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Addressing Risk and Uncertainty in Cost Estimating,
AERONAUTICAL SYSTEMS DIV WRIGHT-PATTERSON AFB OH
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 RiskUncertainty Assessments.
This article is from 'Management of Risk and Uncertainty in Systems Acquisition: Proceedings of the 1983 Defense Risk and Uncertainty Workshop Held at Fort Belvoir, Virginia on 13-15 July 1983,' AD-A136 230, p96-107.