Cost analysis, also known as cost-benefit analysis, is a technique through which business executives analyze the advantages of a project against the cost of implementing it to determine its viability before execution (Beukers, Bertolini, & Te Brömmelstroet, 2014). By evaluating the risks and rewards of implementing a project, the business managers and executives can gauge the profitability which will come about as a result of implementation as well as the general long-term benefit to the organization. Thus, it is crucial to conduct a cost benefit analysis on suggested ideas for the purpose of assuring managers that the project is properly evaluated, budgets are set clearly for the project, goals are established and investment is prioritized (Nas, 2016). This paper considers the events of a fact-finding agenda for the installation of Aerial Surveillance Cameras by Good Intentions Technology (GIT) at the Federal Watch-out Agency (FWA).
Background Information
Good Intentions Technology (GIT) submitted a Firm Fixed Price Proposal (FFP) to the Federal Watch-out Agency (FWA) in response to a Firm Fixed Price Solicitation to build 75 B1-RD-type Aerial Surveillance Cameras (ASC). GIT is a world leader in surveillance systems production and has delivered over 750 of the B1 series cameras. The ASCs must be delivered no later than 24 months after receipt of order. After a series of questions, information exchange, and clarification requests, GIT and the FWA have agreed to meet in a formal fact finding session at an undisclosed location. GIT responded to the FWA RFP with the Cost Summary Detail provided below, and is interested in a Cost Plus Fixed Fee (CPFF) arrangement. GIT’s Program Management asserts that a cost type effort may be better suited for delivering the FWA requirements, than the Firm Fixed Price.
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Following the need to provide documentation for the support of face-to-face meetings between representatives of the two parties, it was necessary to develop a fact-finding agenda for the meetings between GIT and FWA. The following document entails the fact-finding meeting agenda alongside pre-negotiation objectives that are to be completed before the end of the meetings. Future negotiation settlements will also be explored in case the FWA accepts GIT’s proposal without further future discussions:
Federal Watch-Out Agency (FWA) & Good Intentions Technology (GIT) Fact Finding Meeting Agenda
Welcome – at this stage, introductions between the facilitators and the attendees from GIT and FWA.
Detailing the purpose of the meeting – here, background information on the service being provided is given. The following pointers will be followed in the course of this discussion:
The need for the product for the purpose of scope development – security concerns have led to the need for additional surveillance techniques with minimal cost to the FWA (Reel, 2016). As a result, aerial options have proven to be the most effective surveillance techniques as they are separated from the public eye and provide minimal maintenance costs.
The need for the product – following rising global security concerns, this system comes as an enhancement to law enforcement to ensure the assurance of public security.
Target population – since the FWA is a federal body, the entire country is affected by the implementation of such a program, so that over 300 million Americans are beneficiaries.
Project timeframe – the first phase of the project is expected to be complete within 24 months from the placement of the order.
Interested team members include members from the Department of Defense who are chiefly concerned with the surveillance techniques as well as the Department of Justice.
Reviewing the sourcing options and make recommendations – at this stage, an initial discussion is held to consider the appropriate sourcing option. It is well known that different souring options are available for aerial surveillance systems depending on their use. The Canadian government used the best service provider during an implementation of the systems for traffic management (Cavoukian, 2012). Additionally, it is noted that the Congress often considers the best service provider when considering hiring for this kind of a service. Therefore, GIT being the best player in the market is an assurance that the company is most likely to provide the best service for the required surveillance equipment supply.
Special Interest Parties – consideration for special interest groups that might have a stake in the implementation of this program is necessary. The fact-finding discussion would determine the special interest groups interested in this procurement process.
Next steps – the following steps will be taken after the identification of the above-mentioned items, including:
Setting a date for the solicitation between FWA and GIT for kicking off discussions.
Setting topics for discussion, including the review scope, roles, and responsibilities during the project rollout. Different roles such as industry research, market research and existing contracts will be considered.
Developing a project plan.
These discussions assume that the cost proposal is already provided as seen below and shall be considered compared to competitive players in the sector:
Element | Rate Proposed |
| Direct Material | 3,300,000.00 |
| Direct Labor | 2,425,000.00 |
| Subcontracts | 3,250,000.00 |
| Other Direct Costs | 78,950.00 |
| Total Direct Costs | 9,053,950.00 |
Indirect Costs | |
| Labor Overhead | 2,179,460.00 |
| Material Overhead | 330,000.00 |
| Subcontract Overhead | 81,250.00 |
| Total Cost Input | 11,644,660.00 |
| Total Cost | 12,576,232.80 |
| Profit | 2,515,246.56 |
| Total Price | 15,094,126.95 |
In this case, therefore, a discussion on the cost-benefit analysis is necessary to determine whether the benefits of the project accrue to the value of $15 million. Research has shown that surveillance technologies have numerous advantages, including those of security, transportation efficiency and healthcare (Lin & van Gulijk, 2014) . With potential applications for federal security and the best service provider in the market, only further discussions are required to ensure that the details of the project implementation are ironed out.
References
Beukers, E., Bertolini, L., & Te Brömmelstroet, M. (2014). Using cost benefit analysis as a learning process: identifying interventions for improving communication and trust. Transport Policy, 31 , 61-72.
Cavoukian, A. (2012). Privacy and drones: Unmanned aerial vehicles (pp. 1-30). Ontario, Canada: Information and Privacy Commissioner of Ontario, Canada.
Lin, P. H., & van Gulijk, C. (2014). Cost-benefit analysis of surveillance technologies. In P. H. Lin, & C. van Gulijk, Safety and Reliability: Methodology and Applications (pp. 409-415). CRC Press.
Nas, T. F. (2016). Cost-benefit analysis: Theory and application. Lexington Books.
Reel, M. (2016). SECRET CAMERAS RECORD BALTIMORE’S EVERY MOVE FROM ABOVE . Retrieved from Bloomberg: https://www.bloomberg.com/features/2016-baltimore-secret-surveillance/
