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cost savings


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  3. Cost Savings

An action that will result in a smaller-than-projected level of costs to achieve a specific objective. Incentive contracts where the contractor and government share in any difference in cost below the estimated target cost incurred by the contractor to achieve the cost objective is a cost savings. It differs from a cost avoidance in that a cost target has been set from which the savings can be measured. In cost avoidance, the amount is determined as the difference between two estimated cost patterns.