In the light of challenges experienced in cost estimation at the bidding stage of complex engineering services in the defence industry (e.g. contracting for availability), the purpose of this paper is to present a framework to manage the influence of uncertainty on cost estimates.
The research applied the Soft Systems Methodology and benefitted from interaction with four major organisations in the defence industry through document sharing, semi-structured interviews, workshops, and case studies.
The framework is composed of seven stages to plan, identify, prioritise, classify, and manage cost uncertainties. Through the validation of three case studies some of the key benefits of the framework were realised in project planning, uncertainty visualisation, and capability management.
The research has been applied in the defence sector in the UK and focuses on the bidding stage. Further research needs to be applied to confirm that the findings are applicable across industries and across the life cycle.
The paper builds on the theory behind risk and uncertainty management and proposes an innovative framework that avoids the assumption of “perfect” knowledge by raising questions about the validity of the input data.
The authors are grateful for the kind support of the Cranfield IMRC (PSS-Cost project) for funding this research, and the industrial partners. The authors are also grateful to the members of the Manufacturing and Materials Department for their support and contribution to the research. The authors would also like to express their gratitude to the reviewers for their constructive comments.
Ahmet Erkoyuncu, J., Roy, R., Shehab, E. and Kutsch, E. (2014), "An innovative uncertainty management framework to support contracting for product-service availability", Journal of Service Management, Vol. 25 No. 5, pp. 603-638. https://doi.org/10.1108/JOSM-07-2013-0193
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