Are Cost Overruns a Military-Industry-Complex Specialty?

by David Novick


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Criticizes the current tendency to identify military-industrial-complex cost overruns with poor accounting procedures and to assume that such excesses are both new and unique to the military. To prevent overruns, the General Accounting Office recently recommended that all defense contractors adopt uniform accounting procedures. However, uniform bookkeeping can identify past, but cannot avert future, extravagances. Great Britain's Plowden Committee recognized that effective cost control depends on both the accuracy of the original estimate and strict financial control of the project in operation. Cost overruns have occurred for centuries (e.g., a Roman aqueduct cost more than double the estimate), are exclusive to neither the government nor the military, and are not limited to projects advancing the state of the art (e.g., commercial office buildings and private homes often involve substantial overruns). However, these excesses can and should be reduced in both military and civilian projects.

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