Enhancing the Enhanced Scenario-Based Method of Cost- Risk Analysis

Report Number: NPS-CE-11-177

Series: Cost Estimating

Category: Cost Risk Analysis

Report Series: Sponsored Report

Authors: Seth T. Hooper

Title: Enhancing the Enhanced Scenario-Based Method of Cost- Risk Analysis

Published: 2011-11-01

Sponsored By: Acquisition Research Program

Status: Published--Unlimited Distribution

Research Type: Graduate Student

Full Text URL: http://acquisitionresearch.net/files/FY2011/NPS-CE-11-177.pdf

Keywords: cost-risk analysis, actual cost, full-rate production, Weapons System Acquisitions Reform Act (WSARA)

Abstract:

The current s-curve method of cost-risk analysis for major DoN acquisitions projects does not accurately estimate actual cost when the program reaches full-rate production. Another, sometimes more effective method of measuring cost risk, is the enhanced scenario-based method (eSBM) of risk analysis. The reason that cost estimations based on Milestone B costs are inaccurate is that little, if any, real information about the project is known at that point in the project. eSBM allows managers a less statistically tasking method of determining cost risk for a project, while still maintaining the requirements of the Weapons System Acquisitions Reform Act (WSARA) of 2009. In measuring the usefulness of eSBM, the key factors should focus on the acquisition strategy being used for the project and the time frame from Milestone B to later milestones. I hypothesized that different acquisition strategies will yield different levels of success in estimating cost risk for eSBM.