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Bus 505: Business Strategies and Proposals- Assignment 4; Proposal Preparation Plan

1. Discuss and prepare a work breakdown structure (WBS) showing a condensed version of cost estimates, using the price to win (PTW) cost approach. Use the example shown in Chapter 14 of the textbook as a guide.

A work breakdown structure (WBS) is a breakdown of a project into smaller components and it is a key project deliverable that organizes the team's work into manageable sections. The Project Management Body of Knowledge (PMBOK) defines the WBS as a "deliverable oriented hierarchical decomposition of the work to be executed by the project team". A WBS is arranged in a hierarchy and constructed to allow for clear and logical groupings, either by activities or deliverables. The WBS should represent the work identified in the approved Project Scope Statement and serves as an early foundation for effective schedule development and cost estimating. Project managers typically develop a WBS as a precursor to a detailed project schedule. The WBS is accompanied by a WBS Dictionary, which lists and defines WBS elements.

The goals of developing a WBS and WBS Dictionary are 1) for the project team to proactively and logically plan out the project to completion, 2) to collect the information about work that needs to be done for a project, and 3) to organize activities into manageable components that will achieve project objectives.

The WBS and WBS Dictionary are not the schedule, but rather the building blocks to it. The progression of WBS and WBS Dictionary development is as follows:

1- WBS (Diagram or List): Defines comprehensive list of project activities.

2- WBS Dictionary: Describe tasks; sequence activities; estimate duration and cost and identify constraints.

3- Detailed Schedule: Integrate detailed list of project activities, dependencies, constraints, and resources to reflect complete timeframe.

The WBS and WBS Dictionary are not static documents. They need to be updated and revised regularly to reflect that information. Following is a sample of WBS organized by hierarchical levels and numbering sequence.

1.0 PREPARING DINNER EVENT 1.1 Planning 1.1.1 Plan andSupervise 1.1.2 Make Budget 1.1.3 Prepare Planning andDisbursement 1.2 Guests 1.2.1 Make GuestLists Receive RSVPs 1.2.2 Create NameTags 1.2.3 1.3 Room Equipment 1.3.1 Set up Table 1.3.2 Lay outSetting 1.3.3 Decorate 1.4 Dinner 1.4.1 Make Menu 1.4.2 Create Shopping List Service Dinner 1.4.3

2. Describe the strategies that could be implemented to prevent unethical practices and promote compliance with federal guidelines in the selected contract type’s performance risk and profit incentive.

Federal Acquisition Regulation (FAR) 1.602-2 states that Contracting Officers are responsible for ensuring performance of all necessary actions for effective contracting, ensuring compliance with the terms of the contract, and safeguarding the interests of the United States in its contractual relationships. FAR 3.1002 states that (a) Government contractors must conduct themselves with the highest degree of integrity and honesty. (b) Contractors should have a written code of business ethics and conduct. The cost-plus-incentive-fee contract is a costreimbursement contract that provides for the initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. If the contractor is unethical, there is a lot of opportunity for fraud and misuse of the government funds. Though there is a lot of regulations that cover the government, opportunities to misuse can be found in processes if they are not transparent.

To promote compliance with such code of business ethics and conduct, contractors should have an employee business ethics and compliance training program and an internal control system that:

(1) Are suitable to the size of the company and extent of its involvement in Government contracting;

(2) Facilitate timely discovery and disclosure of improper conduct in connection with

Government contracts; and

(3) Ensure corrective measures are promptly instituted and carried out.

FAR 52.203-13 Contractor Code of Business Ethics and Conduct requires that contract for full cooperation for ethics where “Full cooperation”— (1) Means disclosure to the Government of the information sufficient for law enforcement to identify the nature and extent of the offense and the individuals responsible for the conduct. It includes providing timely and complete response to Government auditors’ and investigators' request for documents and access to employees with information. All of these regulations prove that the government is very serious about compliance and ethics. Following are a few strategies to be ethical and in compliant with the usage of contract type’s performance risk and profit incentive.

Establish Culture of Honesty: In implementing fixed-price-incentive or cost-plus-incentive projects it is important that companies establish culture of honesty in spending government money and make the employees accountable for their performance and spending. As the government and contractor shares the excess money, it is important that the contractor be honest and spend what is needed, not more than what is required.

Create Policies and Practices: Companies must develop, and document policies and processes around defining, identifying, and reporting ethics violations. These policies should be articulated in the employee handbook and protections should be put in place for those who raise ethical issues.

Create Checks and Balances: Rather than putting related responsibilities in the hands of one employee, create a system of checks and balances to minimize the opportunities for unethical behavior.

Put Controls in Place: Perform regular audits to help reduce opportunities to act unethically, incent individuals who may act unethically to reconsider, help catch issues that have occurred by accident, and mitigate risk all around.

3. Develop three (3) ground rules and three (3) assumptions that are conditional to the cost estimate.

The ground rules are the basic principles on which future action will be based. Ground rules are established consciously to make the process effective and consistent. To be effective, ground rules must be clear, consistent, agreed-to, and followed.

Ground Rules:

1- Only 5% salary increase will be provided for the project staff who have been over three

years with the company and transferring from an existing project to the new project.

2- Annual salary escalation rate for US and Expatriate is 3% per year and 6% per year for

cooperating country nationals.

3- Department of Energy structured approach (Weighted Guidelines) will be used for each

project to determine the profit/fee objective.

4- In no occasion the proposed fixed fee percentage ceiling will be above the statutory limit

(10%) set forth in FAR 15.404-4, even the risk and uncertainty in its greatest amount.

An assumption is a statement that is presumed to be true without concrete evidence to support it. In the business world, assumptions are used in a wide variety of situations to enable companies to plan and make decisions in the face of uncertainty. Perhaps the most common use of assumptions is in the accounting function, which uses assumptions to facilitate financial measurement, forecasting, and reporting.


1- The required regulatory framework for project implementation and sustainability is put in

place by the host government.

2- The skillsets of key personnel matches the requirement of the RFP.

3- The project will be co-funded by the private donors who have big stake in the project


4- The local institutions are cooperative and understand the value that this project brings to their communities.


Osborne Steve, Winning Government Business - Gaining the Competitive Advantage, (2002) Management Concepts, Vienna, VA

Project Management Institute, A Guide to Project Management Body of Knowledge (PMBOK, 5th edition), 2013

Federal Acquisition Regulation, Subpart FAR 52.203-13 Contractor Code of Business Ethics and

Conduct, (2016), retrieved from

O’Guin, Michael, Price-to-Win - Knowledge Link, retrieved from

White, Jaquetta, To Prevent Unethical Behavior, Companies Should Operate around A Core Set of Values, (February 2011), retrieved from

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