› › Historical Cost Growth Of Completed Weapon System Programs

Historical Cost Growth of Completed Weapon System Programs

Author : Mark V. Arena

Publisher : Rand Corporation

Page : 74 pages

File Size : 48,51 MB

Release : 2006

Category : History

ISBN : 0833039253

Get eBook

Book Description

This report is one of a series from a RAND Project AIR FORCE project, "The Cost of Future Military Aircraft: Historical Cost Estimating Relationships and Cost Reduction Initiatives." The purpose of the project is to improve the tools used to estimate the costs of future weapon systems. It focuses on how recent technical, management, and government policy changes affect cost. This report focuses on the accuracy of cost estimates. For our analysis, we used a very specific sample of Selected Acquisition Report (SAR) data, namely only programs that are complete or are nearly so. The analysis indicates a systematic bias toward underestimating the costs and substantial uncertainty in estimating the final cost of a weapon system. In contrast to the previous literature, the cost growth was higher than previously observed. We also found few correlations with cost growth, but observed that programs with longer duration had greater cost growth and electronics programs tended to have lower cost growth. Although there were some differences in the mean cost growth factors among the military departments, the differences were not statistically significant. While newer programs appear to have lower cost growth, this trend appears to be due to factors other than acquisition policies.



Historical Cost Growth of Completed Weapon System Programs

Author :

Publisher :

Page : 0 pages

File Size : 45,20 MB

Release : 2006

Category :

ISBN :

Get eBook

Book Description

This report is one of a series from a RAND Project AIR FORCE project, "The Cost of Future Military Aircraft: Historical Cost Estimating Relationships and Cost Reduction Initiatives." The report complements another document from this project, "Impossible Certainty: Cost Risk Analysis for Air Force Systems," and includes a literature review of cost growth studies and a more extensive analysis of the historical cost growth in acquisition programs than appears in the companion report. Overall, most of the studies reviewed reported that actual costs were greater than estimates of baseline costs. The most common metric used to measure cost growth is the cost growth factor (CGF), which is defined as the ratio of the actual cost to the estimated costs. A CGF of less than 1.0 indicates that the estimate was higher than the actual cost -- an underrun. When the CGF exceeds 1.0, the actual costs were higher than the estimate -- an overrun. Studies of weapon system cost growth have mainly relied on data from Selected Acquisition Reports (SARs). These reports are prepared annually by all major defense acquisition program (MDAP) offices within the military services to provide the U.S. Congress with cost, schedule, and performance status. The comparison baseline (estimate) typically corresponds to a major acquisition decision milestone. Prior studies have reported Milestone (MS) II CGFs for development costs ranging from 1.16 to 2.26; estimates of procurement CGFs ranging from 1.16 to 1.65; and total program CGFs ranging from 1.20 to 1.54. Regarding the differences among cost growth due to service, weapon, and time period, prior studies tended to find the following: Army weapon systems had higher cost growth than did weapon systems for the Air Force or Navy; cost growth differs by equipment type; and cost growth has declined from the 1960s and 1970s, after it was recognized as an important problem.



Sources of Weapon System Cost Growth

Author : Joseph G. Bolten

Publisher : Rand Corporation

Page : 117 pages

File Size : 38,3 MB

Release : 2008-06-19

Category : Technology & Engineering

ISBN : 0833045245

Get eBook

Book Description

This analysis uses data from Selected Acquisition Reports to determine the causes of cost growth in 35 mature major defense acquisition programs. Four major sources of growth are identified: (1) errors in estimation and scheduling, (2) decisions by the government, (3) financial matters, and (4) miscellaneous. The analysis shows that more than two-thirds of cost growth (measured as simple averages) is caused by decisions, most of which involve quantity changes, requirements growth, and schedule changes.



Is Weapon System Cost Growth Increasing?

Author : Obaid Younossi

Publisher : Rand Corporation

Page : 142 pages

File Size : 18,71 MB

Release : 2007

Category : Business & Economics

ISBN : 0833041355

Get eBook

Book Description

In recent decades, there have been numerous attempts to rein in the cost growth of U.S. Department of Defense (DoD) acquisition programs. Cost growth is the ratio of the cost estimate reported in a program's final Selected Acquisition Report (SAR) and the cost-estimate baseline reported in a prior SAR issued at a particular milestone. Drawing on prior RAND research, new analyses of completed and ongoing weapon system programs, and data drawn from SARs, this study addresses the following questions: What is the cost growth of DoD weapon systems? What has been the trend of cost growth over the past three decades? To address the magnitude of cost growth, it examines cost growth in completed programs; to evaluate the cost growth trend over time, it provides additional analysis of a selection of ongoing programs. This sample of ongoing programs permits a look at growth trends in the more recent past. Changes in the mix of system types over time and dollar-weighted analysis were also considered because earlier studies have suggested that cost growth varies by program type and the cost of the program. The findings suggest that development cost growth over the past three decades has remained high and without any significant improvement.







Sources of Weapon System Cost Growth. Analysis of 35 Major Defense Acquisition Programs

Author :

Publisher :

Page : 0 pages

File Size : 29,87 MB

Release : 2008

Category :

ISBN :

Get eBook

Book Description

Previous RAND Project AIR FORCE work has concluded that the Department of Defense (DoD) and the military departments historically have underestimated the cost of new weapon systems. Analysis of the data in Selected Acquisition Reports (SARs) for a sample of 68 completed programs showed that the average total cost growth (after adjusting for procurement-quantity changes) was 46 percent over the baseline estimate made at Milestone B (MS B) and 16 percent over the baseline estimate made at MS C. The cost growth typically continued for about 75 percent of the time between the initiation of major development and the expending of 90 percent of program funding. Most of the cost growth occurred early in the acquisition phase, and the magnitude of development cost growth at completion for programs initiated in the 1970s, 1980s, and 1990s remained relatively steady. Although quantifying cost growth is important, the larger issue is why cost growth occurs. To answer that question, this analysis examines 35 mature, but not necessarily complete, major defense acquisition programs (MDAPs) from the database of SARs that document the development and procurement of a variety of systems, including aircraft, missiles, electronics systems, launch vehicles, munitions, vehicles, and satellites. The programs were similar in type and complexity to those conducted by the Air Force. We analyzed a relatively small number of programs because of the labor-intensive nature of the work. We first examined the programs as a complete set and then analyzed Air Force and non Air Force programs separately to determine whether the causes of cost growth in the two groups differed.



Is Weapon System Cost Growth Increasing? A Quantitative Assessment of Completed and Ongoing Programs

Author :

Publisher :

Page : 0 pages

File Size : 26,74 MB

Release : 2007

Category :

ISBN :

Get eBook

Book Description

Cost growth in DoD acquisition programs has been a long-standing concern of senior policymakers and members of Congress. In recent decades, there have been numerous attempts to rein in this growth. Some changes involve reforms to the acquisition process, while others entail legislation. The RAND Corporation has a long history of studying cost growth in defense acquisition, with research reaching back to the 1950s.





Budgetary Pressures Created by the Army's Plans to Procure New Major Weapon Systems are Just Beginning

Author : United States. General Accounting Office

Publisher :

Page : 40 pages

File Size : 43,40 MB

Release : 1981

Category :

ISBN :

Get eBook

Book Description

GAO reviewed new weapon system acquisition programs to determine the likely effect on the budget for the next several years of financing the procurement, operation, and support of the Army's new major weapon systems and identifying ways for relieving the pressure which characterized the preparation of the Army's 1982-1986 5-Year Defense Program. The 1970's marked the Army's most intensive peacetime effort to modernize its forces with new weapon systems. Most of the procurement of these systems became a reality in preparing the fiscal year 1982 budget. With less funds available than were needed to procure the weapons in the quantities desired, together with substantial cost increases, the Army proposed to stretch out the production schedules of nearly all of the systems which would have resulted in higher prices and program delays. Additional funds in the revised fiscal year 1982 budget alleviated this problem. The systems production has been characterized by substantial cost growth, stemming mainly from the actual production processes being more complex than anticipated and requiring more labor hours and machine time. Much of the cost growth was due to inflation. The use of optimistic inflation rates in developing cost estimates also accounts for some of the cost growth. Operating and supporting the new weapon systems once they are fielded will require very large amounts of resources. Since the budgetary effect of operations and support will not be felt until after the weapons are deployed, these costs are not receiving as much attention as procurement costs. Fielding all of the systems will seriously strain the Army's resources. Most of the systems will require more skilled personnel, more fuel and ammunition, a greater expenditure for spare parts, and will impose a logistics burden on the Army.