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AFCAA Cost Risk and Uncertainty Analysis Metrics Manual

Risk Track

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The Cost Risk and Uncertainty Handbook (CRUH), published by the Air Force Cost Analysis Agency (AFCAA) in July 2007, is a reference for approved methods, practices, and reporting requirements needed to produce a realistic, defendable cost uncertainty analysis. CRUH addresses the question “how to do it”. CRUAMM provides guidance on “what to base it on” – that is, it provides data and data-driven uncertainty distributions for potential use in your cost model or for use as cross-checks. This paper will present a status on development of this supplement to the AFCAA CRUH.

Choosing the right uncertainty distributions for your cost risk analysis is critical. The purpose of the CRUAMM is to provide the analyst a “place to start” and a source of distributions based upon data-driven analysis. CRUH provided broad, expert opinion suitable for the most generic of analysis. CRUAMM is designed to provide commodity specific guidance at various levels within the commodity WBS, CRUAMM guidance introduces the principle of “orders of dispersion”. Uncertainty is quantified by measuring dispersion in observed data sets at different levels of detail. In the process, a custom curve-fitting tool was developed to facilitate analysis of hundreds of data sets to generate the recommended distribution and the parameters that will become the uncertainty model inputs.

This paper summarizes the 17 Key Risk areas discussed in the CRUAMM, the data collected to date, the analytical curve-fitting framework, emerging results, how to make use of it in a Crystal Ball, @Risk or ACEIT model and the path forward.


Wilson Rosa
Air Force Cost Analysis Agency
Wilson Rosa is a Technical Advisor with the Information Technology Division of the Air Force Cost Analysis Agency (AFCAA). Prior to joining AFCAA, Mr. Rosa worked at the Naval Sea Systems Command as a General Engineer where he was responsible for analyzing numerous major acquisition programs including Remote Mine Hunting System, Standard Missile Block IV, Cobra Judy Replacement, Naval Fires Network, and Area Air Defense Commander. Mr Rosa also spent 2 years with the Naval Air Warfare Center (NAWC) as an Industrial Engineer. At NAWC, he prepared multiple budget requests and cost analyses for the V‐22 Osprey and T‐45 Goshawk project offices. Before joining NAWC, Mr. Rosa was an Engineering Director with Caguas Medical Center (Puerto Rico) where he was responsible for the safety, daily operations, and modernization of 13 regional hospitals.
Throughout his financial management career, Mr. Rosa has received numerous awards and accolades to include 2006 Civilian Cost Analyst of the Year, 2003 Comptroller Excellence Award from the Assistant Secretary of the Air Force (SAF/FM), 2000 Procurement and Competition Excellence Award from the Assistant Secretary of the Navy (ASN/RDA), 2008 Comptroller Eagle Award, and 2003 Runner‐Up Civilian Cost Analyst of the Year from the American Society of Military Comptrollers.
Mr. Rosa has recently earned his PhD in Engineering Management at George Washington University
(GWU). In 2001, he earned his M.S. in Engineering Management from GWU. He majored in Mechanical Engineering, graduating in 1995 from the University of Puerto Rico.

Alfred Smith
Tecolote Research, Inc.
Alfred earned a Bachelor Mechanical Engineering degree from the Canadian Royal Military College and a Master of Science with Distinction in naval architecture from the University College, London, England. He spent 21 years in the Canadian Navy driving submarines
(Navigator, Operations Officer) and ten years as a naval architect. He has over 20 years experience leading, executing or contributing to life cycle cost model development and cost uncertainty analysis for a wide variety of military, Coast Guard, NASA and foreign projects. He has been with Tecolote since 1995 and since 2000 has been the General Manager for Tecolote’s Software Products/Services Group, responsible for the development, distribution and support of a variety of web and desktop products including ACEIT. Alfred has delivered numerous papers on cost risk analysis topics and was the lead writer of the AFCAA Cost Risk and Uncertainty Handbook. He is a SCEA Certified Cost Estimator/Analyst (CCEA)

Jeff McDowell
Tecolote Research, Inc.
Jeff is employed by Tecolote Research, Inc. as the Chief Scientist for the Huntsville Group, where he performs cost research and cost estimating for numerous customers. He has thirty years of experience in cost estimating, cost analysis and cost modeling. Mr. McDowell received a Bachelor of Industrial Engineering degree from Auburn University in 1979.

Lew Fichter
Tecolote Research, Inc.
Dr. Fichter is employed by Tecolote Research, Inc. as the General Manager for the Huntsville Group, where he manages the activities of 32 professional cost and financial analysts. He has 45 years of experience in cost estimating, cost analysis and cost modeling, and is the recipient of the SCEA Lifetime Achievement Award. Dr. Fichter received a Masters in Mathematical Statistics from Rutgers University (1970), and a MBA (1974), and a PhD. in Operations Research (1976) from the University of Alabama.