The Benefits and Drawback of Standardization of Cost Estimation in Naval Surface Warfare Centers

Abstract

Work supported by Naval Surface Warfare Centers (NSWCs) enlists the assistance of many engineering codes to generate cost estimates for large projects’ budgets. One important issue needing attention is to better understand how to manage estimated costs and planned budgets against the reality of typically higher actual costs. In this project, I examine the benefits and drawbacks of using a standard method for cost estimations at a NSWC for engineering codes for their cost estimations as a way to improve the accuracy of estimations and minimize the margin between estimated and actual project costs. This study draws from prior studies on methods of cost estimation and from reviewing NSWC cost estimate approaches in support of Full Ship Shock Trials (FSST). My examination found that other factors, difficult to anticipate, impact the accuracy of large project budgets to a greater degree than the methods used by engineering codes for cost estimation. The recommendation is to focus on better understanding and defining these other factors to improve the mitigation of large project challenges.