Uncertainty to Probability for Cost with Duration Estimating Relationships (CDERs)
Ross, M.
r2Estimating, LLC

This paper starts with the premise, "The only thing certain about project performance is uncertainty." Years of industry experience and project data tells us that cost and duration estimating is essential to diligent affordability management and project management. It also tells us that projects behave according to certain dynamic properties; that time, money, and system content / performance are all inexorably linked; that this linkage is influenced by people, project, and product characteristics; and that, prior to project completion, everything is uncertain. A primary goal of any estimating process should therefore be to not only yield values for cost and duration; it should also indicate whether or not these values satisfy their corresponding goals within some corresponding desired probability of success. This paper describes a new chart (we call it a Ross chart™) that shows the confidence limits (probabilities of success) and goals satisfaction of the two coupled dependent variables in a bivariate estimating relationship. Using a Cost with Duration Estimating Relationship (CDER) example (i.e., cost coupled with duration as a function of content / performance and efficiency), the paper describes a method for stochastic (probabilistic) treatment of bivariate relationships. It presents the example using Ross charts to show the degree of risk associated with a particular estimating solution. In other words, this paper presents a process for performing confidence-driven estimating.