Probability Methods for Cost Uncertainty Analysis, 2nd Edition

13

Cost Uncertainty Analysis Practice Points

The following provides recommended practices and considerations when

performing cost uncertainty analyses. They reect the authors’ insights and

experiences in developing, rening, and applying many of the techniques

presented in this book.

13.1 Treating Cost as a Random Variable

The cost of a future system can be signicantly affected by uncertainty. The

existence of uncertainty implies the existence of a range of possible costs.

How can a decision-maker be shown the chance a particular cost in the range

of possible costs will be realized? The probability distribution ...