Week 6 Discussion – Advanced Risks Tools
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Please respond to the following:
- Review the Monte Carlo Analysis method presented in Chapter 15 in Practical Project Risk Management. Then, determine whether you would recommend to a project manager the use of this methodology for a large, complex project. Include an example to support your response. If you would not recommend the use of a method such as Monte Carlo, explain what you would recommend as an alternative tool that would allow the project manager to make informed decisions. Provide a rationale for your recommendation.
Be sure to respond to at least one of your classmates' posts.
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Angel Thyagarajan
Yesterday Aug 10 at 1:52pm
I would recommend using Monte Carlo Simulation for large complex projects. These algorithms build extremely accurate variations or probability of the data and it can be a great assistance for extreme uncertain situations. This algorithm is tested using different input variables and can provide a large number of possible outcomes.
Risks are based on the probability of different occurrence, functions and the extent of the damage. Monte simulations delivers a reliable results based on the quantification of the risks through a large number of random experiments. It includes the dependencies between the risks into the account and it results ranges widely (1).
This Monte Carlo tool for risk management allows to carry analysis of overall risk situation and assists with the targeted query of risk information. It assists with mapping the risk management process to risk analysis and are able to provide information for the management to make appropriate decisions.
For example, to get the distance between the home and office is mostly fixed but the probability using Monte Carlo simulation might predict different travel times by considering different factors such as congestion, bad weather, and vehicle breakdowns(2).
Sources:
- “Monte Carlo”, NA. What is a Monte-Carlo simulation?. https://www.gbtec.com/resources/monte-carlo-simulation/
- Links to an external site.
- “AWS Monte Carlo”, NA. What Is The Monte Carlo Simulation?. https://aws.amazon.com/what-is/monte-carlo-simulation/#:~:text=The%20Monte%20Carlo%20simulation%20is%20a%20probabilistic%20model%20that%20can,home%20and%20office%20is%20fixed