A Scenario-Based Method for Cost Risk Analysis

Abstract

Abstract This article presents an approach for performing an analysis of a program's cost risk. The approach is referred to as the scenario-based method (SBM). This method provides program managers and decision-makers an assessment of the amount of cost reserve needed to protect a program from cost overruns due to risk. The approach can be applied without the use of advanced statistical concepts or Monte Carlo simulations, yet is flexible in that confidence measures for various possible program costs can be derived.