On the change of cost risk and uncertainty throughout the life cycle of manufacturing products

Oliver Schwabe, John A. Erkoyuncu, Essam Shehab

Research output: Contribution to journalConference articlepeer-review

1 Citation (Scopus)

Abstract

In practice cost estimators typically assume that cost risk and uncertainty continuously decrease across the whole product life cycle. Industry case studies and semi-structured interviews indicate that while cost risk and uncertainty decreases between technology readiness levels / stage gates, it increases when technology readiness levels / stage gates change. This increase can lead to cost risk and uncertainty levels above those at previous technology readiness levels / stage gates. This difference between assumptions in practice and evidence from case studies and semi-structured interviews may lead to the over- and / or under-assignment of capital reserves over time, thus resulting in binding project capital unnecessarily and / or the need to increase projects budgets in an unplanned manner. Further research is suggested regarding the scale of changes in cost risk and uncertainty when technology readiness level changes / stage gates are arrived at in order to improve robustness of forecasting efforts.

Original languageEnglish
Pages (from-to)239-244
Number of pages6
JournalProcedia CIRP
Volume86
DOIs
Publication statusPublished - Jan 1 2020
Externally publishedYes
Event7th CIRP Global Web Conference, CIRPe 2019 - Berlin, Germany
Duration: Oct 16 2019Oct 19 2019

Keywords

  • Cost Risk and Uncertainty
  • Dynamic Propagation
  • Financial Contingency

ASJC Scopus subject areas

  • Control and Systems Engineering
  • Industrial and Manufacturing Engineering

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