The purpose of RACM is to provide a process for cost forecasting and cost management that has the capability to model how policies can change the cost and duration of outcomes. A three year study concluded that present methods of cost forecasting and cost management are inadequate. Existing models and processes have a relatively passive point of view in which projects are controllable by management policies and are deficient in the following areas:
- Arithmetically summing instead of statistically summing WBS cost elements results in a program cost that has a Ps that is unreasonable.
- Budget allocation policies inadvertently cause increased costs and overruns.
- Subtle hidden incentives that increase a programs costs are incorporated into the present day management styles.
- The goal of staying on the budget line may result in cost overruns. This is a misapplication of the Earned Value Management System discipline.
- Cost estimating relationships (CERs) as used by many models, assume that the result of a past program is a 50% probability of success (Ps).
- Methods and models are used that do not provide management with adequate insight. Often, too much credibility is given to cost and planning models without the visibility to accept or reject the results.
