# Presentation: 521172

## Cost Risk Tenet #9Communicating With Cost Readiness Levels (CRLs)

## Communicating With Cost Readiness Levels (CRLs)

**CRLs are patterned after the NASA Technology Readiness Level scale**
- Like TRLs, CRLs are designed to communicate the quality of the product—its fitness for use
- CRLs have been constructed to run the same 1 to 9 ordinal scale as TRLs
- In the case of CRLs, it is the quality of the _cost product_ itself—the estimate’s fitness for use as cost information for a flight project
- CRL 1-3:
- _Not_ fit for use for systems engineering decisions or budget commitment
- CRL 4-5:
- Formal cost risk probably not yet available
- Early deterministic estimate available
- Cost fit for conceptual systems engineering decisions and preliminary budget use
- CRL 6-8:
- CRL 6: “We think we are +/- 25% with 50% certainty”
- CRL 7: “We think we are +/- 15% with 50% certainty”
- CRL 8: “We think we are +/- 5% with 50% certainty”
- Fit for detailed engineering decisions and firm budget commitments
- CRL 9: End of project actual cost

- NASA Headquarters Cost Analysis Division

## Cost Readiness Levels at Low TRLs

**If the project has critical items at less than TRL 4...**
- This is like asking Edison in 1876 “How much longer for the light bulb, Tom?”
- “Hard to say”, he would have said as he had you thrown out of Menlo Park
- Note that this is not the same as asking, in 1879, once he had found a workable carbon filament, “How much will a production version of the light bulb cost to develop and produce Tom?”
- This would have been a TRL 4 question
- Tom’s cost estimators could have begun to model this
**So if 1<TRL<3 ********CRL=TRL**
**Likewise, if requirements are not firm, the CRL < 4 (not fit for use)**

- NASA Headquarters Cost Analysis Division

## Table 1: CRL Rating Prior to Availability of Probabilistic Risk Analysis

| 

Criteria  | 
CRL 4 | 
CRL 5
 | 
CRL 6 | 
CRL 7 | 
CRL 8 |
| --- | --- | --- | --- | --- | --- |
| 
Basic technical and programmatic  complexity* of the "to go" work at time of estimate | 
Extremely complex | 
Very complex | 
Average complexity | 
Less than average complexity | 
Relatively simple |
| Experience and adequacy of estimating team, quality of CARD, availability of analogous data and cost tools, time allowed for estimate, independence of estimate, number of cross checks performed  | 

Low | 

Fair | 

High | 

Very high | 

Extremely high |

- If Project has critical items < TRL 4, CRL = TRLmin

- If Project requirements are not stable, CRL < 4

- Otherwise, use table:

- *Complexity considerations include include human rating, launch system requirements, planetary destination, operational vs experimental requirements, materials complexity, use of deployables, parts count, challenging  thermal requirements, high data rates, electronic parts class, stabilization requirements, power generation type, propellant choice, propulsion requirements and many other factors.  Programmatic complexity includes team size, team experience, schedule and many other factors.

- NASA Headquarters Cost Analysis Division

## Table 2: CRL Rating After Availability of Probabilistic Risk Analysis

| 
25th Percentile Cost | 
Median Cost
 | 
75th Percentile Cost | Lookup
Ratio of 75th Percentile Cost to 25th Percentile Cost
 | 
Read
CRL |
| --- | --- | --- | --- | --- |
| 
100 | 
100
 | 
100 | 
1.00 | 
9 |
| 
95 | 
100 | 
105 | 
1.11 | 
8 |
| 
85 | 
100 | 
115 | 
1.35 | 
7 |
| 
75 | 
100 | 
125 | 
1.67 | 
6 |
| 
65 | 
100 | 
135 | 
2.08 | 
5 |
| 
55 | 
100 | 
145
 | 
2.64
 | 
4 |

- Use inter-quartile cost range to translate to a CRL rating
- Calculate ratio of 75th percentile cost to 25th percentile cost
- Lookup ratio on chart to read CRL

- NASA Headquarters Cost Analysis Division