Revised R&D Budgets for Funding Postponements

Abstract

We propose an analytical technique to estimate the budgetary impact of a funding postponement of an on-going research and development (R&D) program. The method quickly produces revised budgets by year when planned R&D funding is delayed. While the program duration may remain unchanged or extended to a later completion date, we assume the program's technical requirements remain unchanged. We use the Weibull cumulative distribution function to model expenditures over time, both prior to a budget curtailment and after it. Based on the modeled expenditures, we determine the budget after the curtailment to program completion. Our proposed methodology accounts for budget spendout rates, inflation, and program schedule growth. We test the proposed analytical technique using historical cost data from five defense programs. We know of no other analytical technique or heuristic that supports determining revised budgets for near-term adjustments to on-going R&D programs. The Weibull parameters characterize R&D programs similar to the cost progress (learning) curve's first unit cost and slope characterize production programs.