Dealing with Uncertainty - Sensitivity Analysis
3 important questions on Dealing with Uncertainty - Sensitivity Analysis
What is meant with sensitivity in engineering economy studies?
General non probabilistic methodology to provide information about the potential impact of uncertainty in selected factor estimates.
What are [3] sensitivity techniques and when are they applied?
- Break-even analyses | Selection among project alternatives or acceptability of a project is heavily dependent upon a single factor.
- Sensitivity graph | Two or more factors (spider plot)
- Combination of factors | Combined effects of uncertainty in two or more factors
What approach should be used being concerned about the combined effects? (2 steps)
- Develop a sensitivity graph
- Select the most sensitive project factors based on the information in the sensitivity graph. Analyze the combined effects of these factors on the projects economic measure of merit.
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