Double It, Double It Again, and Again, and Once More

Have you ever wondered how NASA estimates the costs of space flight programs?  Courtesy of Glen Butts and Ken Linton (PDF), here is how it was done for the Apollo program:

[T]he original cost [estimate] was 1.5 billion with completion targeted in 1965. The "actual" historical events went something like this. The NASA cost estimating gurus in 1961 projected an amount close to $7 Billion to do the entire program.33 34 This figure was apparently padded to $10-$12 Billion by management prior to giving that estimate to James Webb, the NASA Administrator. Mr. Webb (within hours of receiving the $10-$12 Billion figure) placed an "administrator's discount" on NASA’s ability to predict costs with due precision and by the stroke of his own pen, changed the estimate to $20 billion and submitted it to Vice President Linden B. Johnson. In the words of Robert Seamans Jr., (the Associate Administrator at the time) "We were aghast!"35 This cavalier beginning describes how Apollo's original fiscal requirements arrived at the steps of the Capitol and was subsequently blessed by Congress.

Ironically, the $20 billion amount submitted by Mr. Webb to the Vice president appeared to be a completely arbitrary and highly irregular move. In anyone's book it was a radical cost estimating maneuver to be sure. But in the end, Mr. Webb's innate business sense and the courage to follow what that sense told him validated his action. It turned out to be a leadership demonstration of profound foresight. In the end the "real cost" of Apollo ultimately surpassed Mr. Webb's $20 billion estimate with a price tag of $25.4 billion as was reported to congress in 1973. The final program cost varies depending on what we include or exclude in the calculations,36 37 38 but in all instances exceeds $20 billion.

Today we are submitting a very short analysis of the total costs of the Space Shuttle program, 1971-2011 -- stay tuned.

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