Cost Estimation Guide for Performance Work Statements

This guide offers a detailed guide to preparing a comprehensive cost estimate for Performance Work Statements. Learn the proper way to document expenses for travel, materials, subcontracts, wages, and other direct costs to ensure your project is accurately budgeted from the start.

This lesson is a preview from Graduate School USA's Performance Work Statements course.

Creating a comprehensive cost estimate is a critical component of any Performance Work Statement (PWS). This detailed financial breakdown ensures that all project expenses are anticipated and accounted for, leading to better budget management and project planning. The process involves itemizing all direct costs, which include everything from travel and materials to direct wages and subcontracts.

When preparing your cost estimate, it's essential to be methodical. You will need to detail all direct costs associated with the project. This includes categories such as travel, materials and supplies, subcontracts, direct wages and salaries, and any other direct costs that may arise.

For travel costs, a simple total is not enough. You must specify the dates for each trip, clearly state its purpose, and provide the associated cost. This same level of detail is required for direct materials and supplies. Provide a breakdown of purchase dates, the purpose of the materials, and their costs. If your project involves subcontracts, they should also be detailed with the same specificity.

Direct wages and salaries demand a more granular approach. The first step is to estimate the total person-hours needed to complete each task. This should be broken down by the job title of the personnel involved. Once you have the hours and titles, you can calculate the direct wages by multiplying the hours by the corresponding hourly rates for each position. Remember to include fringe benefits in this calculation to arrive at the total direct wages and salaries.

Finally, you must account for any other direct costs. Specify the type of cost, its purpose, and the total amount. After detailing every individual cost category, you can sum them all up to determine the total cost for the task. This structured approach provides a clear, defensible, and accurate cost estimate for your PWS.

Alan McCain

Alan McCain is an instructor at Graduate School USA, specializing in Audit, Financial Management, and Acquisition. A retired combat veteran who served as both an Air Force enlisted member and a Navy officer, Alan brings more than 30 years of experience in federal and commercial budgeting, auditing, programming, operations, global logistics support, supply chain and inventory management, and major IT acquisition.

He possesses extensive, hands-on budget and audit experience across Federal, State, and Local government operations, including work within the Executive Office of the President and the Departments of State, Defense, Homeland Security, Health and Human Services, Housing and Urban Development, and Education, as well as the Office of the Mayor of Washington, D.C., among others.

Alan’s consulting background includes strategic planning and business development with the District of Columbia government, multiple federal agencies, Lockheed Martin, KPMG, and PricewaterhouseCoopers. He is a Certified Government/Defense Financial Manager (CGFM/DFM), holds a Teaching Certification from Harvard University’s Bok Center for Teaching and Learning, and earned an Executive MBA in International Business from The George Washington University.