The Impact of Changing Requirements

The fundamental purpose of an Engineering Change Proposal (ECP) is to change the requirements of a contract. To build in flexibility, the acquisition practice is to estimate a dollar value to hold in reserve after the contract is awarded. There appears to be no empirical-based method for estimating this ECP withhold in the literature. Using the Cost Assessment Data Enterprise (CADE) database, 533 contracts were randomly selected to build two regression models: one to predict the likelihood of a contract experiencing an ECP, and the other to determine the expected median percent increase in baseline contract cost if an ECP was likely. Results suggest that this two-step approach works well over a managed portfolio of contracts in contrast to three investigated rules-of-thumb. Significant drivers are the basic contract cost and the number of contract line items