ACAP Cost Risk and Uncertainty Analysis 2

Question 1

What is the coefficient of variation (CV) used for in cost risk analysis?

Accepted Answer

To measure relative variability of a cost estimate as standard deviation divided by the mean

Answer

To determine the most likely cost outcome

Answer

To compare schedule variance to cost variance

Answer

To calculate the risk-adjusted budget

Question 2

In cost risk terminology, what is 'aleatory uncertainty'?

Accepted Answer

Irreducible variability inherent to a process or system

Answer

Uncertainty that can be reduced by gathering more data

Answer

Risk arising from poor cost estimating methods

Answer

Uncertainty due to changing government requirements

Question 3

Which distribution is most commonly used to represent a cost element's uncertainty when only minimum, most likely, and maximum values are known?

Accepted Answer

Triangular distribution

Answer

Normal distribution

Answer

Log-normal distribution

Answer

Uniform distribution

Question 4

What does a 'tornado chart' display in cost risk analysis?

Accepted Answer

Ranked sensitivity of total cost to each individual input variable

Answer

Probability of cost overrun at various thresholds

Answer

Cumulative cost growth over program phases

Answer

Correlation matrix between cost elements

Question 5

What is 'risk-adjusted cost estimate' in Army cost analysis?

Accepted Answer

An estimate that incorporates probability distributions for uncertain inputs rather than single point values

Answer

An estimate approved by the Army Cost Review Board

Answer

An estimate that has been escalated to then-year dollars

Answer

An estimate reflecting contractor-proposed risk fees

Question 6

Which Army organization is responsible for providing independent cost estimates (ICEs) for major Army programs?

Accepted Answer

Army Cost and Economic Analysis Center (ACEA)

Answer

Army Materiel Command (AMC)

Answer

Program Executive Office (PEO)

Answer

Defense Contract Management Agency (DCMA)