Posted by

Study on developing CERs with Insufficient Data in Korean R&D environment

Methods Track

Downloadable Files:



Parametric cost estimating models have been used widely to obtain appropriate cost estimates in the weapon acquisition process. A parametric cost estimating model is composed of some Cost Estimating Relationships(CERs). Generally, CERs are regression models which have been based on cost and technical data. In order to obtain a good cost estimate from CERs, it’s important that gathering the sufficient historical data and selecting a proper method for statistical satisfaction under restricted condition is essential.

To develop Korean version parametric cost estimating model, we analyzed the historical data that were obtained from historic R&D records. We found some cost drivers from those historic data. However, historical data were not enough to develop good CERs statistically because multicollinearities existed among variables.
Therefore, we proposed a methodology to develop CERs suitable for estimating the cost of weapon systems with insufficient data. We used prevailing two alternative methods, which are principle components regression(PCR) and ridge regression(RR) to overcome the restriction of the insufficient sample number and the multicollinearity problem.

We showed the several examples of CERs using PCR and RR in movement, helicopter, artillery weapon systems. PCR and RR showed results with satisfaction in a case of multicollinearity of a multiple regression.
Our result will provide a appropriate methodology to develop our CERs and more realistic model with small historical data.


Sung Jin Kang
Department of Operations Research, Korea National Defense University
Dr. Sung Jin Kang obtained his ph. D(I.E) from the Texas A&M university in 1988 and his masters degree(OR/SA) from US Naval Postgraduate School in 1983.
He has been teaching OR/SA courses in KNDU since 1989. His teaching experience includes Linear statistical model, Cost estimation, Military O.R and war-game, Seminar on O.R applications, Cost and effective analysis, Stochastic models and queuing theory etc.
His research areas include system analysis, cost effective analysis, resource allocation, cost analysis methods and technique in weapon acquisition phases, EVMS (Earned Value Management System), CAIV (Cost As an Inadvertent Variable) concept application in weapon system acquisition phases, Korea-US collaboration strategy on the weapon system acquisition and R&D based on the ROK’s acquisition policy etc.
He is a senior member of MORS-K(Military Operations Research Society of Korea), and a member of SCEA and ISPA. He was president of MORS-K in 2007 and chief editor of the Journal of MORS-K(1999-2005). He served as Dean of faculty in KNDU from 2005 to 2007 and has worked and participated in many cost estimating projects.
From 1999 he developed and started various cost estimation courses in KNDU. He has also been a consultant in cost estimating and analysis for MND, DAPA and the defense industries.

Yong Bok Lee
Department of Operations Research, Korea National Defense University
Major Yong Bok Lee is a major on Republic of Korea Army and studies as a KNDU Ph. D Student (Operations Research). He obtained masters degree (Industrial Engineering) from Han Yang University, Korea in 2006 and graduated from Korea Military Academy in 1997.
He served as a field artillery officer from 1997 to 2004 and worked as an officer of army war-game model maintenance at BCTP(Battle Command Training Program) from 2006 to 2007.
His research areas are cost analysis methods and technique in weapon acquisition phases, development of a parametric cost estimating model in Korea.

Dong Kyu Kim
Department of Operations Research, Korea National Defense University
He is to line of duty in Republic of Korea Army for 10 years since graduate Korea Military Academy. As he works for 3 years as an army finance officer, he accumulated business experience connected with cost and expense, and graduated officer’s basic/advanced course.
During he works in DAPA(Defense Acquisition Program Administration) for 3 years, he worked in defense acquisition policy, especially M&S(Modeling & Simulation) and achieved various studies about program management, cost-effectiveness analysis and proposed main policies about this field.
At the present, he is studying doctor’s course of operational analysis at KNDU(Korea National Defense University). Specially, he is interested in cost analysis because of experience of military program management and cost.
Now, he is studying cost analysis methodology suitable for Korean defense aquisition environment.