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Cost growth (meaning the underrun or overrun of actual vs. estimated costs) is an enduring and prevalent problem in weapon system development. In tight budgetary times, the problem is intensified because a systematic bias in cost estimates can undermine the basis of resource allocation decisions. This exploratory analysis attempts to quantify the magnitude of cost growth in weapon system programs, and identify factors affecting cost growth. The study revealed that cost estimates are systematically biased toward underestimation, resulting in an average program cost growth of 20%.

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This report is part of the RAND Corporation Monograph report series. The monograph/report was a product of the RAND Corporation from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

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