Assignment:
Learning Objective of Assignment - To apply risk analysis quantitative techniques to projects
Select a project. Can be from your work experience; or a social project (could be same project as Part A of Assignment #1. It is best for learning purposes if the project is a real future project (could use project from Time Management or Cost Management units)
BUDGET REPORT (using Monte Carlo Simulation)
NOTE: This is a formal project management document , not an academic assignment.
Produce a BUDGET REPORT document to the Project Sponsor, who is not knowledgeable about the cost estimating process or Monte Carlo simulation, that must have has the following sections (a-f):
a) Introduction: e.g. executive summary (key results within the report), project scope, and any other relevant information
b) Recommended Baseline Budget (excluding contingency), Composed of 10-30 cost variables
(This is a deterministic estimate based on most likely value for each cost variable, excluding risk events).
Explain the source of information used to produce this budget
NOTE:
Once you have completed the above deterministic baseline budget, then conduct Monte Carlo Simulation (including correlations). Your cost model for MCS will:
• replace deterministic values in the Recommended Baseline Budget with probability distributions ,
• and add 3 specific risk events
c) Recommendation for Contingency (explaining reasons)
d) Sensitivity Analysis - based on the Tornado Chart, explain to the Sponsor how you will manage:
I. Most sensitive cost variable
II. Most sensitive risk event
e) Compare and comment on the your cost results against the organisational policy that states "it is expected that the Baseline Budget should have an 80% probability of being with a range of -5/+10%,"
f) Appendix:
I. Quick Output Report (no marks but should be referred to in answering above points)
II. The sponsor wants to understand MCS. To facilitate this, the sponsor has asked:
i. Explain and justify the selected values (minimum, most likely and maximum) in the probability distributions for ONE of the cost variables
ii. Explain and justify the selected values (minimum, most likely and maximum)and probability of occurrence for ONE of the risk events
III. Correlation matrix. Select 2 correlated variables (i.e. one correlation) from your cost model. Explain why they might be correlated. And the likely nature and strength of this correlation
Presentation (looks like a formal professional management document)
Format - One and half spacing, Arial narrow 10 font, 2.5cm margins, WORD, submit through turnitin