Cost Estimating for Air-to-Air Missiles
CONGRESSIONAL BUDGET OFFICE (U S CONGRESS) WASHINGTON DC
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Accurate estimation of system cost is a key requirement for making correct decisions about defense programs. For many reasons, however, accurate cost estimation has proved to be very difficult for a wide variety of defense systems. Long lags between identification of the need for a system and its eventual deployment make cost estimation the victim of unforeseen economic changes, especially unanticipated inflation. The technological complexity characteristic of many systems introduces an element of engineering risk, not usually present in nondefense programs, that complicates cost estimation. Funding stringency or variability can also affect system cost and thus render cost estimates inaccurate. Despite these difficulties, the need for cost projections as part of the system development decision has stimulated diverse approaches to the problem of estimating defense system costs. This paper reviews one technique, the development of cost-estimating relationships, as it is applied to estimating the costs of air-to-air missiles. The focus of this review is a cost-estimating algorithm known as PRICE, a model used extensively by the Armaments Division of the Air Force Systems Command.
- Economics and Cost Analysis
- Air- and Space-Launched Guided Missiles