Understanding Cost Analysis Process in United States Government Systems Acquisition

摘要

Cost estimates are one of the most widely known attributes of a program, butrnfrom an outsider's perspective, the process of cost estimation and analysis often appears to berna "black art." The purpose of this paper is to describe the development and use of costrnestimates and cost analysis, particularly with respect to United States (U. S.) governmentrnsystems acquisition, and describe the systems engineers’ role in this process.rnFirst, we discuss why a systems approach to cost analysis is critical to mission success andrnneeds to begin at the time of program formulation. Second, we describe the cost analysisrnprocess. Third, we examine the most common methods used in cost estimation; thernestimates' accuracies often depend on which methods are chosen and when these methodsrnare used. Fourth, we describe the evolutionary process of cost estimation throughout thernprogram lifecycle. Since the amount of information available to estimate the cost of arnprogram changes over the lifecycle as the program evolves, so too should the methods usedrnto estimate the program's cost. Finally, we describe the use of cost estimates in cost-risk andrncost-benefit analysis.