Improving the Cost Estimating Capability at the FAA
Management & Lessons Learned Track
M&LL-13 Hall Paper Improving CE at FAA
For many years the FAA has struggled to provided quality products and services to the aviation community while controlling schedule and cost overruns. Agencies such as OMB, GAO, and the DOT OIG have stated that the FAA must become more fiscally responsible in providing these products. The agency has responded by developing in- house processes and procedures that will provide the framework to achieve this directive.
The largest culprit of cost overruns on major acquisitions is determined to be the lack of cost estimating discipline in building cost estimates. It was determined that there needs to be greater standardization of cost estimating procedures throughout the agency. The plan to improve the FAA’s cost estimates are outlined below:
• Perform an Independent Cost Evaluation on all acquisitions above $1M.
• Establish required cost estimating training curriculum.
• Build robust business cases based on link between cost, risk, and schedule.
• Tie agency goals and metrics to improving the cost estimating capability.
• Use Exhibit 300 as the baseline document for acquisitions.
• Partner with other established/benchmarked cost estimating communities.
Although some of these activities are still a work in progress, there are already measurable improvements. Last fiscal year (FY2006), the agency met all of its cost performance targets and remained within acceptable cost baseline limits. As the agency continues to improve its cost estimating capability it will ultimately reach its goal to become a consistently credible source of cost estimates.
Katrina Hall is a senior cost estimator and operations research analyst at the Federal Aviation Administration. With over 15 years of cost estimating experience, she began her federal career working for the Navy at Naval Surface Warfare, Indian Head Division and more recently the Federal Aviation Administration. Katrina holds a Bachelor of Science degree in Industrial Engineering and is Level III DAWIA Certified in Business Financial Management. Her background includes, but not limited to; cost benefit analysis, linear programming, linear regression, financial analysis, and building cost estimating models in support of major acquisitions.