Project cost sensitivity and variability analysis

Sensitivity analysis is commonly used in project economic evaluation. It is a non-probabilistic technique used for the evaluation of risk variables. Despite its inherent deficiencies, it can be profitably adapted for project cost sensitivity analysis. The technique is further enhanced by introducing a measure of cost variability over a feasible cost range. A case example is given to demonstrate the calculation of the cost sensitivity index and coefficient of variation to measure the level of cost risk associated with key estimating variables using a cost modelling approach.