What is wrong with space system cost models? A survey and assessment of cost estimating approaches

• The problem: final costs exceed estimates by 45%; inadequate parametric models.
• Inability to predict future: statistical limitation of parametric use of historical data.
• Models lack insight: do not explain which or why variables cause a change in cost.
• Process replaces judgment: fear of failure and over-reliance on tools and models.
• Endogenous cost growth: due to methods used to develop complex space systems.

Despite several decades of research and refinement in cost estimating tools and practices, the final cost of US space programs continues to exceed initial cost estimates by an average of more than 45%. Thus, program cost models not only exhibit error, they are seriously biased. A structured review surveyed techniques, approaches, models and conceptual tools related to space program cost estimating, to understand cost in complex space systems. Analysis shows problems of cost estimating result from the growing complexity of space programs, failures in managing growth, and mission failures. Although there is greater expectation for the models to accurately predict program costs, the current models used for seeking funding for large space programs are inadequate due to (1) inability to predict future, (2) lack of insight, and (3) process replaces judgment in decision making.