Should Cost/Will Cost/Must Cost - A Theory on the Cause of Cost Growth

Abstract

Incentives exist for procurement to establish the most favorable contract negotiating positions based on what a system should cost. This appears to contradict an establishment for resource allocation purposes best estimates of what a system will cost. The winner of the battle of cost estimating philosophies is must cost, decided by the prevailing monopsonistic market conditions. This highly competitive environment of one buyer and many sellers is dedicated to the proposition that costs must be lower.

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Document Details

Document Type
Technical Report
Publication Date
Jun 01, 1972
Accession Number
AD0758820

Tags

Communities of Interest

  • Weapons Technologies

DTIC Thesaurus Topics

  • Budgets
  • Commerce
  • Congress
  • Contracts
  • Cost Analysis
  • Cost Estimates
  • Cost Overruns
  • Costs
  • Defense Industry
  • Department Of Defense
  • Economic Analysis
  • Government Procurement
  • Governments
  • Law
  • Money
  • Motivation
  • Organizational Structure

Readers

  • Industrial Economics
  • Life Cycle Cost Analysis
  • Theoretical Analysis.