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Best practices on Cost Analysis of Information And Communication Technology

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System Analysis and Studies

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Cost analysis, Cost modelling, Information and Communication Technology


Like most other sectors within our societies, information and communication technology (ICT) is of increasing importance within modern armed forces. ICT is key to operational advantages like robust communication that supports rapid, well-informed decision cycles as well as effective supporting and administrative functions. Information and communication technology develops at an extraordinary fast pace, driven by enormous research and development of the commercial sector. The Armed Forces operates in an environment using highly interdependent and interconnected systems which creates challenges that prevents simple adoption of the capability and inhibits the development of accurate cost analysis processes (includes estimation, lifecycle costs and schedules) for ICT. Cost analysis of military ICT is also challenging due to the complexity and rate of technological change of ICT. Furthermore, ICT acquisitions faces challenges such as unclear requirements, ambiguous objectives and new technologies that are not adequately captured in the cost estimate. These problems are just as relevant for military projects and could even be deeper due to the need for complex highly integrated systems that must operate in a range of environments. The consequences are that ICT often experiences cost overruns, time delays and fail to deliver the capabilities needed by our both civilian and military agencies. An example of such cost analysis failure is found in the McKinsey report by Bloch et al.(2012) where large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted. More knowledge on cost analysis of ICT will strengthen defence planning, investment decisions and budgeting.


The scientific objective is to provide enhanced cost analysis capabilities for ICT to NATO, Nations and Partners. The scientific objective is obtained by understanding why current ICT cost analysis fails (or succeeds) and providing best practices to address this. Research will be undertaken to: - build and populate a shared data repository for historical ICT-projects in order to compare ICT-projects across nations - investigate existing known industry and military best practices for cost analysis


Information and communications technology, work breakdown structure, cost analysis, data analysis, cost estimation, lifecycle costs, schedule analysis.

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