Shifting the emphasis: From cost models to satellite utility or revenue models: The case for a value-centric mindset in space system design

Cost models are pervasive throughout the aerospace industry. Almost every engineer or program manager in this industry is familiar with cost models or cost estimate relationships (CER), and has at some point in his or her career performed cost analyses for a system or a subsystem. This situation is the laudable result of the emphasis over the last two decades on financial discipline in the design of complex engineering systems.Unfortunately, while cost models are pervasive throughout the aerospace industry, revenue models or utility models on the other hand are quasi-inexistent. In this paper, we argue that while the proliferation of spacecraft cost models is laudable, the absence of interest in satellite utility or revenue models is deplorable. We contend that this situation carries a number of drawbacks. For example, the situation perhaps conveys the false impression that satellites are either cost sinks, or expensive artifacts whose value or utility profile over their design lifetime is difficult to quantify and does not warrant efforts to do so. More importantly, we argue that the absence of quantitative revenue models (in the case of commercial systems) or utility models (in the case of scientific or military systems) makes it difficult to build the case for such systems to policy-makers or decision-makers, especially in the light in their exorbitant costs. Furthermore, we show that the specification and selection of a system design lifetime will always have weak arguments fraught with subjectivity in the absence of quantitative revenue or utility models. We make the case that satellites, like other complex engineering systems, should be viewed as “value-delivery artifacts.” Finally, we propose a roadmap for developing a spacecraft utility model in the case of a GEO communications satellite.