Uncertainty in through-life costing-review and perspectives

Yee Mey Goh, L. B. Newnes, A. R. Mileham, C. A. McMahon, M. E. Saravi

Research output: Contribution to journalArticle

40 Citations (Scopus)

Abstract

Estimating through-life cost (TLC) is an area that is critical to many industrial sectors, and in particular, within the defense and aerospace where products are complex and have extended life cycles. One of the key problems in modeling the cost of these products is the limited life-cycle information at the early stage. This leads to epistemic and aleatory uncertainty within the estimation process in terms of data, estimation techniques, and scenarios analysis. This paper presents a review of the uncertainty classification in engineering literature and the nature of uncertainty in TLC estimation. Based on the review, the paper then presents a critique of the current uncertainty modeling approaches in cost estimation and concludes with suggestion for the requirement of a different approach to handling uncertainty in TLC. The potential value of imprecise probability should be explored within the domain of TLC to assist cost estimators and decision makers in understanding and assessing the uncertainty. The implication of such a representation in terms of decision making under risk and decision making under uncertainty is also discussed.
Original languageEnglish
Pages (from-to)689-701
Number of pages13
JournalIEEE Transactions on Engineering Management
Volume57
Issue number4
DOIs
Publication statusPublished - Nov 2010

Keywords

  • cost estimation
  • through-life cost (TLC)
  • uncertainty
  • decisions under risks and uncertainty

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