Taming the Hurricane of Acquisition Cost Growth - Or at Least Predicting It

Abstract

Cost growth is a persistent adversary to efficient budgeting in the Department of Defense. Despite myriad studies to uncover causes of this cost growth, few of the proposed remedies have made a meaningful impact. A key reason may be that DoD cost estimates are formulated using the highly unrealistic assumption that a program s current baseline characteristics will not change in the future. Using a weather forecasting analogy, the authors demonstrate how a statistical approach may be used to account for these inevitable baseline changes and identify related cost growth trends. These trends are then used to reduce the error in initial acquisition cost estimates by over one third for major defense acquisition programs, representing a more efficient allocation of $6 billion annually.

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Document Details

Document Type
Technical Report
Publication Date
Jan 01, 2015
Accession Number
ADA616977

Entities

People

  • Allen J. Deneve
  • Christine Schubert Kabban
  • Erin T. Ryan
  • Jonathan D. Ritschel

Organizations

  • Defense Acquisition University

Tags

Communities of Interest

  • Energy and Power Technologies
  • Ground and Sea Platforms
  • Materials and Manufacturing Processes
  • Weapons Technologies

DTIC Thesaurus Topics

  • Acquisition
  • Air Force
  • Budgets
  • Business Administration
  • Cost Analysis
  • Cost Estimates
  • Costs
  • Department Of Defense
  • Financial Management
  • Governments
  • Hurricanes
  • Iraqi-War
  • Military Acquisition
  • Procurement
  • Simulations
  • Storms
  • Weapon Systems

Readers

  • Life Cycle Cost Analysis
  • Systems Analysis and Design