Monday, May 01, 2006

KNIGHT-RIDDER REPORTS THAT one of the biggest factors in soaring costs for the Iraq war is the harsh desert climate, which erodes military equipment like tanks, guns, and helicopters.

The Army is requesting $13.5 billion this year to repair, replace or upgrade equipment lost or damaged in the war. And officials estimate that the Army will need $12 billion to $13 billion a year for these purposes until at least two years after most troops have left Iraq and Afghanistan.

The cost of replacing equipment is one of the factors likely to make Iraq one of the costliest military engagements in U.S. history.

If Congress passes the emergency spending request that's before the Senate, the cost of military operations since the 9-11 terrorist attacks will top $439 billion, with $320 billion of that for the Iraq war alone, according to a report this week by the Congressional Research Service.

Even with a significant reduction in U.S. forces in Iraq and Afghanistan over the next several years, the Congressional Budget Office estimates that total war spending could top $811 billion by 2016.

For comparison, the 1991 Persian Gulf War cost about $89 billion in today's dollars, while the Korean War cost $455 billion and the Vietnam War cost $655 billion, according to Steven Kosiak, an analyst with the Center for Strategic and Budgetary Assessments, an independent policy research group in Washington.

"This war is turning out to cost far more than anticipated and not simply because we had to stay in Iraq with far more troops and far longer than the Bush administration expected," Kosiak said. "Compared to past wars and earlier projections of war costs made by the Congressional Budget Office and others, this war is turning out to be very expensive."

I wonder: What would happen if a corporation's management underestimated the cost of a project this badly, and ended up spending twice as much or four times as much or ten times as much as they had estimated? How long would the people responsible keep their jobs?

1 comment:

Roci said...

Good point, but the government has never been any good at cost estimates. Despite paid professional staff with degrees in cost estimating, the results are usually no better than just guessing. This is why it is unlikely a contractor will take a fixed price contract for government work. The risk is too high for normal business.

I think the example you are looking for is the Alaskan oil pipeline. Original estimate: $800 million. Actual cost $9 Billion. All privately funded by the oil companies. The execs and project mangers were considered heros for accomplishing it at all and the profits from the venture have exceeded their estimates too.

Predicting the future is hard.

In the final analysis, in the decision to go to war in Iraq, cost was never an issue.