Summary
The article “Analyzing cost growth at program stages for DoD aircraft” by Kozlak et al. (2017) represents a research study that analyzed cost growth factors (CGF) from 30 aircraft programs at different stages of development. The development of CGFs was revealed to be significantly higher than that of the procurement of CGFs (Kozlak et al., 2017). Cost growth mostly happened in the early stages of the program, with the first increase occurring around three years after Milestone B (MS B) at First Flight (FF) (Kozlak et al., 2017). By Initial Operational Capability (IOC), or around 6.5 years after Milestone B, 91% of the total cost growth had been realized (Kozlak et al., 2017). This information could be used to improve initial cost estimates and contingency planning and to take proactive measures to minimize the potential for cost overruns.
The study also used data from the Defense Acquisition Management Information Retrieval database. Almost half of the programs experienced cost growth at Critical Design Review (CDR), increasing to 75% or more for FF, Development Test & Evaluation End (DTE), IOC, or Full Operational Capability (FOC) (Kozlak et al., 2017, p. 396). During the FOC stage, the CGF values that were in the middle of the range for the development, procurement, and overall acquisition phases were 1.43, 1.28, and 1.34, respectively (Kozlak et al., 2017, p. 392). Additionally, all cost growth related to the procurement and total acquisition phases occurred by the IOC stage.
Other findings were also insightful and detailed, showing the changes that occurred at different stages of project development. The median duration from MS B to IOC was 78.1 months, and at the IOC stage, an aircraft program experiences 91% of its overall cost growth (Kozlak et al., 2017, p. 390). The analysis primarily relied on median values extracted from Tables 3-4 and on macro trends depicted in Figures 4-5 to identify macro trends, focusing on CGFs higher than 1.0 (Kozlak et al., 2017, p. 396). The study also discovered that the total cost growth indicators began to diverge at the DTE stage by examining the connection between the median cost growth percentage and median schedule completion percentage.
Analysis
The trends discussed in this study provide valuable insight into the factors contributing to cost growth in Department of Defense aircraft programs. The study was able to identify significant macro trends by utilizing the Defense Acquisition Management Information Retrieval database and concentrating on CGFs greater than 1.0. Scrutinizing the connection between the percentages of median cost growth and schedule completion allowed concluding that the overall cost growth percentage began to diverge during the DTE stage (Kozlak et al., 2017). This, in turn, has provided further evidence of the importance of early cost management.
The results of this study align with previous research on cost overruns in government projects, which have highlighted that poor project management and planning during the planning and design phases can lead to cost overruns. Effective cost management strategies, data analysis, and early identification of potential cost increases are essential to prevent cost overruns and ensure that government projects stay within budget. Project managers must take proactive measures to address cost issues before they escalate, thereby eliminating the need for costly corrective actions in the future. Consistent tracking and reporting of project expenditures and advancement can provide project managers with significant knowledge to make informed judgments and appropriately modify project plans.
Reference
Kozlak, S., White, E., Ritschel, J., Lucas, B., & Seibel, M. (2017). Analyzing cost growth at program stages for DoD aircraft. Defense Acquisition Research Journal, 24(3), 386-407. Web.