This book is intended to be a convenient source of ideas and methods (a companion) for practicing cost analysts. It deals with five areas: a global perspective of cost analysis and estimating as applications of system identification; the nature and use of cost-progress curves; the use and development of cost-estimating relations; the application of Rayleigh methods for analyzing development program costs; and, the implementation of engineering and statistical principles when estimating operating and support costs. Some of the material, like the introduction to cost-estimating relations, is elementary. These parts probably will be useful mostly to people who have limited experience in cost analysis. Other parts, like the discussion of system identification as a paradigm for cost analysis and the section on using physical principles to make cost-estimating relationships, are intended to be interesting and useful to the experienced practitioner.

The approach in each of the five areas of consideration is to base cost analyses on principles of economics, physics, and technology, and to develop them with careful applications of mathematics and statistics. Working this way may seem unnecessarily fussy. The complex situations cost analysts must treat usually far exceed what can be modeled completely from first principles. Almost always, cost estimates and analyses need inputs from experience, known as "analysts' judgments." Since judgment will always play an essential role, why bother with careful modeling and analysis?

Precisely because judgment is essential, it is vitally important for cost analysts to get as much help as possible from rational applications of physics, economics, technology, mathematics, and statistics. In this way, the number of analysts' judgment calls is kept small. Each one is clearly identified, and the effects of its uncertainties can be assessed.

Fuzzy economics and physics and the sloppy use of mathematical and statistical tools introduce uncertainties (or downright errors) into estimates. These gratuitous uncertainties are hard to track. They tend to amplify uncertainties introduced by truly necessary judgment inputs, and they make it hard to tell when judgment really is required.

Estimates and analyses made with careful attention to underlying principles, and to mathematical and statistical developments, are much easier to communicate and are more likely to be accurate than those made less carefully. When practices like "Cost as an Independent Variable" in the United States' defense acquisition community make cost estimates an integral part of system design, the careful approach really does seem to be the only way to go.

*"synopsis" may belong to another edition of this title.*

A usable, friendly guide to the practice of cost estimating, The Cost Analyst's Companion is for both experienced practitioners and new analysts. The more experienced reader will gain thoughtful insights from lessons learned through Dave Lee's years "in the trenches." Those with less experience will learn first rate tools, techniques, and principles for developing accurate, defensible cost analyses. Among the insights demonstrated in The Companion, the reader will find:

- An understanding of the reasons for cost progress and guidance for reflecting how features of a manufacturing situation may be reflected in cost progress curve parameters

- A method for forecasting cost and completion time in development programs

- Ways to develop more rational cost-estimating relationships

- An appreciation for the benefits of using principles of economics, physics, and mathematics in cost estimating.

This book does not provide cookbook solutions. Instead, it offers logical, practical methods of analysis that will enhance any cost analyst's work.

The tasks cost analysts face are often so complex, and the data so scarce, that "analysts' judgments"--inputs from experience--are necessary. Therefore, it is vitally important for the cost analyst to get as much help as possible from the rational, systematic application of physics, economics, mathematics, and statistics. In this way, the number of analysts' judgment calls is minimized. Each one is clearly identified and the effects of its uncertainties can be assessed.

Estimates and analyses made with careful attention to underlying principles, and to mathematical and statistical developments, are much easier to communicate-and are more likely to be accurate-than those made less carefully.

This book suggests ways for the cost analyst to employ such principles. It is not meant to provide solutions to specific problems. It is intended to be a handy source of ideas, methods, and techniques-in essence, a companion.

*"About this title" may belong to another edition of this title.*

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