Probability Methods for Cost Uncertainty Analysis: A Systems Engineering Perspective, Second Edition gives you a thorough grounding in the analytical methods needed for modeling and measuring uncertainty in the cost of engineering systems. This includes the treatment of correlation between the cost of system elements, how to present the analysis to decision-makers, and the use of bivariate probability distributions to capture joint interactions between a system’s cost and schedule. Analytical techniques from probability theory are stressed, along with the Monte Carlo simulation method. Numerous examples and case discussions illustrate the practical application of theoretical concepts.
While the original chapters from the first edition remain unchanged, this second edition contains new material focusing on the application of theory to problems encountered in practice. Highlights include the use of GERM to build development and production cost estimating relationships as well as the eSBM, which was developed from a need in the community to offer simplified analytical alternatives to advanced probability-based approaches. The book also lists the major technical works of the late Dr. Stephen A. Book, a mathematician and world-renowned cost analyst whose contributions advanced the theory and practice of cost risk analysis.
THEORY AND FOUNDATIONS: Uncertainty and the Role of Probability in Cost Analysis. Concepts of Probability Theory. Distributions and the Theory of Expectation. Special Distributions for Cost Uncertainty Analysis. Functions of Random Variables and Their Application to Cost Uncertainty Analysis. System Cost Uncertainty Analysis. Modeling Cost and Schedule Uncertainties: An Application of Joint Probability Theory. PRACTICAL CONSIDERATIONS AND APPLICATIONS: Elements of Cost Uncertainty Analysis: A Review. Correlation: A Critical Consideration. Building Statistical Cost Estimating Models. Mathematics of Cost Improvement Curves. Enhanced Scenario Based Method. Cost Uncertainty Analysis Practice Points. Collected Works of Dr. Stephen A. Book. Appendices. Index.
Praise for the First Edition:
"Sound theoretical basis, fine-tuned by empirical evidence, and focused like a laser on the application of performing cost risk analysis on complex systems … after teaching from a collection of papers, I’m delighted to finally find this well-written text."
—Daryl J. Hauck, Ph.D., Assistant Professor, Ohio
"Paul Garvey has done a tremendous job taking a technical subject and producing a readable, interesting, and informative primer. … strongly recommend[ed] … to all professional cost analysts, both for its readability and its insights … also recommend[ed] … to anyone who is in the position of making decisions based on cost estimates."
—Phalanx, The Bulletin of Military Operations Research
"… does a very thorough job of explaining probability methods in cost uncertainty analysis in mathematical terms."
—International Cost Engineering Council, 2001
"This book focuses on the development of a structured approach to quantifying the uncertainty of cost estimates, backed by a great deal of mathematical rigor."
—INCOSE Insight, 2001