AACE 113R-20 (Integrated Cost and Schedule Risk Analysis — Parametric and Expected Value)

AACE 113R-20 is the AACE International Recommended Practice titled "Integrated Cost and Schedule Risk Analysis and Contingency Determination Using Combined Parametric and Expected Value". Published in 2020, it represents the more recent of the two integrated cost-schedule QRA methodologies AACE maintains — the other being 57R-09 (the Risk Driver method, published 2009). Where 57R-09 builds the integrated model bottom-up from a CPM schedule with risk drivers attached, 113R-20 combines parametric cost estimating (statistical relationships between cost and project attributes derived from historical data) with expected-value treatment of discrete risks.

The methodology rests on two distinct calculations. The parametric cost component derives a base estimate and its uncertainty distribution from historical project data — typical inputs include project type, scope size, complexity factors, location adjusters and schedule duration. The expected-value risk component takes the discrete risk register and computes the probability-weighted impact of each risk on cost and schedule, summing across the register to produce a contingency provision. The two components are combined to give the integrated cost-schedule contingency position at the chosen confidence level (typically P50 and P80).

113R-20 is preferred over 57R-09 in three practical contexts. First, on programmes where parametric cost data is the primary basis of the estimate (early-stage major programmes where the CPM schedule is not yet developed enough to support detailed Monte Carlo simulation). Second, on programmes where the project team is more comfortable with parametric cost estimating than with Monte Carlo modelling — 113R-20's mathematical machinery is simpler to explain to a non-technical sponsor. Third, on programmes subject to historical-data-based regulatory requirements where the parametric approach maps directly onto the regulator's expected evidence base.

The methodology has its limitations. Parametric cost estimating depends on having a sufficient historical dataset of comparable programmes — on truly novel programmes (first-of-a-kind defence platforms, novel nuclear technology) the parametric base is thin and the methodology can produce misleadingly narrow uncertainty distributions. Expected-value treatment of discrete risks averages across the probability-impact range but loses the upper-tail detail that a full Monte Carlo simulation captures, which can understate exposure on programmes with a few large discrete risks. Practitioners using 113R-20 should be alert to both limitations and consider whether 57R-09's Risk Driver Monte Carlo approach is the better fit for the programme's risk profile.

On UK programmes, both 57R-09 and 113R-20 are accepted methodologies for IPA gateway business cases and major programme reviews. The choice is typically made early in the programme's QRA strategy and documented in the business case methodology statement. Where the programme has a mature CPM schedule and a well-developed discrete risk register, 57R-09 tends to win. Where the programme is at early business-case stage with primarily parametric cost data, 113R-20 is the more natural fit.