Monte Carlo Simulations

This technique considers cost and schedule risk not only for individual activities but also for the entire project. In many cases, there is the temptation to assume that all project risks must be accounted for in the worst case. The Monte Carlo analysis technique, however, takes a more holistic approach. As such, the total project cost risk and the total project schedule risk are usually expressed as a cumulative probability distribution of total project cost and total project schedule, respectively. Such distribution information can be used to reflect project risk by computing the probability that the project will be accomplished within particular cost or schedule targets. It can also be used to assess what level of funding or schedule would be required to virtually guarantee success.