Abstract: The cost driver of the traditional Parametric Cost Estimation（PCE） model is the technical variable，however it is difficult to collect the variables that indicate the technical advancement.Effectiveness of aircraft is introduced in the improved PCE.The effectiveness variables are taken as the cost driver instead of technical variables.The improved PCE model is a function of three new parameters including REACH，ADVANCE and REDESIGN，which are defined based on State of Art（SOA）.Considering the effect of input randomness，Monte Carlo simulation is conducted on the model.The improved modeling method is adjustable for different hierarchies，and can be applied to estimate the costs of most complex weapon systems.