Handling uncertain information in whole-life costing: a comparative study.

Kishk, Mohammed; Al-Hajj, Assem; Pollock, Robert

Abstract

A number of recently developed algorithms to handle uncertain information in whole life costing (WLC) are explained and validated in the context of two example applications. In the first example application, the proposed methodology is compared to the sensitivity analysis technique. The break-even point has been correctly identified in almost all cases. Furthermore, it has been shown how the employed fuzzy methodology may be seen as a generalised sensitivity approach to which has been added a measure of the precision with which input variables are known to the decision-maker. In the second example application, the proposed methodology is compared to two probabilistic techniques: the confidence index method and the Monte Carlo simulation (MCS) technique. The proposed methodology correctly identified the most uncertain cost items and portrayed well the confidence in ranking. Besides, all predicted net present values were in close agreement with those obtained by the MCS technique. This showed once more the robustness of various measures and concepts employed in the developed algorithms.

Citation

KISHK, M., AL-HAJJ, A. and POLLOCK, R. 2002. Handling uncertain information in whole-life costing: a comparative study. Risk management [online], 4(3), pages 59-70. Available from: https://doi.org/10.1057/palgrave.rm.8240126

• Journal Article Type: Article
• Acceptance Date: Jul 31, 2002
• Online Publication Date: Jul 31, 2002
• Publication Date: Jul 31, 2002
• Deposit Date: Mar 7, 2008
• Publicly Available Date: Mar 7, 2008
• Journal: Risk management
• Print ISSN: 1460-3799
• Electronic ISSN: 1743-4637
• Publisher: Springer
• Peer Reviewed: Peer Reviewed
• Volume: 4
• Issue: 3
• Pages: 59-70
• DOI: https://doi.org/10.1057/palgrave.rm.8240126
• Keywords: Decision making; Integration; Lifecycle costing; Uncertainty; Whole life costing
• Public URL: http://hdl.handle.net/10059/146
• Contract Date: Mar 7, 2008