Determining a Budget Profile from a R&D Cost Estimate

Often in developing budgets for programs with a development phase, analysts must determine a budget profile from a point estimate of the total development cost. Expenditures for Department of Defense (DoD) development programs, as recorded in Cost Performance Reports, are seen to fit a scaled Rayleigh cumulative density function reasonably well. Thus, given a point estimate of total development costs, a realistic expenditure profile can be determined using a Rayleigh model. Furthermore, these expenditures can be related to annual budget requirements through the DoD Comptroller's outlay rates. This paper describes a method for determining a budget profile from a point estimate of the total development cost.