IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-349-01639-6_5.html
   My bibliography  Save this book chapter

Overruns and Errors in Estimating Development Cost, Time, and Outcome

In: Research and Innovation in the Modern Corporation

Author

Listed:
  • Edwin Mansfield

    (University of Pennsylvania)

  • John Rapoport

    (Mount Holyoke College)

  • Jerome Schnee

    (Columbia University)

  • Samuel Wagner

    (Temple University)

  • Michael Hamburger

    (Federal Reserve Bank of New York)

Abstract

In recent years, cost and time overruns in military development have made the front pages of newspapers. Long before these overruns reached the headlines, economists were interested in them. For example, studies carried out by the RAND Corporation in the late fifties showed that there were substantial errors in the estimates (made prior to development) of the costs of producing various types of military hardware. When adjusted for unanticipated changes in factor prices and production lot-sizes, the average ratios of actual to estimated cost were 1.7 (fighters), 3.0 (bombers), 1.2 (cargoes and tankers), and 4.9 (missiles). The extent to which costs were understated was directly related to the extent of the technological advance. In cases where a “large” technological advance was required, the average ratio was 4.2; in cases where a “small” technological advance was required, the average ratio was 1.3.1

Suggested Citation

  • Edwin Mansfield & John Rapoport & Jerome Schnee & Samuel Wagner & Michael Hamburger, 1971. "Overruns and Errors in Estimating Development Cost, Time, and Outcome," Palgrave Macmillan Books, in: Research and Innovation in the Modern Corporation, chapter 5, pages 86-109, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-01639-6_5
    DOI: 10.1007/978-1-349-01639-6_5
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-349-01639-6_5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.