Chapter 15Calculating Cost and Price: The Basics

Ultimately, money buys the resources needed to produce the products and to deliver the services desired by the customer. Whether you are an estimator, an engineer, a manager, or a buyer, you need to understand the relations between resources, cost, and price so that you can do the following:

• Calculate the cost for a project

• Evaluate costs for proposed projects

• Prepare budgets and track expenditures

• Analyze historical cost and productivity data

Both sellers and buyers need to understand how project costs (and bid prices if relevant) are determined. Buyers internal to the developing organization need to evaluate costs compared to expected savings or other benefits. Buyers who are external ...

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