L6 - An Introduction to Parametrics

Question 1

Understand relative advantages and disadvantages of key costing techniques

Answer 1

• History shows cost overruns in all major space programs ∴ need better system of budgeting • Advantage of parametrics declines in later project stages as more information is known

Question 2

Understand the parametric method of costing

Answer 2

• A technique that develops estimates based upon the examination and validation of the relationships which exist between a projects technical, programmatic, and cost characteristics, and the resources consumed during its development, manufacture, maintenance, and/or modification • Validity? Parametricians must exercise due diligence in selection and treatment of data to generate a model, then carefully test the model concept

Question 3

Understand the development of the relevant models

Answer 3

• Constructing a model: 1. Observation of actual costs 2. Establishing the cost drivers 3. Establishing the equations involving the cost drivers 4. Continuous calibration a. Done by running the cost model backwards • Use cost estimating relationships to compare input variables to cost and schedule output (benefit of PRICE is that you don’t have to establish the relationships yourself) • Empirical data is reduced to a few principal variables that describe significant technological and cost differences between individual projects and organizations • Fundamental parameters are weight and complexity