Basis of Estimate (BOE) Template
A basis of estimate explains how a price was built, so that a reviewer or customer can follow the logic and challenge it. This template gives you the structure, and you fill in the facts for each quote.
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Basis of Estimate Document Template
Basis of Estimate
Company: Acme Precision Ltd Customer: Northfield Systems Reference: RFQ-24817 Item: Housing assembly, PN-48213 Rev C Quantity: 250 units, delivered in 5 lots of 50 Estimator: J. Moreno Date: 2026-10-20
Material basis
Aluminum 6061-T6 bar from current supplier quote dated 2026-10-12, 8 percent allowance for cut waste and scrap.
Labor and machine basis
Routing times from similar part PN-47110 adjusted for added features. Setup spread over 50-unit lots. Machine and labor rates from the 2026 rate table.
Cost summary
| Element | Basis | Amount |
|---|---|---|
| Direct material | See material basis | |
| Direct labor | See labor basis | |
| Machine time | See labor basis | |
| Outside processing | Supplier quote | |
| Tooling and NRE | One-time | |
| Overhead | Current absorption rate | |
| Contingency | 5 percent of subtotal | |
| Profit or fee | Per pricing policy | |
| Total |
Assumptions
Drawing Rev C is final. Customer provides test fixtures. No change to quantity by more than 10 percent.
Exclusions
Qualification testing, export licenses and freight beyond the plant gate.
Risks and mitigation
Thin wall feature may require extra fixturing. Anodize lead time depends on supplier capacity.
This estimate is valid for 30 days from 2026-10-20.
Review and approval
This is a starting point for documenting an estimate, not a substitute for your proposal procedures or the requirements of a specific contract. Government contract proposals may require specific cost formats; check the solicitation.
Link estimates to actual cost
An optional review of how to compare each estimate with actual job cost from your ERP.
Optional. The tool and every export work without this. No spam.
How to use the template
Enter the customer, item and quantity, then describe the material, labor and machine bases in plain terms. Add assumptions, exclusions and risks, and set the contingency and validity. Export the document as PDF or Word, add the dollar amounts in the cost summary table, and attach it to the quote. Keep one copy in the quote file for later comparison with actual cost.
- Fill in the fields at the top
- Add amounts to the cost summary table
- Export and file with the quote
What a good basis states
Each cost element should say where the number came from: a dated supplier quote, a routing for a similar part, a rate table by year, or a historical actual. Reviewers trust estimates that name their sources and flag judgement. Describing the method also makes the estimate repeatable, so another estimator reaches a similar number from the same inputs.
Assumptions, exclusions and contingency
Assumptions say what must be true for the price to hold, such as a final drawing revision. Exclusions state what is not included. Contingency covers identified risk and should be tied to named risks rather than added as a flat padding. When a risk is resolved, the contingency should reduce. If the contract has special rules for contingency, follow them.
Common mistakes
Vague bases such as based on experience, missing dates on supplier quotes, and assumptions hidden in an email thread cause disputes later. Another mistake is not recording who reviewed the estimate. Use the signature block, and store the document where the contracts team can find it.
Frequently Asked Questions
What is a basis of estimate?
It is a document that explains how an estimate was developed: the sources, methods, assumptions and risks behind each cost element. It lets a reviewer verify the logic without redoing the work, and is common in defense and aerospace proposals.
How much detail is needed?
Enough that another estimator could reproduce the number. Name the source for each element, state the quantity or time used and note any adjustments. More detail is warranted for large or high-risk items.
How should contingency be set?
Tie it to identified risks, estimate the cost impact and likelihood of each, and sum the expected values. Show it as a visible line. A flat percentage is easy but harder to defend and does not reflect risk reduction over time.
Does this satisfy a government cost proposal?
Not by itself. Government solicitations can require specific forms and cost data formats. Use this as the narrative support and follow the solicitation's instructions and your compliance procedures.
Netray can help link your estimates to actual job cost in your ERP so each basis of estimate can be tested against what the job really cost.
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