On the fallacy of averages in project risk management

Managers recognize the presence of uncertainty in the estimates of the various parameters of their projects, but usually circumvent the required analysis (which can be demanding) by replacing the random variables by their averages. This paper argues against such practice. It demonstrates that gross errors can be committed in cost estimates and in the bids based on them. (c) 2004 Elsevier B.V. All rights reserved.