Accession Number : ADP002307

Title :   Addressing Risk and Uncertainty in Cost Estimating,


Personal Author(s) : Jette,G. E.

Report Date : 15 JUL 1983

Pagination or Media Count : 12

Abstract : The function of the Directorate of Cost Analysis at the Aeronautical Systems Division (ASD) of the Air Force Systems Command is to prepare and present cost estimates for weapon systems in various stages of acquisition. Frequently these estimates take the form of Independent Cost Analyses performed to test the reasonableness of the program office estimate or Most Probable Costs developed in support of Source Selection Evaluations. Perhaps the most significant problem in predicting such future costs is the risk and uncertainty inherent in predicting the future. Although ASD has not had a breakthrough in measuring the cost impact of risk and uncertainty, a number of approaches have been developed, adopted, or refined to address risk in cost estimating. These techniques or methods which have been incorporated into cost estimating are as follows: Learning Curve Adjustments, Technology Indexing, ECO (Engineering Change Order) Model, Proposal Analysis, Range of Estimates, Confidence Indexes, and Risk/Uncertainty Assessments.

Descriptors :   *Cost estimates, *Air Force procurement, *Weapon systems, Acquisition, Cost analysis, Air Force systems command, Predictions

Distribution Statement : APPROVED FOR PUBLIC RELEASE