Enhanced Scenario-Based Method for Cost Risk Analysis: Theory, Application, and Implementation

Abstract

In 2006, the scenario-based method was introduced as an alternative to advanced statistical methods for generating measures of cost risk. Since then, enhancements to the scenario-based method have been made. These include integrating historical cost performance data into the scenario-based method's algorithms and providing a context for applying the scenario-based method from the perspective of the 2009 Weapon Systems Acquisition Reform Act. Together, these improvements define the enhanced the scenario-based method. The enhanced scenario-based method is a historical data-driven application of scenario-based method. This article presents enhanced scenario-based method theory, application, and implementation. With today's emphasis on affordability-based decision-making, the enhanced scenario-based method promotes realism in estimating program costs by providing an analytically traceable and defensible basis behind data-derived measures of risk and cost estimate confidence. In memory of Dr. Steve Book, nulli...