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The Economics of NASA Mission Cost ReservesIncreases in NASA mission costs have led to analysis of the causes and magnitude of historical mission overruns as well as mitigation and prevention attempts. This paper hypothesizes that one cause is that the availability of reserves may reduce incentives to control costs. We draw a comparison to the insurance concept of moral hazard, and we use actuarial techniques to better understand the increase in mission costs due to the availability of reserves. NASA's CADRe database provided the data against which we tested our hypothesis and discovered that there is correlation between the amount of available reserves and project overruns, particularly for mission hardware cost increases. We address the question of how to prevent reserves from increasing mission spending without increasing cost risk to projects.
Document ID
20120008248
Document Type
Conference Paper
Authors
Whitley, Sally (Johns Hopkins Univ. United States)
Shinn, Stephen (NASA Goddard Space Flight Center Greenbelt, MD, United States)
Date Acquired
August 25, 2013
Publication Date
March 3, 2012
Subject Category
Economics and Cost Analysis
Report/Patent Number
GSFC.CP.5992.2012
Meeting Information
2012 IEEE Aerospace Conference(Big Sky, MT)
Distribution Limits
Public
Copyright
Other