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Space Design Exploration with Early Integration of Parametric Cost Estimation

By PRICE® Research TeamMay 19, 2020

Many complex systems can cost billions of dollars to acquire, take decades to develop, and will last several more decades in service, needing constant repair and support. Can a point estimate at the beginning of a big acquisition program stand the test of time? How should we address the uncertainty that is prevalent in engineering models today?

“What will it cost?” is a question that stays in the back of decision maker’s minds and often sets in motion engineering teams to scramble helplessly for answers every time the question is invoked.

Most of the time, the answer is incorrect.

Programs get cancelled, production volume is cut due to increased cost during development, and delivery date postponed – all the results of poor estimates. The root cause of this issue is an absence of good cost management; The kind that can evolve and adjust as programs mature. Without it, as history has shown, programs can be sent into a death spiral.

One of the best cost management strategies for a big acquisition program is an early inclusion of parametric cost estimation in a Model Based Engineering (MBE) environment. The growth of knowledge in the early program lifecycle is increasing which is needed to make effective decisions for the entire life of a project. As decisions are made, there is a level of commitment to one specific design choice over the others, thus increasingly diminish the freedom. It is important to always consider affordability issues as decisions, especially in the early phases. The ability to extract design knowledge and use it to inform parametric cost estimation is a key enabler to have an effective cost management strategy that leads to program success.

The added benefit of having an established MBE environment early is the ability to perform fast and accurate design space exploration using some form of cost-benefit criterion as a guide toward best value, while keeping tabs on design aspects or technologies that may be exposed to high risks and uncertainties. This allows decision makers to be more proactive in managing a healthy program and be increasingly more confident to answer that burning question.