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I have heard that +/-1% was the SAE margin for error and I am not paying for the SAE documents to check it out. I think 1% is a good rule of thumb but I believe the SAE horsepower rating is a fixed number. If it was just 1%, the leeway would become greater for higher output engines. Here is an example of a + or - 1% in increments of 100hp
100bhp = 1hp +/- @ 1%
200bhp = 2hp +/- @ 1%
300bhp = 3hp +/- @ 1%
400bhp = 4hp +/- @ 1%
As you can see, in higher horsepower applications (5.0 and LS3), the standard 1% margin of error ceases to be standard and scales along with the output. Just because an engine's output is small, does not mean the certification method should be stricter. If the SAE leeway was a set standard, it would be standardized as a unwavering unit of measurement. Although I cannot confirm this, I believe that the SAE margin of error for certification is 5hp.
People will no doubt challenge this because they themselves have witnessed an engine, dyno significantly more horsepower than what is advertised. I honestly believe these people. As the engine is broken in, the engine will begin to produce more power once the internal engine components have settled in. I remember when the 5.0 was dyno'd by Edmunds, and it dyno'd at 395rwhp. It was however in 4th gear as I remember, but Livernois experimented with a 4th gear pull and found it to be within 5-9rwhp difference from a 5th gear pull.
Most LS3 and 5.0 owners can vouch that there can be a 20rwhp gain after 2000 miles on the odometer. If a Mustang dyno'd at 385-395rwhp from the factory without break-in, it would obviously be overrated. Even then, you would still have to account for the parasitic drive train losses.. and as of now... there is no possible way to measure or calculate those losses.
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