IE interfaces (산업공학)

Korean Institute of Industrial Engineers (대한산업공학회)
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A Cost Estimation Development Methodology via CER's Linear Combination

CER 선형결합을 통한 비용추정 모델 개발

  • Jung, Won-Il (Department of Operations Research, Korea National Defense University) ;
  • Lee, Yong-Bok (Department of Operations Research, Korea National Defense University) ;
  • Kim, Dong-Kyu (Department of Operations Research, Korea National Defense University) ;
  • Kan, Sung-Jin (Department of Operations Research, Korea National Defense University)
  • Received : 2011.05.15
  • Accepted : 2012.03.28
  • Published : 2012.09.01
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Abstract

The acquisition cost of defense weapon system has been continuously increasing because of art-of-technology of it. This phenomenon requires efficiency and transparency in the weapon system acquisition process through cost estimation. Therefore cost estimation is very important to the government acquisition programs to support decisions about funding and to evaluate resource requirement as a key decision point. The Commercial parametric cost estimating models have been using extensively to obtain appropriate cost estimates in early acquisition phase. These models have many restrictions to ensure the cost estimating result in Korean defense environment because they are developed based on foreign R&D data. Also estimation results are different from Korean defense industry accounting system. So, some studies have been tried to develop a CER (Cost Estimation Relationship) based on the Korean historical data. However, there are some restrictions to improve the predictability and ensure the stability of the developed singular CERs which consider the following data characteristics individually. The the abnormal conditions of data that is multicollinearity, outlier and heteroscedasticity under rack of the number of observations. In this paper, a CER's Linear Combining Model is proposed to overcome those limitations which guarantee more accurate estimation (25.42% higher precision) than other singular CERs. At least, this study is meaningful as a first attempt to improve the predictability of CER with insufficient data. The methodology suggested in this study will be useful to develop a complex Korean version cost estimating model development in future.

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