Project Risk Management Page 11
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17MONTE CARLO SIMULATION: this simulation “performs” the project many
times, uses the network diagram, and estimates to simulate the cost or
schedule results of the project.
Monte Carlo Simulation:
Evaluates the project, not the tasks
Provides the probability of completing the project on any specific
day, of for any specific amount of cost
Provides the probability of any task actually being on the critical
path
Provides a percent probability that each task will be on the
critical path
Takes into account path convergence (places in the network
diagram where many paths converge into one task)
Translates uncertainties into impacts to the total project
Can be used to assess cost and schedule impacts
Is usually done with a computer-based Monte Carlo program
because of the intricacies of the calculations
Results in a probability distribution
OUTPUTS FROM QUANTITATIVE RISK ANALYSIS: When completed,
quantitative risk analysis results in:
A prioritized list of quantified risks
Forecasts of potential project costs or schedule
A listing of the possible project completion dates and costs with
their confidence levels
A probability of achieving the required project cost or schedule
objectives
Trends in risk as risk qualification is repeated through the project
A documented list of non-critical, non-top risks
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