IDEAS home Printed from https://ideas.repec.org/a/spr/envsyd/v41y2021i2d10.1007_s10669-021-09799-y.html
   My bibliography  Save this article

The correlation of cost and schedule variance in satellite programs: level of effort versus discrete cost accounts

Author

Listed:
  • Andy Lewin

    (The George Washington University)

  • Ekundayo Shittu

    (The George Washington University)

  • Thomas Mazzuchi

    (The George Washington University)

  • Rene Dorp

    (The George Washington University)

Abstract

This research analyzes cost account-level detail from ten similar satellite programs to assess the relationship between cost and schedule variances. A model is defined to break activity into two types: level of effort (LOE), in which cost is directly proportional to the cost account’s duration and discrete, where the cost is independent of the schedule. Primary data collected by the authors from the ten satellite programs are split into these two categories and analyzed separately. Marginal distributions for schedule and cost for each of the two databases are built using the generalized two-sided power distribution (GTSP). Correlations between cost and schedule variance are calculated for the LOE and discrete cost accounts. Finally, joint distributions are created for each database using generalized diagonal band copulas. The results show that the GTSP effectively modeled the marginal distributions and the generalized diagonal band copula with a slope generating function successfully representing the observed joint distribution. The analysis, resulting from the correlation values, show that the cost and schedule variance for discrete cost accounts are not correlated. However, the LOE cost accounts show a correlation well below the projected perfect correlation. The models were validated by removing one program’s data from the database, regenerating the models, and assessing the accuracy of the model against the program excluded from the model. The model derived from nine programs successfully modeled the results from the tenth program. These results provide both a modeling method and guidance for modeling parameters for joint cost and schedule risk analysis.

Suggested Citation

  • Andy Lewin & Ekundayo Shittu & Thomas Mazzuchi & Rene Dorp, 2021. "The correlation of cost and schedule variance in satellite programs: level of effort versus discrete cost accounts," Environment Systems and Decisions, Springer, vol. 41(2), pages 248-266, June.
    • Handle: RePEc:spr:envsyd:v:41:y:2021:i:2:d:10.1007_s10669-021-09799-y
    DOI: 10.1007/s10669-021-09799-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10669-021-09799-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10669-021-09799-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Roger M. Cooke & Rudi Waij, 1986. "Monte Carlo Sampling for Generalized Knowledge Dependence with Application to Human Reliability," Risk Analysis, John Wiley & Sons, vol. 6(3), pages 335-343, September.
    2. van Dorp J.R. & Kotz S., 2002. "The Standard Two-Sided Power Distribution and its Properties: With Applications in Financial Engineering," The American Statistician, American Statistical Association, vol. 56, pages 90-99, May.
    3. Jose Manuel Herrerias-Velasco & Rafael Herrerias-Pleguezuelo & Johan Rene van Dorp, 2009. "The generalized two-sided power distribution," Journal of Applied Statistics, Taylor & Francis Journals, vol. 36(5), pages 573-587.
    4. Samuel Kotz & Johan René van Dorp, 2010. "Generalized Diagonal Band Copulas with Two-Sided Generating Densities," Decision Analysis, INFORMS, vol. 7(2), pages 196-214, June.
    5. P E D Love & C-P Sing & X Wang & D J Edwards & H Odeyinka, 2013. "Probability distribution fitting of schedule overruns in construction projects," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 64(8), pages 1231-1247, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zachary A. Collier & James H. Lambert & Igor Linkov, 2021. "Algorithms and models for decision making in advanced technology systems," Environment Systems and Decisions, Springer, vol. 41(2), pages 179-180, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pérez, José García & Martín, María del Mar López & García, Catalina García & Sánchez Granero, Miguel Ángel, 2016. "Project management under uncertainty beyond beta: The generalized bicubic distribution," Operations Research Perspectives, Elsevier, vol. 3(C), pages 67-76.
    2. Shokofeh Zinodiny & Saralees Nadarajah, 2022. "Matrix Variate Two-Sided Power Distribution," Methodology and Computing in Applied Probability, Springer, vol. 24(1), pages 179-194, March.
    3. L. Robin Keller & Kelly M. Kophazi, 2010. "From the Editors..," Decision Analysis, INFORMS, vol. 7(2), pages 151-154, June.
    4. Liu, Wenli & Li, Ang & Fang, Weili & Love, Peter E.D. & Hartmann, Timo & Luo, Hanbin, 2023. "A hybrid data-driven model for geotechnical reliability analysis," Reliability Engineering and System Safety, Elsevier, vol. 231(C).
    5. L. Robin Keller & Kelly M. Kophazi, 2012. "From the Editors ---Copulas, Group Preferences, Multilevel Defenders, Sharing Rewards, and Communicating Analytics," Decision Analysis, INFORMS, vol. 9(3), pages 213-218, September.
    6. Ching-Chung Kuo, 2011. "Optimal assignment of resources to strengthen the weakest link in an uncertain environment," Annals of Operations Research, Springer, vol. 186(1), pages 159-173, June.
    7. Francisco Pinheiro Catalão & Carlos Oliveira Cruz & Joaquim Miranda Sarmento, 2023. "The entanglement of time and cost deviations in public projects," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 241-272, March.
    8. Caballer Mellado, Vicente & Herrerías Pleguezuelo, Herrerías, 2007. "Tasacion y Valoracion. Situacion Actual y Perspectiva de Futuro," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 25, pages 23-48, Abril.
    9. Werner, Christoph & Bedford, Tim & Cooke, Roger M. & Hanea, Anca M. & Morales-Nápoles, Oswaldo, 2017. "Expert judgement for dependence in probabilistic modelling: A systematic literature review and future research directions," European Journal of Operational Research, Elsevier, vol. 258(3), pages 801-819.
    10. Björn Bornkamp & Katja Ickstadt, 2009. "Bayesian Nonparametric Estimation of Continuous Monotone Functions with Applications to Dose–Response Analysis," Biometrics, The International Biometric Society, vol. 65(1), pages 198-205, March.
    11. Daekyoung Yi & Eul-Bum Lee & Junyong Ahn, 2019. "Onshore Oil and Gas Design Schedule Management Process Through Time-Impact Simulations Analyses," Sustainability, MDPI, vol. 11(6), pages 1-19, March.
    12. Franco Nicolás, M. & Vivo Molina, J.M., 2007. "Weighting Two Quality Indexes In Valuation Theory: Survival Function And An Alternative Technique/Ponderando Dos Índices De Calidad En Teoría De Valoración: Función De Supervivencia Y Una Técnica Alte," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 25, pages 83-106, Abril.
    13. C. García & J. García Pérez & J. Dorp, 2011. "Modeling heavy-tailed, skewed and peaked uncertainty phenomena with bounded support," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 20(4), pages 463-486, November.
    14. Johan René van Dorp & Ekundayo Shittu, 2024. "Two-sided distributions with applications in insurance loss modeling," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 33(3), pages 827-861, July.
    15. Giuseppe F Gori & Patrizia Lattarulo & Marco Mariani, 2017. "Understanding the procurement performance of local governments: A duration analysis of public works," Environment and Planning C, , vol. 35(5), pages 809-827, August.
    16. Rubinchik-Pessach, Anna, 2005. "Can decentralization be beneficial?," Journal of Public Economics, Elsevier, vol. 89(7), pages 1231-1249, July.
    17. L. Robin Keller & Ali Abbas & J. Eric Bickel & Vicki M. Bier & David V. Budescu & John C. Butler & Enrico Diecidue & Robin L. Dillon-Merrill & Raimo P. Hämäläinen & Kenneth C. Lichtendahl & Jason R. W, 2012. "From the Editors ---Brainstorming, Multiplicative Utilities, Partial Information on Probabilities or Outcomes, and Regulatory Focus," Decision Analysis, INFORMS, vol. 9(4), pages 297-302, December.
    18. He, Chusu & Milne, Alistair & Ataullah, Ali, 2023. "What explains delays in public procurement decisions?," Economic Modelling, Elsevier, vol. 121(C).
    19. Luo, Yao, 2020. "Unobserved heterogeneity in auctions under restricted stochastic dominance," Journal of Econometrics, Elsevier, vol. 216(2), pages 354-374.
    20. Catalina García & José Pérez & Salvador Rambaud, 2010. "Proposal of a new distribution in PERT methodology," Annals of Operations Research, Springer, vol. 181(1), pages 515-538, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:envsyd:v:41:y:2021:i:2:d:10.1007_s10669-021-09799-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.