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Should Cost

APMT 057

DAU GLOSSARY DEFINITION

A PM's cost goal for an acquisition program, or particular activity or product within an acquisition program, developed by analyzing all elements of the program's independent cost estimate (“will-cost estimate”) and planning reasonable measures to reduce them. These specific, discrete “should cost” initiatives are developed with prudent, cost-benefit based considerations of associated risks, but without unacceptable reductions in the value received. A program's “should cost” target represents what the PM believes the program ought to cost if identified cost saving initiatives are achieved.

General Information

For Major Defense Acquisition Programs (MDAPs), it is DoD policy to budget to the Director of Cost Assessment and Program Evaluation (DCAPE) Independant Cost Estimate (ICE) unless an alternative estimate is specifically approved by the Milestone Decision Authority (MDA). Program Managers (PMs) will also develop a “should cost” estimate as a management tool to control and reduce cost. PMs should not allow the ICE to become a self-fulfilling prophecy. [DoDI 5000.85]

Functional Service Managers (FSMs) are responsible for the security, cost, schedule, and performance of a specific service acquisition project.  The FSM will capture support metrics and cost data, as appropriate, and track performance against cost targets.  [DoDI 5000.74]  The cost target is equivalent to the should-cost target.