Extensive cost overruns in major defense programs are common and studies have implicated poor cost estimation as one of the major contributors. DoD Major Defense Acquisition Programs (MDAPs) expect two to three submissions to achieve independent cost estimate approval, resulting in delays of three to six months or more. The GAO has reported that the cost overrun growth in the DoD R&D portfolio in past five years amounts to $32B. Research and experience have identified several factors associated with poor cost estimates. These include
In this tutorial we teach the steps of a novel cost estimation method, Quantifying Uncertainty in Early Lifecycle Cost Estimation (QUELCE). QUELCE synthesizes future scenario thinking techniques—such as dependency structure matrices, Bayesian belief network models, and Monte Carlo simulation—into an estimation method that quantifies domain-specific uncertainties, allows subjective inputs by calibrated experts, visually depicts influential and cascading relationships among sources of uncertainty, plugs into the front end of existing cost models, and naturally produces a rich basis of estimate. QUELCE digests greater program execution information than traditional estimation tools but leverages techniques to limit the combinatorial explosion of complex, interacting, and cascading program change drivers for a more tractable cost estimate.
