Predicting Over Target Baseline (OTB) Acquisition Contracts

Cost estimators use a variety of methods to develop estimates at completion EACs and new methods continue to be developed. Research has shown there is no best method for computing EACs for all acquisition contracts. However, some methods perform better under specific circumstances. In 2009, Captain Trahan investigated the use of a Gompertz growth model for developing EACs. She found that this method is more reliable for Over Target Baseline OTB contracts than the standard indexed based approaches. Captain Trahans model is an excellent model to use for OTB contracts or contracts with a high likelihood of becoming an OTB contract. In this study, we attempt to develop a model that predicts whether an acquisition contract is likely to become an OTB. By identifying contracts that are likely to become OTB, we can apply the Gompertz growth model to develop better EACs. Furthermore, an OTB, by definition, recognizes a cost overrun. Therefore, the ability to predict OTBs also allows us to understand what may cause cost overruns. However, our models indicate that we are unable to predict an OTB. This indicates that the OTB process may be used randomly which leads us to question the benefits of OTBs.