Mr. Messing joined Northrop Grumman in 2003 as a cost analyst within the Management Consulting Division of Northrop Grumman Information Technology / TASC. Mr. Messing has spent the last five years managing and developing Independent Life Cycle Cost Estimates (I-LCCEs), Intelligence Capability Baseline Descriptions
(ICBDs), Independent Cost Estimates/Assessments (ICEs/ICAs), Affordability Assessments, Ad Hoc Cost/Risk Analysis, cost planning tools and general cost/risk support for government clients within the DoD and Intelligence Community. Mr. Messing has previously contributed to the publication of several papers presented at the Society of Cost Estimating and Analysis (SCEA) and is currently a SCEA Certified Cost Estimator / Analyst (CCE/A). Mr. Messing has also served as the Principal Investigator for an Independent Research and Development (IRAD) program focusing on the development of cost estimating tools and products to support physical security for classified programs.