Quick Definition:
Monte Carlo Simulation is a mathematical technique used to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables.
How It Works
Instead of using single-point estimates for task durations or costs, you provide a range (e.g., best case, most likely, worst case). The simulation then runs thousands of times, randomly picking values from those ranges to create a probability distribution of the project’s end date or total cost.
Benefits for PMs
- Quantifies Uncertainty: Provides a realistic range of possible outcomes.
- Identifies Critical Risks: Shows which tasks have the biggest impact on the project’s success.
- Improves Decision-Making: Helps PMs set realistic expectations with stakeholders.
