Guide the project management body knowledge pmbok guide

Case Study Assignment 10: Monte Carlo in Italy

Introduction

In the Case Study Assignment 10: Monte Carlo in Italy Peter Davis business manager at ABC and asked to visit one of ABC’s acquisitioned companies PQR Inc. to vet their processes in regard to project management. While visiting he discovers they have many great processes that deliver a great amount of detail and thoroughness that prove their processes to be highly effective. One particular process that Peter loves is Monte Carlo Analysis used to run risk simulation analysis and provides risk identification, risk analysis, risk priority/impact, risk resolution and risk monitoring. In this paper the advantages and disadvantages of MCA will be discussed along with whether or not it is a necessary tool for every project.

Should Monte Carlo Analysis be used in every project? Why or Why not?

Monte Carlo simulation is a computerized mathematical technique that allows people to account for risk in quantitative analysis and decision making. The technique is used by professionals in such widely disparate fields as finance, project management, energy,
manufacturing, engineering, research and development, insurance, oil & gas, transportation, and the environment. Monte Carlo simulation performs risk analysis by building models of possible results by substituting a range of values—a probability distribution—for any factor that has inherent uncertainty. It then calculates results over and over, each time using a different set of random values from the probability functions. A Monte Carlo simulation could involve thousands or tens of thousands of recalculations before it is complete. Taking this into
consideration the extensive data required to run the scenarios and the time taken to enter the parameters I believe that it is not practical to use in every project. The main reason is cost, and time of resources spent running simulations and analysing data only become relevant at projects of a certain level or scope that would require this tool. For example, if a project met a certain level of capital investment or a high complexity then yes definitely it would be worth it to use this tool. But fir say a simple sustainment project that is a replacement or restoration most risks will have been identified and the process well known.

References

KARANOVIC, G., & GJOSEVSKA, B. (2012). Analysis of risk and uncertainty using monte carlo simulation and its influence on project realization. Universitatii
Bucuresti.Analele.Seria Stiinte Economice Si Administrative, 6, 145-162. Retrieved from https://search-proquest-com.libraryservices.yorkvilleu.ca/docview/1672863470?