Monte Carlo Simulation for Integrated Cost-Schedule Risk Analysis

Evidence shows that project costs and schedules often overrun their initial plans. The purpose of this chapter is to illustrate the most recent tools and methodologies available today in the application of Monte Carlo simulation techniques to quantify possible overruns in cost and schedule and to understand the sources of those overruns to facilitate risk mitigation actions. Notable methods described include the Risk Driver method, collecting risk data using individual confidential interviews, and use of iterative risk prioritization that facilitates risk focused risk mitigation. Emphasis is placed on the quality of the project schedule and on the quality of the risk data used. The use of prioritization of pre-mitigated for risk mitigation strategies shows how the methodology can be used as a dynamic tool of successful project management.