Methods to predict performance in major program acquisition

Numerous instances have been documented of major acquisitions where costs far exceeded the original estimates. With increasing levels of system complexities, limited resources, constant changes in scope and advances in technology, the probability of cost growth is a critical aspect of the acquisition process. Even where technology is considered as being current state-of-the-art, programs are not immune to cost growth. Considerable effort has been expended in attempting to find why most acquisitions have cost overruns. The research reported here builds on prior work in the field and provides an approach for dealing with the uncertainty involved in acquisitions. The objective of this paper is to develop an approach to predicting cost uncertainty which recognizes that variability cannot be eliminated but that there are trade-offs available to decision makers predicated on formulating cause and effect models. Thus, inherent in the approach presented here is system dynamics, interdependencies, variability and uncertainty in the acquisition process. The approaches used to achieve desired objectives are also described.