Technological change and cost analysis of high-technology systems

Technological change is discussed in the context of systems cost analysis in two ways. First, it is a specific objective of research and development (R&D) programs and is a direct determinant of R&D cost. Methods of measuring technological change are evaluated and an example of an R&D cost equation is set forth. Second, technological change underlies the relationships between design/performance characteristics and procurement costs. For many systems, the year-to-year change is highly significant, and cost analyses which overlook this phenomenon can be in serious error. Examples are discussed.