Ames Procedural Requirements APR 7120 · 2017-11-28 · Ames APR 7120.52 Procedural Requirements Effective Date: November 14, 2017 Expiration Date: November 14, 2022 COMPLIANCE IS

Ames APR 7120.52

Procedural Requirements

Effective Date: November 14, 2017

Expiration Date: November 14, 2022

COMPLIANCE IS MANDATORY$

Subject: Program/Project Cost Estimating for Space Flight Systems

Responsible Office: C/Office of the Chief Financial Officer/Ext 4-5310, Mail Stop 200-8

DOCUMENT HISTORY LOG

Status (Baseline /Revision/Cancelled)

Document Revision

Effective Date DESCRIPTION

Baseline 0 July 13, 2007 New document

Revision 1 Novemeber 14, 2017

To update to reflect current estimation process, the use of

“shall”, the new Clemo associated wth AQMS (section 2.2.7) and feedback from technical orgs.

Changed to APR 7120.52 from 7120.7 to align with NPR

document numeral.

APR 7120.52 This document is uncontrolled when downloaded or printed. Page 1 of 20

Verify current version before use at: https://cdms.nasa.gov/directive/library/ARC

https://cdms.nasa.gov/directive/library/ARC

TABLE OF CONTENTS%

PREFACE

P.1 PURPOSE%

P.2 APPLICABILITY%

P.3 AUTHORITY%

P.4 APPLICABLE DOCUMENT%

P.5 MEASUREMENT/ VERIFICATION%

P.6 CANCELLATION%

CHAPTER 1. Responsibilities%

1.1 Program or Project Manager$

1.2 Project Staff$

1.3 Line Organization Manager$

1.4 Cost Estimator$

1.5 Chief Financial Office$

CHAPTER 2. Procedures

2.1 Cost Estimate Products$

2.2 Cost Estimate Reporting$

2.3 Cost Estimate Tracking$

APPENDIX A: DEFINITIONS

APPENDIX B: ACRONYMS

APPENDIX C: REFERENCE MATERIAL




PREFACE

P.1 PURPOSE

This procedure defines the Ames Research Center requirements which are to be followed for the development of all space flight systems programs/project cost estimates. Usingvarious NPR and NPDs as authorities, this APR will help improve the ARC program/project Cost Estimating Community’s ability to provide quality and accurate cost estimates, help generate realistic budget submissions, and provide decision makers with accurate and realistic cost data. This will aid in delivering space flight projects on time and within budget and improve NASA’s reputation with external stakeholders.

P.2 APPLICABILITY

This policy and approval authorities apply to current and future ARC-led space flight programs/projects as shown in Table 1. Space flight programs/projects include spacecraft, instruments and experiment payloads, designated technology developments to be incorporated by space flight projects, critical technical facilities specifically developed or significantly modified for space flight systems, space flight include suborbital (i.e. high altitude balloons) and ground systems that are in direct support of space flight operations. For existing programs and projects, the requirements of this document are applicable to the program/project's extant phase as of the effective date of the APR and to phases yet to be completed. For those space flight activities wherein Ames is responsible for a task within a project led by an organization outside of Ames, the applicable procedural requirements shall be jointly negotiated by the cognizant authorities and delineated in the statement of work or customer agreement for the task. This agreement will establish the hierarchy and reconciliation of the procedural requirements to be followed.

This APR applies to all ARC employees and contractors who support the above described activities as a member of a technical team or in any other capacity.

This APR may be applied to other ARC activities at the discretion of the relevant project or line manager.

The policy recognizes that each program or project has unique aspects that must be accommodated to achieve mission success in an efficient and economical manner. The request for relief from these requirements shall follow the tailoring process discussed in section 3.5 Principles Related to Tailoring Requirements of NPR 7120.5 E NASA Space Flight and Project Management Requirements W/Changes 1-15.

The cost estimation processes discussed in this APR applies to both projects and proposals developed for submittal. The deliverables for each reviewing milestone required by the project shall follow APR 7120.5 and project specific requirements while these deliverables for the proposals will follow APD 8000.1 ARC Policy for Pursuit, Review, Approval, Submission, and Archiving of New Business Opportunities and the solicitations announcement guidelines.

In this procedural requirements, all document citations are assumed to be the latest version unless otherwise noted.




Table 1 – Applicability and Approval Authorities$

P.3 AUTHORITY

NPD 1280.1, NASA Integrated Management Systems Policy NPD 7120.4, NASA Engineering and Program/Project Management PolicyNPR 7120.5, NASA Space Flight Program and Project Management Requirements

P.4 APPLICABLE DOCUMENTS

a. NASA Cost Estimating Handbook b. NPR 7150.2, Software Engineering Requirements c. SP 6105, NASA Systems Engineering Handbook d. APR 7120.5 Program & Project Management Requirements for Space Flight Systems e. APR 7120.51 Program/Project Reviews for Space Flight f. APD 8000.1 Ames Policy for Proposal Authorization, Review, Approval and Archiving g. APR 7150.2 Ames Software Engineering Requirements h. ARC Standard Pricing Template i. NASA Cost Analysis Data Requirements (CADRe)




P.5 MEASUREMENT/VERIFICATION

Measurement and verification shall be accomplished by the Office of Chief Financial Officer via its oversight role for the requirements identified below.

a. For space flight activities wherein Ames is responsible for a task within a project led$by an organization outside of Ames, the applicable procedural requirements related to$cost/budget shall be jointly negotiated by the cognizant authorities and delineated in the$statement of work or customer agreement for the task.$Measurement & Verification: Is there an agreement/document explaining how this requirement has been met?$

b. Each estimate shall be a full cost estimate$Measurement & Verification: Are all the direct and indirect costs identified in the cost$report/table?$

c. The advocate cost estimate shall be structured to identify all required cost elements.$Measurement & Verification: Are all the costs broken down by cost structure whichidentify all required cost elements?$

d. As members of the product or project design team, cost estimators shall prepare the$estimate using established cost estimating methodologies.$Measurement & Verification: Is there a document that describes the estimation$methodology as well as the rationale of selecting such methodology?$

e. The cost of ARC on-site project management and support cost shall be estimatedthrough use of the ARC Standard Pricing Template or work with Cost Analysis Team.$Measurement & Verification: Is there a Standard Pricing Template report for the ARC on-site project management and support costs?$

f. Project personnel shall document the estimate, including all itemized costs, basis of$estimates, assumptions, data sources, and approach. The format used for reporting the$estimate will meet the requirements of the solicitation or other requesting mechanism.Measurement & Verification: Are there documents that support the estimates? These$documents include all itemized costs, basis of estimates, assumptions, data sources, and$approach.$

g. The cost estimate documents shall be reviewed by the Office of Chief Financial$Officer.$Measurement & Verification: Were the cost estimate documents reviewed by the Officeof Chief Financial Officer prior to the submission?$

h. The office of the Chief Financial Officer shall track the final decisions of the$Announcement of Opportunity (AO) proposals and project reviews. When cost estimates are provided as part of the reason for non-selection, the Ames CFO Organization will track those to determine if a pattern develops and will appropriately address the issue.$Measurement & Verification: Have there been consistent errors/issues with the Ames Cost Estimate sections of proposals? What steps have been taken to address this?$




P.6 CANCELLATION

APR 7120.7, Program/Project Cost Estimating for Space Flight Systems dated: July 13, 2007

/S/

Eugene Tu Director

DISTRIBUTION STATEMENT: CDMS%




In this document, a requirement is identified by "shall," a good practice by "should," permission by "may" or "can," an expectation by "will" and descriptive material by "is."

CHAPTER 1. Roles and Responsibilities

1.1 Program, Project or Proposal Manager

The program, project or proposal manager (PM) is responsible for the development of an advocate cost estimate as well as for providing the program/project information required to perform an independent cost estimate (ICE) when required. The program or project manager is also responsible for the update and maintenance of the cost-to-complete estimatethroughout the lifecycle of the project.

1.2 Team Staff

The team members comply with the requirements of this APR and support the PM in performing the activities required. Additionally, the project or proposal staff will notify the PM of any status or events which may affect the cost estimate or the project cost.

1.3 Line Organization Manager

Line organization managers review and approve cost estimates developed by their staff to ensure that they comply with the requirements of this APR.

1.4 Project/Proposal Cost Estimator

Table 2 - Project/Proposal Lifecycle Phases

The Lifecycle Phase I role for the cost estimator is to understand the key mission and$performance parameters to develop Rough Order of Magnitude (ROM) cost estimates.$




In Lifecycle Phase II, the cost estimator examines cost feasibility, uncertainty, and constraints, from the technical baseline to the cost risk assessment, and documents and presents the results of these efforts to the decision makers.

In Lifecycle Phase III, these activities continue and the cost estimator recommends thereserves required based upon updated cost risk assessments. The cost estimator will refine the estimate's accuracy by reviewing assumptions, cost drivers and risks. During this phase, more specific data is available to develop a technical baseline defined in the NASA Cost Analysis Data Requirement (CADRe), conduct a full Life Cycle Cost Estimate (LCCE), and reconcile it with a Non-Advocate Review (NAR). Estimates should be based on Preliminary Design Review (PDR) / Red Team Review (RTR). The cost estimator ensures that the NASA CADRe is used as the basis for the estimate and is as complete and accurate as possible ifsuch cost data is available. The project Life Cycle Costs (LCCs) team and the NAR team must use the same version to build their estimates. Another critical responsibility of the cost estimator is to work with the PM and acquisition team to ensure WBS reporting structures and data collection mechanisms for the execution of the project are in place. Finally, the cost estimator supports budget formulation as well as source selection in the transition from lifecycle phase III to lifecycle phases IV and V.

In Lifecycle Phase IV, the cost estimator's role includes reviewing the engineering build upestimate for completeness and consistency. Additionally, the cost estimator must understand and validate the basis of estimate used to derive the engineering cost estimate.

During Lifecycle Phases V and VI, the cost estimator supports the PM and captures accurate cost data for future projects.

The tables below summarize the roles and responsibilities as well as the tasks during project and proposal development phases discussed above.




Team roles in Project & Proposal phases in cost development

Roles Proposal Development Phase Project Implementation Phase

PM Lead Advocate cost estimate, support independent cost

estimate*

Lead Advocate cost estimate, support independent cost estimate* & update and maintain the cost-to-complete

estimate

Team Support and provide task requirements with estimated

required resources to PM Support and provide task updates, status and risk

analysis that might have cost impact to PM

Line Org Manager Verify and approve cost estimates as well as ensuring

the requirement compliances Verify and approve cost estimates as well as ensuring

the requirement compliances

Cost Estimator

Cost feasibility study based on proposal requirements, cost assessment, recommand required reserves, cost estimate based on Analogous (CADRe), parametric &engineering build-up cost models, source selection,

Cost analysis write up

Cost feasibility study based on project requirements, cost assessment, recommand required reserves, cost estimate based on Analogous (CADRe) & engineering build-up cost models, budget formulation, source

selection, collect actual cost data for CADRe

* if applicable

Table 3 - Team Roles and Responsibilities

Cost estimator roles in Project & Proposal phases

Tasks Project

Implementation Phase

Proposal Development

Phase

Advocate Cost Estimate (ACE) Yes Yes

Independent Cost Estimate (ICE) Yes* Yes*

CADRe Yes* No

Milestones reviews Yes Yes * if applicable

Table 4 - Cost Estimator Tasks

1.5 Office of the Chief Financial Officer

The Office of the Chief Financial Officer supports the development of the advocate cost estimate for space flight projects. APR 7120.7 This document is uncontrolled when downloaded or printed. Page 9 of 20



The Office of the Chief Financial Officer provides an oversight role on the development and results of the independent and advocate cost estimates.

CHAPTER 2. Cost Estimation Procedures

Cost estimating is an essential part of cost management, which is performed throughout the lifecycle of the project. Cost estimates are input requirements for several gate reviews (see APR 7120.5 for review requirements). Throughout the project lifecycle cost performance andcost estimates for remaining work will be evaluated during Program Implementation Reviews. Cost estimates for ARC projects should be consistent with the NASA Cost Estimating Handbook and the ARC Cost Estimating Process (see Figure 1).

The Project shall develop an initial cost estimate during the proposal and formulation phases of a project. The cost estimate baseline is refined and finalized after the Red Team Review (RTR) during the Proposal Development phase or after the Preliminary Design Review (PDR) of the project development phase. All cost estimates done by the project organization staff is referred to as advocate cost estimates.

A final cost estimate is required for a Non-Advocate Review and this final estimate shall be verified by an independent cost estimate prior to the Non-Advocate Review if the cost is projected more than $250M.




Figure 1 – ARC Cost Estimating Process (Summarized from the NASA Cost Estimating Handbook)

Whether the cost estimate is the advocate or the independent estimate, the baseline should be the same which describes the project in sufficient detail so as to allow a supportable cost estimate.

The estimation process typically begins early between the Project/Proposal Management andassigned Cost Estimators to determine the level of support and kind of cost estimate needed. This communication should be continuous and start early in the process to ensure that the collection of the data that will form the basis of the estimate is as thorough as possible and will result in a usable output format. In this regard, it is critical to understand the requirements and limitations that the customer will face, as the complexity or the cost reporting requirements will directly affect the effort that goes into preparing the estimate and its final submitted form.

Once initial data is collected and an understanding of the project is achieved, it may be prudentto research previous missions and projects to the extent possible to perform cost analysis. This may provide indications as to the magnitude or appropriate ratios of various cost elements. Additionally, this can provide a reality check not only on costs, but on the WBS and the development schedules produced.

After an understanding of the overall project is achieved, a determination must be made on how best to approach the cost estimate. This decision takes into consideration complexity, available data, available time, and the desired fidelity of the cost output.

2.1 Cost Estimate Products

There are two products of cost estimates prepared (advocate and independent) with the goal of producing an approved baseline. The baseline cost is the best estimate of the program/project's full cost achieved through a reconciliation of the advocate and independent cost estimates with the inclusion of margins and reserves appropriate to the phase of the program/project. Each estimate shall be a full cost estimate.




2.1.1 Advocate Cost Estimate (ACE)$

An advocate cost estimate shall be developed to ensure that costs are fully considered and that each project's life cycle cost (LCC) is appropriate. The advocate cost estimate will be structured to identify all required cost elements. As members of the product or project designteam, cost estimators will prepare the estimate using established cost estimating methodologies. Iterative and on-going reviews are conducted with the technical team during the design process until the cost estimator and the project management teams are confident that the cost estimate credibly reflects the project's baseline design requirements, technical capabilities, management structure, and operational scenarios.

2.1.2 Independent Cost Estimate (ICE)

Life cycle of a project forecasted to cost more than $250M in total project costs shall conduct an independent cost estimate. This estimate will be based on the same project definition documentation (technical baseline or CADRe) as used for the advocate cost estimate --including life cycle, WBS, and phase. However, for this estimate, data sources, and cost estimating approaches are intentionally external and independent from the advocate cost estimate and are performed by an independent review team (as opposed to the program or project team). This is designed to provide an independent assessment of the project LCC thatvalidates whether the project is feasible at the advocate cost estimate. NPR 7120.5, NASA Space Flight Program and Project Management Requirements w/Changes 1-15, identifies the types, purpose, and frequency of these independent reviews (also see APR 7120.51).

The entire breakdown of the Cost Estimating Process, including differing types of Cost Estimating Methodologies, can be found in the NASA Cost Estimating Handbook.

2.2 Cost Estimate Reporting

Project personnel shall document the estimate, including all itemized costs, basis of estimates, assumptions, data sources, and approach. These documents will be reviewed by the Office of the Chief Financial Officer. The format used for reporting the estimate will meet the requirements of the solicitation or other requesting mechanism. The total cost estimate for the project generally should be reported on the ARC Standard Pricing Template.

2.3 Cost Estimate Tracking

The cost estimate should be maintained throughout the project lifecycle after the costestimate reports are developed and approved. The office of the Chief Financial Officer will maintain a log of all cost estimates that are generated in response to an Announcement of Opportunity (AO) or official project reviews. The Ames CFO organization will assess feedback of the Cost Estimate section of the proposal or review. The Ames CFO organization will track feedback to see if a pattern is determined and, if so, will work to address those issues with additional training and information sharing.







APPENDIX A. DEFINITIONS%

Term Definition

Advocate Cost Estimate (ACE)

Prepared by cost analysts who are a part of the design team and provide the program/project management with an estimated cost based on translating the technical and designparameters characteristics into cost estimates using established cost estimating methodologies.

Baseline The technical performance and content, technology application, schedule milestones, and budget (including contingency andAllowances for Program Adjustment (APA) which are documented in the approved Program and Project Plans.

Baseline Cost That cost agreed upon through reconciliation of the advocateand independent cost estimate which will be used as the full cost of the program/project for funding purposes.

Cost Estimating Relationship (CER)

A mathematical relationship that defines cost as a function of one or more parameters such as performance, operatingcharacteristics, physical characteristics, etc.

Center Management & Operations (CM&O) costs

Center M&O costs are costs that cannot be related or traced to a specific project, but benefit all activities. Such costs areallocated to a project based on its proportion of the Center/s total budget. Examples of CM&O cost include costs associated with financial management, procurement, security, legal and facilities and related costs as well as IT.

Contingency Reserves, including funding, schedule, performance, manpower, and services, allocated to and managed by the Program/Project Mgr. for the resolution of problems normally encountered to mitigate risks while ensuring compliance to the specified program/project scope.

Cost Estimate The estimation of a project's life cycle costs, time-phased by fiscal year, based on the description of a project or system's technical, programmatic, and operational parameters. A cost estimate may also include related analyses such as cost-risk analyses, cost-benefit analyses, schedule analyses, and tradestudies.

Cost Estimation The process of analyzing each hardware element, the buildup, integration and test of these elements, and the operation of the system over some specified life cycle (including disposal of theasset), with respect to the cost associated with the total effort.

Cost-To-Complete The cost necessary to carry the program/project through to completion from the point at which the estimate is being done.




Direct Costs Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall betreated as direct costs of all activities of the institution.

Indirect Costs Costs, which, because of their incurrence for common or joint objectives, are not readily subject to treatment as direct costs.

Full Cost The sum of all direct costs, indirect costs, and associated CM&O costs.

Independent Cost Estimate (ICE)

Prepared as a result of an independent review of a program/project. ICEs are developed by the cost analyst members of the independent review team in order to provide program/project management with the review team's assessment of how realistic the project's life cycle costs are.

Life Cycle Cost (LCC) The total cost for all phases of a project or system including design, development, production, operations, and disposal. It is also referred to as a benefit-cost analysis.

Life Cycle Cost Estimate (LCCE)

Presents life cycle costs with alternatives, by comparing the current estimate to the independent estimate (or prior estimate).

Margin The allowances carried in budget, projected schedules, and technical performance parameters (e.g., weight, power, or memory) to account for uncertainties and risks. Margins are allocated in the formulation process, based on assessments of risks, and are typically consumed as the program/projectproceeds through the life cycle.

Non-Advocate Review An independent verification of a candidate project's plans, LCC (NAR) status, and readiness to proceed to the next phase of the

projects life cycle. A Pre-NAR is conducted before the project moves from Phase A to Phase B. The NAR is conducted before a project moves from Phase B to Phase C.

Preliminary DesignReview

The PDR demonstrates that the preliminary design meets allsystem requirements with acceptable risk and within the cost and schedule constraints and establishes the basis for proceeding with detailed design. It will show that the correct design options have been selected, interfaces have been identified, and verification methods have been described




Program A strategic investment by a Mission Directorate or MissionSupport Office that has a defined architecture and/or technical approach, requirements, funding level, and management structure that initiates and directs one or more projects. A program implements a strategic direction that the Agency has identified as needed to accomplish Agency goals and objectives

Project A space flight project is a specific investment identified in a Program Plan having defined requirements, a life-cycle cost, a beginning, and an end. A project also has a management structure and may have interfaces to other projects, agencies, and international partners. A project yields new or revisedproducts that directly address NASA's strategic goals.

Reserve See Unallocated Future Expenses.

Unallocated Future Expenses

The portion of estimated cost required to meet specified confidence level that cannot yet be allocated to the specific project WBS sub-elements because the estimate includes probabilistic risks and specific needs that are not known until these risks are realized.




APPENDIX B. ACRONYMS%

Acronym Definition

ACE Advocate Cost Estimate

AO Announcement of Opportunity

APD Ames Policy Directive

APR Ames Procedural Requirement

CADRe Cost Analysis Data Requirement

CEH Cost Estimation Handbook

CFG Cost Accounting Branch

CFO Chief Financial Officer

CM&O Center Management and Operations

ICE Independent Cost Estimate

IT Information Technology

LCC Life Cycle Cost

LCCE Life Cycle Cost Estimate

NAR Non-Advocate Review

NPD NASA Policy Directive

NPR NASA Procedural Requirement

PM Project Manager

PDR Preliminary Design Review

WBS Work Breakdown Structure




APPENDIX C: REFERENCE MATERIAL

Advocate Cost Estimate Document Requirement Source

Requirements NPR 7120.5, NASA Space Flight Program and Project Management Requirements w/Changes 1-15

http://nodis3.gsfc.nasa.gov/displayDir.cfm?t=NPR &c=7120&s=5E

Work Breakdown Structure

NPR 7120.5, NASA Space Flight Program and Project Management Requirements w/Changes 1-15


G-6020a, Uniform WBS for NASA Ames-New NSM

https://intranet.share.nasa.gov/arc/finance/Center %20CFO%20Support/CostEstimating.aspx

Organizationa l Breakdown Structure

E-3010, Project Functional Org Chart


Schedule NPR 7120.5, NASA Space Flight Program and Project Management Requirements w/Changes 1-15


Basis of Estimate (BoE)

G-6051, Basis of Estimate


Software Cost Estimate

APR 7150.2 Software Engineering Requirements

http://server-mpo.arc.nasa.gov/Services/CDMSDocs/Centers/ ARC/Dirs/APR/APR7150.2.html

NASA Software Engineering Handbook

SWE-015 Cost Estimation

http://swehb.nasa.gov/display/7150/SWE-015+-+Cost+Estimation

Life Cycle Cost Estimate

G-6030b, Life Cycle Cost - Background and Overview





Independent Cost Estimate$

APR 7120.52 This document is uncontrolled when downloaded or printed.


Page 19 of 20

Document Requirement Source

Requirements NPR 7120.5, NASA Space Flight Program and Project Management Requirements w/Changes 1-15

http://nodis3.gsfc.nasa.gov/displayDir.cfm?t=N PR&c=7120&s=5E

51 USC 30307: Requirement for independent cost analysis from Title 51-NATIONAL and COMMERCIAL SPACE PROGRAMS

http://uscode.house.gov/view.xhtml?req=granul eid%3AUSC-prelim-title51&saved=L3ByZWxpbUB0aXRsZTUxL3N 1YnRpdGxlNS9jaGFwdGVyNTA5%7CZ3Jhbn VsZWlkOlVTQy1wcmVsaW0tdGl0bGU1MS1ja GFwdGVyNTA5%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim

Work Breakdown Structure

NPR 7120.5, NASA Space Flight Program and ProjectManagement Requirements w/Changes 1-15


G-6020a, Uniform WBS for NASA Ames CFG

https://intranet.share.nasa.gov/arc/finance/Center%20CFO%20Support/CostEstimating.aspx

Organizational Breakdown Structure

E-3010, ProjectFunctional Org Chart


Schedule NPR 7120.5, NASA Space Flight Program and Project Management Requirements w/Changes 1-15


Basis of Estimate (BoE)

G-6051, Basis of Estimate

https://intranet.share.nasa.gov/arc/finance/Cent er%20CFO%20Support/CostEstimating.aspx

Software Cost Estimate

APR 7150.2 Software Engineering Requirements

http://server-mpo.arc.nasa.gov/Services/CDMSDocs/Center s/ARC/Dirs/APR/APR7150.2.html

Cost Analysis Data Requirements

G-6030a, Cost Analysis Data Requirement (CADRe)


(CADRe)

Life Cycle Cost Estimate

G-6030b, Life cycle Cost - Background and Overview

https://intranet.share.nasa.gov/arc/finance/Cent er%20CFO%20Support/CostEstimating.aspx




Documents

Ames Procedural Requirements APR 7120 · 2017-11-28 · Ames APR 7120.52 Procedural Requirements Effective Date: November 14, 2017 Expiration Date: November 14, 2022 COMPLIANCE IS