Handling uncertain information in whole-life costing: a comparative study
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KISHK, M., AL-HAJJ, A. and POLLOCK, R., 2002. Handling uncertain information in whole-life costing: a comparative study. Risk Management: An International Journal, 4(3), pp. 59-70
A number of recently developed algorithms to handle uncertain information in whole life costing (WLC) are explained and validated in the context of two example applications. In the first example application, the proposed methodology is compared to the sensitivity analysis technique. The break-even point has been correctly identified in almost all cases. Furthermore, it has been shown how the employed fuzzy methodology may be seen as a generalised sensitivity approach to which has been added a measure of the precision with which input variables are known to the decision-maker. In the second example application, the proposed methodology is compared to two probabilistic techniques: the confidence index method and the Monte Carlo simulation (MCS) technique. The proposed methodology correctly identified the most uncertain cost items and portrayed well the confidence in ranking. Besides, all predicted net present values were in close agreement with those obtained by the MCS technique. This showed once more the robustness of various measures and concepts employed in the developed algorithms.