Prediction Bounds for General-Error-Regression Cost-Estimating Relationships

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Prediction Bounds for General-Error-Regression Cost-Estimating Relationships

Journal of Cost Analysis and Parametrics

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Estimating the cost of a system under development is essentially trying to predict the future, which means that any such estimate contains uncertainty. When estimating using a cost-estimating relationship (CER), a portion of this uncertainty arises from the possibility that the cost-estimating form to which regression analysis is applied may be the incorrect one. That is, the data may have been fit to a linear form, but some curvilinear relationship may more appropriately model the data. Assuming the algebraic model being used is the correct one, the CER’s uncertainty is described by its standard error of the estimate (SEE), which is basically the standard deviation of errors made (residuals) in applying that CER to estimate the (known) costs of the systems comprising the historical database.


Dr. Stephen A. Book vacated the position of Chief Technical Officer of MCR, LLC in 2010 (after serving in that position for almost a decade) to concentrate on research, training, and subject-matter-expert customer support. In his former capacity, he was responsible for ensuring technical excellence of MCR products, services, and processes by encouraging process improvement, maintaining quality control, and training employees and customers in cost and schedule analysis and associated program-control disciplines. Earlier, at The Aerospace Corporation, he was a principal contributor to several Air Force cost studies of national significance, including the DSP/FEWS/BSTS/AWS/Brilliant Eyes Sensor Integration Study (1992) and the ALS/Spacelifter/EELV Launch Options Study (1993). He served on national panels as an independent reviewer of NASA programs, for example the 2005 Senior External Review Team on cost-estimating methods for the Exploration Systems Mission Directorate, the 1997–98 Cost Assessment and Validation Task Force on the International Space Station (Chabrow Committee), and the 1998–99 National Research Council Committee on Space Shuttle Upgrades. Dr. Book joined MCR in January 2001 after 21 years with Aerospace, where he held the title Distinguished Engineer during 1996–2000 and served as Director, Resource and Requirements Analysis Department, during 1989–1995. Dr. Book was co-editor of the ISPA/SCEA technical journal, The Journal of Cost Analysis and Parametrics. He received the 2010 SCEA Lifetime Achievement Award, the 2009 NASA Cost Contractor of the Year award, the 2005 ISPA Freiman Award for Lifetime Achievement, and the 1982 Aerospace Corporation Presidents Award for Analytic Achievement. Dr. Book earned his Ph.D. in mathematics, with concentration in probability and statistics, at the University of Oregon. Dr. Book passed away in January 2012.