COST PREDICTION BASED ON CER UTILIZATION
Cost analysis rept.
AERONAUTICAL SYSTEMS DIV WRIGHT-PATTERSON AFB OH DIRECTORATE OF ADVANCED SYSTEMS PLANNING
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It has been generally recognized that a need exists for more precise and comprehensive methods of predicting weapon system total costs. This costing problem becomes greatly magnified in the case of postulated weapon systems which are radically different from any system on which actual cost data is available. Since historical costs provide the most reasonable basis for projecting future costs, it is desirable to develop historical data relationships. These relationships are generally referred to as Cost Factors or Cost Estimating Relationships CERs. The CERs are developed by gathering and processing historical data and applying various statistical techniques. This paper reviews the statistical techniques that are most appropriate for accomplishing this task and provides illustrations of the application of these techniques. Some of the pitfalls or difficulties in developing and utilizing CERs are also discussed.
- Economics and Cost Analysis