OA4702 Cost Estimation

This course provides a broad-based understanding of the cost analysis activities involved in the acquisition and support of DoD weapon systems. In addition, it introduces Operations Research techniques fundamental to the field of cost estimation. The course covers the Defense Systems Acquisition Process, Time Value of Money, and Economic Analysis; it develops, uses and analyzes estimating techniques commonly encountered in both the DoD and industry, including statistical and non-statistical cost estimating relationships, inflation indices, cost improvement curves, time phasing and uncertainty analysis. Prerequisites: None.

Lecture Hours

4

Lab Hours

0

Course Learning Outcomes

The general objective of this course is to provide the student with the knowledge required to create, understand and interpret acquisition life cycle cost estimates, economic analyses and analyses of alternatives. A good basic understanding of the principles of probability is essential. Prior knowledge of regression analysis is helpful, but not a pre-requisite.

The specific learning objectives for this course are for each student to demonstrate comprehension and application of the following aspects of DoD weapon system life cycle cost analysis:

• The DoD System Acquisition Process,
• The cost estimating process,
• Cost data sources,
• Normalization and inflation/deflation of cost data,
• The cost modeling process,
• Regression analysis, including single- and multi-variable regression,
• Transformation of non-linear data to linear data using the Power function,
• Development and documentation of cost models,
• Estimation by analogy,
• Estimation by cost factors,
• Time phasing development and production,
• Cost improvement curves (a.k.a. learning curves),
• Operating and support (O&S) cost estimating,
• Risk and uncertainty analysis,
• Software cost estimating, and
• Utilizing the Unified Facilities Criteria (UFC’s) to create engineering cost estimates.