Formulation of financial valuation methodologies for NASA's human spaceflight projects

The United States National Aeronautics and Space Administration (NASA) is continually evaluating proposals to improve its human spaceflight systems. But because of its current restricted budget, NASA must now develop and use financial valuation methodologies (FVM) to ensure that its funds are most appropriately allocated and expended. This article examines how NASA could develop the FVMs it needs to enhance its project analysis process and initiate the projects it requires to both improve its safety practices and spaceflight performance and manage the portfolio of projects it oversees as the managing partner for the International Space Station (ISS). In doing so, it defines the three categories of ISS changes that NASA is managing; it identifies NASA's valuation challenge and the concept of real options analysis (ROA), a capital budgeting tool for reformulating financial options and analyzing potential additional project value.