The conceptual analytical approach described in section E.2 used highly stylised assumptions to analytically express the dynamics of the 'problem'. More realistic assumptions make an analytical approach inaccessible for a number of reasons.
Firstly, cost inflation in the EPP is not proportional to the amount of planned spend since each project (or cohort of projects of a certain 'vintage') is likely to suffer from cost growth and ISD slippage at different rates, both in the same year and in age-equivalent years. For example, more recent cohorts may have less overall cost growth because of improving performance.
Secondly, the EPP is not an ensemble of equivalent spend: each project has a particular lifetime, from assessment phase through demonstration and manufacture to in-service. Underlying outcomes for a particular cohort and budgetary decisions should depend on the level of maturity of each cohort. For example, budgetary constraints may mean pre-contract cohorts are purposefully delayed to reduce in-year spend.
Thirdly, the exponential nature of defence inflation means that the amount of approved spend added to the EPP is unlikely to be constant168.
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168 Independent Review of Top 20 MoD Procurement Programmes Cost and Schedule Estimates, HVR Consulting Services Ltd (Feb 2005) showed that Defence inflation for given equipments is typically exponential