Enhanced Normalisation Process of Price References for Developing Cost Models
Lamboglia, E.
European Space Agency

Data point normalization is a preliminary fundamental step for the development of consistent Parametric Cost Estimating models. When using prices instead of internal cost, the purpose of data point normalization is in particular to `filter` the values from market influencing factors. The paper is introducing a process for Space Industries prices interpretation, with some insight on the mathematical tools supporting the theory. An Appendix will show to the reader how the prices are normalised to remove market effects biases. By doing so normalised prices can then be treated similarly to costs in the Cost Estimating Relationship development. The paper shows how these market effect parameters have been identified, weighted, and how their possible combinations give a realistic cost simulation. This article finally includes an example concerning a particular case study at equipment level for space borne application, discussing results and lessons learned. This methodology can be extended to any other domain of applications.