NASA Cost Estimating Handbook - 2002

Of the major challenges facing NASA today, perhaps none is more difficult than the challenge of managing a world-class research and development agency for aeronautics, space science, and technology in an environment of constrained resources. To meet this challenge head on, NASA has embarked on several initiatives aimed at aligning its programs with unfolding budget realities. Foremost in these efforts has been the development of NASA’s strategic plan and strategic planning process. To meet the strategic goals set forth in the President’s Management Agenda (PMA), in the NASA Strategic Plan, and in the NASA Cost Analysis Improvement Plan, the NASA Cost Estimating Community (CEC) has responded by beginning new initiatives of its own, including this handbook. 

The NASA Cost Estimating Handbook (CEH) is a collaborative document developed through hours of interviews, discussion, and correspondence with the NASA CEC. Interviews with the NASA CEC and Independent Program Assessment Office (IPAO) staff were held to research and document cost estimating best practices embraced by NASA, to garner a feel for the environments where NASA cost estimators perform their estimates, and to see, first hand, how the CEH can enhance the cost estimating capability. The CEH strikes a balance between documenting processes and providing basic resources for cost estimators from the beginner to the experienced, without setting a tone of strict guidance. It is supplemented by Center specific examples where appropriate. 

The NASA CEH brings the fundamental concepts and techniques of cost estimating to NASA CEC personnel in a way that recognizes the nature of NASA systems and the NASA environment. This handbook is a top-level overview of cost estimating as a discipline, not an in-depth examination of each and every aspect of cost estimating. It is also a useful reference document, providing many pointers to other sources for details to complement and to enhance the information provided on these pages. In addition to the back to basics approach, the CEH has been created to facilitate increased credibility and communications within and beyond the NASA CEC by promoting the knowledge and skills necessary to formulate consistent and accurate estimates. 

Accurate and defensible estimates are at the core of the future credibility of the NASA CEC. Regardless of whom the estimate is being prepared for, who the decision-maker is or to whom the estimate is being presented, the estimator must always remember that the ultimate customer is the cost-estimating discipline. Truth and accuracy combined with a defensible and well-documented estimate will always earn the respect of a decision-maker. 

Cost estimation is part science, part art. There are many well-defined processes within the cost estimating discipline. There is also a subjective element to cost estimating that makes the discipline an art 1 . An attempt is made to capture the art form as well as the science in this text. The current perception that cost estimating is a “black box” can be demystified by accurate, defensible, well-documented estimates that are consistently presented and can be easily understood. This handbook is a starting point.

Both the NASA CEC as a cost estimating group and cost estimating as a discipline are undergoing rapid evolution. Over the next decade, many significant changes will no doubt occur, and many are already in progress. NASA’s new Administrator (Mr. Sean O'Keefe) has made it clear that managing cost is important. New tools such as Cost Analysis Requirements Description (CARD) implementation and the level of review, validation, and verification that cost estimates will require are positive indicators of the future and growth of cost estimating at NASA. 

This document is the “first ink” that will be refined over time and through use. This first edition is a living document developed to be a useful tool for the NASA Cost Estimator. Our mark of success is your feedback, dialogue, and a dog-eared copy of the NASA CEH on your desk. 

Feedback, comments, suggestions, and/or corrections are welcomed. Please send your comments to the NASA IPAO point of contact, Mr. Rey Carpio at R.S.Carpio@larc.nasa.gov.