# Presentation: 280340

## NASA Cost Estimating Initiatives2005 NASA Cost Estimating SymposiumNew OrleansApril 12-14, 2005

**Joe Hamaker, **
**Director of the Cost Analysis Division**
**NASA Headquarters, Washington DC**

## 2004 GAO Report on NASA Cost Estimating

**1992 GAO study of NASA cost analysis**
-  29 projects; median cost growth of 77%
**2004 GAO study**
- 27 projects;  median cost growth of 13%
**2004 GAO recommendations**
- Develop an integrated plan including
- Guidance for rebaselining
- Enforced use of EVM
- Staff and support for cost-estimating and EVM
- Establish a standard framework for LCCEs
- Based on a full LCC
- Using a WBS encompassing both in-house and contractor efforts
- Using CARDs
- With ICEs at each milestone
- Using cost risk assessments
- Prohibit projects from proceeding through the review and approval process without above

**Hinders**

- NASA Headquarters Cost Analysis Division

## 2004 Aldridge Commission Recommendations On NASA Cost Estimating

**Recommended an independent cost analysis organization similar to DoD CAIGs (Cost Analysis Improvement Group)**
- Independent cost estimating organization
- Maintains corporate data base of historical project cost information
- Generally uses parametric cost estimating procedures
- Recommends final cost position to approving bodies

- NASA Headquarters Cost Analysis Division

## NPR 7120.5C

**Independent Cost Estimates performed at:**
- End of Phase A (Preliminary Non-Advocate Review (p-NAR)
- End of Phase B (NAR)
- Surveillance reviews thereafter
- Seamless independent assessment method by Office of the Chief Engineer and Office of the Chief Financial Officer
- Center Systems Management Offices (SMOs)
- Cost estimating
- HQ Cost Analysis Division
- Independent Program Assessment Office (IPAO) Cost Group
- Center independent cost groups
- Outside experts, SETAs, FFRDCs, consultants

- NASA Headquarters Cost Analysis Division

## 2004 NASA Cost Estimating Handbook

**Completely revised since 2002 Edition**
**Purpose and Objectives**
**To provide a best practices resource**
**Tied closely to NPR 7120.5C**
**Scope **
**Approaches broad cost-estimating topics through general concept discussions and generic processes, techniques, and tool descriptions**
**Introduces Continuous Cost Risk Management (CCRM)**
**A living document with revisions on the web at www.ceh.nasa.gov**

- NASA Headquarters Cost Analysis Division

## Cost Initiatives

**Initiatives to improve Agency cost estimating are documented in the new NASA Cost Estimating Handbook (**_**[www.ceh.nasa.gov](http://www.ceh.nasa.gov/)**_**) **
**These initiatives will be required by NPD 7120.5C**
- The Deputy Administrator signed a directive on 23 December 2004 immediately implementing the initiatives (prior to NPR 7120.5C release)
**The initiatives include**** **
- Use of Continuous Cost Risk Management to improve coordination across cost communities of practice (estimating, EVM, project management, procurement, etc.)
- The use of cost risk analysis to quantify uncertainty
- Better cost data collection using a Cost Analysis Data Requirement (CADRe)
- A corporate cost data base-the One NASA Cost Engineering (ONCE) database
- Standardization of work breakdown structures
- Other related initiatives

- NASA Headquarters Cost Analysis Division

## Flight Projects Lifecycle Phasesand CADRe Submissions

**Flight Projects Lifecycle Phases****and CADRe Submissions**

- FORMULATION

- IMPLEMENTATION

**NAR**

- Flight Project
- Life Cycle
- Phases

**Pre-Phase A**
- Concept
- Studies

**Phase A:**
- Concept
- Development

**Phase B:**
- Preliminary Design

**Phase C:**
- Final Design

**Phase D:**
- Fabrication,
- Assembly & Test

**Phase E:**
- Operations &
- Sustainment

**Phase F:**
- Disposal

- Concept Design Review

- Pre-NAR

- SRR

- Launch**

**Directed Missions**
**CADRe Submissions**

- PDR

- CDR

- MCR

- CADRe EZ

**AO Missions**
**CADRe Submissions**

- CDR

- Down
- Select

-  PDR

- Launch**

- CADRe EZ

- CADRe
- Parts A/B*

- CADRe
- Parts A/B*

- CADRe
- Parts A/B/C

- CADRe
- Parts A/B/C

- Updated CADRe (if changed) & Part C actuals only  unless rebaseline
- Or additional assessments req’d

- Updated CADRe (if changed) & Part C actuals only unless rebaseline
- Or additional assessments req’d

- *    90 Days Before PDR; update to part B again 30 days prior to PDR
- ** 30 Days afer Launch

- NASA Headquarters Cost Analysis Division

## Proposed CADRe Data Collection Process

**Project Manager responsible for compiling CADRe data**
**Data format and submission method per DRD**
- Format (suggested)
- Word (Part A)
- PowerPoint (Part A)
- Excel spreadsheet (Part B/C)
- Etc.
- Data to be submitted via
- Email
- CD Rom
- Upload via portal website

- NASA Headquarters Cost Analysis Division

## Cost Initiative Implementation Plan

**Phase 1**
- Workshops at the Centers to cover ONCE data base, CADRe and the Common WBS
- Define requirements
- Review current formats for ONCE, CADRe, WBS
- February-March 2005
**Phase 2**
- Overview at the Centers of NPR 7120.5C by OCFO Cost Analysis Division  and Office of Chief Engineer
- Detailed CCRM briefing by Cost Analysis Division
- April 2005?
**Phase 3**
- Detailed CCRM 2 day training seminar at the Centers
- May-September 2005

- NASA Headquarters Cost Analysis Division

## Supporting Information

## Continuous Cost-Risk Management

**A cost management architecture providing:**
- Identification of medium- and high-risk WBS elements, their assessment & cost impact quantification in the LCCE
- Communication of identified risk WBS elements to project managers for focused cost management
- Post-cost estimate tracking of identified  risk WBS element cost and schedule performance using EVM system
- Annual LCCEs for measuring cost-risk reduction
- Updates, collection and archiving of technical and cost data for cost model improvement

***Incorporated in ***
***NPG 7120.5C***

- NASA Headquarters Cost Analysis Division

## Cost Risk Analysis

**Risk Areas**
**Safety**
**Technical/Performance/ Engineering**
**Schedule**
**Cost**

**All cost estimates are really probability distributions**
**Variance narrows as project life cycle proceeds**
**Sources of uncertainty**
**Uncertainties in project definition (“known unknowns”)**
**Cost model statistical variance**
**Cost risk analysis quantifies budget reserves necessary for acceptable level of confidence**

**$**

**“****Dollarizing” Risks**

**$**

**$**

**$**

- P

- P

- P

**WBS Elements**

- Cumul
- P

**Lows via modeling optimistic assumptions**
**Highs via modeling ****pessimistic**** assumptions**

**TOTAL PROJECT**

- $

- NASA Headquarters Cost Analysis Division

## Cost Analysis Data Requirement (CADRe)

**CADRe is a Data Requirement on **_**new**_** high dollar value **_**flight**_** **_**projects**_** (“Cat I and Cat II” in NPR 7120.5C vernacular)**
**Some PMs have expressed an interest in using CADRe for smaller missions as well**
**DoD has had a similar approach in place for many years**
**CARDs (Cost Analysis Requirement Description)**
**CCDRs (Contractor Cost Data Report)**
**Typically voluminous**
**NASA approach**
**CADRe:  A single Data Requirement combining DoD’s CARD and CCDR concepts**
**Streamlined (focused on cost drivers and related information)**
**Collects data at key milestones from Phase A to E**
**Includes the project’s Life-Cycle Cost Estimate that **_**corresponds**_** to CADRe description**
**Configuration control for the cost estimate**

- NASA Headquarters Cost Analysis Division

## One NASA Cost Engineering (ONCE) Database

_**Future**_** data**
**Collected with CADRe at major milestones (at least annually)**

- NASA Headquarters Cost Analysis Division