Improved Methodology for Developing Cost Uncertainty Models for Naval Vessels
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Authors
Brown, Cinda L.
Subjects
Advisors
Date of Issue
2009-04
Date
Published: 22 April 2009
Publisher
Monterey, California: Graduate School of Business & Public Policy, Naval Postgraduate School
Language
en_US
Abstract
The purpose of this paper is to analyze the probabilistic cost model currently in use by NAVSEA 05C to predict cost uncertainty in naval vessel construction and to develop a better method of predicting the
ultimate cost risk. The data used to develop the improved approach is collected from analysis of the CG(X) class ship by NAVSEA 05C. The NAVSEA 05C cost risk factors are reviewed and analyzed to determine if different factors are better cost predictors. The impact of data elicitation, the Money Allocated Is Money Spent (MAIMS) principle, and correlation effects are incorporated into the research and analysis of this paper. Data quality is directly affected by data elicitation methods and influences the choice of probability distribution used to give the best predictor of cost risk. MAIMS and correlation effects are shown to make
a significant impact to the overall cost model. Program managers and analysts can readily implement the
enhanced models using commercial Excel? add-ins, such as Crystal Ball? or @Risk and integrate them into their current cost risk analysis and management practices to better mitigate risk and control project cost.
Type
Technical Report
Description
Series/Report No
Department
Graduate School of Business & Public Policy (GSBPP)
Acquisition Research Symposium
Identifiers
NPS Report Number
NPS-AM-09-035
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.