MGB Flashcards
Understand the concept of Purchasing Power Parity (PPP)
PPP is an adjustment factor that takes account of differences in price levels between countries. Different cultures, different products and different needs. You can see it in the salary and it changes a lot with countries. China can do twice as much with the same money compared to America
Examples (revised figures 2019)
- China x 2
- India x 3.5
Note: Not to be confused with PPP = Public- Private-Partnership!
Understand the different economic rationales of space activities
-
Private Motives: the existence of a market
Production of a good or a service, under conditions of repeatability, to meet a well-identified demand -
Public Motives: the existence of a public good
Good or service where the consumption or use by one individual does not reduce or infringe the consumption or use by others
Examples: - national defense, basic research, development programs on infrastructure if high risk, social interest, natural monopoly
Give key figures of the space economy
- Commercial World Space Economy ≥ 250 B$
- 25% Public, 75% commercial
- Worldwide = 0.25% of World GDP
- In Europe : 17$ / capita public spending (versus 125$ in USA…)
- Space employment worldwide > 750,000 people
- Return from Space investment > 3
Understand the NewSpace Economy rationale
-
Private companies which act independent of governmental space policies and funding, targeting equity funding and promoting affordable access to space and novel space applications
- Due to reduced government spending space shifts to commercial space took place
- New Space Economy is a paradigm shift towards more affordable space applications
- Spin-off is an important element to communicate with the general public
- The general public, with better information flows, is very sensitive about cost overruns in the space sector
New Space
Less dependent on the country, more global. New Space is not using bank money/debt financing, brilliant but not so wealthy. Going to look for equity, look for someone with shares. The fact you do things cheaper and equity funding makes a difference.
It is more software related, very simple designs (don’t care about shielding, and life of the satellite is shorter but does not matter), launch goes down (shared launcher), intellectual property (passive, faster than my competition and not patenting), matrix hierarchy.
Old Space
looking for a launcher, intellectual property (patenting), hierarchical
Definition: New Space Economy
Private companies which act independent of governmental space policies and funding, targeting equity funding and promoting affordable access to space and novel space applications
Understand the transfer from government to private space activities
Due to reduced government spending space shifts to commercial space took place. New Space Economy is a paradigm shift towards more affordable space applications
Since private industrial capabilities for possible commercial activity in space are now developing into competitive businesses, the role of the government is changing. The role of the government is becoming more regulatory in nature (e.g. safety, treaties)
Understand the geopolitical changes driving the space economy next decades
Equity funding > new space companies > new markets
New business services with commercialisation potential
- Navigation
- New launch systems
- SmallSat EO constellations and systems
- Space tourism
- ISS servicing
- Geoinformation, data and services
- Media and internet for all
- Debris mitigation and removal
- Satellite servicing
- Energy from space
- Space resource mining
- Space habitats
- Humans to Mars
Understand the impact of geopolitical changes on the space budget
Example: On 25 May 1961 JFK gave the speech -> Space Race era started -> Budgetary priority
After Apollo: NASA budget went down drastically, defense up
Describe the changes in the space sector as a result of these fluctuations
Approach
- Mergers: 20 U.S. space companies in 1980 - 3 main left in 1997! (Lockheed-Martin, Boeing, Raytheon)
- Verticalization (end-to-end, market contact)
- Consolidation ( economy of scale…)
- Similar in Europe:
- Astrium (now Airbus) and Alcatel, later OHB
Step 1: Mergers
in the US from vertical to horizontal
- M&A = Mergers and Acquisitions
- Merger = company takes over another one (e.g. Microsoft)
- Acquisition = PE (Private Equity takes the majority of shares)
- Since 2010 mainly with satellite operators (Inmarsat, Intelsat)
Step 2: Transcontinental alliances - International cooperation
Geographical alliances, e.g.:
- ASTRA – AsiaSat merger in 1998
- EurasSpace Joint Venture between Astrium and the China Aerospace Corporation
- EuropStar Joint Venture between Alcatel (F) and Loral (US)
- Space Imaging Joint Venture (Mitsubishi, Lockheed Martin and Raytheon)
Describe the workforce in the space sector
- World: > 750,000 people
- (185,000 USA; 200,000 Russia; 280,000 China, 17,500 ISRO)
- STEM issue. Remains flat in all countries except China increasing massively
- Soft skills preferences are increasing
US: average age > 50 yrs, 35% women
Europe: average age 45 yrs, 25% women
Describe the impact of the space activities on our economy
What happens to the economy in a world without satellites?
T0
- All flights grounded, trains stopped, road transport traffic jams (suddenly no GNSS signals)
- Delayed intervention police/ambulances/fire brigades (no GNSS)
- Cash-dispensers stop working (GNSS controlled)
T + 2hrs
- Stock markets drop considerably
- Congestion terrestrial communications and remote access (oceanic/polar) interrupted
T + 7 hrs
- News Agencies and energy companies hit
T + 11 hrs
- No thunderstorm/hurricane/natural disaster warnings anymore
T + 1 day
- Government limits public access to give priority to crisis communication
- No public access to social media
T+2days
- Financial transactions stop (no timestamp)
- Breakdowns of power stations (uncontrolled overload)
T+3 days
- Power blackouts (no power synchronization)
- Food and temperature-sensitive medicaments affected
T+4 days
- The food supply chain starts to break down
- Panic-buying of food, plundering
T+ 5 days
- Freshwater shortage
- Tourism heavily affected
T+1 week
- Slow economic collapse
- No funding transactions/ no new contracts
T+2 weeks
- No forecasting of solar
- Disrupted power grids (in particular if solar storm)
T+ 2 months
- Economy strongly affected (2 Trillion USD?)
- Communication companies bankrupt
- Factories with complex delivery systems bankrupt
T+4 months
- Strong public interest to increase space budgets immediately!
T+12 months
- new constellations operational (first LEO, then GEO)
Understand the trends in the future space sector
- Further reduction in public funding to be expected worldwide (ongoing financial crisis and post-COVID)
- Agencies will concentrate on R&D of technologies
- A further shift to commercial companies, in particular for downstream applications but also Cislunar
- New Space will use growing equity funding
- Effect of US space strategy supports commercialisation (e.g. ESA/DLR microlauncher competition in Europe)
- Export Control (ITAR) regulations further relaxed
- Increasing concern about space debris
- Increasing trend towards ‘green space’
Understand the effect of location in the NewSpace Economy
Location of companies:
1. Manufacturing:
- per country (governments as client and export control)
2. Telecom :
- Less staff
- Closer to end-user
- High profit (attractive)
- Taxation different per country
3. New Space :
- facility to establish, grants, working permits
Important for space business: Export Control!
Define a Project
A Project is …
no routine task but a temporary endeavor to create a unique product or service.
Describe the History of Project Management
E.g. Pyramids, great wall of china, churches/mosques, train systems, concord
E.g. space projects:
Pioneering phase - Sputnik
Maturity phase - Proton rocket (russian), Saturn V
Commercialization - ISS, NASA Shuttle, Falcon 9
World wide space - Arian 6?, Satellite constellations
Define Project Management Functions
Project Management deals with:
- Size & Volume: small, medium, large scale
- Complexity: Engineering and Manufacturing
- Geography: Involvement of multiple Countries and/or Regions
- Time & Money: Time schedules & Milestones, Man-hours, Material, other Direct Costs
- Organisation & Staffing: Key Personnel, Partners, Subcontractors and Suppliers
- Legal Matters: Contracts & Agreements, SOW
- Culture: Language, Behavior, Tradition
Describe Project Tasks and Responsibilities
- Defined Start and End: From Goal Setting to Completion and Acceptance by Customer.
- Unique Undertaking: Design, Development, Prototyping.
- Involvement of Innovation: New Technologies.
- High Technical Complexity: Many Interfaces.
- Involvement of Many People: Different Skills and Multiple Disciplines.
- High Organizational Complexity: Multiple Teams, Cooperation’s, Joint Ventures.
Define Management
Management is…
a task and/or responsibility which can be subdivided into sub-tasks
Define Management Functions
- Planning: Tasks, Resources, Facilities, Key Personnel, Tools, Financing
- Organization: Structure, Interfaces, Responsibilities
- Team Building: Selection of Personnel, Identification of Key Personnel
- Control: Actual vs. Planning, Feed-Back Solutions, Changes, Analysis
- Leadership: Guidance, Decisions, Directions
Two forefathers of project management are:
(1) Henry GANTT, called the father of planning and control techniques, who is famous for his use of the Gantt Chart as a project management tool – also known as Bar Chart
(2) Henri FAYOL created 5 management functions which form the foundation of project management
- Planning
- Commanding
- Controlling
- Coordinating
- Organising
Explain Project Life Cycle Concept
From Goal to Result
- Goal - MDR (mission definition review)
- TG (toll gates/major milestones)
- Result
Product Life Cycle
The sum of all phases from Start to End of product development, production and implementation to the user
The Product Life Cycle from Cradle to Grave includes following Major Phases:
- 0. Pre-Phase A: Early Mission Definition
- A. Concept: Concept Design, Feasibility Studies and Trade-Offs (eg. time and money) “concept phase”
- B. Product Definition: System Specification and Planning “definition fase”
- C. Design & Development: Detailed Design, Prototyping and Development Testing “development phase”
- D. Production: Manufacturing, Tooling, Testing and Acceptance “production phase”
- E. Operation: Implementation, Operation & Maintenance “operation phase”
- F. Disposal (at least of a satellite) “disposal phase”
Different organizations have different phase names
Some companies may merge certain phases
Describe the Major Tasks of Concept Phase
Phase A - Major Tasks of Project Concept
- Overall System Design
- Technical Trade-offs
- Operational Trade-offs
- Commercial Trade-offs
- Feasibility Studies
- Concept Formulation
- System Concept Review (SCR)
- Selection of Phase „B“ Contractors
- Go/No-Go Decision for Phase „B“
Describe the Major Tasks of Definition Phase
Phase B - Major Tasks of Project Definition
- Completion of Overall System Design
- Completion of System Specification
- Preparation of Subsystem & Test Specifications
- Preparation of Phase C/D Project Plans
- System Specification Review (SSR)
- Selection of Phase C/D Contractors
- Preparation of RFP for Phase C/D (Guideline, Specification, SOW, Schedules, etc.)
- Proposal Evaluation
- Contractor Selection
- Go/No-Go Decision for Phase „C/D“
Describe the Major Tasks of Development and production phases
Phase C - Major Tasks of Project Development
- Completion of Detailed Design
- System and Subsystem Prototype Manufacturing and Testing
- Evaluation of Test Results
- System Design Reviews – Design Confirmation
- Preliminary Design Review (PDR)
- Critical Design Review (CDR)
- System Test Review (STR)
- Start Phase D Activities
Phase D - Major Tasks of PFM Production
- Procurement of Jigs & Tools
- Procurement and/or Renting of Manufacturing and Test Facilities
- Preparation of Work
- Implementation of Work Procedures
- Unit Production
- Assembling, Integration & Verification (AIV)
- PFM Production Fully Accepted
- Customer Documentation
Phases C and D may be simultaneously contracted.
Describe the Major Tasks of the Operation and Disposal phases
E. Operations phase and F. Disposal phase
- Follow-On Production (FOP) & AIV
- PFM & FOP Satellite In-Orbit-Tests (IOT’s)
- Acceptance Reviews and Hand-Over
- Satellite Operations and Orbit Control
- Payload Performance Measurement
- Operations of Satellite Ground Control Station
- Satellite EOL Documentation
- Disposal of Satellite into Graveyard Orbit
Describe the Benefits of Project Management
- Identification and understanding of
- functional tasks & responsibilities
- time scheduling planning & control
- methodologies for cost trade-off analyses
- Measurement of accomplishment against plan
- Early identification of issues and challenges
- Identification & control of project risks
- Project configuration & change control
Explain the Product Tree (PT)
The product tree is the breakdown of the project into successive levels of hardware and software products or elements
- The Product Tree (PT) is required to define the H&SW (hardware and software) Products:
- Development models
- Ground Support Equipment (GSE)
- H&SW Integration Tools
- Test equipment
- It includes items submitted to customer configuration control and items that are the subject of a technical requirements specification
- The PT forms the basis for the elaboration of the project work breakdown structure
Explain the Work Break Down Structure (WBS)
- The WBS is the principal structure used in managing a project and provides a framework for managing schedule cost and technical content
- It divides the project into manageable Work Packages (WPs), organized according to the nature of the work by breaking down the total work to be performed into increasing levels of detail
- The WBS is derived from the PT, selected elements of which are extended to include support functions (i.e. management, engineering, product assurance) and associated services (e.g. test facilities)
WBS serves several important Purposes (see pp)
What‘s the Content of a Work Package Description?
Content of Work Package Description (WPD)
- Work Package (WP) Identification
- Title
- Identification of the WP in the WBS (WP Number)
- Date of the Start and End of the WP
- Company or Entity in charge of the WP Performance
- Assign Work Package Manager
- Description of WP Tasks to be Performed
- Tasks Explicitly Excluded
- WP Inputs (Documents, Hardware, Software)
- WP Outputs (Products: Hardware, Software, Documents)
Describe planning tool: Milestone plan
Milestones
are scheduled events that indicate the completion of a major deliverable event or set of events
- Milestones are
- Measurable
- Observable
- Progress Markers
- Independent of time (zero duration – discrete event)
- Milestones must be linked to WBS and Schedules
Examples
completion of project phases, product delivery (HW/SW), key go/no-go decisions and project reviews
Describe planning tool: Bar Chart
Bar charts (Gantt charts)
Shows the task duration against a calendar
- Tasks plotted against a timeline and separated into discrete activities
- Shows project milestones
- PDR
- CDR
- Launch
- etc.
Describe planning tool: PERT network plan
PERT network plan
Once the project has been broken down into individual tasks, these tasks can be organized into a flowchart to show the sequence of the project’s tasks. The task name and its duration in days/weeks /months are drawn in the corresponding box. The PERT network plan has arrows leading to tasks. The arrows indicate which tasks may begin once the preceding task has been completed
- Program Evaluation Review Technique (PERT)
What is meant by a critical path?
Critical Path Analysis
- The Critical Path represents the longest time sequence of a time plan
- Any delay of tasks on the Critical Path will delay the entire project as this delay is passed on to all subsequent tasks dependent on it
- Tasks not on Critical Path have float (or slack or buffer)
- The time a task can be delayed before another task’s start is delayed is called free float
- The time a task can be delayed before it becomes a member of the Critical Path is called total float
Describe network plans with PERT or CPM.
PERT - Program evaluation and review technique
CPM - Critical Path Method
Describe a Cost Breakdown Structure (CBS).
Describe the project control process.
Define Project Management Control Loop.
Describe Schedule Control and Status Review.
- Through use of GANTT charts (see below) and Milestones (see the question regarding Milestones for image).
- Can plot and see the ‘slippage’ happening too.
Know the difference between the three main cost estimating methods.
- Cost estimates preferably try to forecast the »should cost« of the product or service
- Forecasting involves making projections about future performance on the basis of historical and current data. A cost estimate is a forecast of what the cost will be or should be. The distinction is important for the decision‐maker:
- The »will cost« is a cost forecast of the product as proposed by the engineers designing it.
- The »should cost« is a cost forecast of the function fulfilled by the product, as seen by the consumer or market.
- If the »will cost« is higher than the »should cost«, there will be a problem with competitiveness!
- The »Pareto Frontier« helps to understand the concept of should cost, as there will be the lowest cost for a given performance
-
Engineering build-up - Engineering drawings then route sheets then cost sheets. The best method if time and labor are not issues. Uses WBS to estimate labor cost of every single part and subsystem, very detailed.
The »traditional approach« for determining product cost is no longer appropriate. Today, decisions about production must be made very early. The profitability of a new product must be analyzed before going into detailed design, this means cost must be estimated before drawings are available! - Analogy - In your head compare what else you’ve seen that’s similar on the market. Use when don’t have much data available or as an end crosscheck. Using this technique, the analyst must have a thorough understanding of both the old system, used as a reference point and the new system in order to assess accurately the differences in complexity between them. Often, there is ni existing system that could be used for comparison.
- Parametric - bases the cost of the new system upon the cost of similar characteristics (weight, power requirements materials, etc) of a previously costed system. Most useful when a new item is not similar to exicstimg items. But highly depends on subjective assumptions and therefore risky. Uses mathematical relationships to estimate cost from the products description to its cost. Parametric Estimating’s preferred domain are the early phases of a project.
Understand the idea behind parametric estimating.
»Parametric cost estimating is the scientific approach for going directly*, by using mathematical relationships, from the product’s description to its cost«
»directly« here means without first having to make a list of activities from the engineering drawing and the bill of materials (BoM)
- Cost estimating relationships (CERs) apply ‘parameters’ in order to calculate the cost of a product.
- The ‘parameters’ are ‘cost drivers’ and therefore determine the product’s cost; hence the naming ‘parametric’!
- Over most project phases, parametrics have an advantage.
- There are 2 kinds of models; specific cost and general cost (see slide 26)
- Specific Cost Models describe members of one product family, for instance, rocket engines. It can only be used for the product family it was designed for
- General cost model can estimate the cost of any product without the need to compare it directly. Can be used for estimating the cost of any product
- General parametric models use two key parameters: Mass and Manufacturing Complexity (MCPLX), aka Quality Level.
- With product R having known mass and cost, its specific cost and then quality level s can be established;
- If the quality level “s” of an existing product R is known, the specific cost of a similar, but new product M can be determined
- Parametric can give roughly an 80% saving on cost and time
Know the difference between specific and general cost models.
Specific models use only 1 key cost driver (mass eg//in kg), general models use 2 (mass and manufacturing complexity)
- Cost is a function of Mass
- Weight and Complexity in Parametric Hardware Cost Estimating
Also, see slide 26.
Understand the factors of weight and complexity in creating cost estimating relationships.
- Can have 1 item x cost, then multiple items cost more. Higher weight, higher cost
- Not always true though: higher weight, lower cost. Why?
- E.g//manufacture more motorbikes but the price gets cheaper. This is because bulk manufacturing brings down the cost
- Weight as sole cost driver does not lead to a good cost estimating equation (example: motorcycles)
- Weight is not enough as a cost driver:
- There is also something like “cost density”. Higher cost density comes from increased use of labor.
- Eg//aluminium rod 8 quid, but a lighter rod that been hollowed out (takes longer) costs more due to labor.
- There is also something like “cost density”. Higher cost density comes from increased use of labor.
The need to measure “cost density” leads us to the concept of Manufacturing Complexity (see picture)
- Manufacturing Complexity is a function of technology and productivity
- Higher productivity is lower relative labor cost
- Higher technology, higher relative material cost
- cost per weight unit
Understand how to obtain values for the Complexity Factor.
1) The Complexity factor can be obtained from tables or databases
Model‐Internal Tables:
- Typical values for a given product or technology
- Contain reference (industry average) Complexity Factors
- Based on the data collected over the last 40 years
- Can be used to generate a should cost when internal data is missing
Knowledge Network:
- Cost knowledge database hosted on the PRICE web site
- Contains typical inputs for systems or products to be estimated
- Alternative delivery vehicle to supply cost research data to the user
- Data sources: NASA, DoD, aerospace & defense companies
2) The complexity factor can be obtained from the model’s generators
- Assessing technical characteristics of the equipment. Drawing helps
3) The complexity factor can be obtained from calibration
- Results from the previous calibration can be documented and re‐used for future estimates
- Calibration involves running the model backwards, this obtains the complexity figures
- You use a value from a previous actual cost (expense or analytic estimate), establish the complexity by calibration, which can then be used as a reference for new products.
The complexity links both, estimation and calibration, in a multilayer ‘onion model’ (see picture)
Actual cost > helps to calibrate > Complexity > helps estimate > estimated cost
Know the challenges of data gathering.
Understand Cost Data Normalisation: Most publicly available data is not normalized (see picture)
- The »gold standard« of normalised hardware cost information is the Manufacturing Complexity (MCPLX)
- The preferred input for calibrating manufacturing complexity is the unit production cost, but it may be virtually impossible to obtain! (from different companies)
- Each may have a different unit production cost with different general and administrative costs and different levels of profit/loss.
Know areas of potential improvement.
The bottom line is: We understand space project cost quite well, yet there is room for improvement
Lessons learned:
- Lack of good, normalized cost data; context often missing, most data comes from the 1960s/1970s
- Space hardware cost drivers well understood; models mature
- Systems and software cost analysis needs a better understanding of requirements and sizing
- Yet, the probability that actual cost equals the prior point estimate is virtually 0% …
Recommendations:
- Collect and publish more normalized data; it is out there!
- Cost normalization should apply realistic escalation indices (not GDP deflator)
- Use probability distributions in place of deterministic point values
Proposals for further Research Lessons Learnt :
- Test how to treat low TRL (technology readiness level) and other negative impacts as a defined cost risk instead of accepting it as inherent cost model uncertainty.
- Stimulate the exchange of »open source« cost data in the space (cost) community.
List and describe 4 P’s of marketing.
Product - What do we offer?
Price - How much does it cost? Set by customer base, Competition base or cost base.
Promotion - How do we communicate with our customers? (trade shows, conferences and digital marketing)
Place - How do we distribute our products/services? Direct or through resellers or a combination of the two.
Describe how the market for space tourists can be estimated.
Telephone surveys - how many months of your salary would you be willing to give to go to space?
Major Criticisms:
- Population of the survey not adequate
- Interest/desire was measured
- Then used - Approach in 2002 Futron/Zogby study (100 K$ tickets)
- Customer group of 7 million$ net worth (spending 1.5% on a single trip in a year)
- Survey of 450 individuals within that group :
- Interest in space flight (28%)
- Pioneering discount (76%) - many said yes but only if one of the first to do it (exclusivity)
- Physical fitness (86%)
- S-curve distribution of the target market
Understand the present obstacles for space tourism.
- People don’t want to be strapped in seats the whole time
- feeling of adventure
- Spend a whole week of training
- time issues
- Private developments
Describe the drivers and enablers for NewSpace.
-
Technology, new and emerging with ever cheaper costs
- Quantum computing, electric propulsion, AI etc.
-
Policy and Law:
- Luxembourg, UK, Japan, India, China have NewSpace-friendly laws and policies
- The U.S. has long sought to foster the commercialization of space activities
-
Private Funding:
- Increasing private investment
- Over $100 billlion since 2004
- Startup prizes like AnsariX prize, Google Lunar X-prize, Kickstarter prize
- Private, government and academic incubators and accelerators supporting the development of new companies
- Market demand
Describe the difference between equity and debt financing.
Equity vs debt
Provided by who
Do they get ownership?
Need collateral?
Asking for interest? Or looking for capital gains?
Performance based payments or interest payments?
Provide broad answers to the general financing flow in New Space activities over time
In New Space activities a usual financing flow is
– Start with own money (FFF)
– First financing via a Business Angel (Network)
– Attract a Venture Capitalist with a good Business Plan (leaving 4-6 yrs)
– Finance operations with Equity Investor, stocks or debt financing
Provide broad answers to the trend over time of the different equity financers.
Early stage: Grants are important
Business Angels: 50K to $1million
Venture Capital: $2-75 million
Private Equity: $100 million to 1billion
Banks: $100 million to 1billion
There is a geographical shift from US equity financing to the rest of the world
