Predicting the completion time of a project is one of the challenging tasks in project management. There are many problems present that can overrun this process such as the lack of historical completion data, inadequate skill set, and organization culture. There are many tools used by project managers to generate probable performance outcomes and one of them is the Monte Carlo Simulation.
The Monte Carlo Simulation is a technique that generates large volumes of probable performance outcomes based on the probability distribution of the schedule and cost of individual activities. The outcome of the simulation is used to create the probability for the entire project.
In this particular project management tool, the duration of the activities is simulated to take random values with the help of a random number generator. For every simulation, a set of project completion time, as well as the probability of completion, is then calculated and stored as output. Once the simulations are done, the result will yield numerous project completion times and completion probability values. The values will then be plotted in a Histogram with an S-curve to determine the probability of the whole project.
This term is defined in the 5th edition of the PMBOK.