Probability Methods for Cost Uncertainty Analysis, 2nd Edition

417 Enhanced Scenario-Based Method

Confidence

Level

Dollars Million

x

0.70

1

α

120 174.2

Point Protect

Estimate Scenario

PE PS

FIGURE 12.12

Program cost probability distribution for Exercise 12.4b.

protect scenario cost PS, denoted by α

PS

;thatis,

P(Cost

WBS

≤ PS) = α

PS

a. Modify eSBM Equations 12.3 and 12.4 in terms of α

PS

instead of α.

b. Suppose a program team developed their protect scenario and esti-

mated its cost to be $174.2M. Suppose the point estimate cost for this

program is $120M. Suppose the program team assessed α

PS

= 0.70,

CV = 0.30, and that the program’s cost follows a normal distribution.

From this, derive the condence