SPACE SYSTEM COST RISK ANALYSIS: IMPROVING OUR VIEW OF AN UNCERTAIN WORLD*

Aerojet has a long history of producing space systems: including surveillance sensors, environmental sensors, solid rocket motors, and liquid rocket engines. Cost risk analysis provides crucial support for management decisions on all our programs. Cost risk analysis works to increase the likelihood of program success by giving management an improved picture of program cost. Our preferred view is not just of one most likely cost, but of the full range of possible costs associated with a wide range of events that might occur on a program. We see single-valued cost estimates as based on just one set of possible assumptions about future events. Typically there are a number of other sets of events that might occur, each with its own associated costs. Realism in cost estimating requires that we project program cost as a range of possible values associated with alternative sets of future events. Experience suggests that a sound view of that range of cost values can be derived from a combination of two analytical approaches. One develops a cost range from qualitative assessments of the overall level of uncertainty in a standard set of risk driver categories. The other projects a range of costs from estimates of the impacts of explicit individual possible events.