Probability Methods for Cost Uncertainty Analysis, 2nd Edition

7

Modeling Cost and Schedule Uncertainties:

An Application of Joint Probability Theory

7.1 Introduction

When cost uncertainty analyses are presented to decision-makers, questions

often asked are “What is the chance the system can be delivered within

cost and schedule?” “How likely might the point estimate cost be exceeded

for a given schedule?” “How are cost reserve recommendations affected by

schedule risk?” During the past 30 years, techniques from univariate prob-

ability theory have been widely applied to provide insight into P(Cost ≤ x

1

)

and P(Schedule ≤ x

2

). Although it has long been recognized that a system’s

cost ...