ACAP Cost Estimating Methodologies

Question 1

What are the four primary cost estimating methodologies recognized in DoD cost analysis?

Accepted Answer

Analogy, parametric, engineering build-up, and expert opinion

Answer

Regression, Monte Carlo, extrapolation, and interpolation

Answer

Should-cost, will-cost, contractor estimate, and independent estimate

Answer

Bottoms-up, tops-down, statistical, and historical

Question 2

What is the 'learning curve' concept and how is it applied in Army cost estimating?

Accepted Answer

As cumulative production quantity doubles, unit cost decreases by a fixed percentage, reflecting worker efficiency gains and process improvements

Answer

The cost of training Army personnel decreases as more soldiers are trained

Answer

Unit costs increase with quantity due to diminishing supplier competition

Answer

Learning curves apply only to software development, not hardware production

Question 3

What is an 'engineering build-up' estimate and when is it most appropriate?

Accepted Answer

A bottoms-up estimate built from detailed labor, material, and overhead costs for each component; most appropriate when design is mature and detailed technical data are available

Answer

An estimate built by analogy to a previously developed similar system

Answer

An estimate constructed by engineering the parametric CER from first principles

Answer

A rapid estimate prepared early in concept development using engineering judgment

Question 4

What is a 'Cost Estimating Relationship (CER)' and what data is required to develop one?

Accepted Answer

A mathematical equation relating cost to one or more technical or program parameters, developed using regression analysis of historical cost and technical data

Answer

A contractual relationship defining how contractor costs will be reimbursed

Answer

A factor converting engineering estimates to contractor bid prices

Answer

A lookup table of historical unit costs organized by system type

Question 5

What is the 'coefficient of determination (R²)' and what does it indicate about a CER?

Accepted Answer

It measures the proportion of variance in cost explained by the independent variable(s); a higher R² indicates a better statistical fit

Answer

It measures the ratio of explained cost to total program budget

Answer

It indicates the number of data points used to develop the CER

Answer

It measures the correlation between two independent cost drivers

Question 6

In the analogy method, what is 'complexity factor' adjustment?

Accepted Answer

A multiplier applied to the reference system's cost to account for differences in technical difficulty between the analog and the new system

Answer

The ratio of the new system's weight to the analog system's weight

Answer

A discount factor applied when the analog system cost data is more than 10 years old

Answer

An escalation factor for inflation between the analog program year and today