Survey of Step 8

Identify assumptions and parameters, including key cost drivers, as factors for sensitivity testing.
Test the sensitivity of cost elements to changes in identified factors.
Document the results, including those factors that are most sensitive to change.

The cost estimate includes a sensitivity analysis that identifies a range of possible costs based on varying major assumptions and parameters.

The following steps were taken: key cost drivers, ground rules, and assumptions were identified as factors;
Cost elements representing the highest percentage of cost were determined and their assumptions were examined;
The total cost was re-estimated by varying each factor; and
Results were documented and outcomes were evaluated for factors most sensitive to change.

Without a sensitivity analysis that reveals how the cost estimate is affected by a change in a single factor, stakeholders will not fully understand which variable most affects the cost estimate.
An agency that fails to conduct sensitivity analysis to identify the effect of uncertainties associated with different assumptions increases the chance that decisions will be made without a clear understanding of these impacts on costs.
Carefully assessing the underlying risks and supporting data, and documenting the sources of variation, is necessary for a sensitivity analysis to be useful in making informed decisions.
Simply varying factors by applying a subjective plus or minus percentage that does not have a valid basis is not useful and does not constitute a valid sensitivity analysis. For management to make informed decisions there should be a clear link between the technical baseline parameters, assumptions, and cost model inputs examined by cost estimators in the sensitivity analysis.