ACAP Cost Risk and Uncertainty Analysis

Question 1

Which statistical technique is most commonly used in DoD cost risk analysis to model the probability distribution of a program's total cost?

Accepted Answer

Monte Carlo simulation

Answer

Linear regression

Answer

Moving average

Answer

Chi-square test

Question 2

In cost risk analysis, what does 'S-curve' represent?

Accepted Answer

Cumulative probability distribution of cost outcomes

Answer

Schedule growth over time

Answer

Cost growth plotted against schedule slip

Answer

Sensitivity of cost to a single input

Question 3

What is a 'point estimate' in the context of cost analysis?

Accepted Answer

A single deterministic value representing expected cost

Answer

The midpoint of a cost range

Answer

The 50th percentile of a Monte Carlo simulation

Answer

A cost estimate prepared at a single program milestone

Question 4

Which risk percentile does DoD policy typically require programs to budget to when using probabilistic cost estimates?

Accepted Answer

80th percentile

Answer

50th percentile

Answer

95th percentile

Answer

65th percentile

Question 5

What is the primary purpose of a sensitivity analysis in cost estimating?

Accepted Answer

To identify which input variables have the greatest impact on total cost

Answer

To determine the probability of cost overrun

Answer

To validate historical analogies

Answer

To establish a cost baseline

Question 6

What does 'correlation' between cost elements mean in a Monte Carlo cost risk model?

Accepted Answer

When risks in different elements tend to occur together, driving costs up simultaneously

Answer

The statistical fit of a regression line to historical data

Answer

The ratio of standard deviation to mean for a cost element

Answer

The dependency of cost on schedule