Monte Carlo simulation
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.
