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NASA Cost Estimating Handbook - Version 4.0

NASA Cost
Estimating Handbook

Version 4.0

www.nasa.gov
The image on the cover is the MA VEN spacecraft in orbit around Mars, looking back at Earth. MA VEN launched on
November 18, 2013, and, following a roughly 10-month trip of over 442 million miles, reached Mars on September
21, 2014. The MA VEN project successfully implemented the principles in this handbook to produce their JCL
analysis. MA VEN was launched on schedule and delivered under its budget commitment.
Acknowledgments

Many people contributed to the development of the Version 4.0 edition of the Cost Estimating Handbook
(CEH). The members of the NASA Executive Cost Analysis Steering Group (ECASG) are the foundation
of NASA’s cost estimating expertise and provided valuable discussion and materials from their personal
wealth of NASA experience. They also spent many hours reviewing and commenting on the handbook.
The information from these sources helped identify topics that needed to be enhanced, updated, or
created in order to preserve the CEH’s usefulness for NASA estimators, contractors, and customers.

This is the fourth edition of the National Aeronautics and Space Administration (NASA) Cost Estimating
Handbook (CEH), updating the 2008 edition. The purpose of this handbook is to serve as a guide for cost
estimating at NASA. The intended audience covers the non-estimating professional and the new cost
estimator, as well as experienced analysts. The intent of this revision is to provide an update reflecting
significant policy changes since the 2008 edition.

Revision Highlights

This revision includes the addition of an Appendix J addressing Joint Cost and Schedule Confidence
Level (JCL) analysis and is intended to be a reference for cost estimating best practices at NASA. Other
new topics have been added, and the document layout has been updated. This revision has been
developed with the input and participation of the members of the Executive Cost Analysis Steering Group
(ECASG), a multi-Center group that coordinates the internal NASA cost estimating and analysis
community; ensures that appropriate policy is adopted; and promotes best practices are being developed,
communicated, and used across the Agency.

This update to the CEH provides current information on NASA cost estimating policy, including
requirements for probabilistic estimating at Key Decision Points (KDPs) in the project1 life cycle. The
information on how to develop probabilistic cost and schedule ranges for KDP-B (approval to start
preliminary design) is provided in Appendix C and a JCL calculation in support of KDP-C (approval to
start final design) is provided in Appendix J. For probabilistic estimating, the NASA cost community has
found it necessary to incorporate active consideration of risk, schedules, and performance and to develop
methods of incorporating these factors into cost estimates.