A cost-estimating process for forecasting resources for innovative technologies.

What is it about?

The applicability and shortcomings of a well-defined cost-estimating process to forecasting resources required for developing and fielding innovative technologies are examined. Whereas the process itself provides a suitable approach for estimating the cost of any program, investment is required for collecting historical data on analogous programs to serve as the foundation for the estimating methodologies. Particular challenges in costing innovation are summarized. An appropriate form of the cost probability distribution for research programs is offered.

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Why is it important?

Determining the cost of innovation is as challenging as forecasting its benefit. While cost analysis as a discipline is barely out of diapers, there is a well-defined process rooted in a few fundamental principles for estimating the resources needed for a new program regardless of where it originates or how innovative it is. This chapter summarizes the process and principles that should serve as the basis for costing innovation and looks at particular challenges that must be addressed when doing so.