On Using Monte Carlo Simulations for Project Risk Management

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Author(s): Cristiana Tudor (Bucharest University of Economics, Romania)and Maria Tudor (Bucharest University of Economics, Romania)
Copyright: 2016
Pages: 24
Source title: Managing Project Risks for Competitive Advantage in Changing Business Environments
Source Author(s)/Editor(s): Constanta-Nicoleta Bodea (Bucharest University of Economic Studies, Centre for Industrial and Services Economics, Romania), Augustin Purnus (Technical University of Civil Engineering Bucharest, Romania), Martina Huemann (WU-Vienna University of Economics & Business, Austria)and Miklós Hajdu (Budapest University of Technology and Economics, Hungary)
DOI: 10.4018/978-1-5225-0335-4.ch008

Keywords: Business & Management / Business Science Reference / Management Science

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Abstract

This chapter covers the essentials of using the Monte Carlo Simulation technique (MSC) for project schedule and cost risk analysis. It offers a description of the steps involved in performing a Monte Carlo simulation and provides the basic probability and statistical concepts that MSC is based on. Further, a simple practical spreadsheet example goes through the steps presented before to show how MCS can be used in practice to assess the cost and duration risk of a project and ultimately to enable decision makers to improve the quality of their judgments.

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