NASA: Lack of Disciplined Cost-Estimating Processes Hinders Effective Program Management
GAO-04-642
Published: May 28, 2004. Publicly Released: Jun 22, 2004.
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Highlights
For more than a decade, GAO has identified the National Aeronautics and Space Administration's (NASA) contract management as a high-risk area--in part because of NASA's inability to collect, maintain, and report the full cost of its programs and projects. Lacking this information, NASA has been challenged to manage its programs and control program costs. The scientific and technical expectations inherent in NASA's mission create even greater challenges--especially if meeting those expectations requires NASA to reallocate funding from existing programs to support proposed new efforts. Because cost growth has been a persistent problem in a number of NASA programs, GAO was asked to examine NASA's cost estimating for selected programs, assess NASA's cost-estimating processes and methodologies, and describe any barriers to improving NASA's cost-estimating processes. To conduct GAO's work, GAO analyzed a total of 27 NASA programs--10 of which GAO reviewed in detail.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| National Aeronautics and Space Administration | The NASA Administrator should direct the Program Executive Officer for IFMP, the Chief Financial Officer, and the Chief Engineer to develop an integrated plan for improving cost estimating that, at a minimum, includes specific actions for ensuring that guidance is established on rebaselining and that rebaselining is consistently applied to provide accountability among programs. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of all NASA programs and projects, includes strengthened guidance on cost rebaselining.
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| National Aeronautics and Space Administration | The NASA Administrator should direct the Program Executive Officer for IFMP, the Chief Financial Officer, and the Chief Engineer to develop an integrated plan for improving cost estimating that, at a minimum, includes specific actions for ensuring that true earned value management is used as an organizational management tool to bring cost to the forefront in NASA's management decision-making process. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of all NASA programs and projects, includes strengthened requirements for earned value management.
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| National Aeronautics and Space Administration | The NASA Administrator should direct the Program Executive Officer for IFMP, the Chief Financial Officer, and the Chief Engineer to develop an integrated plan for improving cost estimating that, at a minimum, includes specific actions for ensuring that acquisition and earned value management policies and procedures are enforced. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of All NASA programs and projects, includes requirements that should facilitate enforcement of earned value management policies and procedures.
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| National Aeronautics and Space Administration | The NASA Administrator should direct the Program Executive Officer for IFMP, the Chief Financial Officer, and the Chief Engineer to develop an integrated plan for improving cost estimating that, at a minimum, includes specific actions for ensuring that staff and support for cost-estimating and earned value analyses are effectively used. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of all NASA programs and projects, includes requirements that should facilitate efficient and effective use of NASA cost-estimating and earned value analyses staff.
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| National Aeronautics and Space Administration | The NASA Administrator should direct the Chief Financial Officer to establish a standard framework for developing life- cycle cost estimates. At a minimum the framework should require each program or project to base its cost estimates on a full life cycle for the program--including all direct and indirect costs for operations and maintenance and disposal as well as planning and procurement--and on a work breakdown structure that encompass both in-house and contractor efforts. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of all NASA programs and projects, includes requirements that strengthen NASA's ability to develop life-cycle cost estimates on a full cost basis based on a work breakdown structure that encompasses both in-house and contractor efforts.
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| National Aeronautics and Space Administration | The NASA Administrator should direct the Chief Financial Officer to establish a standard framework for developing life- cycle cost estimates. At a minimum the framework should require each program or project to prepare a cost analysis requirements description. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of all NASA programs and projects, includes a new requirement that involves the preparation of a Cost Analysis Data Requirement (CADRe) document to improve NASA project cost estimating. CADRe is a comprehensive document which provides a technical and quantitative description of the project in terms that permit the development of a life-cycle cost estimate.
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| National Aeronautics and Space Administration | The NASA Administrator should direct the Chief Financial Officer to establish a standard framework for developing life- cycle cost estimates. At a minimum the framework should require each program or project to prepare an independent government estimate at each milestone of the program. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of all NASA programs and projects, identifies specific requirements for independent assessments at program and project milestones and provides for the preparation of an independent government cost estimate during an independent assessment.
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| National Aeronautics and Space Administration | The NASA Administrator should direct the Chief Financial Officer to establish a standard framework for developing life- cycle cost estimates. At a minimum the framework should require each program or project to conduct a cost risk assessment that identifies the level of uncertainty inherent in the estimate. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C, which governs the formulation, approval, implementation, and evaluation of all NASA programs and projects, improves NASA program and project cost-estimating by requiring the development of risk-based life-cycle cost estimates and use of risk-based acquisition management.
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| National Aeronautics and Space Administration | The NASA Administrator should develop procedures that would prohibit proposed projects from proceeding through the review and approval process when they do not address the elements of the recommended cost-estimating practices. |
NASA concurred with this recommendation and has addressed it in its revised procedural requirements document--NASA Procedural Requirements (NPR) 7120.5C, NASA Program and Project Management Processes and Requirements--effective March 22, 2005. NPR 7120.5C governs the formulation, approval, implementation, and evaluation of all NASA programs and projects. It includes enforcement mechanisms for ensuring that project cost-estimating requirements in NPR 7120.5C are met before the project proceeds to the next milestone.
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Topics
Financial analysisFinancial managementContract administrationCost analysisCost controlProgram managementData collectionData integrityCost estimatesSpace science