What differentiates price analysis from cost analysis?

Price analysis focuses on evaluating the total price of a proposal against market conditions, using external data to compare prices. This method typically involves reviewing historical pricing, competitive bids, and pricing benchmarks to determine whether the price is fair, reasonable, and appropriate in the given market context.

In contrast, cost analysis delves into the individual components of cost in a proposal, examining the direct and indirect costs incurred by a contractor to perform the work. This process requires a detailed understanding of the contractor's cost structure and is typically more involved, as it requires analyzing costs based on specific financial data which may be proprietary to the contractor.

The distinction lies in the approach and the kind of information utilized; price analysis uses market data to evaluate overall price while cost analysis scrutinizes internal costs. Understanding this difference is crucial when assessing proposals and ensuring successful contracting practices.