| dc.description.abstract | In KOSTMOD, a long-term defence plan costing tool developed for the Norwegian Defence, annual growth rates (TKF-rates) are applied to current cost estimates to predict future acquisition costs for different equipment categories.
This is done to address the persistent phenomena of unit cost escalation, beyond inflation, from one generation of equipment to the next.
The key issue is how to determine the appropriate cost escalation growth rate for a spesific weapon system. Historic acquisition costs from one generation to the next often carries a significant bias from cold war arms race mechanisms. Available cost estimates for future acquisitions are often too optimistic. Findings from data samples collected for this report reveals that rates found in British studies are too high for KOSTMOD use. However, British rates may still be used as an indicator for where on the scale a specific weapons system belongs.
The report introduces a TKF decision matrix, a tool to determine an appropriate TKF growth rate for each equipment category in KOSTMOD. Updated TKF rates based on the matrix show a slight increase in the overall TKF level in KOSTMOD. This increase is consistent with findings from the data samples collected for this report. | en_GB |