Episode 115: Leadership Challenges of Complex Projects

One major factor that is making a larger project more difficult to manage than a smaller project is complexity. On a larger project you will have a larger product scope, a more extensive budget, a more intricate project schedule and not least of it all also a lot more people. All of these add to your project’s complexity.

Montcarlo simulation

A Monte Carlo method is a technique that involves using random numbers and probability to solve problems. The term Monte Carlo Method was coined by S. Ulam and Nicholas Metropolis in reference to games of chance, a popular attraction in Monte Carlo, Monaco (Hoffman, 1998; Metropolis and Ulam, 1949).

Computer simulation has to do with using computer models to imitate real life or make predictions. When you create a model with a spreadsheet like Excel, you have a certain number of input parameters and a few equations that use those inputs to give you a set of outputs (or response variables). This type of model is usually deterministic, meaning that you get the same results no matter how many times you re-calculate. [ Example 1: A Deterministic Model for Compound Interest ]

Figure 1: A parametric deterministic model maps a set of input variables to a set of output variables.

Monte Carlo simulation is a method for iteratively evaluating a deterministic model using sets of random numbers as inputs. This method is often used when the model is complex, nonlinear, or involves more than just a couple uncertain parameters. A simulation can typically involve over 10,000 evaluations of the model, a task which in the past was only practical using super computers.

Read more

http://www.vertex42.com/ExcelArticles/mc/MonteCarloSimulation.html