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.
- Cost Risk and Uncertainty
- Dynamic Propagation
- Financial Contingency
ASJC Scopus subject areas
- Control and Systems Engineering
- Industrial and Manufacturing Engineering