Understanding the Dynamics of Program Productivity to Drive Towards Labor 'Should-Cost'

摘要

The US Department of Defense specifies an approach to determine an acquisition program's "should-cost" as a separate input from the "will-cost" or traditional cost evaluation for developing a negotiating strategy. Will-cost is based on analysis of historical costs and trends to determine a price. Should-cost does not assume that historical costs reflect efficient and economical operation but instead evaluates the "efficiency of the contractor's work force, methods, materials, facilities, operating systems, and management." (Federal Acquisition Regulations 15.810) Getting program labor costs as low as possible or towards a should-cost requires an inherent understanding of the productivity that can be achieved given the conditions under which the program will be executed. Understanding these conditions is also crucial to identify which actions should be taken and at what time to influence labor productivity positively and thus improve overall program performance. Determining the should-cost for labor therefore necessitates understanding how the workforce, methods, facilities, operating systems and management actions interact within the overarching facility dynamics and over the course of the program to drive productivity and quality and thus overall performance.