Cost uncertainty management and modelling for industrial product-service systems

Abstract

Globally manufacturing based industries are typically transforming operations to enhance the delivery of services throughout equipment use. Within the defence industry, Contracting for Availability (CfA) has emerged as an approach that is increasingly dominating the interation between the customer and the manufacturers. This application serves as an example for an Industrial Product-Service System, and sets the context to this research. Predicting the delivery of services, particularly at the bidding stage, creates enhanced complexity and unpredictability in costs due to uncertainties. Driven by this contextual challenge the aim of this research is to develop a framework for cost uncertainty management and modelling at the bidding stage of CfA in the defence industry. The thesis presents the existing literature associated to uncertainty in cost estimation, whilst the current practice is demonstrated based on interaction with seven organisations involved in the defence industry. A software prototype, Uncertainty Tool for Assessment and Simulation of Cost (U-TASC), has been developed to implement an integrated cost uncertainty management and modelling framework. The cost uncertainty management framework offers a systematic procedure at the bidding stage to guide subject matter experts to focus the attention on influential uncertainties, while also proposing suitable mitigation strategies. In contrast, the cost uncertainty modelling framework involves a step by step procedure to make use of subjective opinion collated from subject matter experts to reflect the influence of uncertainty in cost estimates. The thesis also presents an agent based model that takes into account the influence of dynamic uncertainty (e.g. failure rate) on cost estimates over time. This is applied within a service supply network, where the interaction between the stakeholders represents a typical CfA with incentives and risk sharing scenarios. The frameworks embedded in U-TASC are validated and verified through three case studies including, a naval radar, aircraft carrier, and naval electronic system. The outcomes indicate that reliable and useful results are generated and the tool is highly applicable. On the other hand, the framework for the agent based model is validated through expert opinion and a pilot case study in the naval domain.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 26 citations exist upstream.