Systems Engineering FAQ

Answers by Robert Halligan FIE Aust CPEng IntPE(Aus).

What is the Basis of Justifiable Verification Costs?


90% probability of compliance vs. 10% of not
Non-compliance will cost us $10mil
Cost risk = 10% of $10mil = $1mil

If we verify, we will reduce the loss to $1mil
If non-compliant
cost risk = 10% of $1mil = $100k
So risk reduction = $900k

Any verification costing less than $900k that, with certainty, would detect non-compliance would add value.

If there is uncertainty of the verification activity discovering the non-compliance, say 50% probability, we would be justified in spending up to 50% of $900k; 10%: 10% of $900k, etc.


Answered By

Systems engineering thought leader, consultant, trainer and coach, impacting people's lives on six continents.
Published 2 months ago



Make 2022 A Year of Learning Improvement

PPI's 2022 full course schedule is now live. Click here and register your interest today!

FREE Monthly SE Industry News?
Scroll to Top