[bumby]

That’s an important distinction. The way we handled it was by letting managers define their acceptable level of risk and then use the model to define the estimates in that context.

For example, if they were ok with a 60% chance of making or beating a cost estimate, the forecast could be much more aggressive than, say, a management expectation of 90% chance of being on budget

[myth2018]

Thanks for sharing this. I think I'll experiment presenting the situation to a customer using such model as soon as I have a opportunity. Sounds good.

[bumby]

This might be helpful:

https://www.nasa.gov/pdf/741989main_Analytic%20Method%20for%...

It’s a straightforward enough primer that it can be done in Excel, including simulating the data if necessary.

Even if this type of model is too simple for actual estimation, it’s a useful (and sobering) tool to help managers understand why their intuitive estimates can so often be incorrect.