Browse Definitions :
Definition

should costing (should-cost analysis)

Contributor(s): Matthew Haughn

Should costing is an analysis, conducted by a customer, of the supplier’s expenses involved in delivering a product or service or fulfilling a contract. The purpose of should-cost analysis is assessing an appropriate figure to guide negotiations or to compare with a figure provided by a supplier. Should costing is often used in procurement.

The processes in should-cost analysis can be labor-intensive. In a large organization, the engineering department typically arrives at a “should” cost for a product. Often this estimate is achieved by reverse engineering to determine the cost of parts. Then the additional costs of labor, materials, overhead and profit margin are added to that estimate.

Should costing can complement strategic sourcing or be used as an alternative method. In strategic sourcing, the traditional means of pricing, a company compares the quotes of at least three competitors for a product.

Developed by the United States Department of Defense (DoD), should costing has become an integral part of the government procurement process with its inclusion in the Federal Acquisition Regulations (FAR).

This was last updated in June 2016

Continue Reading About should costing (should-cost analysis)

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • PCI DSS (Payment Card Industry Data Security Standard)

    The Payment Card Industry Data Security Standard (PCI DSS) is a widely accepted set of policies and procedures intended to ...

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

  • compliance framework

    A compliance framework is a structured set of guidelines that details an organization's processes for maintaining accordance with...

SearchSecurity

  • DNS over HTTPS (DoH)

    DNS over HTTPS (DoH) is a relatively new protocol that encrypts domain name system traffic by passing DNS queries through a ...

  • integrated risk management (IRM)

    Integrated risk management (IRM) is an approach to risk management that uses a set of practices and processes to improve an ...

  • MITRE ATT&CK framework

    The MITRE ATT&CK (pronounced 'miter attack') framework is a free, globally accessible service that provides comprehensive and ...

SearchHealthIT

  • telemedicine (telehealth)

    Telemedicine is the remote delivery of healthcare services, such as health assessments or consultations, over the ...

  • Project Nightingale

    Project Nightingale is a controversial partnership between Google and Ascension, the second largest health system in the United ...

  • medical practice management (MPM) software

    Medical practice management (MPM) software is a collection of computerized services used by healthcare professionals and ...

SearchDisasterRecovery

SearchStorage

  • M.2 SSD

    An M.2 SSD is a solid-state drive (SSD) that conforms to a computer industry specification and is used in internally mounted ...

  • kilobyte (KB or Kbyte)

    A kilobyte (KB or Kbyte) is a unit of measurement for computer memory or data storage used by mathematics and computer science ...

  • virtual memory

    Virtual memory is a memory management capability of an operating system (OS) that uses hardware and software to allow a computer ...

Close