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

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 secundus, for his kindness and devotion, and for his invaluable comments and insights on an earlier draft.