UNCERTAINTIES IN MONTE CARLO SIMULATION OF LIFE CYCLE COSTS.

Abstract

The paper deals with select sources of uncertainties associated with Monte Carlo simulation of Life Cycle Costs (LCC). Fundamental aspects of the Monte Carlo method are discussed, followed by uncertainties of the LCC simulation model itself stemming from such considerations as underlying motivation, purpose and objectives of modeling effort, perception of reality, and reasonableness of supporting assumptions. Sources of input data uncertainty are identified by characteristics of aggregation, heterogeneity, coarseness, paucity, and inexactitude of reporting/recording observations. The assumptions which lead to selection of the event governing probability density function and its parameter(s) are deemed principal sources of uncertainty. The uncertainty connected with generation of random numbers and their distribution completes the paper.