METHODOLOGY FOR MODELING COST AND SCHEDULE RISK ASSOCIATED WITH RESOURCE DECISIONS INVOLVING THE U.S. ARMY'S MODERNIZATION EFFORTS FOR 2035
Authors
McClary, Matthew A.
Subjects
cost estimation
cost variance
risk management
Monte Carlo simulation
lognormal distribution
Army Modernization and Analysis
AMA
Trade-Space Decision Exploration System
TRADES
Cost Assessment Database Enterprise
CADE
cost variance
risk management
Monte Carlo simulation
lognormal distribution
Army Modernization and Analysis
AMA
Trade-Space Decision Exploration System
TRADES
Cost Assessment Database Enterprise
CADE
Advisors
Mislick, Gregory K.
Hernandez, Alejandro S.
Wade, Brian M.
Date of Issue
2021-06
Date
Publisher
Monterey, CA; Naval Postgraduate School
Language
Abstract
Prioritization decisions using the Army Modernization and Analysis (AMA)-developed Trade-Space Decision Exploration System (TRADES) does not address programmatic variance related to cost and schedule growth. This study offers an improved methodology for modeling cost risk by employing sound cost estimation principles, distribution fitting, Monte Carlo simulations, and cost/benefit analysis to assist strategic decision makers and the acquisitions community. To that end, this approach follows a five-step methodology that (1) collects and screens cost data from the Cost Assessment Database Enterprise (CADE), (2) determines normalized cost growth factors, (3) identifies and constructs the appropriate distributions for modeling, (4) simulates cost variance among the entire program portfolio, and (5) recommends the necessary contingency cash reserve quantity associated with a decision maker’s confidence level. The result is a credible, repeatable, and effectual cost estimating methodology that promotes commodity-based models for predicting cost growth and measuring risk.
Type
Thesis
Description
Series/Report No
Department
Systems Engineering (SE)
Organization
Identifiers
NPS Report Number
Sponsors
Funder
Format
Citation
Distribution Statement
Approved for public release. Distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.