What technique will you use with this simulation?

You are the project manager of the AMD project for your organization. In this project, you are currently performing quantitative risk analysis. The tool and technique you are using is simulation where the project model is computed many times with the input values chosen at random for each iteration. The goal is to create a probability distribution from the iterations for the project schedule. What technique will you use with this simulation?

A.
Expected Monetary Value

B.
Pareto modeling

C.
Monte Carlo Technique

D.
Analogous modeling

Explanation:

This is an example of the Monte Carlo Technique which is typically used with project simulations. You can ideally use the Monte Carlo Technique with time and estimates using pessimistic, optimistic, and most likely value.
Monte Carlo simulation is a process for iteratively evaluating a deterministic form using sets of random numbers as inputs. This method is repeatedly used when the model is complex, nonlinear, or involves more

than just a couple of vague parameters. Monte Carlo simulation is named after the city in Monaco, where the major attractions are casinos that have games of chance. Gambling games, such as roulette, dice, and slot machines, exhibit random behavior. This technique works particularly well when the process is one where the underlying probabilities are known but the results are more difficult to determine. It is a process that generates hundreds or thousands of probable performance outcomes based on probability distribution for cost and schedule on individual tasks. The outcomes are then used to generate a probability distribution for the project as a whole.
Answer option A is incorrect. The expected monetary value is found by multiplying the risk probability times the risk impact.
Answer option B is incorrect. Pareto Modeling is not a valid quantitative risk analysis process term. Answer option D is incorrect. Analogous modeling uses previous project data to predict the current project experience.
Reference: “Project Management Body of Knowledge (PMBOK Guide), Fourth Edition”