Developing Analogy Cost Estimates for Space Missions

The analogy approach in cost estimation combines actual cost data from similar existing systems, activities, or items with adjustments for a new project's technical, physical or programmatic differences to derive a cost estimate for the new system. This method is normally used early in a project cycle when there is insufficient design/cost data to use as a basis for (or insufficient time to perform) a detailed engineering cost estimate. The major limitation of this method is that it relies on the judgment and experience of the analyst/estimator. The analyst must ensure that the best analogy or analogies have been selected, and that appropriate adjustments have been made. While analogy costing is common, there is a dearth of advice in the literature on the 'adjustment methodology', especially for hardware projects. This paper discusses some potential approaches that can improve rigor and repeatability in the analogy costing process.