SimulationMonteCarloAnalysisMonteCarloConcept•Mostcommontypeofscheduleandcostsimulation.•TakesintoaccountPathConvergence.•Takesintoaccounttheuncertaintyonallnetworkdiagrampaths.•Aniterativeprocessusingthepowerofthecomputertocalculateorsimulatethescheduledmanytimes.MonteCarloAnalysis•Exampleofoneiterationofthesimulation4.QuantitativeRiskAnalysisTools•Simulation–MonteCarloStartB3,9,15A7,10,13FinishMonteCarloAnalysisStartB3,9,15A7,10,13FinishPERTEstimatesO,ML,PFormula(O+4(ML)+P)/6EstforA=(7+4(10)+13)=10EstforB=(3+4(9)+15)=9WhereisthecriticalPath?ThroughA.Whatistheprojectduration?10days.MonteCarloAnalysisStartB3,9,15A7,10,13FinishSupposeyourseniormanagertoldyouthetheywillbequotingyourscheduletoaveryvaluablecustomer.Theseniormanagerhasaskthatyoube95%surebeforewequotethescheduleduration.Usingstatisticalanalysis,wecandeterminetheprobabilityofcompletingtheprojectwithinagiventimeframetakingintoaccounttheuncertainty.MonteCarloAnalysisStartB3,9,15A7,10,13FinishUsingstatisticalanalysis,whatisthePERTformulaforcalculatingStandardDeviation?SD=(P–O)/6WhatistheSDforAandforB?A(13-7)/6=6/6=1B(15-3)/6=12/6=2ThisindicatesthatthereismoreuncertaintyinActivityBonthenon-criticalpaththanAonthecriticalpath.MonteCarloAnalysisStartB3,9,15A7,10,13FinishInordertogeta95%confidencelevel,howmanyStandardDeviationsfromthemeanmustwego?Whatisrangeat2SD’sforAandforB?A2x1=2Range=8-12B2x2=4Range=5-13Ifwewanttobe95%sure,weneedascheduleof13days.2MonteCarloAnalysisStartB3,9,15A7,10,13FinishUsingtheearlierPERTmethod,whatwastheprobabilityofcompletingtheprojectin10days?100%50%100%MonteCarloAnalysisMonteCarlowillprovideareportlikethis.Probability50%95%1310DaysIfwewanttobe95%sure,weshouldbepresentingascheduleof13days.
