What is the process of independently reviewing elements to assess the realism of proposed costs?

The process of independently reviewing elements to assess the realism of proposed costs is known as Cost Realism Analysis. This analysis ensures that the costs proposed by contractors are accurate and reflect a realistic perspective on what it will take to complete the project. In doing so, the analysis evaluates the relationship between the proposed costs and the technical aspects of the proposal. This is crucial in federal contracting because it helps ensure that government agencies do not pay more than necessary and that proposals are viable for successful project completion.

Cost Realism Analysis involves assessing whether the costs are aligned with the requirements and scope of work outlined in the solicitation, as well as considering factors such as labor rates, overhead, and profit margins. This thorough vetting process helps mitigate risks associated with budget overruns and project delays.