Estimating and controlling the cost of extending technology: A revision and extension
Moses, O. Douglas
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When firms undertake new development projects, there is considerable uncertainty as to the amount of cost that will eventually be incurred. This study tests hypotheses concerning the relationships between extensions in technology and costs, and provides approaches for estimating and controlling costs. The study begins by examining the techniques currently available for measuring the state-of-the-art of technology. Next, methods for quantifying the incremental progress represented by a particular project are reviewed and extended. Third, relationships between technology measures and development time and development costs are formulated and tested. Fourth, variance measures related to development cost are specified. Fifth, relationships between the scope of the development phase of a program and subsequent production costs are examined. Finally, the idea of a development cost premium, used to relate development costs to production costs, is introduced and tested. The workability of the approach for cost prediction and control is tested and demonstrated by using technological and cost data from 18 satellite programs. (kr)
Approved for public release; distribution is unlimited.
NPS Report NumberNPS-54-89-06
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