Cost Estimating for Technology Programs

Abstract

E in the planning phase of all major endeavors, it is important to estimate cost. This is true whether the endeavor is the construction of a building, the development of a commercial venture, or a space mission. No project is ever begun without some estimate of its cost and also its value. Cost estimation of space programs has long been a topic of concern, and a great deal of effort has gone into producing cost estimates and improving the technology of cost estimating. Indeed, cost estimation is of such importance that cost estimators have their own professional society, their own journals, and their own conferences devoted to the technology and application of cost-estimating methods. Over the past 20 years, a cost-estimating methodology of particular application to the aerospace industry has emerged. This is the methodology of cost-estimating relationships (CERs), which are discussed in detail in an earlier chapter. The idea behind the CER methodology is that aerospace systems are comprised of physical subsystems that have measurable properties such as weight, size, power consumption, and so on. It is felt that engineers can generally estimate the physical properties of proposed subsystems with some degree of accuracy. The cost estimator then relates these parameters to subsystem cost through the CER. The CER in turn is derived from historical data for similar subsystems, adjusted for variations in performance. Total system cost is taken to be the sum of the costs of