Cost overruns on NASA projects are often due to schedule delays, which can increase costs in several ways. Common causes of schedule delays include incomplete requirements definition, optimistic assumptions, and inadequate reserves to cover risks. Delays can lead to additional work, inflation, vendor price increases, and other issues. Ensuring thorough reviews, realistic schedules and budgets, mature designs before implementation, and open communication can help reduce the risk of cost overruns.

1. Project Costs Go Up: the Question is Why? NASA Project Management Challenge Long Beach, CA Feb 9 – 10, 2011 Rod Zieger Manager, Project Support Office Jet Propulsion Laboratory, California Institute of Technology Used with permission

5. Pre-Phase A & Proposals Phase A Phase B Phase C Phase D Authorization Commitment MCR/ Downselect PDR Phase E SIR CDR SRR/MDR/ Selection Preliminary estimates remembered by sponsors as commitments L Costs Go Up Anywhere in the Lifecycle Optimistic assumptions Incomplete requirements Requirements creep without funding creep Increased knowledge and detail in cost estimates Contractors bids exceed assumptions Test failures LV Delays Increased understanding of technical difficulty Schedule delays anytime are major cost drivers Scope doesn’t match resources New technical problems discovered (S/C, LV, etc) Management inexperience with projects of similar complexity

6. Cost Increases are Not New !! This is a copy of an original Werner Gruhl chart from April 19, 1988

7. Costs Go Up With Schedule Delays Example FY 1 FY 2 FY 5 FY 4 FY 3 FY 7 FY 6 FY 8 Δ Cost, % / mo 0.6 Baseline Plan 14 Δ L, mo 5 Δ Cost, % 3 11 0 0 1.3 1.4 19 15 0 (this is based on a real project that had 4 significant delays from the baseline plan) 15 1.1 17 PDR B C/D E L C/D E L PDR B C/D E L C/D E E L TOTAL Project Cost, $M 290 280 235 205 175 L Schedule Delay Due to Funding Delay More Schedule Delay Due to Funding Delay Schedule Delay Due to Tech Problems & Contractor Capability Schedule Delay Due to Launch Vehicle

10. Risk Imbalances Lead to Cost Increases Desirable Characteristics Cost Risks Enormous Science Breakthrough Innovative Mission Concept High Decadal Survey Ranking High NASA Strategic Priority Exciting to Public Advances State of the Art World-Class PI Advocate Risks Not Well Understood Few Acceptable Descopes Requirements Not Well Defined Inheritance Several Years Old New Mission/ System Architecture New Operating Environments Scope Mismatch to Cost & Schedule New Technology Breakthrough No Experience With This Kind of Mission

11. Implementation Problems Are Big Cost Drivers Phase C Phase D Commitment PDR SIR CDR L (more) New driving requirements mandated (fewer) Start implementation before design complete - Build to redlines, then re-build - Order wrong parts, then re-order Costs of trades open at PDR Infrastructure not available on time due to schedule slip by other projects Known threats against the budget not included in the baseline - Known threats consume reserves, inadequate reserves remain to cover new unknown-unknowns Environmental test failure requires redesign New technology not ready, requires redesign Not identifying impending schedule slips in time for efficient replan Contractor capabilities not adequate to deliver Hardware failure during I&T requires redesign Partner performance shortfalls Launch vehicle readiness slips