James Dean has written a report on costs overruns and delays that will likely start to hit the Space Launch System/Orion capsule program in the coming years: Faith in rocket’s progress stumbles: NASA: Budget’s structure makes cost overruns, delays likely – Forida Today. The video shown here earlier goes with this article.

NASA strives for at least 70 percent confidence that programs over $250 million will come in on time and budget, but Bolden said he suspected the heavy-lift rocket might fall short “for a variety of reasons, mainly having to do with reserves.”

“So then, you have to decide, OK, how much risk do you want to accept if you’re going to go below this level?” he told the NASA Advisory Council on July 31.

As Rick Boozer discussed in his book, The Plundering of NASA: an Exposé, a Booz Allen Hamilton study of SLS/Orion in 2011 said that the program would meet its cost and schedule for the first 3-5 years but that the agency was far too  optimistic for subsequent years : Executive Summary: Independent Cost Assessment [ICA] of the Space Launch System, Multi-Purpose Crew Vehicle And 21St Century Ground Systems Programs – Booz Allen Hamilton (pdf).

Finding: The Programs’ estimates are serviceable and can be used for near-term budget planning in the current 3 to 5 year budget horizon. Beyond this horizon, the inclusion of large expected cost savings in the estimates, the beginning of development activities, and the potential for significant risk events decreases the ICA Team’s confidence in the estimates.

[…]

Finding: There are many instances of unjustified cost reductions in the Program estimates. This exposes the Programs to cost risk and undermines the credibility of the estimate. Cost reductions were generally observed in either of two categories: scope reductions where the removed work will likely be required, or the application of anticipated efficiencies (production, competition, etc.) that NASA has not historically achieved. In some cases the efficiencies leading to cost reductions are not explicitly identified. Both of these categories lower the estimates below what historical data suggests and indicate that the estimates are optimistic

[…]

Finding: Programs lack sufficient reserves to cover their Protect Scenarios. Program reserves were applied independent of the level of cost and schedule risk. Quantitative risk/sensitivity analyses have not been performed on any estimates.

[…]

Finding : Program estimates were shaped to fit within an anticipated budget profile. While this is common practice, it is not consistent with GAO cost estimating best practices. Shifting costs to later years to fit upcoming budget caps decreases each Program’s availability of funds for risk reduction, technology maturation, and exposes the Programs to out -year co st growth.