Introduction

Obtaining fair and reasonable pricing from contractors and suppliers is a critical goal for both businesses and governments. This program equips participants with the essential skills to conduct effective Cost and Price Analysis, enabling better decision-making in procurement and contract management. Attendees will learn to manage costs in volatile markets, understand pricing methods used by contractors, and evaluate the elements that make up a fair and reasonable price.

Course Objectives

By the end of this program, participants will be able to:

• Understand the importance of price and cost analysis in continuous improvement programs
• Differentiate between cost analysis and price analysis and select the appropriate method
• Apply methods of price analysis, including historical and market-based techniques
• Use analytical tools to identify cost drivers and develop “should cost” models
• Analyze supplier pricing models and Total Cost of Ownership (TCO) approaches
• Implement strategies to obtain better pricing in volatile markets
• Report and track cost reduction and savings effectively

Target Audience

• Contract and Procurement Managers
• Supply Chain Professionals
• Cost Estimators and Analysts
• Commercial and Contract Officers
• Project Managers involved in procurement and vendor negotiations

Course Outlines (5 Days)

Day 1 – Defining Cost Savings Opportunities

• Reducing the cost of purchased goods and services
• Understanding the impact of contracts on the bottom line
• Identifying focus areas for cost reduction
• Supplier pricing models and negotiation strategies
• Developing opportunity hypotheses
• Cost reduction reporting procedures
• Continuous improvement skill sets

Day 2 – Performing Price Analysis

• Understanding the difference between price and cost analysis
• Selection tools for analysis type
• Methods of price analysis
• Historical analysis and benchmarking
• Using price indexes to calculate changes
• Developing the organization’s contract price index

Day 3 – Performing Cost Analysis

• Methods of cost analysis
• Identifying major cost elements and overheads
• Developing “Should Cost” models
• Requesting supplier cost information
• Analyzing supplier cost breakdown
• Determining reasonable profit margins

Day 4 – Other Important Valuation Criteria

• Industry analysis and benchmarking
• Global industrial labor rates
• Working with currency exchange rates
• Total Cost of Ownership (TCO) models
• Reengineering processes to reduce costs
• Cost-volume-profit analysis
• Value analysis techniques

Day 5 – Controlling Contract Pricing in Volatile Markets

• Managing procurement in volatile economic situations
• Contract economic adjustment clauses
• Continuous improvement methods
• Early supplier involvement strategies
• Reducing waste in the supply chain
• Reporting and tracking savings
• Implementing best practices for achieving cost reductions