Tools › Project Management › Cost › Cost Risk Analysis › Example
NASA Cost Estimating Handbook Appendix G: roll-up of eleven correlated lognormal WBS elements
| Tool | Cost Risk Analysis |
| Source | NASA (2015). NASA Cost Estimating Handbook, Version 4.0. Appendix G, Section G.5, Tables G-4 and G-5. |
| Level | Professional |
Problem
A mission's eleven WBS elements are given as a mean and standard deviation each (lognormal), with a correlation of 0.6 between every pair of uncertain elements and the launch vehicle fixed. Roll them up analytically and by Monte Carlo: the total mean, the correlated standard deviation against the root-sum-square, the cost S-curve and the 70 % confidence cost.
Inputs to Enter
- Elements (loaded by default, $M mean / SD): Project Management 5.7 / 0.57; Systems Engineering 3.8 / 0.38; Safety and Mission Assurance 4.5 / 0.45; Science / Technology 6.2 / 0.93; Payload 8.1 / 2.67; Spacecraft 98.4 / 19.68
- Mission Operations 10.4 / 3.12; Launch Vehicle / Services 87.0 / 0 (fixed); Ground Systems 3.5 / 0.35; Systems Integration and Test 8.0 / 2.40; Education and Public Outreach 0.7 / 0.04
- Lognormal distributions, correlation 0.6 between every pair; Monte Carlo 20,000 draws with Iman–Conover rank correlation
Answers
- Sum of means 236.3 (handbook $236M); root-sum-square SD 20.29 (independent), correlated SD 26.95 (handbook ±1 SD = $209M / $263M, i.e. 27), fully correlated 30.59
- Monte Carlo: mean 236.3, SD 26.9, P50 233.8, P70 248.3 (handbook: 70 % chance below $248M), P80 257.7, P90 271.9; point estimate 236.3 sits at about 54 %
- Spacecraft carries 71 % of the total variance (Spearman 0.97 with the total)
Notes
The tool's default inputs are this example; press Submit to reproduce it. The handbook's statement that 40 % of the distribution lies below $221M is read off its figure and is not reproduced (both the analytic and the simulated P40 are about 227).