Examice

A regional vendor for custom manufactured steel oil derricks, is awarded a contract to design, manufacture, and install 40 offshore oil platforms. Installation of these derricks requires precision placement and stable seas for the transport and installation ships to properly install the deep water structure. There are several schedule and cost incentives for early completion, and the project manager asks the project risk coordinator to perform an analysis, which will predict the probability of meeting the incentive dates. While researching methods that could be used for performing this analysis, the risk manager realizes that there are readily available spreadsheets within the organization. The risk manager is considering performing a Method of Moments (PERT) analysis with software already owned, or the other option is to buy a commercial risk analysis software suite that will perform Latin Hypercube Monte Carlo simulations at a cost of US$975.

What would be the best analytical option for this probability assessment?

Schedule based Method of Moments analysis is a time proven, highly accurate method for schedule risk and is not impacted by Monte Carlo simulation's limitation of summation modeling where only addition and subtraction of uncertain values are used.

The commercial product that performs the Monte Carlo simulations is the best option, because a schedule risk assessment involves summation of uncertainties added or subtracted from or to schedule dates.

Because a schedule risk assessment involves multiplication and division of schedule durations against specific risk events, a spreadsheet and using a Method of Moments analysis is the best option.

Since a schedule risk assessment involves multiplication and division of schedule durations against specific risk events, the Monte Carlo simulation software is the best option.