2004 NASA Cost Estimating Handbook

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2004 NASA Cost Estimating Handbook

• NASA Cost Symposium
• April 2005
• New Orleans, LA

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Purpose

• Introduce CCRM and CEH linkages
• Provide overview of 2004 NASA CEH format
• Demonstrate tips for navigating the CCRM process
  with the NASA CEH
• Discuss future plans and invited input for the
  2006 NASA CEH

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NASA CEH Linkages to the Continuous Cost Risk
Management (CCRM) Process

• What is CCRM?
• Overall Agency focus on performing best practices
  in cost estimating (CE)
• Approach to cost estimating and project cost
  management seeking to integrate various project
  management activities involving cost and cost risk

• How does it relate to the NASA CEH?
• The cornerstone of CCRM is Cost Estimating
• 7120.5C provides overview
• NASA CEH supplies details

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Welcome to the 2004NASA Cost Estimating Handbook
(CEH)

• Revision Highlights
• Enhanced introduction to give a more in depth
  overview of regulations, environment, and cost
  estimating processes at NASA
• Cost estimating process tasks identified by life
  cycle phase and
• The introduction of the Project Continuous
  Cost-Risk Management (CCRM) process and how it is
  integrated with the NASA cost estimating process
  tasks.

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1 Introduction
Moon Dark Side
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2 The Role of Cost Estimating

• The Importance of Life Cycle Management and Cost
  Estimating
• Life Cycle Management and the Role Cost Plays
• Government Wide Imperatives
• Confidence Levels and Budgeting at NASA

Ganymede
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3 Cost Estimating at NASA

• One NASA Cost Estimating Community
• NASA Procedures and Requirements (NPRs)
• The Cost Estimating Process
• Cost Estimating Products
• Project Category Overviews

Io
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4 Cost Estimating Process Tasks and Project CCRM
by LCC Phase

• Pre Phase A Conceptual Definition
• Project definition
• (cost estimating process tasks 1-3)
• Cost methodology
• (Cost estimating process tasks 4-7)
• The estimate
• (cost estimating process tasks 8-12)
• Pre-Phase A Overall Objectives
• Pre-Phase A Roles and Responsibilities
• Pre-Phase A Exit Criteria
• Project CCRM Risk Considerations
• Project CCRM Transition Activities Pre-Phase A To
  Phase A

Europa
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5 Cost Estimating Application
Callisto
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6 NASA Cost Estimating Techniques

• Cost Readiness Levels (CRL)s
• Cost/Performance Trade Studies
• Cost-Benefit (C-B) and Cost Effectiveness (C-E)
  Analysis
• Lease versus Buy Analysis
• Sensitivity Analysis
• Present Value, Inflation, and Discounting
• Return on Investment (ROI)
• Net Present Value (NPV)
• Payback Period and Break-Even Analysis

• Real Option Valuation
• Learning Curves
• Construction of Facilities Estimation
• Software Estimation
• Estimating Operations and Support (OS) Costs
• Full Cost Accounting
• The 12 Tenets of NASA Cost-Risk
• Using Project Schedules in Cost Estimates
• Earned Value Management (EVM) Techniques to
  Formulate an Estimate at Completion (EAC)

Miranda
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Appendices

• A Acronym List
• B Glossary
• C References
• D NASA Organizational Charts
• E NASA Cost Analysis Steering Group (CASG)
• F NASA Career Development Guide
• G Standard Work breakdown Structure (WBS)
  Examples
• H NASA Cost Data Requirement Descriptions (DRDs)
• I NASA Cost Estimate Briefing Template
• J IPAO Cost Estimate Sufficiency Review
  Checklist
• K Cost Growth
• L COTS, GOTS, Center Unique Tools and Methods
• M Compilation of Models and Tools
• N NAFCOM Overview
• O Jump Start Program
• P Galorath Incorporated Overview
• Q PRICE Systems LLC Overview
• R NASA Lessons Learned Information System (LLIS)

• S Process-Based Modeling
• T REDSTAR Database
• U JPLs Parametric Mission Cost Model (PMC)
  Introduction and Summary
• V NASA New Start Inflation Indices
• W Spreading Model (Based on Beta Curves)
• X Orbital Space Plane (OSP) Cost Credibility Team
  (CCT)
• Y IPAO Seven Principles
• Z NASA Cost Estimating and Analysis Lessons
  Learned
• AA Sample Customer Feedback Form
• BB One NASA MIS
• CC Defense System Management College Earned Value
  Management Gold Card
• DD Technology Readiness Level
• EE White Paper (A Parable of Cost Estimating in
  Aerospace?)
• FF Acknowledgement
• GG Index

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Using the NASA CEH to Navigate the CCRM Process

• Overview in Chapter 3
• Describes life cycle phases, NASA policy and
  directives, 12 Tenants of NASA Cost Risk and the
  continuous nature of the CCRM
• Details in Chapter 4
• Provides step-by-step instructions for applying
  cost estimating and Project CCRM throughout the
  various life cycle phases

Goal of section is to provide the cost estimator
with specific knowledge and ability to address
the objectives and the issues/challenges
highlighted in the overview
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NASA Life Cycle Phases
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NPR 7120.5C is Final!!!
First there was the cost initiatives letter
Then came the final NPR 7120.5C
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12 Tenets of NASA Cost-Risk
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CCRM Overview
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Cost Estimating Process and Project CCRM
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Cost Estimating Process Tasks and Project CCRM
by LCC Phase

• Pre Phase A Conceptual Definition
• Project definition
• (cost estimating process tasks 1-3)
• Cost methodology
• (Cost estimating process tasks 4-7)
• The estimate
• (cost estimating process tasks 8-12)
• Pre-Phase A Overall Objectives
• Pre-Phase A Roles and Responsibilities
• Pre-Phase A Exit Criteria
• Project CCRM Risk Considerations
• Project CCRM Transition Activities Pre-Phase A
• To Phase A

Illustrative
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Chapter 4 and CCRM
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Tips

• Focus on the estimate with awareness of CCRM
• By increasing the frequency of cost-risk feedback
  analysis and evaluation, the PM can maximize
  corrective recovery actions in keeping the
  projects costs on track
• Your estimate and CCRM awareness can make a
  positive and long term difference for the project
  and for NASA!

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2005 / 2006 NASA CEH

• Cost Estimating Community Survey
• We want to hear from you! CEH_comments_at_nasa.gov
• Current CEH / NPR 7120.5C Gap Analysis
• Now that 7120 is final, what has changed?
• Current CEH Interim Updates
• Immediate updates for critical items
• 2006 NASA CEH Plan
• Based on survey results and gap analysis

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Background Slides
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2004 NASA CEH Moons