Date of Award

6-16-2016

Document Type

Thesis

Degree Name

Master of Science in Engineering Management

Department

Department of Systems Engineering and Management

First Advisor

Gregory D. Hammond, PhD.

Abstract

The Air Force estimates military construction (MILCON) costs early in a project’s development as a part of the funding approval process. However, many of the initial cost estimates deviate significantly more than expected from the actual project costs, hindering funding allocation efforts. There is a need for improved estimation techniques. This research examines a cost estimation model for the initial programming stages of a project when only general scope information is available.

This study develops a Monte Carlo simulation based on historical construction cost data to predict project costs base on facility type. For a given facility type, the research identified distributions and associated correlations to model major cost elements from the historical data. The Monte Carlo simulation uses these distributions and correlations to estimate the total cost of separate validation projects. The results reveal a histogram, showing the probability range of possible costs for each project. This research compares these results to the actual costs and cost estimates for the same projects along with additional estimated costs derived from standard Air Force cost estimation guides. The results highlight the level of accuracy for current estimation techniques and validate the utility of this model. The Air Force can use this model to improve initial cost estimates, better predicting expected costs in addition to revealing the uncertainty inherent in those costs.

AFIT Designator

AFIT-ENV-MS-16-M-137

DTIC Accession Number

AD1054025

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