Logistic and Multiple Regression: a Two-Pronged Approach to Accurately Estimate Cost Growth in Major Dod Weapon Systems
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Air Force Institute of Technology AFIT Scholar Theses and Dissertations Student Graduate Works 3-2004 Logistic and Multiple Regression: A Two-Pronged Approach to Accurately Estimate Cost Growth in Major DoD Weapon Systems Matthew B. Rossetti Follow this and additional works at: https://scholar.afit.edu/etd Part of the Finance and Financial Management Commons Recommended Citation Rossetti, Matthew B., "Logistic and Multiple Regression: A Two-Pronged Approach to Accurately Estimate Cost Growth in Major DoD Weapon Systems" (2004). Theses and Dissertations. 3964. https://scholar.afit.edu/etd/3964 This Thesis is brought to you for free and open access by the Student Graduate Works at AFIT Scholar. It has been accepted for inclusion in Theses and Dissertations by an authorized administrator of AFIT Scholar. For more information, please contact [email protected]. LOGISTIC AND MULTIPLE REGRESSION: A TWO-PRONGED APPROACH TO ACCURATELY ESTIMATE COST GROWTH IN MAJOR DoD WEAPON SYSTEMS THESIS Matthew B. Rossetti, B.A. First Lieutenant, USAF AFIT/GCA/ENC/04-04 DEPARTMENT OF THE AIR FORCE AIR UNIVERSITY AIR FORCE INSTITUTE OF TECHNOLOGY Wright-Patterson Air Force Base, Ohio APPROVED FOR PUBLIC RELEASE; DISTRIBUTION UNLIMITED. The views expressed in this thesis are those of the author and do not reflect the official policy or position of the United States Air Force, Department of Defense, or the U. S. Government. AFIT/GCA/ENC/04-04 LOGISTIC AND MULTIPLE REGRESSION: A TWO-PRONGED APPROACH TO ACCURATELY ESTIMATE COST GROWTH IN MAJOR DoD WEAPON SYSTEMS THESIS Presented to the Faculty Department of Mathematics and Statistics Graduate School of Engineering and Management Air Force Institute of Technology Air University Air Education and Training Command In Partial Fulfillment of the Requirements for the Degree of Master of Science in Cost Analysis Matthew B. Rossetti, B.A. First Lieutenant, USAF March 2004 APPROVED FOR PUBLIC RELEASE; DISTRIBUTION UNLIMITED. AFIT/GCA/ENC/04-04 LOGISTIC AND MULTIPLE REGRESSION: A TWO-PRONGED APPROACH TO ACCURATELY ESTIMATE COST GROWTH IN MAJOR DoD WEAPON SYSTEMS Matthew B. Rossetti, B.A. First Lieutenant, USAF Approved: ______________//signed//______________ _30 Jan 2004_ Dr. Edward D. White (Chairman) date ______________//signed//______________ _30 Jan 2004_ Michael A. Greiner, Major, USAF (Member) date ______________//signed//______________ _30 Jan 2004_ Michael J. Seibel (Member) date Acknowledgments I could not have completed this endeavor had it no been for the undying support of my wife. Her patience and understanding are limitless. I thank my son, for reminding me when it was time to go fishing and I thank my Labrador retriever for begging me to take her for walks so I could clear my head. I sincerely thank Dr. Edward White, my thesis advisor, for all his support and direction during this research. His guidance was indispensable. I thank my committee members, Mr. Michael Seibel and Major Michael Greiner for their constmctive guidance on this thesis. Finally, I would like to thank the US Air Force for the opportunity to come to AFIT and learn. Matthew B. Rossetti IV Table of Contents Page Acknowledgements .......................................................................................................... iv List of Figures................................................................................................................. viii List of Tables ..................................................................................................................... x Abstract............................................................................................................................. xi I. Introduction .................................................................................................................. 1 General Issue ...................................................................................................................1 Specific Issue...................................................................................................................3 Scope and Limitations of the Study.................................................................................4 Research Objectives.........................................................................................................6 Chapter Summary ............................................................................................................6 II. Literature Review ....................................................................................................... 8 Chapter Overview............................................................................................................8 The Acquisition Process ..................................................................................................8 The Acquisition Environment........................................................................................13 Cost Risk........................................................................................................................15 Past Research in Cost Growth .......................................................................................18 Sipple Thesis ..............................................................................................................19 Bielecki Thesis ...........................................................................................................21 Moore Thesis .............................................................................................................22 OSD CAIG Study .......................................................................................................23 Chapter Summary ..........................................................................................................25 III. Methodology ............................................................................................................ 26 Chapter Overview..........................................................................................................26 Database.........................................................................................................................26 Data Collection ..............................................................................................................26 Response Variables........................................................................................................27 Predictor Variables ........................................................................................................28 Program Size Variables.............................................................................................30 Physical Type of Program .........................................................................................31 Management Characteristics.....................................................................................31 Schedule Characteristics ...........................................................................................32 Other Characteristics ................................................................................................34 v Page Model Building..............................................................................................................36 Preliminary Data Analysis ........................................................................................36 Logistic Regression....................................................................................................39 Multiple Regression...................................................................................................42 Chapter Summary ..........................................................................................................43 IV. Results and Discussion ............................................................................................ 44 Chapter Overview..........................................................................................................44 Preliminary Findings .....................................................................................................44 Logistic Regression Results — Estimating Response...................................................46 Logistic Regression Results — Support Response........................................................54 Multiple Regression Results — Estimating Response ..................................................59 Multiple Regression Results — Support Response.......................................................66 Validation ......................................................................................................................72 Logistic Regression Model – Estimating Response...................................................72 Logistic Regression Model – Support Response........................................................74 Ordinary Least Squares Model – Estimating Response ............................................77 Ordinary Least Squares Model – Support Response.................................................78 Chapter Summary ..........................................................................................................79 V. Conclusions................................................................................................................ 80 Chapter Overview..........................................................................................................80 Restatement of the Problem...........................................................................................80