Integrated Cost / Schedule Risk Analysis

摘要

Project costs often exceed their estimatesrnbecause those estimates do not take into considerationrnthe actual duration of project activities. Cost risk willrnalso be underestimated if it does not take intornconsideration schedule risk. This paper presents arnmethod of incorporating the uncertainty in activities’rndurations into the assessment of cost risk. In thisrnmethod, a Monte Carlo simulation of the schedulernprovides uncertainty in time. Incorporating thernschedule risk results into the cost risk model providesrnthe linkage between schedule and cost risk. Thenrnequivalence must be established between the schedulernand network concepts. Uncertainty in costs is thenrnrepresented by uncertainty in “independent costs” (costsrnthat do not depend on time) and “variable costs” (costsrnthat depend on uncertain time and cost per unit time orrn“burn rate” and rate of labor compensation.)rnSimulation of the cost model combines the results fromrnthe schedule risk analysis with the uncertainty in therncost assumptions. The results include the probabilityrndistribution of total project costs and sensitivity of thatrndistribution to the different inputs. Issues are discussedrnand simplified examples are provided.