Companies that do business with the U.S. Defense Department (e.g., The Boeing Company, Lockheed Martin Corporation, General Electric, Northrop Grumman, and General Dynamics) typically develop large multiyear proposals for large-scale defense-related projects. A key aspect of developing a successful proposal for the Department of Defense is to use proper cost estimation tools.

Required

1. Review the information at the site of the International Society of Parametric Analysis (ISPA), (www.ispa-cost.org/ISPA_PEH_4th_ed_Final.pdf), which sets out proper estimation methods for proposals to the Department of Defense. Look especially at Chapter 3 of the ISPA's handbook. In 100 words or less describe the cost estimation methods suggested in this document for use in developing proposals for the Department of Defense. What are some examples of how cost estimation is used by defense contractors such as The Boeing Company.

2. Review Figure 3.6 in the handbook and compare it to Exhibit 8B.7 in this chapter.