CM-MA-701 Control of Proposal and Business Development Costs

Table of Contents

1. Purpose
2. General
3. Responsibilities
4. Procedure
5. Flowchart
6. References
7. Attachments

1. Purpose

This procedure describes the responsibilities and authorities for the control of proposal and business development costs and this applies to Company and Environmental Group activities.

2. General

This procedure essentially needs to be read in conjunction with ref 1, but can be read separately by personnel of Accounting and Project Management Services Department, responsible for reporting proposal and business development costs.

3. Responsibilities

See 4.0 Procedure

4. Procedure

4.1 Proposal Cost Control

The Business Development & Proposals Department is solely responsible to control proposals costs.  The Manager of Proposals is directly responsible for monitoring, controlling and reporting proposals costs.

Upon receipt of an inquiry, the Sales Manager will initiate action within 24 hours to get Management's decision whether or not to bid, via the Job Prospect Analysis Form. For this purpose, he will develop after appropriate consultations an approximate, but realistic, proposal budget.

If Management decides to bid, the Manager of Proposals will, in consultation with the Proposal Manager nominated for the proposal and the Sales Manager concerned, develop a detailed proposal budget by obtaining estimates of labour/non-labour costs utilizing the attached form.  The budget will give detailed break-down of labour costs per discipline and all non-labour costs.  The Manager of Proposals will review and approve this budget which should not exceed the approximate budget prepared by the Sales Manager.

Upon approval, the Manager of Proposals will formally communicate with Accounts Department, Company Operations and to the outside-Hague office (if involved): (i) the inquiry number (N,J,I,F,or G) and (ii) the approved proposal budget showing labour and non-labour allocations for each discipline.  The budget allocations for the Business Develop­ment Department and for the outside-Hague offices will also be shown.

If any minor front-end costs have unavoidably to be incurred prior to budget approval, the Manager of Proposals will initially charge such costs to a suspense account which will be established for this purpose.  Later, if an inquiry number is issued after Man­age­ment approval, the aforesaid costs will be transferred to the approved inquiry number.  If Management decline to bid, these costs will be charged to optional overhead number C0101-24.

Once an approved budget and inquiry number (N,J,I,F, or G) have been issued, the responsibility to control individual proposal costs will devolve on the Proposal Manager concerned.  The responsibility of the Manager of Proposals will be to monitor costs incurred on all active proposals in the company and to submit to Management consoli­dated company-wide proposal cost status reports.  He will be assisted in this by W.P.C. de Mos (Project Management Services).

Administration Department will forward to the Manager of Proposals every week the detailed breakdown by discipline of labour and non-labour costs incurred on each proposal (HOTA 4.1.1.-Level 3; HOTA 4.1.2).  The Manager of Proposals will distrib­ute these reports to the Proposal Managers and to the Sales Managers con­cerned for acceptance or rejection.  The Manager of Proposals will review comments received and will forward to Accounting the final consolidated cost figures.

The Manager of Proposals will be responsible to bring to the Manager of Sales attention as and when necessary, cost overrun trends and will seek approval in advance for continuing to incur costs or to take other appropriate action.

4.2 Control of Business Development Costs

Sales Managers will be directly responsible to control their individual business develop­ment costs.

Sales Managers will be allocated an ad-hoc allocation of 900 manhours per year to be expended on minor costs related to business development which cannot be charged to an inquiry number or other cost code.  Such costs will be charged to a personal number of the Sales Manager.  Charges against such personal numbers will be restricted to minor business develop­ment efforts, for example: pre-inquiry presenta­tions; preparing qualifications brochures.

Accounting will forward to each Sales Manager on a weekly basis, detailed reports on labour and non-labour costs charged to his personal number.

Accounting will continue forwarding to the Manager of Sales the monthly overhead variance reports and the weekly company manhours summary report (HOTA 4.1.3).  The latter report will, however, show a new additional item, namely, the approved budget for each proposal number.

4.3 Control of Other Costs

Costs under the following cost sub-codes will be centralized and directly monitored and controlled by the persons shown hereunder:

Accounting will forward to the Manager of Sales and Manager of Proposals on a monthly basis, the details of costs incurred under the cost codes specified in 3.1 above for review and acceptance/rejection.

Any cost which is sought to be charged by anybody to Business Development & Proposals Department under a cost sub-code for which no budget allocation has been made will automatically be refused by Accounting and sent back to the cost originator.

5. Flowchart

Not applicable.

6. References

7. Attachments

1.  Proposal Budget Estimate Form

PROPOSAL BUDGET ESTIMATE ( NLG )