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

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

Authors

Mohammed Kishk

Assem Al-Hajj

Robert Pollock



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.

Journal Article Type Article
Publication Date Jul 31, 2002
Journal Risk management
Print ISSN 1460-3799
Electronic ISSN 1743-4637
Publisher Palgrave Macmillan (part of Springer Nature)
Peer Reviewed Peer Reviewed
Volume 4
Issue 3
Pages 59-70
Institution 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
DOI https://doi.org/10.1057/palgrave.rm.8240126
Keywords Decision making; Integration; Lifecycle costing; Uncertainty; Whole life costing

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