Methods and Challenges in Early Cost Estimating
Department of Defense (DoD) leadership is currently making decisions on acquisition programs much earlier in the system’s lifecycle than they have in the past, and leadership demand for cost information to support these decisions is growing rapidly. Since its inception two years ago, the ODASA-CE Early Cost Team’s primary mission has been to find ways to ensure that the cost information to support these early decisions is available and reliable.
Capability-based cost estimating is a tool that in many cases can enable cost analysis for these early decisions. Although it has proven to be very helpful, capability-based cost estimating presents challenges. Where does an analyst start when they are asked to produce an early cost estimate when they do not have key information such as quantities or schedules? How can an analyst utilize what little information is provided in early capability documents to produce a lifecycle cost estimate?
This paper presents some atypical methodologies that can be used to extract the limited available information in early capability-based documents to develop an estimate. Examples from some of the early cost estimating efforts where the ODASA-CE Early Cost Team successfully used some of these methods will be provided. Furthermore, the paper discusses some challenges that still must be overcome as capability-based cost estimating continues to evolve.
Mr. Hull is a senior Operations Research Analyst for the Office of the Deputy Assistant Secretary of the Army for Cost and Economics (ODASA-CE). He is a member of the Weapons Systems Costing Division and specializes in tactical vehicle and early life cycle cost initiatives. Prior to his arrival at Army headquarters, Mr. Hull worked for Calibre, a management and technology services company, where he conducted performance management analysis for ODASA-CE. Prior to that, Mr. Hull spent eight years in the United States Army as a commissioned officer in the Field Artillery. Mr. Hull graduated with a Bachelor of Science Degree in Mathematics from the United States Military Academy in 1996.