3.2 Purposes of Cost Estimates
There are different purposes for cost estimates performed at NASA. The processes for conducting these estimates are similar and the basic analytical techniques do not vary. However, it is important to understand and recognize the differences between the purposes of estimates, the customer or requesting organization, and the use and expected result of the estimate.
3.2.1 Life Cycle Cost (LCC) Estimates
An LCC estimate provides an exhaustive accounting of all resources necessary to develop, deploy or field, operate, maintain, and dispose of a system over its lifetime. The life cycle of a system or a program equals its total life, beginning with mission feasibility and extending through operation and disposal or conclusion of the system or program. The LCC estimate should be comprehensive and structured to identify all cost elements including development, deployment, operation and maintenance, and disposal costs. It includes total cost of ownership over the system life cycle, including all program feasibility; program definition; system definition; preliminary and final design; fabrication and integration; deployment; operations and disposal efforts. The projected LCC of a program should reflect both on the life span of the program and on program objectives, operational requirements, or contractual specifications.
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Of the major challenges facing NASA today, perhaps none is more difficult than the challenge of managing a world-class research and development agency for aeronautics, space science, and technology in an environment of constrained resources. To meet this challenge head on, NASA has embarked on several initiatives aimed at aligning its programs with unfolding budget realities. Foremost in these efforts has been the development of NASA’s strategic plan and strategic planning process. To meet the strategic goals set forth in the President’s Management Agenda (PMA), in the NASA Strategic Plan, and in the NASA Cost Analysis Improvement Plan, the NASA Cost Estimating Community (CEC) has responded by beginning new initiatives of its own, including this handbook.