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Parametric Price to Win (PTW) Analysis: When & How to Use It to Win More Work

business cityscape

When you’re looking for a ballpark estimate, an analogous (AKA “back of the envelope”) calculation may be all you need. After a quick look at the budget over the last five years, you can do a quick run rate, determine trends in play, and extrapolate those numbers into a rough estimate. Ultimately, this technique is based on assumptions and arbitrary percentages of planned growth, so the margin for error is significant. That said, it’s an approach that can still have value, especially in the absence of a lot of information; in fact, it may be the best you can do. 

A Parametric PTW strategy, however, is a quantitative approach that determines the expected cost of a project depending on market or historic information. Using the statistical relationship between past information and specific other variables, a parametric model looks at every requirement listed and applies costs to each. Far more granular than other estimating techniques, a parametric approach will yield more accurate information when the ingredients to perform one are there.  

Doing a Parametric PTW analysis is most accurate when you’re looking at building a project from the ground up. Below is a simple example to illustrate the concept. Keep in mind that, in reality, there are many other things that must be factored in, making the parametric model far more complex.

Example: A project team has been asked to estimate the cost of a new hotel, similar to facilities their company has built over the past five years. Using a Parametric PTW strategy, the team can use the company’s in-house database to track the costs, schedules, and other specifics of the previous projects. 

For an initial evaluation, the team will use the cost per square foot as the appropriate input parameter, extrapolating the future building’s cost per square foot using the rule of three. For exact types of buildings, the cost had amounted to $200 for every square ft in the past—the cost for every parameter unit. The current building is intended to occupy a space of 3,000 square feet—the parameter value for the new project. The calculation of the construction using parametric using the rule of three will be as follows.

Estimated construction cost (ECC) = $200×3,000 square foot = $600,000.

The parametric values, of course, can be reduced and adjusted as the needs of the project get more specific and requirements change.

When using a parametric PTW strategy, it is critical to understand the requirements the RFP is asking for. Look at minimum requirements and work to fulfill those. Create the cost to build the customer what they are asking for, not what you want to build or have built in the past.

When companies lose work, one of the reasons is frequently that they did not build what the customer was asking for. It’s important not to add unwanted bells and whistles to the client’s product.

Because obtaining historical information requires a lot of resources and effort, using a Parametric PTW technique can be expensive and time-consuming. However, when sufficient historical information is available, a Parametric PTW strategy is one of the best approaches for estimating resource requirements, duration, and cost.

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Introducing Our New CA and PTW Tools

We are pleased to introduce to you some of the newest and most powerful solutions here at Richter and Company – our competitive analysis tool, competiRATER, as well as our Price To Win Tools, laborRATER & wrapRATER. While these new products use elements of our traditional services, they intuitively analyze general capabilities and solutions in the context of an awarded contract vehicle or market segment. As a result, these productized results now may be offered at a much lower price on an non-exclusive basis to multiple clients seeking improved performance.

Our traditional services provide detailed assessments of the low-level solutions and capabilities of targeted competitors, based on consistent processes backed by comprehensive and ethical research. Each analysis is highly tailored to meet the requirements of specific opportunities and specific clients. As a result, these services are offered on an exclusive basis to just one client per opportunity, through our PTWservices and CAservices offerings.

Our competiRATER tool is intended to provide a high-level analysis of a targeted company’s general capabilities in the US Federal market. Each unique analysis is based on independent, open-source research which augments prepositioned information in our extensive knowledge base. competiRATER deliverables use a consistent format to analyze and present accurate and highly-reliable information. Results provide insights and actionable information to increase your win probability and profit — news you can use, not fluff filling a binder. Results are generally provided within five business days of acceptance of your order. Pricing is per single competitor; discounts are available for multiple purchases.

Note that competiRATER results are not intended to assess the specific capabilities, strategies, or solutions in the context of the requirements of a specific opportunity. They are offered on a non-exclusive basis. Clients wishing an opportunity-specific assessment are encouraged to request a proposal for exclusive support.

Our laborRATER tool product provides labor cost and pricing data that can be used to benchmark your labor rates against others in your market. laborRATER results are based on labor “pools”: groups of similar labor categories that reflect similar types of work. Pricing is for a single labor pool and region and discounts are available for multiple purchases. Results are generally provided within five business days of acceptance of your order.

Finally, our wrapRATER product is intended to provide an estimate of a targeted company’s likely current wrap rate before fee. wrapRATER results do not reflect the company’s likely future rate, strategies, or solutions in the context of the requirements of any specific opportunity.

Results are offered on a non-exclusive basis. wrapRATER results are not intended to assess the specific strategies, tactics, or solutions likely to be used by a company in its pursuit of a specific opportunity. Clients wishing an opportunity-specific assessment are encouraged to request a proposal for exclusive support.

For more information on each specific tool, please contact us at the emails below or by calling 301-845-7300.

competiRATER@richterandcompany.com
laborRATER@richterandcompany.com
wrapRATER@richterandcompany.com

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Richter & Company Employee Spotlight: Avantika Singh

With over 15 years of experience in the government contracting industry as a seasoned pricing strategist, Avantika Singh has a deep focus and understanding of bidding methodologies, pricing tools and techniques, and possesses in-depth experience on cost/price development and analysis.

Prior to joining Richter & Company, Ms. Singh was the VP of Pricing Strategy & Solutions at The McKelvey Group. She has also worked as a Financial Analyst and Project Control Analyst at several government contracting companies, providing thought leadership and valuable financial analysis to help sustain and increase growth.

We are thrilled to have Avantika on the Richter team and we wanted to take the time to further introduce her to you with the following set of ten questions. With that being said, we hope you enjoy learning a little bit more about her!

What made you want to get into Pricing & Strategy?

I have always enjoyed honing new skills and I am looking forward to bringing value to this industry from my past knowledge and experience.

What aspect about your job do you really enjoy?

I enjoy analytical reasoning and estimating, which ties in so well to my role here at Richter.

What is one thing people might not know about you?

I actually minored in Astronomy during my undergraduate career. Finance was my major, but I also enjoy astronomy.

What is one thing people don’t know about Richter that you think they would find surprising or interesting?

The extremely high level of analysis and capability this firm brings to the industry, especially for being a small family-run group.

What is the most unique experience you’ve had at Richter during your time at the company?

I’m too new for this one, but I’m sure to have some stories, soon! Haha!

What is your background? Ex: where are you originally from, where did you go to school, etc.?

I was a Finance major in my undergraduate studies, then I completed my MBA.  Following that, I worked around the beltway for pretty much all sizes of companies, starting with IBM, Siemens’ and L3.

What is your favorite pastime?

I enjoy the outdoors – specifically going hiking. When indoors, I enjoy watching Bravo

Have you travelled a lot? Where to? What was your favorite place and what’s the next place on your list?

Yes, I love, love, love to travel! My favorite place is probably South Africa or Costa Rica. My next dream vacation would be to Mt. Kili in Tanzania, or maybe New Zealand.

What is currently on your Netflix list? 

The Crown.

Do you have any bucket list items? Ex: skydiving, learning to play an instrument, etc.

Skydiving is on my bucket list, as well as living abroad for maybe a year at a time in a new country, once I retire!

So there you have it, straight from Avantika! That’s all for this month’s Employee Spotlight. Stay tuned here to our blog for more industry news and information, including introductions to more of our team here at Richter & Company!

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Richter & Company Announces Chris Richter as President

With 10+ years of proven experience in business development and technical and analytical support within the public and private sectors, we are proud to announce that our own Chris Richter has assumed the role of President of Richter & Company.

When asked about his new role, Chris commented: “I am excited to start my new role as President of Richter & Company. Having the ability to be an integral part of growing the company from the ground up, I’m excited to take it to the next level.”

Chris was recently interviewed with a set of ten questions to help define his approach and personality within the organization.  Take a moment to learn more about Chris within his new role as President:

What made you want to initially work at Richter & Company?

In 2007, Randy Richter (my father and company Chairman) approached me to help provide some research and marketing support. We decided to do a week of marketing to the top 20 programs that year and as a result of those efforts, landed a few new clients. Those clients fueled our growth over the next several years and I knew this type of work was clearly something I felt strongly about and could excel within.

What aspect about your job do you really enjoy?

One of the best parts of working at Richter & Company is the breadth of programs we get to support.  In a single year we may do everything from building tactical vehicles, surface ships, aircraft, healthcare IT, or intel analysis.

What is one thing people might not know about you?

My favorite movie growing up was Top Gun. I think I’ve watched it over a hundred times. My nickname was “Goose” when I was younger and the scene of Tom Cruise on his Honda sport bike led me to buying my first motorcycle in college.

What is one thing people don’t know about Richter that you think they would find surprising or interesting?

Full-time staff does almost all of our work. We are not a “body shop” using 1099’s. We hire the best people in the industry to provide premier value to our customers.

What is the most unique experience you’ve had at Richter during your time at the company?

Honestly, it is challenging to pick only one.  I think the most unique experience was during my first presentation of a competitive analysis. The plan was to present to the capture manager and the proposal manager, but when we arrived to present the briefing, it was the entire executive board. Talk about jumping in with both feet! The good news is that I was able to provide them with information they needed, and Richter & Company was proud to help them to secure their bid.

What is your background? Ex: where are you originally from, where did you go to school, etc.?

I was born in Ithaca, NY and moved to Maryland when I was 5.  I went to school in Virginia and eventually ended up back in Maryland.

What is your favorite pastime?

I grew up playing lacrosse – in fact, my father and I helped really grow the sport within Western Maryland. However, two years ago, I ruptured my Achilles in a Master’s lacrosse game. Having a strong competitive nature, I needed to do something. I was introduced to competitive pistol shooting shortly after my surgery and actually shot my first 12 matches wearing a boot to protect my newly repaired Achilles.

Have you travelled a lot? Where to? What was your favorite place, and what’s the next place on your list?

I’ve traveled to most of the US, the Bahamas and Bermuda, but my favorite vacation was in Costa Rica. The rainforest was amazing, and the people have such a relaxed attitude. Next will be somewhere else tropical, and eventually I want to make it to Europe and the Far East.

What is currently on your Netflix list?

Lost in Space, The Defenders, Iron Fist, Luke Cage and of course, Stranger Things.

Do you have any bucket list items? Ex: skydiving, learning to play an instrument, etc.?

I will say that I’ve done most of my bucket list items. I’ve been skydiving, both tandem and solo, I’ve ridden a motorcycle at 199 mph (I couldn’t turn my wrist that last fraction to break 200 mph), I learned how to ride horses and to shoot pistols and rifles. I think the few things that remain are to make Grand Master in USPSA and to visit Europe.

So there you have it, straight from the man himself! That’s all for this month’s news here at Richter. Stay tuned here to our blog for more industry news and information, including introductions to more of our team here at Richter & Company!

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Getting Personal | Meeting In-Person vs. Virtual Conferencing

meeting in person
I was sitting at dinner with my wife and daughter and as I looked around the restaurant I noticed something. Almost everyone in the restaurant was more engaged with their phone than the person sitting next to or in front of them.

In today’s technology-driven lifestyle, it’s become easy do everything remotely. I can see my nieces in Omaha via FaceTime, attend a conference via GoToMeeting and even present information to a client via a web conference. The simplicity of it is great but it lacks something.

Last week I had the opportunity to travel to a city in the South and meet with some existing clients and some potential new clients. With a business partner we had scheduled five meetings in a period of two days. Over the course of those two days we spent an hour or two with each client. These were in-person, no media, “let’s sit down and have a conversation” discussions.

This was personal.

You could see the expressions on the face of the person sitting across from you. You could see and hear nuances in the conversation. This was plain and simple a personal interaction and you know what, at the end of each conversation, every client echoed the same thing. They want to develop a personal relationship. They want to know you so that they can pick up the phone and call you with honest feedback, whether it be good or bad.

So what came of those meetings?

We were able to develop our business relationship with these clients into a more personal relationship. So what does that mean? Well, in the coming weeks or months, we will be meeting with each of these clients and further expand our relationship. We may do some business or simply develop some relationships. Either way, at the end of the day, this personal approach will have a great impact on our business going forward.

So guess what, Beth, Brandon and Kevin… I hope you don’t mind doing a little traveling.