MGB Flashcards

Question

Describe the **Benefits** of Project Management

Answer 1

* Identification and understanding of * functional tasks & responsibilities * time scheduling planning & control * methodologies for cost trade-off analyses * Measurement of accomplishment against plan * Early identification of issues and challenges * Identification & control of project risks * Project configuration & change control

Answer 2

The product tree is the breakdown of the project into successive levels of hardware and software products or elements * The Product Tree (PT) is required to define the H&SW (hardware and software) Products: * Development models * Ground Support Equipment (GSE) * H&SW Integration Tools * Test equipment * It includes items submitted to customer configuration control and items that are the subject of a technical requirements specification * The PT forms the basis for the elaboration of the project work breakdown structure

Answer 3

* The WBS is the principal structure used in managing a project and provides a framework for managing schedule cost and technical content * It divides the project into manageable Work Packages (WPs), organized according to the nature of the work by breaking down the total work to be performed into increasing levels of detail * The WBS is derived from the PT, selected elements of which are extended to include support functions (i.e. management, engineering, product assurance) and associated services (e.g. test facilities) **WBS serves several important Purposes (see pp)**

Answer 4

Content of Work Package Description (WPD) * Work Package (WP) Identification * Title * Identification of the WP in the WBS (WP Number) * Date of the Start and End of the WP * Company or Entity in charge of the WP Performance * Assign Work Package Manager * Description of WP Tasks to be Performed * Tasks Explicitly Excluded * WP Inputs (Documents, Hardware, Software) * WP Outputs (Products: Hardware, Software, Documents)

Answer 5

**Milestones** are scheduled events that indicate the completion of a major deliverable event or set of events * Milestones are * Measurable * Observable * Progress Markers * Independent of time (zero duration – discrete event) * Milestones must be linked to WBS and Schedules *Examples* completion of project phases, product delivery (HW/SW), key go/no-go decisions and project reviews

Answer 6

**Bar charts (Gantt charts)** Shows the task duration against a calendar * Tasks plotted against a timeline and separated into discrete activities * Shows project milestones * PDR * CDR * Launch * etc.

Answer 7

**PERT network plan** Once the project has been broken down into individual tasks, these tasks can be organized into a flowchart to show the sequence of the project's tasks. The task name and its duration in days/weeks /months are drawn in the corresponding box. The PERT network plan has arrows leading to tasks. The arrows indicate which tasks may begin once the preceding task has been completed * Program Evaluation Review Technique (PERT)

Answer 8

Critical Path Analysis * The Critical Path represents the longest time sequence of a time plan * Any delay of tasks on the Critical Path will delay the entire project as this delay is passed on to all subsequent tasks dependent on it * Tasks not on Critical Path have float (or slack or buffer) * The time a task can be delayed before another task’s start is delayed is called *free float* * The time a task can be delayed before it becomes a member of the Critical Path is called *total float*

Answer 9

PERT - Program evaluation and review technique CPM - Critical Path Method

Answer 10

* Top-down estimation – Expert judgments * Budget planning * Advanced studies * Back-up assessments, etc. * Parametric estimation * bases the cost of the new system upon the cost of similar characteristics: weight, power requirements, materials etc) * Highly depends on subjective assumptions and is therefore risky * Cost estimation relationships (CERs) * Software supported cost models (PRICE, 4Cost, others) * A comparable task is done before * Bottom-up manpower and cost estimation * Grass route cost commitments – WP based estimation * Required for binding proposals * Applied for change requests in running projects Project Planning and Costing 1) Bottom-Up Cost Estimation * Year of Economy * Year of Technology * Geographical Distribution * Inflation Rate * Price Conditions (CR, FP, FFP) * Escalation Formula * Incentive/Penalty Clause * Currencies * Conversion Rates * Profit Margin * Estimating Responsibility 2) Manpower and cost estimation Cost estimation is an important responsibility determining the expected costs of a tasks or project. This task requires that the estimator is highly qualified because an accurate and reliable cost estimation has a positive impact on the project.

Answer 11

Cost estimation is an important responsibility for determining the expected costs of a task or project. This task requires that the estimator is highly qualified because an accurate and reliable cost estimation has a positive impact on the project. * Over-estimation may result in a project not been accepted by the customer * Under-estimation may increase the risk of failure * A proper cost estimate supports the project budgeting and funding process. * Repeated and documented cost estimates allow sound comparisons to support the decision-making process. * Prior to the project start, a detailed manpower and cost plan (MCP) has to be prepared – Usually as part of a Financial Proposal * For international projects, it is recommended, that a common currency (i.e. Euro, USD or any other currencies) is applied. * In addition, a project-currency conversion table has to be applied for other currencies * Profiles of manpower and cost and payment schedules must also be prepared

Answer 12

**Manpower and cost plan** * The MCP shall be subdivided into cost categories. Typical labour categories are: * Management and administration * Engineering and scientists * Drafting and documentation * Manufacturing * Testing * Others (to be specified) * The estimated manpower and other direct costs as required for the successful execution of a project has to be distributed over time; usually at monthly intervals. * The anticipated manpower efforts and costs are to be shown at all levels of the WBS, i.e. at WP level up to the entire program/project **Bottom-up Cost Estimation** * Cost for each WP has to be calculated * Cost and Price are two different subjects * **Price = Sum of all WP costs + Overheads + Profit** * Plans to be generated from WP cost data * Cost Summary per Company * WP Manpower Plan * Travel & Subsistence Plan * Other Cost Data as Required **Composition of the hourly rate** is made up of: * Selling price * R+D overhead * Division overhead * Profit rate * Corporate overhead * Basic rate

Answer 13

**Project Control Responsibilities - 1** * Definition of Project Objectives * Statement of Work (SOW) – Tasks & Deliverables * Work Breakdown Structure (WBS) & Work Package Descriptions (WPDs) * Project Milestones respectively Toll Gates * Project Time Schedules – Bar Charts * Schedule Status Monitoring & Control * Schedule Trend Analysis **Project Control Responsibilities - 2** * Resource and Cost Estimation * Resource & Cost Control (CTC & CAC) * Documentation & Configuration Control * Sub-Contractor & Supplier Monitoring * Documentation and Configuration Control * Contract Change Control * Project Risk Management * Meeting & Action Item Control * Status Reporting

Answer 14

* Through use of GANTT charts (see below) and Milestones (see the question regarding Milestones for image). * Can plot and see the ‘slippage’ happening too.

Answer 15

Financial Status including Commitments **Example****:** * Initial Total Budget +100 * Additional Costs for Changes +20 * New total Budget +120 * Actual Costs/Commitments at TN -80 * Actuals versus Budget at TN [120/-80] * Remaining Budget +40 * Estimated CTC (cost to completion) at TN acc. to Schedule -55 * New Balance (Forecast) -15 TN = Time now

Answer 16

**Definition of Earned Value:** 1. A _methodology for determination_ of the project value reached at the time now (i.e. at the agreed status control date – usually monthly) 2. An _integrated management methodology_ which provides the project manager at any time with an overview of the integrated project status including: * **Technical** status (performance and configuration) * **Schedule** status (planned vs. actual completion) * Manpower and **cost** status (budget vs. actual). The Earned Value Concept was Developed and Implemented in the early 60‘ (MOD, USAF, Industry) Can make predicted vs. actual graphs (see slides)

Answer 17

**Primary Objectives of Risk Management** * Keep Project Management informed on any Potential and Actual Risk which becomes visible. * Identification of Risks for each Work Package in order to inventory potential causes and assess consequences on Project Objectives. * Classify all identified risks according to the ranking of their criticality. * Implement on a regular basis a Risk Abatement Plan. * Establish and implement a Risk Status Report (RSR) **Typical Risk Areas** Technical Risks * Function * Quality * Reliability Schedule Risks * Late Completion of: * Design * Manufacturing * Test * Late Delivery Financial Risks * Manpower Overrun * Cost Overrun * Penalty Personnel Risk * Availability * Qualification * Engagement * Commitment Legal Risk * Applicable Law * Regulations * Procedures Contractual Risk * Acceptance * Payment * Bankruptcy

Answer 18

**Contract Change Control** * Only for (firm) fixed-price contracts * Change Request by Client * Cost proposal and negotiation * Change Request by Contractor * Change Review Board (CRB) classifies: * **A:** fully paid by the customer * **B:** paid by the customer without profit * **C:** to be absorbed by the contractor * **D:** no cost impact

Answer 19

1. **Baseline control** including identification and documentation of functional and physical characteristics of systems, subsystems and products 2. **Control of changes to the characteristics** of the identified items, with verification of compliance to agreed requirements 3. **Detection of the implication** of changes applied to one configuration items on others and on systems 4. **Recording** of changes, documentation **and** **reporting** of changes and implementation status 5. Make sure that all project participants have the **same view and use identical data** during the life cycle of the project, in a consistent and controlled manner

Answer 20

* **The cost impact of place (=location):** Cost is a function of the country of production; piece costs can vary widely * **The cost impact of time:** when adjusting for inflation, must convert currency »as spent« into »constant year currency«, use correct escalation index. This adjusts for the inflation rate. But there are different conversion indexes to use so must be wary. Eg//GDP deflator or consumer price index or NASA has their own ‘new start’ index. * **The cost impact of timescale:** Project cost spread over time depends on the timescale and has to fit within budget ceilings. So eg// cost over a 5 yr project will not be the same cost every yr but likely forms a bell curve over course of the project. * **The cost impact of schedule:** adjusting project schedule will have a negative effect on effort and costs (“Schedule Penalty”). This must be taken into account... if you accelerate a project schedule need more manpower etc. and this can be very costly. * **The cost impact of human learning:** It helps to reduce cost and has been a research subject since the 1930s * Every time the quantity produced is doubled, the time spent is reduced by the same percentage. * Unit learning curve (ULC) must always be specified * Human Learning Effect uses two Systems: Boeing (cost of unit n)/Crawford and Wright (Average cost of n units) * AUC of Wright \< AUC of Boeing for same unit learning curve (ULC) value

Answer 21

**_Cost and Price are two completely different concepts!_** * **Cost is the monetary value of human effort to create something.** * Cost changes as a function of place: human effort does not have the same economic value across different regions and countries of the world. * Cost changes as a function of time: human effort’s economic value is subject to inflation; while schedule and cost are closely coupled, human learning reduces the cost. * Cost correlates with performance, both are present in trade‐offs * Very often, the cost of something is unknown -\> this is the raison d’être for cost estimators! * The way cost is calculated can vary extremely, depending on the accounting rules applied * Often the cost of something is unknown, much to the chagrin of owners and producers alike * **Price is the outcome of a monetary agreement between 2 parties in exchange for a good or service** * Price can be observed in an actual transaction, so it is known, at least to the parties involved! * The price is potentially a very good indicator of the value (=benefit of ownership) of a good or service to the buying party, insofar as price ≤ value! * In a market, price follows the law of supply and demand * The price of a good or service can be totally disconnected from the cost of providing it

Answer 22

* Cost estimates preferably try to forecast the »should cost« of the product or service * Forecasting involves making projections about future performance on the basis of historical and current data. A cost estimate is a forecast of what the cost will be or should be. The distinction is important for the decision‐maker: * The **»will cost«** is a cost forecast of the product as proposed by the engineers designing it. * The **»should cost«** is a cost forecast of the function fulfilled by the product, as seen by the consumer or market. * If the »will cost« is higher than the »should cost«, there will be a problem with competitiveness! * The »**Pareto Frontier**« helps to understand the concept of should cost, as there will be the lowest cost for a given performance * **Engineering build-up** - Engineering drawings then route sheets then cost sheets. The best method if time and labor are not issues. Uses WBS to estimate labor cost of every single part and subsystem, very detailed. The »traditional approach« for determining product cost is no longer appropriate. Today, decisions about production must be made very early. The profitability of a new product must be analyzed before going into detailed design, this means cost must be estimated before drawings are available! * **Analogy** - In your head compare what else you’ve seen that’s similar on the market. Use when don’t have much data available or as an end crosscheck. Using this technique, the analyst must have a thorough understanding of both the old system, used as a reference point and the new system in order to assess accurately the differences in complexity between them. Often, there is ni existing system that could be used for comparison. * **Parametric** - bases the cost of the new system upon the cost of similar characteristics (weight, power requirements materials, etc) of a previously costed system. Most useful when a new item is not similar to exicstimg items. But highly depends on subjective assumptions and therefore risky. Uses mathematical relationships to estimate cost from the products description to its cost. Parametric Estimating’s preferred domain are the early phases of a project.

Answer 23

**»Parametric cost estimating is the scientific approach for going directly\*, by using mathematical relationships, from the product’s description to its cost«** ## Footnote »directly« here means without first having to make a list of activities from the engineering drawing and the bill of materials (BoM) * Cost estimating relationships (CERs) apply ‘parameters’ in order to calculate the cost of a product. * The ‘parameters’ are ‘cost drivers’ and therefore determine the product’s cost; hence the naming ‘parametric’! * Over most project phases, parametrics have an advantage. * There are 2 kinds of models; **specific cost** and **general cost** (see slide 26) * Specific Cost Models describe members of one product family, for instance, rocket engines. It can only be used for the product family it was designed for * General cost model can estimate the cost of any product without the need to compare it directly. Can be used for estimating the cost of any product * General parametric models use two key parameters: **Mass** and **Manufacturing Complexity** (MCPLX), aka Quality Level. * With product R having known mass and cost, its specific cost and then quality level s can be established; * If the quality level “s” of an existing product R is known, the specific cost of a similar, but new product M can be determined * Parametric can give roughly an 80% saving on cost and time

Answer 24

Specific models use only 1 key cost driver (mass eg//in kg), general models use 2 (mass and manufacturing complexity) * Cost is a function of Mass * Weight and Complexity in Parametric Hardware Cost Estimating Also, see slide 26.

Answer 25

* Can have 1 item x cost, then multiple items cost more. Higher weight, higher cost * Not always true though: higher weight, lower cost. Why? * E.g//manufacture more motorbikes but the price gets cheaper. This is because bulk manufacturing brings down the cost * Weight as sole cost driver does not lead to a good cost estimating equation (example: motorcycles) * Weight is not enough as a cost driver: * There is also something like “**cost density**”. Higher cost density comes from increased use of labor. * Eg//aluminium rod 8 quid, but a lighter rod that been hollowed out (takes longer) costs more due to labor. The need to measure “cost density” leads us to the concept of **Manufacturing Complexity** (see picture) * Manufacturing Complexity is a function of technology and productivity * Higher productivity is lower relative labor cost * Higher technology, higher relative material cost * cost per weight unit

Answer 26

* The PRICE Hardware Model has been built around Weight and Complexity as Key Parameters * The basic cost is a function of: * 1. **Weight**: The higher the weight, the higher the cost, for the same technology and productivity (Complexity). * 2. **Complexity Factor**: The higher the complexity, the higher the cost, for the same weight. * While weight is easy to measure, how do you find Manufacturing Complexity?

Answer 27

**1) The Complexity factor can be obtained from tables or databases** **Model‐Internal Tables:** * Typical values for a given product or technology * Contain reference (industry average) Complexity Factors * Based on the data collected over the last 40 years * Can be used to generate a should cost when internal data is missing **Knowledge Network:** * Cost knowledge database hosted on the PRICE web site * Contains typical inputs for systems or products to be estimated * Alternative delivery vehicle to supply cost research data to the user * Data sources: NASA, DoD, aerospace & defense companies **2) The complexity factor can be obtained from the model’s generators** * Assessing technical characteristics of the equipment. Drawing helps **3) The complexity factor can be obtained from calibration** * Results from the previous calibration can be documented and re‐used for future estimates * Calibration involves running the model backwards, this obtains the complexity figures * You use a value from a previous actual cost (expense or analytic estimate), establish the complexity by calibration, which can then be used as a reference for new products. **The complexity links both, estimation and calibration, in a multilayer ‘onion model’** (see picture) Actual cost \> helps to calibrate \> Complexity \> helps estimate \> estimated cost

Answer 28

Understand Cost Data Normalisation: Most publicly available data is not normalized (see picture) * The »gold standard« of normalised hardware cost information is the Manufacturing Complexity (MCPLX) * The preferred input for calibrating manufacturing complexity is the unit production cost, but it may be virtually impossible to obtain! (from different companies) * Each may have a different unit production cost with different general and administrative costs and different levels of profit/loss.

Answer 29

* Different inflation indexes produce different costs when doing past analysis * Cost normalisation means adjusting for inflation and converting currency »as spent« into »constant«: * different inflation indices lead to different project costs * With general models, parameters lack detail: Manufacturing Complexity may be hard to link to actual cost drivers * Space system cost drivers either must be used in specific cost models or need to be translated into general “complexity” The amount of risk to an estimate is defined by 2 things: * Uncertainty of the estimate * the ‘bet’ (point estimate) **System Cost** * System Cost modelling is more recent than pure hardware and software estimating and the models are not as mature * One driver of system‐level engineering is the number of “equivalent requirements”; quantifying the “value” and “price” of requirements worked out to be very complex and putting a price tag on a requirement doesn’t come easily **Software Cost** * Space projects seem to have a tendency to somewhat neglect software or treat it as an inherent part of electronics * Software sizing is a recurring issue at an early project stage when few information are available; most software size is underestimated * The full potential of state‐of‐the‐art software tools, software reuse and design repeat is not yet realized in the space sector (PRICE ESA software study, 2009)

Answer 30

**The bottom line is:** We understand space project cost quite well, yet there is room for improvement **Lessons learned:** * Lack of good, normalized cost data; context often missing, most data comes from the 1960s/1970s * Space hardware cost drivers well understood; models mature * Systems and software cost analysis needs a better understanding of requirements and sizing * Yet, the probability that actual cost equals the prior point estimate is virtually 0% ... **Recommendations:** * Collect and publish more normalized data; it is out there! * Cost normalization should apply realistic escalation indices (not GDP deflator) * Use probability distributions in place of deterministic point values **Proposals for further Research Lessons Learnt :** * Test how to treat low TRL (technology readiness level) and other negative impacts as a defined cost risk instead of accepting it as inherent cost model uncertainty. * Stimulate the exchange of »open source« cost data in the space (cost) community.

Answer 31

**The managerial process** by which individuals and groups obtain what they **need and want** through creating and **exchanging products of value** with others

Answer 32

_5 stages to the process:_ 1. Understanding market place and customer 2. Developing a marketing strategy 3. Developing a marketing plan 4. Building relationships 5. Capturing value from customers

Answer 33

**1) Understanding market place and customer** * micro environment (direct effects on the company eg// competitors, customers, suppliers, policymakers) * Macro environment (indirect effects on the company) **Marketing function** * Customers have: * needs/wants/demands * value/satisfaction * buying behavior * Competitors/alternative service providers * Competitors * Resellers * Adjacent technology providers (can be partners) * Company * Policy makers * Regulators * Space Agencies * Industry Associations **Porters 5 forces** (model for competition) * Threat of new entrants * Bargaining power of buyers * Bargaining power of suppliers * Threat of substitute products and services * All influence Rivalry among existing competitors **PEST analysis**: * P- political factors * E-Economic factors * S-Social factors (gender, age, health) * T-Technological factors **2) Developing marketing strategy** 1. Segmentation (divide the market into distinct groups of customers) 2. Targeting (select target market that the company will serve) 3. Positioning (how the company positions itself in the market) **3) Developing a marketing plan** Developing programmes to deliver value * Product * Price * Promotion * Place **4) Building relationships** * Supply chain * Customers * 4 marketing P's **5) Capturing value from customers** * KPI (key performance indicators)

Answer 34

**Product** - What do we offer? **Price** - How much does it cost? Set by customer base, Competition base or cost base. **Promotion** - How do we communicate with our customers? (trade shows, conferences and digital marketing) **Place** - How do we distribute our products/services? Direct or through resellers or a combination of the two.

Answer 35

**The future of Space Tourism** * Suborbital spaceflights may not be a sustainable market * Orbital space flights may be the next step, probably adding to the Product Life Cycle (PLC) * Possible long-term evolution: Point-to-Point (P2P) suborbital transport (passengers and cargo transport) **Space tourism falls under the category of ‘Adventure Tourism’** A variety of self-initiated activities utilizing an interaction with the natural environment that contains elements of real or apparent danger, in which the outcome, while uncertain, can be influenced by the participant and circumstance.

Answer 36

**Price** Interest/desire was measured * Demand * Supply **Product** * Requirements: motivation, barriers, risk appraisal **Place** * Physical distribution: Spaceports * Away from commercial air traffic zones * Safe environment * Easy reachable **Promotion** * Target group: Majority involved in ‘risk hobbies’, Net Personal Wealth \> 7 M$, Fitness Level: 46% above average, Average Age: 55 years * Needs exclusivity

Answer 37

**Telephone surveys** - how many months of your salary would you be willing to give to go to space? Major Criticisms: * Population of the survey not adequate * Interest/desire was measured * Then used - Approach in 2002 Futron/Zogby study (100 K$ tickets) 1. Customer group of 7 million$ net worth (spending 1.5% on a single trip in a year) 2. Survey of 450 individuals within that group : 3. Interest in space flight (28%) 4. Pioneering discount (76%) - many said yes but only if one of the first to do it (exclusivity) 5. Physical fitness (86%) 6. S-curve distribution of the target market

Answer 38

**Payload market** using SS2 and Lynx to conduct research (scientific, commercial) * Virgin Galactic - SpaceShipTwo: * Automated payload + VG operator * Scientists with their payload * Contract with NASA (~1.5M$ - 600kg of payload) , SWRI * Also Launcher One derivate * XCOR - Lynx: * Maximum 1 scientist and 650kg payload * Contract with NASA, SWRI, ... **Experiments**: biomedical, astronomy, fluid dynamic and combustion, upper-atmosphere and ionosphere study, ... There is also the **Incentive Travel Market** Companies book seats to use as competition prizes or as ‘best employee of the year award’

Answer 39

* People don’t want to be strapped in seats the whole time * feeling of adventure * Spend a whole week of training * time issues * Private developments

Answer 40

**Requirements** * Easy reachable * Away from commercial air traffic zones (closing air traffic) * Other activities available for accompanying persons * Often therefore to be combined with other space-related activities ( parabolic flights, simulators) * Safe environment (HNWI’s and family...) * Airport infrastructure (emergency services, medical) ex-military airports? * Investments: 250 – 300 M$ **Added-Value chain** * Level 1: Participants * Level 2: Operators and systems, Incl. medical, airport security, meteorology... * Level 3: Family, spectators (hotels, tourist facilities and simulators, memorabilia, ...) * Level 4: Tourism infrastructure (viewers, Ancillary tourism) **Economic impact** Level 1 and 2: 400 million dollars and 2,700 new jobs Level 2 and 3: 70 million dollars and 770 new jobs

Answer 41

He thinks the market will not sustain with the suborbital flights but need to shift to the P2P system to sustain. **P2P could also be used for Cargo transport** * Organs (Implants) * Critical spare-parts * Documents (Tenders!) * And ... Executive laptops **Demand:** * \> 3500 Km * Based upon Concorde parallelism * 50 passengers daily @ 75K$ * New-York/London/Tokyo first trajectory **Costing:** * Suborb-transcost: 4.3B$ * Unit cost: 680 M$ **Technical**: * 4% payload * Environmental (fuel) and acoustics **Legal:** * Start bilateral (Australia 1998 precedence) * Innocent passage right * ICAO and Space traffic management rules afterwards * Liability (consent form) **Opportunity cost for:** * High level executives: 4500$ /hr * Celebrities (film, music, sports...): up to 30,000$/hr

Answer 42

**Medical** * Select-out medical criteria * Psychological **Environmental factors** * Green propellant ( ISO 14000) * Acoustic noise (cfr. Concorde US levels + 75%) **Legal /Regulatory issues** * Air or Space Law? Space ICAO? **Liability** * Informed consent and liability cross-waivers?

Answer 43

“NewSpace” reflects a change of paradigm in the space industry where new business models and processes are disrupting existing markets with more-affordable, faster-paced, innovative products and/or services **Commercial value chain** Most revenue is generated “downstream” in **operations** and **services** $290 billion versus $8 billion (upstream; manufacturing, launch, ground) NewSpace is: * Low cost model * Software driven * Application oriented * Standardization (as opposed to customization) * High tech * Takes business risks

Answer 44

**Earth observation** * Satellite operators: Planet, Axelspace, Spire. * Value-added service companies: Orbital Insight, Earth Cube, Skywatch. **Communications** * Satellite operators of narrowband constellations (information) e.g. ship tracking, internet of thing, vessel tracking: Fleet, Hawkeye, Kepler * Broadband: OneWeb, Telesat LEO, Amazon Project Kuiper * Ground communications: Atlas, infostellar, Leafspace **Launch/access to space** * Launch vehicles: SpaceX, Rocket Lab, Blue Origin * Strstospehic balloons * Launch brokers **Space Exploration** * Orbital infrastructure: Axiom, Made in Space * Crew and cargo transport: SpaceX, Blue Origin * Lunar landers, robotics: Astrobotic, Draper, ispace

Answer 45

* **Technology**, new and emerging with ever cheaper costs * Quantum computing, electric propulsion, AI etc. * **Policy and Law**: * Luxembourg, UK, Japan, India, China have NewSpace-friendly laws and policies * The U.S. has long sought to foster the commercialization of space activities * **Private Funding:** * ****Increasing private investment * Over $100 billlion since 2004 * Startup prizes like AnsariX prize, Google Lunar X-prize, Kickstarter prize * Private, government and academic incubators and accelerators supporting the development of new companies * **Market demand**

Answer 46

* Rising number of small satellite constellations * Increased innovation and new capabilities development * Increased competition * Traditional governance models are challenged * More public-private partnerships: Program/mission jointly developed between government and industry * Boundaries between “NewSpace” and “Old space” are merging * Influencing government strategic planning * Regulatory and policy frameworks adapting

Answer 47

* Bigelow Aerospace laid off its entire workforce * Lay-off personnel * Bankruptcy * Pressure on public finances as governments flow stimulus packages * Deep impact on startups * Supply chain disruptions and work interruptions caused by lockdown * Decrease in demand for many markets * Some experience higher increase in demand (satellite imagery, broadband comms) * Increased Earth observation applications for monitoring COVID-19. * GDP expected to decrease * Higher barriers for new entrants, consolidation and withdrawal of existing players * Access to financing will become more challenging and more competitive in the short- to medium-term.

Answer 48

**Space business financing** * Government budgets * Company budgets * Equity funding **Equity financing** is longer-term, risk-avert and the justification for the money is not performed yearly. * Founders * Private * FInancial * Crowd funding * Governmental corporations Meanwhile, a current **budget** focuses on the next fiscal year. Budget = a plan expressed in quantitative, usually monetary, terms that covers a specified period of time usually one year. * Budget is developed as a result of negotiations between managers of responsibility centers and their management * Government Agencies and large companies work with Budget Financing Examples: Historic incremental budgeting, Zero-based budgeting, activity based budgeting, Planning program budgeting system.

Answer 49

**Equity vs debt** Provided by who Do they get ownership? Need collateral? Asking for interest? Or looking for capital gains? Performance based payments or interest payments?

Answer 50

* Three F’s: Founders, friends, and family * Private: Business Angels, BAN’s * Jeff Bezos * Elon Musk * Paul Allen * etc * Professional Financial: Venture Capitalists (51% of NewSpace, Private Equity * VC: High risk, high profit * PE: More risk avert, longer timeframes * Crowdfunding * Governments, Corporations

Answer 51

**Venture Capitalist**: high risk, high profit Step 1: Seed capital (150K): proof of concept Step 2: Participation (\<49%), early stage, less than $2 million Step 3: Company maturity (added value) (4-6 yrs) Step 4: Exit (10% high flyers that make \> 10x return. 40% is 3-7X return is “on target.” Live on the 10%. **Private Equity Investors** (PEI) (you "made it" if you get here) * Risk-averse * Stay longer * Invest much more

Answer 52

In New Space activities a usual financing flow is – Start with own money (FFF) – First financing via a Business Angel (Network) – Attract a Venture Capitalist with a good Business Plan (leaving 4-6 yrs) – Finance operations with Equity Investor, stocks or debt financing

Answer 53

Early stage: Grants are important Business Angels: 50K to $1million Venture Capital: $2-75 million Private Equity: $100 million to 1billion Banks: $100 million to 1billion There is a **geographical shift** from US equity financing to the rest of the world

MGB Flashcards

(80 cards)