A Methodology for Cost Factor Comparison and Prediction

by Alvin J. Harman, S. Henrichsen

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An improved technique for analyzing the cost experience of weapon system procurements. Unlike earlier analyses, this one accounts for performance requirements, program duration, degree of technological advance, level of effort, earliness of estimates, and subsequent program changes, as well as the more usual ratio of estimated to actual costs (cost factors). Fifteen weapons for which enough information was available were analyzed--11 from the DDR&E selections analyzed in RM-6072, plus the A-7D and E, Difar, and the SQS26CX. Results were compared with 1950s aircraft and missile experience. The Air Force spent 80 percent of the dollar totals of the 1960s sample; the F-111 and C-5A accounted for 54 percent. For comparable programs, 1960s cost factors are roughly the same as 1950s factors. However, the 1960s program tended to be shorter and less ambitious, resulting in somewhat lower cost factors. Based on an assessment of the technological advance and length of time for development of a future system, the actual cost and range of uncertainty can be predicted using this mode.

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