NASA: Lack of Disciplined Cost-Estimating Processes Hinders Effective Program Management GAO-04-642
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Considerable change in NASA’s program cost estimates—both increases and
decreases—indicates that NASA lacks a clear understanding of how much its
programs will cost and how long they will take to achieve their objectives.
For example, the development cost estimates for more than half of the
27 programs that GAO reviewed have increased and for some programs this
increase was significant—as much as 94 percent. Cost estimates changed for
each of 10 programs that GAO reviewed in detail. For 8 of the 10 programs,
the estimates increased. Although NASA cited specific reasons for the
changes, such as technical problems and funding shortages, the variability
in the cost estimates indicates that the programs lacked the sufficient
knowledge needed to establish priorities, quantify risks, and make informed
investment decisions, and thus predict costs.
Most notably, NASA’s basic cost-estimating processes—an important tool
for managing programs—lack the discipline needed to ensure that program
estimates are reasonable. Specifically, GAO found that none of the 10 NASA
programs that GAO reviewed in detail met all of GAO’s cost-estimating
criteria, which are based on criteria developed by Carnegie Mellon
University’s Software Engineering Institute. Moreover, none of the
10 programs fully met certain key criteria—including clearly defining the
program’s life cycle to establish program commitment and manage program
costs, as required by NASA. In addition, only three programs provided a
breakdown of the work to be performed. Without this knowledge, the
programs’ estimated costs could be understated and thereby subject to
underfunding and cost overruns, putting programs at risk of being reduced
in scope or requiring additional funding to meet their objectives. Finally,
only two programs have a process in place for measuring cost and
performance to identify risks.
NASA has limited ability to collect the program cost and schedule data
needed to meet basic cost-estimating criteria. For example, as GAO has
previously reported, NASA does not have a system to capture reliable
financial and performance data—key to using effectively the cost-estimating
tools that NASA officials state that programs employ. Further, without
adequate financial and nonfinancial data, programs cannot easily track an
acquisition’s progress and assess whether the program can meet its cost and
schedule goals before it incurs significant cost and schedule overruns. NASA
identified other barriers, including limited cost-estimating staff. According to
NASA officials, several initiatives are under way to remove such obstacles
and improve the agency’s cost-estimating practices.
WHy GAO did this study
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.
What GAO Recommends
GAO is recommending that NASA
take a number of actions to better
ensure that the agency’s planned
and recently implemented
initiatives to improve its costestimating
practices will result in
sound cost estimates and thereby
enable NASA to control its
programs better.
