Acquisition Cost Experience and Predictability.

by Alvin J. Harman

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Analysis of cost of weapon system acquisitions, based on the ratio of actual to predicted costs. A model is set out that considers influences of the development program on the magnitude of the cost factor. Basically, the length of the development phase of the new system and the technological advance sought are related to the cost estimation inaccuracy. The model is analyzed using two sets of data, the first for systems developed in the 1950s, and the second for the 1960s. Statistical results show essentially no net change in the process over the last two decades. However, programs of the last decade were structured somewhat differently from the previous experience, and results show that the cost factor for the 1960s is somewhat lower. Thus, there is some indication of less bias in cost estimation or overrun of actual cost in the 1960s than previously. 35 pp. Ref.

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