Dr.

Atif Shahzad
_____________________
BE, MECHANICAL ENGINEERING
UNIVERSITY OF ENGINEERING & TECHNOLOGY, TAXILA, PAKISTAN, 2000

MCS, SOFTWARE ENGINEERING

SZABIST,, ISLAMABAD, PAKISTAN, 2003

MS, AUTOMATION & PRODUCTION SYSTEMS

ECOLE CENTRALE DE NANTES, NANTES, FRANCE, 2007

PhD, AUTOMATION & APPLIED INFORMATICS

UNIVERSITE DE NANTES, NANTES, FRANCE, 2011

EMAIL: atifshahzad@Gmail.com

TEL: +92-333-5219846, +92-51-5179755

LINKEDIN: pk.linkedin.com/in/dratifshahzad
 PROJECT
MANAGEMENT
COURSE OBJECTIVES
 COURSE OBJECTIVES
 Learn what project management is and the qualities of an effective
project manager.
 Understand the nine knowledge areas of project management and
how they can be applied to your project.
 Discover the phases of a project and what deliverables are expected
when.
 Identify a project’s key stakeholders.
 Understand the different types of business cases and how to create a
Statement of Work.
 Learn to be prepared for the unexpected by utilizing risk
management and change control.
 Learn how to organize project activities by creating a Work
Breakdown Structure.
Dr. Atif Shahzad

 Create a network diagram to track your project’s progress.

 Learn budgeting and estimating techniques.
 PROJECT
MANAGEMENT
TODAY’S LECTURE
 CHAPTER FIVE

Estimating Project
Times and Costs
Dr. Atif Shahzad

McGraw-Hill/Irwin
Copyright © 2011 by The
McGraw-Hill Companies, Inc. All
 Where We Are Now
5–6
Dr. Atif Shahzad
 Every project boils down to

If you had a bigger budget, you could probably get

more people to do your project more quickly and deliver
more. That’s why no project plan is complete until you
come up with a budget. But no matter whether your
project is big or small, and no matter how many resources
and activities are in it, the process for figuring out the
bottom line is always the same!
Dr. Atif Shahzad
 Estimating Projects
5–8

 Estimating
¤ The process of forecasting or approximating the time
and cost of completing project deliverables.
¤ The task of balancing expectations of stakeholders and
need for control while the project is implemented.
 Types of Estimates
¤ Top-down (macro) estimates: analogy, group consensus,
or mathematical relationships
¤ Bottom-up (micro) estimates: estimates of elements
of the work breakdown structure
Dr. Atif Shahzad
 Why Estimating Time and Cost Are
Important
5–9

• To support good decisions.

• To schedule work.
• To determine how long the project should take and its cost.
• To determine whether the project is worth doing.
• To develop cash flow needs.
• To determine how well the project is progressing.
• To develop time-phased budgets and establish the project
baseline.
• Desire to “have a 95 percent probability of meeting time
Dr. Atif Shahzad

and cost estimates.” EXHIBIT 5.1

 Factors Influencing the Quality of
Estimates
5–10

Planning Horizon

Other
Project
(Nonproject)
Duration
Factors

Quality of
Organization Estimates People
Culture

Padding Project Structure

Dr. Atif Shahzad

Estimates and Organization

 Estimating Guidelines for Times,
5–11
Costs, and Resources
1. Have people most familiar with the tasks make the
estimate.
2. Use several people to make estimates. [Delphi Method]
3. Base estimates on normal conditions, efficient methods, and
a normal level of resources.
4. Use consistent time units in estimating task times.
5. Treat each task as independent, don’t aggregate.
6. Don’t make allowances for contingencies.
Dr. Atif Shahzad

7. Adding a risk assessment helps avoid surprises to

stakeholders.
 Top-Down versus Bottom-Up
Estimating
5–12

 Top-Down Estimates
¤ Are usually are derived from someone who uses experience
and/or information to determine the project duration and total
cost.
¤ Are made by top managers who have little knowledge of the
processes used to complete the project.

 Bottom-Up Approach
¤ Can serve as a check on cost elements in the WBS
by rolling up the work packages and associated cost accounts to
major deliverables at the work package level.
Dr. Atif Shahzad
 Top-Down versus Bottom-Up
Estimating
5–13

Conditions for Preferring Top-Down or Bottom-up

Time and Cost Estimates

Condition Macro Estimates Micro Estimates

Strategic decision making X
Cost and time important X
High uncertainty X
Internal, small project X
Fixed-price contract X
Customer wants details X
Unstable scope X
Dr. Atif Shahzad

TABLE 5.1
 Estimating Projects:
Preferred Approach
5–14

 Make rough top-down estimates.

 Develop the WBS/OBS.
 Make bottom-up estimates.
 Develop schedules and budgets.
 Reconcile differences between top-down
and bottom-up estimates
Dr. Atif Shahzad
 PROJECT
MANAGEMENT
ESTIMATING PROJECT TIME & COSTS
TOP DOWN APPROACH
 Top-Down Approaches for
5–17
Estimating Project Times and Costs
 Consensus methods [DELPHI]
 Ratio methods
 Apportion method
Project Estimate

 Function point methods for Times

Costs
software and system projects
 Learning curves
Dr. Atif Shahzad
 Delphi Method
Step by Step
5–19

 Step 1: Choose a Facilitator

¤ The first step is to choose your facilitator. You may wish to take on
this role yourself, or find a 'neutral' person within your
organization. It is useful to have someone that is familiar with
research and data collection.

 Step 2: Identify Your Experts

¤ The Delphi technique relies on a panel of experts. This panel may
be your project team, including the customer, or other experts from
within your organization or industry. An expert is "any individual
with relevant knowledge and experience of a particular topic."
Dr. Atif Shahzad
 Delphi Method
Step by Step
5–20

 Step 3: Define the Problem

¤ What is the problem or issue you are seeking to understand? The
experts need to understand exactly what they are commenting on,
so ensure you provide a clear and comprehensive definition.

 Step 4: Round One Questions

¤ The Delphi technique relies on a panel of experts. This panel may
be your project team, including the customer, or other experts from
within your organization or industry. An expert is "any individual
with relevant knowledge and experience of a particular topic."
Dr. Atif Shahzad
 Delphi Method
Step by Step
5–21

 Step 5: Round Two Questions

¤ Based on the answers to the first questions, these questions should
delve deeper into the topic to clarify specific issues. These
questions may also go out in the form of questionnaires or surveys.
Again, collate and summarize the results removing any irrelevant
content and look for the common ground. Remember, we are
looking to build consensus.

 Step 6: Round Three Questions

¤ The final questionnaire aims to focus on supporting decision
making. Hone in on the areas of agreement. What is it the experts
Dr. Atif Shahzad

are all agreed on?

 Delphi Method
Step by Step
5–22

 Step 7: Act on Your Findings

¤ After this round of questions your experts will have, we hope,
reached a consensus and you will have a view of future events.
Analyze the findings and put plans in place to deal with future
risks and opportunities to your project.

¤ (You may wish to have more than three rounds of questioning to

Dr. Atif Shahzad

reach a closer consensus.)

 Activity Question ?
 Mrs. Tolstoy and her husband, Serge, are planning their dream
house. The lot for the house sits high on a hill with a beautiful
view of the Mountains. The plans show the size of the house to
be 2,900 square feet.
 The average price for a lot and house similar to this one has
been $120 per square foot. Fortunately, Serge is a retired
plumber and feels he can save money by installing the
plumbing himself. Mrs. Tolstoy feels she can take care of the
interior decorating.
 What is the estimated cost for the Tolstoy’s house if they use
contractors to complete all of the house?
Dr. Atif Shahzad

 Estimate what the cost of the house would be if the Tolstoys

use their talents to do some of the work themselves.
 The following average cost information is available from a local bank that
makes loans to local contractors and disperses progress payments to
contra tors when specific tasks are verified as complete.

 24% Excavation and framing complete

 8% Roof and fireplace complete
 3% Wiring roughed in
 6% Plumbing roughed in
 5% Siding on
 17% Windows, insulation, walks, plaster, and garage complete
 9% Furnace installed
 4% Plumbing fixtures installed
 10% Exterior paint, light fixtures installed, finish hardware installed
 6% Carpet and trim installed
Dr. Atif Shahzad

 4% Interior decorating
 4% Floors laid and finished
 Apportion Method of Allocating Project
Costs Using the Work Breakdown Structure
5–25
Dr. Atif Shahzad

FIGURE 5.1
 Simplified Basic Function Point Count Process
for a Prospective Project or Deliverable
5–26
Dr. Atif Shahzad

TABLE 5.2
 Example: Function Point Count Method
5–27
Dr. Atif Shahzad

TABLE 5.3
 PROJECT
MANAGEMENT
ESTIMATING PROJECT TIME & COSTS
BOTTOM UP APPROACH
 Bottom-Up Approaches for Estimating
5–29
Project Times and Costs
 Template methods
 Parametric procedures
applied to specific tasks
 Range estimates for
the WBS work packages
 Phase estimating: A hybrid
Dr. Atif Shahzad
 Support Cost Estimate Worksheet
5–30
Dr. Atif Shahzad

FIGURE 5.2
 SB45 Support Cost Estimate Worksheet
Dr. Atif Shahzad

FIGURE 5.2
 Phase Estimating over Product Life
Cycle
5–32
Dr. Atif Shahzad

FIGURE 5.3
 Top-Down and Bottom-Up Estimates
5–33
Dr. Atif Shahzad

FIGURE 5.4
 PROJECT
MANAGEMENT
ESTIMATING PROJECT TIME & COSTS
LEVEL OF DETAIL
 Level of Detail
5–35

 Level of detail is different for different levels of management.

 Level of detail in the WBS varies with the complexity of the
project.
 Excessive detail is costly.
¤ Fostersa focus on departmental outcomes
¤ Creates unproductive paperwork
 Insufficient detail is costly.
¤ Lack of focus on goals
Dr. Atif Shahzad

¤ Wasted effort on nonessential activities

 PROJECT
MANAGEMENT
ESTIMATING PROJECT TIME & COSTS
TYPES OF COSTS
 Types of Costs
5–39

 Direct Costs
¤ These costs are clearly chargeable to a specific work package. Direct costs can be
influenced by the project manager, project team, and individuals implementing the
work package. These costs represent real cash outflows and must be paid as the
project progresses; therefore, direct costs are usually separated from overhead costs.
Lower-level project rollups frequently include only direct costs.
 Labor, materials, equipment, and other
 Direct (Project) Overhead Costs
¤ Costs incurred that are directly tied to an identifiable project deliverable or work
package.
¤ Direct overhead rates more closely pinpoint which resources of the organization are
being used in the project. Direct project overhead costs can be tied to project
deliverables or work packages.
 Salary, rents, supplies, specialized machinery
 General and Administrative Overhead Costs
¤ Organization costs indirectly linked to a specific package that are
Dr. Atif Shahzad

apportioned to the project

 Contract Bid Summary Costs
5–40

Direct costs $80,000

Direct overhead $20,000
Total direct costs $100,000
G&A overhead (20%) $20,000
Total costs $120,000
Profit (20%) $24,000
Total bid $144,000
Dr. Atif Shahzad

FIGURE 5.5
 Three Views of Cost
5–41
Dr. Atif Shahzad

FIGURE 5.6
 Refining Estimates
5–42

 Reasons for Adjusting Estimates

¤ Interaction costs are hidden in estimates.
¤ Normal conditions do not apply.
¤ Things go wrong on projects.
¤ Changes in project scope and plans.
 Adjusting Estimates
¤ Time and cost estimates of specific activities are
adjusted as the risks, resources, and situation
Dr. Atif Shahzad

particulars become more clearly defined.

 Creating a Database for Estimating
5–44
Dr. Atif Shahzad

FIGURE 5.7
 Key Terms
5–45

Apportionment methods Overhead costs

Bottom-up estimates Padding estimates
Contingency funds Phase estimating
Delphi method Range estimating
Direct costs Ratio methods
Function points Template method
Learning curves Time and cost databases
Dr. Atif Shahzad
 WBS Figure
5–46
Dr. Atif Shahzad

TABLE 5.4
 Learning Curves Unit Values
5–47
Dr. Atif Shahzad
 Learning Curves Unit Values
5–48
Dr. Atif Shahzad

TABLE A5.1
 Learning Curves Cumulative Values
5–49
Dr. Atif Shahzad

TABLE A5.2
 PROJECT
MANAGEMENT
ESTIMATING PROJECT TIME & COSTS
TYPES OF COSTS

Review
 Simple Rules of
5–51
Cost Estimating
1. Assume resources will only be productive for 80 percent of
their time
2. Resources working on multiple projects take longer to
complete tasks because of time lost switching between them
3. People are generally optimistic and often underestimate
how long tasks will take
4. Make use of other people's experiences and your own
5. Get an expert view
Include management time in any estimate
Dr. Atif Shahzad

6.
 Simple Rules of
5–52
Cost Estimating
7. Always build in contingency for problem solving, meetings
and other unexpected events
8. Cost each task in the Work Breakdown Structure to arrive
at a total, rather than trying to cost the project as a whole
9. Agree a tolerance with your customer for additional work
that is not yet defined
10. Communicate any assumptions, exclusions or constraints you
have to your customer
11. Provide regular budget statements to your customer,
Dr. Atif Shahzad

copying your team, so they are always aware of the current

position
 Cost Estimation
5–53
Common Mistakes
1. Not understanding what is involved to complete work
2. Starting with an amount of money, making the project cost
fit it
3. Assigning resources at more than 80 percent utilization
4. Failing to build in contingency
5. Failing to adjust the estimate following changes in scope
6. Dividing tasks between more than one resource
7. Providing estimates under pressure in project meetings
Dr. Atif Shahzad

8. Giving single-data-point estimates rather than range

estimates
 PROJECT
MANAGEMENT
 COST
LECTURE #
 COST ESTIMATION
 To understand the different methods of cost estimation and their
applicability in the project life cycle.
 To understand the derivation and applicability of parametric cost
models.
 To introduce key cost estimating concepts and terms, including
complexity factors, learning curve, non-recurring and recurring
costs, and wrap factors.
 To introduce the use of probability as applied to parametric
estimating, with an emphasis on Monte Carlo simulation and the
concept of the S-curve.
Dr. Atif Shahzad

 To discuss cost phasing, as estimates are spread across schedules.

 Where does all the money go?
Dr. Atif Shahzad
 Life Cycle Cost Estimate (LCCE)
 A Life Cycle Cost Estimate (LCCE) is an estimate that includes total cost of
ownership over the system life cycle, including all
¤ project feasibility,
¤ project definition
¤ system definition,
¤ preliminary and final design,
¤ fabrication and integration,
¤ deployment,
¤ operations and
¤ Disposal efforts
 It provides an exhaustive and structured accounting of all resources necessary to
identify all cost elements including development, deployment, operation and
support and disposal costs.
 A LCCE is used for budgetary decisions, system trades and studies, milestone
review support, and to determine a projects viability, appropriate scope, and size
Dr. Atif Shahzad
 COST METHODOLOGY PROCESS
Dr. Atif Shahzad
 Thoughts on Space Cost Estimating
 Aerospace cost estimating remains a blend of art and science
¤ Experience and intuitions
¤ Computer models, statistics, analysis
 A high degree of accuracy remains elusive
¤ Many variable drive mission costs
¤ Most NASA projects are one-of-a-kind R&D ventures
¤ Historical data suffers from cloudiness, interdependencies, and small sample sizes
 Some issues/problems with cost estimating
¤ Optimism
¤ Marketing
¤ Kill the messenger syndrome
¤ Putting numbers on the street before the requirements are fully scoped
 Some Solutions
¤ Study the cost history lessons
¤ Insist on estimating integrity
Integrate the cost analyst and cost estimating into the team early
Dr. Atif Shahzad

¤
¤ The better the project definition, the better the cost estimate
 Challenges to Cost Estimate

As spacecraft and mission designs mature, there are many issues and challenges to the
cost estimate, including:

 Basic requirements changes.

 Make-it-work changes.
 Inadequate risk mitigation.
 Integration and test difficulties.
 Reluctance to reduce headcounts after peak.
 Inadequate insight/oversight.
 De-scoping science and/or operability features to reduce nonrecurring cost:
¤ Contract and design changes between the development and operations phases;
¤ Reassessing cost estimates and cost phasing due to funding instability and stretch outs;
¤ Development difficulties.
 Manufacturing breaks.
Dr. Atif Shahzad
 Four Critical Elements to Understand and
Agree Before Conducting a Cost Estimate
Dr. Atif Shahzad
 Mission Costs

 Major Phases of a Project

¤ Phase A/B : Technology and concept development
¤ Phase C: Research, development, test and evaluation (RDT&E)
¤ Phase D: Production
¤ Phase E: Operations
 A life cycle cost estimate includes costs for all phases of a mission.
 Method for estimating cost varies based on where the project is in its life cycle.
Dr. Atif Shahzad
 Mission Costs

Estimating Pre-Phase A & Phase B Phase C/D

Method Phase A
Parametric Cost Primary Applies May Apply
Models
Analogy Applies Applies May Apply
Dr. Atif Shahzad

Grass-roots May Apply Applies Primary

 Cost Estimating Techniques over the Project
Life Cycle

CONCEPTUAL PROJECT
DESIGN DEVELOPMENT OPERATIONS
DEVELOPMENT DEFINITION
A B C D E
PHASE

P
A Analogies , Judgments
R
A System Level CERs As Time Goes By:
M • Tendency to become optimistic
E
T Gen. Subsystem CERs • Tend to get lower level data
R
METHODS

I Calibrated Subsystem CERs

C
D
E • Major dip in cost as
Primes propose lower Prime Proposal
T Detailed
A • Tendency for cost
I commitments to fade out
Estimates via Prime contracts / Program Assessment
L as implementation starts
E up
D
66
 Cost Estimating Methods
See also actual page 74 from NASA CEH for methods and applicable phases

67

1. Detailed bottoms-up estimating

¤ Estimate is based on the cost of materials and labor to develop and produce each element, at
the lowest level of the WBS possible.
¤ Bottoms-up method is time consuming.
¤ Bottoms-up method is not appropriate for conceptual design phase; data not usually available
until detailed design.
2. Analogous estimating
¤ Estimate is based on the cost of similar item, adjusted for differences in size and complexity.
¤ Analogous method can be applied to at any level of detail in the system.
¤ Analogous method is inflexible for trade studies.
3. Parametric estimating
¤ Estimate is based on equations called Cost Estimating Relationships (CERs) which express cost as
a function of a design parameter (e.g., mass).
¤ CERs can apply a complexity factor to account for technology changes.
Dr. Atif Shahzad

¤ CER usually accounts for hardware development and theoretical first unit cost.
 For multiple units, the production cost equals the first unit cost times a learning curve factor.
 Parametric Cost Estimating

68

Advantages to parametric cost models:

¤ Less time consuming than traditional bottoms-up estimates
¤ More effective in performing cost trades; what-if questions
¤ More consistent estimates
¤ Traceable to the class of space systems for which the model is applicable
Major limitations in the use of parametric cost models:
¤ Applicable only to the parametric range of historical data (Caution)
¤ Lacking new technology factors so the CER must be adjusted for hardware using
new technology
¤ Composed of different mix of “things” in the element to be costed from data
Dr. Atif Shahzad

used to derive the CER, thus rendering the CER inapplicable

¤ Usually not accurate enough for a proposal bid or Phases C-D-E
 Strengths and Weaknesses of
Parametric/CER Cost Methodology
Dr. Atif Shahzad
 Strengths and Weaknesses of
Analogy Method of Cost Estimating
Dr. Atif Shahzad
 Strengths and Weaknesses of Engineering
Build Up Method of Cost Estimating
Dr. Atif Shahzad
 PARAMETRIC COST MODEL
DESCRIPTION
Database
Typical Cost Model
Subsystem WBS CER’S
SPACECRAFT X Structure RCS Cost Model Output

$
DDT&E
Y
$

W
$

W
DDT&E
12345678910111213141516171819120212223242526272
123456789101112131415161718191202122232

123456789101112131415161718191202122
123456789101112131415161718191202122232

Mechanical Power 12345678910111213141516171819120212223242526272

Production 12345678910111213141516171819120212223242526272

1234567891011121314151617181912021222324252

$ $ 1234567891011121314151617181912021222324252
12345678910111213141516171819120212223242526272
1234567891011121314151617181912021222324252
12345678910111213141516171819120212223242526272

W W 123456789101112131415161718191202122232

Thermal Etc.
Program Specific Input Production
$ $ 12345678910111213141516171819120212223242526272
123456789101112131415161718191202122232

123456789101112131415161718191202122
123456789101112131415161718191202122232

W W 12345678910111213141516171819120212223242526272

• Weight 12345678910111213141516171819120212223242526272
1234567891011121314151617181912021222324252
1234567891011121314151617181912021222324252

System Level Costs

1234567891011121314151617181912021222324252

• Quantities 12345678910111213141516171819120212223242526272

12345678910111213141516171819120212223242526272

123456789101112131415161718191202122232

• Complexity Prime Wraps = ƒ (Σ Subsystem Costs)

factors Program Costs INDIRECT
Dr. Atif Shahzad

• Analogous Program Wraps = ƒ (Prime Costs) COSTS

data points Operations
Disposal, etc.
 CER Example - Eyeball Attempt
$40

(5,32)
• Four data points are available
4
$30
• CER can be derived mathematically using
(2,24) regression analysis
2
(y), Cost

• CER based on least squares measure

$20
13 • “Goodness of fit” is the sum of the squares of
17
the Y axis error
• This example connects Data points 1 and 4
$10 (4,8)
(Eyeball Attempt)
3

(1,4)
1
$0

0 1 2 3 4 5 6
(x), Weight

Data Summary “Eyeball Try”

Data Point # X Y Data Point # X Y Y Error Y2
1 1 4 1 1 4 0 0
2 2 24 2 2 11 13 169
3 4 8 3 4 25 17 289
4 5 32 4 5 32 0 0

458
73
 CER Example - Mathematical
$40

(5,32)
4 • Four data points are available
$30
7 • CER can be derived mathematically using
(2,24)
regression analysis
2
(y), Cost

$20
11
• CER based on least squares measure
• “Goodness of fit” is the sum of the squares of
13
the Y axis error
$10 (4,8) • This example compares the eyeball attempt
5 3 with the mathematical look
(1,4)
1
$0

0 1 2 3 4 5 6
(x), Weight

Mathematical Look
Data Summary “Eyeball Try”
Y = 4X +5
Data Point # X Y Data Point # X Y Y Error Y2 Data Point # X Y Y Error Y2
1 1 4 1 1 4 0 0 1 1 9 5 25
2 2 24 2 2 11 13 169 2 2 13 11 121
3 4 8 3 4 25 17 289 3 4 21 13 169
4 5 32 4 5 32 0 0 4 5 25 7 49

458 384
The Best Possible Answer
• Would you prefer a CER or analogy?
• How much do you trust the result? 74
 Comparison of Linear / Log-Log Plots
♦ Left side shows the an example CER and data points. Since this is a second order
equation (not a straight line) the relationship is a curve.
♦ A second order equation plots to log-log graph as a straight line and is convenient
for the user, especially when the data range is wide.

$10,000

$800

Sys C
$600
Sys B
Cost

Cost
$400 ($410) $1,000

Sys B Sys C

$200

Sys A

$0
0 200 400 600 800 1000 Sys A
$100
Weight 10 100 1000 10000
Weight

Resulting CER: Cost = 25 * Wt .5 (Slope = .5)

75
Generic CER form: Cost = a + bXc
 Make sure you normalize historical data!

Be sure inflation effects removed!

Historical Data in RY$ Historical Cost Data in 1991 CY$
1991
Inflation Inflation
Year SYS A SYS B SYS C Rate Factor SYS A SYS B SYS C

1981 $11.1 10% 1.882 $20.9

1982 $22.2 9% 1.711 $38.0

1983 $33.3 $53.9 9% 1.57 $52.3 $84.6

1984 $22.4 $80.8 8% 1.44 $32.3 $116.4

1985 $5.0 $107.7 6% 1.333 $6.7 $143.5

1986 $80.8 $72.2 6% 1.258 $101.6 $90.8

1987 $53.9 $144.4 5% 1.187 $64.0 $171.4

1988 $26.9 $216.7 5% 1.13 $30.4 $244.9

1989 $144.6 4% 1.076 $155.6

1990 $36.1 3.5% 1.035 $38.4

Total $94.0 $404.0 $614.0 $150.2 $540.5 $701.1

Cost Adjustment ~60% ~34% ~14%

Make Sense?

76
Note: NASA publishes an inflation table (NASA2003_inflation_index.xls)
 Use of Complexity Factors

Complexity is an adjustment to a CER to compensate for a project’s

unique features that aren’t accounted for in the CER historical data.

Description Complexity Factor

System is “off the shelf” ; minor modifications .2

System’s basic design exists; few technical issues; 20% new .4

design and development

System’s design is similar to an existing design; some technical .7

issues; 20% technical issues; 80% new design and development

System requires new design, development, and qualification; some 1.0

technology development needed (normal system development)

System requires new design, development, and qualification; 1.3

significant technology development; multiple contractors
System requires new design, development and qualification; 1.7
major technology development
System requires new design, development and qualification; 2.0
major technology development; crash schedule

77
 Spacecraft / Vehicle Level

DDT&E Assumed Slope

$10,000

$1,000
Cost, (M)

$100

$10

100 1000 10000 100000 1000000 10000000

DWT, LBS

KEY
Program Equation Validity Range No of Data Points
Liquid Rocket Engines = 21.364 WT^.5 291 to 18,340 4
Crewed Spacecraft = 19.750 WT^.5 7,000 to 153,552 9
Dr. Atif Shahzad

Uncrewed Planetary S/C = 11.279 WT^.5 191 to 2,755 16

Launch Vehicle = 4.461 WT^.5 7,674 to 1,253,953 10
Uncrewed Earth Orbital S/C = 3.424 WT^.5 168 to 19,513 33
78
 Variation in Historical Data
Based on Mission Type
Uncrewed Earth Orbit Uncrewed Planetary Crewed
Program Weight DDT&E Cost Program Weight DDT&E Cost Program Weight DDT&E Cost
AE-3 780 $35 GALILEO 2,755 $467 APOLLO-CSM 31,280 $11,574
AEM-HCM 185 $10 GAL. PROBE 671 $97 APOLLO-LM 8,072 $5,217
AMPTE-CCE 395 $20 SURVEYOR 647 $1,179 GEMINI 7,344 $2,481
COBE 4,320 $55 VIKING LND 1,908 $914 ORBITER 153,552 $8,088
CRRES 6,164 $35 VIKING ORB 1,941 $417 SKYLAB-A/L 38,945 $1,159
DE-1 569 $14 PIONAERV. B. 758 $91 SKYLAB-OW 68,001 $1,786
DE-2 565 $14 PIONERL. 636 $69 SPACELAB 23,050 $1,671
DMSP-5D 1,210 $69 PIONERS. 191 $36 SUBTOTAL 330,244 $31,976
ERBS 4,493 $21 LUNARORB 394 $430 AVERAGE 41,178 $4,568
GPS-1 1,500 $76 MAGELLAN 2,554 $243 HIGH 153,552 $11,574
HEAO-2 3,010 $16 MARINER-4 532 $286 LOW 7,344 $1,159
HEAO-3 3,044 $12 MARINER-6 696 $420
IDSCSP/A 495 $59 MARINER-8 1,069 $333
LANDSAT-4 1,906 $24 MARINER-10 1,037 $241
MAGSAT 168 $9 PIONEER10 423 $187
SCATHA 1,194 $27 VOYAGER 1,226 $394
TIROS-M 435 $65 SUBTOTAL 17,438 $5,804
TIROS-N 836 $26 AVERAGE 1,090 $368
VELA-IV 544 $65 HIGH 2,755 $1,179
INTELSAT 237 $77 LOW 191 $36
ATS-1 527 $108
ATS-2 406 $99
ATS-5 721 $131
ATS-6 2,532 $201
DSCS-11
GRO
1,062
13,448
$158
$223
# Data
HEAO-1 2,602 $89 Avg. Wt Avg. $ Points
LANDSAT-1 1,375 $90
MODEL-35 1,066 $196 Uncrewed Earth Orbit 2,400 $.10B 33
SMS 1,038 $76
TACSAT 1,442 $115 Uncrewed Planetary 1,100 $.37B 16
OSO-8 1,037 $71
HUBBLE 19,514 $968 Crewed 41,000 $4.57B 9
SUBTOTAL 78,820 $3,254
AVERAGE 2,388 $99
HIGH 19,514 $968
LOW 168 $9
79
 Flight Unit Cost vs. DDT&E Costs
DDT&E=Design, Development, Test&Evaluation

$10,000
Crewed
DDT&E Flight Flt % of
Weight Cost Unit Cost DDT&E
100 $198.0 $6.4 3.2%
500 $442.0 $19.8 4.5%
$1,000 1,000 $625.0 $32.2 5.2%
5,000 $1,396.0 $99.4 7.1%
10,000 $1,975.0 $162.0 8.2%
20,000 $2,793.0 $262.0 9.4%
50,000 $4,416.0
100,000 $6,245.0
Cost

150,000 $7,649.0 $1,075.0 14.1%

$100

Earth Uncrewed
DDT&E Flight Flt % of
Weight Cost Unit Cost DDT&E
$10
100 $34.2 $3.8 11.0%
500 $76.6 $11.7 15.0%
1,000 $108.0 $19.0 18.0%
5,000 $242.0 $58.6 24.0%
10,000 $342.0 $95.3 28.0%
$1 20,000 $484.0 $155.0 32.0%

10 100 1000 10000 100000 1000000

Weight
• One flight unit is generally 5-15% of
development at the Vehicle level
Crewed Uncrewed • What happens at the component level?
DDT&E Equation -- 19.75 X Wt^.5 3.424 X Wt^.5 -- Maximum is 40-50%
Flight Unit Equation -- .256 X Wt^.7 .151 X Wt ^.7
80 -- Minimum could be as low as 5-10%
 Learning Curve (when producing
>1 unit)
81

 Based on the concept that resources required to produce each additional unit decline as the total
number of units produced increases.
 The major premise of learning curves is that each time the product quantity doubles the resources
(labor hours) required to produce the product will reduce by a determined percentage of the prior
quantity resource requirements.
 This percentage is referred to as the curve slope. Simply stated, if the curve slope is 90% and it
takes 100 hours to produce the first unit then it will take 90 hours to produce the second unit.
 Calculating learning curve (Wright approach):
Y = kxn
Y = production effort, hours/unit or $/unit
k = effort required to manufacture the first unit
x = number of units
n = learning factor = log(percent learning)/log(2); usually 85% for aerospace
Dr. Atif Shahzad

productions
 Learning Curve Visual
82

 Aerospace systems usually at 85-90%

Dr. Atif Shahzad
 Parametric Cost Estimating Process

83

1. Develop Work Breakdown Structure (WBS); identifying all cost elements

2. Develop cost groundrules & assumptions (see next 2 charts for sample G&A)
3. Select cost estimating methodology
 Select applicable cost model
4. List space system technical characteristics (see following list)
5. Compute point estimate for
♦ Space segment (spacecraft bus and payloads)
♦ Launch segment (usually launch vehicle commercial purchase)
♦ Ground segment, including operations and support
6. Perform cost risk assessment using cost ranges or probabilistic modeling; provide
confidence level of estimate
Dr. Atif Shahzad

7. Consider/include additional costs (wrap factors, reserves, education & outreach, etc.)
8. Document the cost estimate, including data from steps 1-7
 Cost estimate includes all aspects of mission effort.

These are wraps – all

other cost are either
non-recurring or
recurring

System

Subsystem A Subsystem B Subsystem C Management Systems Integration, Logistics

Engineering Test & Verification Support

PBS The Product Breakdown The Work Breakdown

Structure shows the Structure shows all
components from which work components necessary
the system was formed. to produce a complete
system.
The PBS reflects the
work to produce The WBS reflects the
the individual work to integrate
system components. the components
WBS into a system.
Dr. Atif Shahzad

The WBS helps to organize the project costs.

When detailed with cost information per element,
WBS becomes the CBS - Cost Breakdown Structure.
 Key Cost Definitions
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6
SDR PDR CDR ORR FLT

Breadboard Mode B/T

Function
SDR - System Design Review
PDR - Preliminary Design Review
Engineering Model B/T CDR - Critical Design Review
ORR - Operational Readiness Review
Form, Fit, Function FLT- Flight
IACO - Integration
Qualification Unit B/T
Flight Unit Equivalent

Flight Hardware B/T

IACO
Multi-System
●Non-recurring costs include all costs associated with the design,
development and qualification of a single system. Non-recurring
costs include the breadboard article, engineering model, qualification
Non-Recurring unit and multi-subsystem wraps.
Recurring
● Multi-subsystem wraps are cost related to integrating two or more
Wraps subsystems.
Build / Test B/T ● Recurring costs are those costs associated with the production of
the actual unit(s) to be flown in space. Recurring costs include flight
hardware (the actual unit to be flown85in space) and multi-subsystem
wraps.
 Groundrules & Assumptions Checklist (1/2)

86

Assumptions and groundrules are a major element of a cost analysis. Since the results of
the cost analysis are conditional upon each of the assumptions and groundrules being true,
they must be documented as completely as practical. The following is a checklist of the
types of information that should be addressed.
 What year dollars the cost results are expressed in, e.g., fiscal year 94$.
 Percentages (or approach) used for computing program level wraps: i.e., fee, reserves,
program support, operations Capability Development (OCD), Phase B/Advanced
Development, Agency taxes, Level II Program Management Office.
 Production unit quantities, including assumptions regarding spares.
 Quantity of development units, prototype or prototype units.
 Life cycle cost considerations: mission lifetimes, hardware replacement assumptions, launch
rates, number of flights per year.
 Schedule information: Development and production start and stop dates, Phase B
Dr. Atif Shahzad

Authorization to Proceed (ATP), Phase C/D ATP, first flight, Initial Operating Capability
(IOC), time frame for life cycle cost computations, etc.
 Groundrules & Assumptions Checklist (1/2)

87

Early scope definition keeps requirement writers from diverging, reduces requirement inconsistencies,
and keeps the BIG PICTURE in view.
 It also shortens the time required for requirement writing and rewriting and reduces debates.
 The scope definition prevents you from losing sight of important constraints as well as customer needs.
Dr. Atif Shahzad
 Groundrules & Assumptions Checklist (2/2)

88

Assumptions and groundrules are a major element of a cost analysis. Since the results
of the cost analysis are conditional upon each of the assumptions and groundrules
being true, they must be documented as completely as practical. The following is a
checklist of the types of information that should be addressed.
 Use of existing facilities, modifications to existing facilities, and new facility
requirements.
 Cost sharing or joint funding arrangements with other government agencies, if any.
 Management concepts, especially if cost credit is taken for change in management
culture, New Ways of Doing Business (NWODB), in-house vs. contract, etc.
 Operations concept (e.g., launch vehicle utilized, location of Mission Control Center
(MCC), use of Tracking and Data Relay Satellite System (TDRSS), Deep Space Network
(DSN), or other communication systems, etc.).
 Commonality or design heritage assumptions.
 Specific items excluded from the cost estimate.
Dr. Atif Shahzad

 AND any G&As specific to the cost model being used.

See also actual page 73 from NASA CEH for other G&A examples
Example of Applying New Ways of Doing Business
to a Cost Proposal
Project X Software Cost
Reconciliation between Phase B Estimates and Phase C/D Proposal
‘87 $ in Millions

Phase B Estimate 524

1. Reduce SLOC from 1,260K to 825K -192

2. Replace 423K new SLOC with existing secret code -69

3. Transfer IV&V Responsibility to Integration Contractor -88

4. Eliminate Checkout Software -57

5. Improved Software Productivity -33

6. Application of Maintenance Factor to Lower Base -10

7. Application of Technical Management to Lower Base -16

8. Other -11

Proposal
48

89
Cost Estimating 89
 Selection of Cost Parametric Model
90

 Various models available.

¤ NASA website on cost - http://cost.jsc.nasa.gov

¤ Wiley Larson textbooks: SMAD; Human Spaceflight; Reducing
Space Mission Cost
¤ NAFCOM - uses only historical NASA & DoD program data
points to populate the database; user picks the data points
which are most comparable to their hardware. Inputs include:
weight, complexity, design inheritance.
 Usually designed for particular class of aerospace hardware: Launch vehicles, military
satellites, human-rated spacecraft, small satellites, etc.
Dr. Atif Shahzad

 Software models exist too; often based on “lines of code” as the independent variable
 Sources of Uncertainty in
Parametric Cost Model
H
i • Estimator historical data familiarity
s
t • Independent variable sizing
o
r • Time between / since data points
i
c • Impure data collection
a
l
• Budget Codes
&
• Inflation handling
C
u • WBS Codes
r Affects Cost at:
r • Program nuances (e.g. distributed systems)
e • System Level
n • Accounting for schedule stretches
t • Program Level
• Wraps

• Rate of technology advance

M
o • Model familiarity/understanding of data points
d
e • WBS Hierarchical mishandling
l
• Normalization for complexity
U
s • Normalization for schedules
e
• Uncertainty in “engine”
• Uncertainty in inputs
91
 Building A Cost Estimate

 Cost for a project is built up by adding the cost of all

the various Work Breakdown Structure (WBS)
elements
 However, each of these WBS elements have,
historically, been viewed as deterministic values
 In reality, each of these WBS cost elements is a WBS Element 1

probability distribution
+
¤ The cost could be as low as $X, or as high as $Z,
Total Cost
with most likely as $Y
¤ Cost distributions are usually skewed to the right
WBS Element 2
¤ A distribution has positive skew (right-skewed) if
the higher tail is longer +.
 Statistically, adding the most likely costs of n WBS
..
elements that are right skewed, yields a result that
can be far less than 50% probable
¤ Often only 10% to 30% probable
Dr. Atif Shahzad

 The correct way to sum the distributions is using, for

example, a Monte Carlo simulation

92
 Adding Probability to CERs
93 COMBINED COST
MODELING AND CER
TECHNICAL RISK
Cost c
Cost==aa++bX
bXc
COST MODELING risk

Cost
Estimate

Historical data point

$
Cost estimating relationship

TECHNICAL RISK Standard percent error bounds

Dr. Atif Shahzad

Cost Driver (Weight)

Input
variable
 Pause and Learn Opportunity

 Discuss Aerospace Corporation Paper: Small

Satellite Costs (BeardenComplexityCrosslink.pdf)
 Development of the Small Satellite Cost Model
(SSCM) Edition 2002
(Aero_corp_DevelopmentofSSCM2002.pdf)
 Topics to point out:
 The development of cost estimating relationships and new models.
 The use of probabilistic distribution to model input uncertainty
Understanding the complexity of spacecraft and resulting costs
Dr. Atif Shahzad


 The Result of A Cost Risk Analysis
Is Often Depicted As An “S-Curve”
95

100

•The S curve is the cumulative

probability distribution coming out
70 of the statistical summing process

•70% confidence that project will

cost indicated amount or less
50
Confidence •Provides information on potential
Level cost as a result of identified project
risks

25 •Provides insight into establishing

reserve levels

Estimate at
Dr. Atif Shahzad

Cost Estimate 70% Confidence

 S-Curves Should Tighten
As Project Matures
Phase C
96
(narrowest
distribution)
100 Phase B

Phase A
(very wide
70
distribution)
The intent of Continuous Cost Risk Management
Is to identify and retire risk
so that 70% cost tracks to the left as the project
50
Confidence matures—Historically, it has
more often tracked the other way. But distributions
Level always narrow as project
proceeds.

25
Dr. Atif Shahzad

Phase Phase Phase

Cost Estimate C B A
 S-Curves Should Tighten
As Project Matures
 As the project enters Phase C, the delta between the initial target cost and the 70% CL cost
value from the Phase C S-curve has been reduced even further from the delta at the
beginning of Phase B from the previous chart.
 Again, this is to be expected as more risks have been retired and more understanding
gained on remaining risks and cost-risks. Probably not all risk has been removed from the
project’s systems but the level of risk and cost-risk reduction should now enable the NASA
project to proceed to Phase C.
 It should be expected that there will be some cost growth from the initial target cost. Since
not all risk has been driven out of the project up to this point there probably has been a lot
of work going on to strip it out and some realization that development will consequently cost
a little more.
 Plus there may have been some “I forgots” from the initial estimate. It just seems that costs
seem to grow a little in the normal evolution of projects. However, here is the key part of this
analysis, it is only at the point w here the project enters Phase C that NASA should be
responsible for a 70% CL cost value.
 This is the point in time when NASA commits to Congress that it can develop the system for a
given cost value and that is the cost value that really counts and that should be the 70% CL
estimate value. It is not appropriate for the 70% CL value from the beginning of the Phase A
Dr. Atif Shahzad

S-curve or the beginning of Phase B since those times are not the commitment time.
 Only the beginning of Phase C is the commitment time.
 Confidence Level
Budgeting
Source: NASA/Exploration Systems Mission Directorate, 2007

Equates to ~$3B in reserves;

And 2 year schedule stretch
98
PMR 07

Integrated Risk Program Estimate- ISS IOC Scope

100%

90%

80%

70%
Confidenc

60%
Level

50%
e

40%

30%

20%

10%

0%
$19.00 $21.00 $23.00 $25.00 $27.00 $29.00 $31.00
Dr. Atif Shahzad

TY $B

PMR 07 Submit 65% Confidence Level 2013 IOC Budget 2015 IOC Budget
 Explanation Text to Previous Chart
99

 The cost confidence level (CL) curve above is data from the Cx FY07 Program
Manager’s Recommend (PMR) for the ISS IOC scope. The ‘2013 IOC’ point depicts
that the cost associated with the current program content ($23.4B) is at a 35% CL.
 Approximately $3B in additional funding is needed to get to the required 65% CL.
Since the budget between now and 2013 is fixed, the only way to obtain the additional
$3B in needed funding is move the schedule to the right.
 Based on analysis of the Cx New Obligation Authority (NOA) projection, the IOC date
would need to be moved to 2015 for an additional $3B funding to be available (shown
above as the 2015 IOC point).
 Based on this analysis, NASA’s commitment to external stakeholders for ISS IOC is
March 2015 at a 65% confidence level for an estimated cost of $26.4B (real year
dollars).
 Internally, the program is managed to the 2013 IOC date with the realization that it is
challenging but that budget reserves (created by additional time) are available to
Dr. Atif Shahzad

successfully meet the external commitment.

COST PHASING
 Cost Phasing (or Spreading)
101

 Definition: Cost phasing (or spreading) takes the point-estimate derived from a parametric cost model
and spreads it over the project’s schedule, resulting in the project’s annual phasing requirements.
 Most cost phasing tools use a beta curve to determine the amount of money to be spent in each year
based on the fraction of the total time that has elapsed.
 There are two parameters that determine the shape of the spending curve.
¤ The cost fraction is the fraction of total cost to be spent when 50% of the time is
completed.
¤ The peakedness fraction determines the maximum annual cost.
Cum Cost Fraction = 10T2(1 - T)2(A + BT) + T4(5 - 4T) for 0 ≤T ≤1
Where:
¤ A and B are parameters (with 0 ≤A + B ≤1)
¤ T is fraction of time
¤ A=1, B= 0 gives 81% expended at 50% time
Dr. Atif Shahzad

¤ A=0, B= 1 gives 50% expended at 50% time

¤ A=0, B= 0 gives 19% expended at 50% time
 Sample Beta Curves for Cost Phasing

Most common Curve 1 Curve 2

for flight $50 $50

HW $40 $40
$30 $30
$20 $20
$10 $10
60% 40% 50% 50%

TIME TIME

Technical Difficulty: complex Technical Difficulty: complex

Recurring Effort: single copy Recurring Effort: multiple copies

Curve 3 Curve 4

$50 $50 Most common

$40 $40
$30
for ground
$30
$20 $20 infrastructure
$10 $10
50% 50% 40% 60%

TIME TIME

Technical Difficulty: simple Technical Difficulty: simple

Recurring Effort: single copy Recurring Effort: multiple copies

102
 Simple Rules of Thumb for Aerospace
Development Projects

 75% of non-recurring cost is incurred by CDR (Critical Design Review)

 10% of recurring cost is incurred by CDR

 50% of wraps cost is incurred by CDR

 Wraps cost is 33% of project cost

 CSD (contract start date) to CDR is 50% of project life cycle to first flight unit
delivery to IACO

 Flight hardware build begins at CDR

 Qualification test completion is prior to flight hardware assembly

103
 Correct Phasing of Reserves

NO!

YES!
$
Target
Changes
Estimate and
Growth

8 Years

Cost Schedule
Target Estimate $100 M 5 years
Reserve for Changes & Growth $100 M 3 years
Probable $200 M 8 years
104
 SUMMARY
COST ESTIMATING
 Summary: Cost Estimating
106

 Methods for estimating mission costs include parametric cost models, analogy,
and grassroots (or bottoms-up). Certain methods are appropriate based on
where the project is in its life cycle.
 Parametric cost models rely on databases of historical mission and spacecraft
data. Model inputs, such as mass, are used to construct cost estimating relationships
(CERs).
 Complexity factors are used as an adjustment to a CER to compensate for a
project’s unique features, not accounted for in the CER historical data.
 Learning curve is based on the concept that resources required to produce each
additional unit decline as the total number of units produced increases.
 Uncertainty in parametric cost models can be estimated using probability
distributions that are summed via Monte Carlo simulation. The S curve is the
cumulative probability distribution coming out of the statistical summing process.
Cost phasing (or spreading) takes the point-estimate derived from a parametric
Dr. Atif Shahzad


cost model and spreads it over the project’s schedule, resulting in the project’s
annual phasing requirements. Most cost phasing tools use a beta curve.
Keys to cost reduction for small satellites
Scale of Project
¤ Reduced complexity and number of
interfaces
¤ Reduced physical size (light and
small)
¤ Fewer functions (specialized,
dedicated mission)
Procedures
• Short development schedule
• Reduced documentation
requirements
• Streamlined organization &
acquisition
• Responsive management style
Source: Reducing Space Mission Cost; Wertz & Larson, 1996
Development and Hardware
¤ Using commercial electronics, whenever
possible
¤ Reduced testing and qualification
¤ Extensive software reuse
¤ Miniaturized command & data
subsystems
¤ Using existing components and facilities
Risk Acceptance
• Using multiple spacecraft
• Using existing technology
• Reducing testing
• Reducing redundancy of
subsystems
COST ESTIMATING MODULE
 THE SIGNIFICANCE OF
GOOD ESTIMATION
$40

Total = $160 10% Prime/Sub Parts/Mtls

}
Touch
$30 DDT&E ($128) Non-
90% Prime/Sub Labor
Touch

Requirements Changes ($27) 20% Prime/Sub

Touch Parts/Mtls
$20 Make-It-Work Changes ($18)

Schedule Rephasing ($15)

First Production
Unit ($32)
Non-
Touch } 80% Prime/Sub
Labor

Requirements Changes ($4)

Make-It-Work Changes ($4)
$10
Base Program ($68) Schedule Rephasing ($4)

Base Program ($20)

Dr. Atif Shahzad

$0
1 2 3 4 5 6 7 8 9 10
 Common Inputs for Parametric Cost Models
Other key parameters
Mass Related
Earth orbital or planetary mission
Satellite dry mass
Design life
Attitude Control Subsystem dry mass
Number of thrusters
Telemetry, Tracking and Command Subsystem Pointing accuracy
mass
Pointing knowledge
Power Subsystem mass
Stabilization type (e.g., spin, 3-axis)
Propulsion Subsystem dry mass
Downlink band (e.g., S-band, X-band)
Thermal Subsystem mass
Beginning of Life (BOL) power
Structure mass End of Life (EOL) power
Notes: Average on-orbit power
Make sure units are consistent with Fuel type (e.g., hydrazine, cold gas)
those of the cost model.
Solar array area
Can use ranges on input variable to Solar array type (e.g., Si. GaAs)
get a spread on cost estimate
Battery Capacity
(high, medium, low).
Battery type (e.g., NiCd, Super NiCd/NiH2)

110 Data storage capacity

Downlink data rate
 Other elements to estimate cost
111

 Need separate model or technique for elements not covered in Small Satellite Cost Model
¤ Concept Development (Phases A&B)
 Use wrap factor, as % of Phase C/D cost (usually 3-5%)
¤ Payload(s)
 Analogy from similar payloads on previously flown missions, or
 Procured cost plus some level of wrap factor
¤ Launch Vehicle and Upper Stages
 Contracted purchase price from NASA as part of ELV Services Contract
 Follow Discovery Program guidelines
 For upper stage, may need to check vendor source
¤ Operations
 Analogy from similar operations of previously flown missions, or
 Grass-roots estimate, ie, number of people plus facilities costs etc.
¤ Known assets, such as DSN
 Get actual services cost from DSN provider tailored to your mission needs
 Follow Discovery Program guidelines
¤ Education and Outreach
 GRACE mission a good example
Dr. Atif Shahzad

 Use of Texas Space Grant Consortium for ideas and associated costs
 Analogy
112

Analogy as a good check and balance to the parametric.

Steps for analogy estimate and complexity factors
See page 80 (actual page #) in NASA Cost Estimating Handbook
NASA’s Discovery Program: (example missions: NEAR, Dawn, Genesis, Stardust)
$425M cost cap (FY06$) for Phases B/C/D/E
25% reserve at minimum for Phases B/C/D
36 month development for Phases B/C/D

NASA’s New Frontier’s Program: (example mission: Pluto New Horizons)

$700M cost cap (FY03$)
48 month development for Phases B/C/D

NASA’s Mars Scout Program: (example mission: Phoenix)

$475M cost cap (FY06$)
Dr. Atif Shahzad

Development period based on Mars launch opportunity (current for 2012)

Note: for all planetary mission programs, the launch vehicle cost is included in the cost cap.
 Cost Estimating Relationships (CERs)

Definition
Equation or graph relating one historical dependent variable (cost) to an independent
variable (weight, power, thrust)

Use
Utilized to make parametric estimates

Steps
1. Select independent variable (e.g. weight)
2. Gather historical cost data and normalize $ (i.e. adjust for inflation)
3. Gather historical values for independent variable values (e.g. weight) and graph cost vs.
independent variable
4. For the plan / proposed system: determine the independent variable and compute the cost
estimate
5. Determine the plan / proposed system complexity factor and adjust the cost estimates
6. Time phase the cost estimate – discussed earlier in this section

113
Cost Estimating 113
 COST CONFIDENCE LEVEL
WHY MANY ENGINEERING PROJECTS FAIL

100
Confidence (%)

Basic Cost Est.

Including $x
Reserve
50 • Develop m en t of cos t
Basic Cost Est. con t in gen cy/ r es er ves m a y u s e
- Ris k / s en s it ivit y a n a lys is
40 - Mon t e Ca r lo s im u la t ion s

0
Dr. Atif Shahzad

Cost ($) X
 NEAR Actual Costs
Subsystem Actual Cost
in 1997$

Attitude Determination & Control Subsys & Propulsion 21,199.

Electrical Power System 6,817.
Telemetry Tracking & Control/Data Management Subsys. 20,027.
Structure, Adapter 2,751.
Thermal Control Subsystem 1,003.
Integration, Assembly & Test 7,643.
System Eng./Program Management 4,551.
Launch & Orbital Ops Support 3,052.

Spacecraft Total 67,044.

Genesis Mission (FY05$) Stardust Mission (FY05$)
Phase C/D: $164 M Phase C/D: $150 M
Dr. Atif Shahzad

Phase E: $45 M Phase E: $49 M

LV: Delta II LV: Delta II
115
 Standard WBS for JPL Mission
1 Project Name

Project Management Project Sys Eng Mission Assurance Science Payload Flight System Mission Ops System Launch System
2 01 02 03 04 05 06 07 08

Project Mgmnt Project Sys Eng MA Mgmnt Science Mgmnt P/L Mgmnt Spacecraft Contract Mission Ops Mgmnt Launch Services
3 01.01 02.01 03.01 04.01 05.01 06.00 07.01 08.01

Business Mgmnt Mission & Nav Design System Safety Science Team P/L Sys Eng Flt Sys Mgmnt MOS Sys Eng
01.02 02.02 03.02 04.02 05.02 06.01 07.02
WBS Levels

Risk Mgmnt Project SW Eng Environments Sci Data Support Instrument 1 Flt Sys - Sys Eng Ground Data Sys
01.03 02.03 03.03 04.03 05.03 06.02 07.03

Project Plng Spt Information Systems Reliability Sci Investigatio Instrument N Power Subsys Operations
01.04 02.04 03.04 & Ops Spt 05.04 06.03 07.04
04.04

Review Support Config Mgmnt EEE Parts Eng Sci Environment Common P/L Systems Command & Data S/s MOS V&V
01.05 02.05 03.05 Characterization 05.05 06.04 07.05
04.05

Facilities Planetary Protection HW Q&A Education & Outreach P/L I&T Telecomm Subsys
01.06 02.06 03.06 04.06 05.06 06.05

Foreign Travel/ITAR Launch Sys Eng SW Q&A Mechanical Subsys

01.07 02.07 03.07 06.06

Project V&V Contamination Control Thermal Subsys

02.08 03.08 06.07

SW IV&V Propulsion Subsys

03.09 06.08

GN&C Subsys
06.09

Spacecraft Flt SW
06.10

Testbeds
06.11

6 Spacecraft assembly
test & verification
06.12
QUESTIONS
THANK YOU FOR YOUR INTEREST
  The project team can create a working software program without
organization or documentation. This is usually called ‘‘spaghetti code.’’
Considering the cost of
 the project as delivered, the ‘‘spaghetti coded’’ project will be less costly.
 Considering the life cycle cost of the project, however, this approach will be
 more costly. This is because the cost of debugging and modifying the soft-
 ware after delivery of the project will be more difficult.
Dr. Atif Shahzad
  Expected Value ? [Optimistic ? Pessimistic ? (4 ? Most Likely)] / 6
 Standard Deviation ? (Pessimistic ? Optimistic) / 6
Dr. Atif Shahzad