The Time-Cost Trade-Off for Airliners

THE literature on research and development, especially on defence projects, contains a number of references to a trade-off between development time and cost.1 It has been hypothesized that a given quality of project, such as a supersonic bomber or airliner or a 'moon landing', can be developed with varying combinations of time-scale and cost. Faster development requires greater resources and cheaper development implies a longer time-scale. If empirically valid, the concept of a development isoquant has implications for optimal choice in a variety of public and private sector projects, ranging from the development of natural resources, such as North Sea oil fields, to industrial training. Decisions have to be made on the type or quality of project to be developed and whether it is worth developing quickly or slowly. Evidence is required on the magnitude of the trade-offs. What, for example, are the extra costs of saving six months? Little empirical work has been undertaken and reported in this area, a deficiency which this paper aims to reduce.2 Two issues are examined. First, is there a time-cost trade-off for airliners? Second, is the faster development of U.S. airliners due to greater resource inputs or to other factors? It is well known that the U.S. industry develops similar airliners some I2-I8 months faster than the U.K. A timecost relationship might help to explain such a difference.