A Range of Cost Measuring Risk and Uncertainty in Major Programs:

An Aid to Decisionmaking

PSAD-78-12: Published: Feb 2, 1978. Publicly Released: Feb 2, 1978.

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Historically, major Federal programs and projects have experienced substantial cost growth. Overly optimistic estimates, problems encountered during the life of the program, inflation, and uncertainty associated with the estimating process itself contribute to the cost increases.

Uncertainty is the keynote in decisions involving Federal programs which span many years. Agencies continue to present early cost projections to Congress as single-point estimates despite the fact that they are highly misleading. A range of probable cost should be presented in addition to the single, most likely, point estimate which would remain as program and budget cost estimates.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should require that each agency submit to the pertinent oversight and appropriation committees an analysis of the uncertainties affecting each program including: an identification of significant uncertainties that could cause deviations in estimated program cost, a range of potential cost around the point estimate reflecting the potential cost changes, and a statement of the likelihood of the actual cost exceeding certain predetermined levels.

 

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