Defense Acquisition Research Journal Issue 95

Use of Factors in Development Estimates: Improving the Cost Analyst Toolkit

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as fixed wing aircraft, rotary wing aircraft, a specified contractor for radar modifications, a specified contractor’s role in a program (prime versus sub), a specified period for a certain commodity type, and many more. Once the factors are established for each program, the mean, median, and standard deviation values for the various program groupings are calculated. In addition, interquartile ranges are calculated to examine variability among factors. This allows for descriptive analysis and provides a basis from which the programs are grouped and analyzed to compare differences. The second stage of analysis subdivides the cost factors into categories for statistical testing to aid the cost analyst in determining appropriate levels of aggregation for practical use. The categories were determined through discussions with cost analyst practitioners in the field. These categories represent the way cost analysts may consider grouping or filtering their data when developing an estimate. The categories are Commodity Type, Service, Contractor Designation, Development Type, and Contract Type, with associated subcategories shown in Table 3.

TABLE 3. CATEGORIES FOR COMPARISON ANALYSIS

Categories

Commodity Type

Contractor Designation

Contract Type

Service

Development Type

CPAF (Cost Plus Award Fee)

Army

Aircraft

Prime

Modification

Electronic/ Automated Software

Navy (includes Marine Corps)

CPFF (Cost Plus Fixed Fee)

Sub

New Design

CPIF (Cost Plus Incentive Fee)

Air Force

Missile

Prototype

Cost-Other (Other than CPAF, CPFF, CPIF)

Multiple

Ordnance

Subsystem

New Mission Design Series (MDS) Designator

FFP (Firm Fixed Price)

Space

Unmanned Aerial Vehicle (UAV)

FPI (Fixed Price Incentive)

Commercial Derivative

FPIF (Fixed Price Incentive Firm Target) Fixed - Other Unknown

For each of the categorical comparisons, hypothesis tests are used to iden tify differences in the elements detailed in Table 3. For example, differences in cost factors are tested based on whether the work was completed by a

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Defense ARJ, January 2021, Vol. 28 No. 1 : 40-70