Considering Risk Within Net Present Value: Calculations for Government Projects
The vision for space includes Shuttle retirement by 2010 and development of new launch vehicles; however, budget increases are not projected. To control costs additional insight into cost factors early in the system life cycle is needed. This article reports on a new launch vehicle upper-stage engine trade study where insight into cost factors was gained by using net present value and applying a set of risk factors to incorporate the risks inherent to key system life cycle phases. A matrix is presented that provides a general framework for assessing these risk levels. This approach shows the effects of various cost factors on the system cost and requires modest resource expenditures for the analysis itself.
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Document Type: Research Article
NASA, Marshall Space Flight Center, Engineering Directorate, Propulsion Division, MSFC, Huntsville, Alabama, USA
Department of Management, Industrial Engineering Program, Worcester Polytechnic Institute, Worcester, Massachusetts, USA
Industrial & Systems Engineering and Engineering Management, University of Alabama in Huntsville, Huntsville, Alabama, USA
Publication date: April 1, 2009