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Procurement Cost Estimation Process
•Two methods were used to estimate cost:
–Top-down method using data from the Congressional Budget Office (CBO), Visibility and Management of Operating and Support Costs (VAMOSC), and others
–Bottom-up method using detailed weight-based Cost Estimating Relationships (CERs), labor costs, and specialized equipment costs
–The bottom-up method produced results that were less than 10% lower than the top-down method
–For brevity, only the top-down method is detailed on the following slides
In performing the cost estimate,  both top-down and bottom-up approaches were taken.

For the top-down approach, we began by reviewing the cost to procure similar ships using data gathered from several Government and Industry sources.  We then accounted for changes based on differing components, displacements or design requirements and thus were able to arrive at a rough estimate of procurement cost.

In using the bottom-up approach, we arrived at a cost per compartment by using weighting factors between individual compartment displacements and cost that were derived from last years cost estimation process.

Both methods yielded a final cost estimate that were within 10% of each other.  For brevity, only the top-down method will be discussed in the following slides