Computer Program RISKCOST
Copyright 1997 Wieslaw J. Jurkiewicz P.E.
Project Risk Cost Analysis by Monte Carlo Method
This computer program, called RISKCOST, is designed to
handle analysis of project risk according to the statistical probability method
known as the Monte Carlo Simulation. RISKCOST deals only with the
analysis part of the project risks. For data entry purposes, the program is
interfaced with another application, such as ENGRISK, that deals in detail with
project risk evaluation and risk matters tracking. RISKCOST automatically
extracts data from the ENGRISK program.
Program Sample Screens
Click here to see the program Main Menu screen
Click here to see the Project Simulation Execution screen
Click here to see the Risk Analysis Data Input screen
Click here to see the Project Risk Probability Curve screen
Click here to see the Mean Scenario Risk Curve
Click here to see the Risk Correlation Diagram of RISKCOST
Click here to see the Monte-Carlo Simulation Diagram of RISKCOST
Why to use RISKCOST?
You should use RISKCOST because:>
- RISKCOST can do what the ENGRISK program cannot do. Namely, RISKCOST can
show the most probable cost of the risk in the range of assumed probabilities,
and that if form of standard probability and risk curves and relevant reports.
- RISKCOST is the very easy tool for performing the Monte Carlo Analysis.
Data already existing in the database of ENGRISK can be utilized directly
without any additional input, and then individually redefined by the user
within the RISKCOST domain.
What kind of simulations are available?
- Simulations for individual Risk Elements.Here one run involves
all risk elements, but each element is handled individually, yielding
standard deviation, average cost, maximum cost, minimum costs, the z-score, and
number of hits, with number of simulation occurrences up to 32,000. This
analysis is done under the assumption that that each risk element must occur and
that correlation does not apply. The power cubic curve (i.e. non-linear) is
assumed for the risk distribution, fitting the cost values of Basic Cost,
Assumed Minimum Cost at p=1%, and Assumed Maximum Cost at p=1% - i.e. reflecting
the input data assumptions. The execution time of this analysis is very short:
only 5 seconds for 30,000 samples generated for one risk element.
- Simulation Scenarios for the whole Project. The run
involves all risk elements combined. Correlation between individual risk
elements can be defined as ABSOLUTE, PARTIAL or NONE. The final risk element
value (cost) will vary in each simulation according to the user-assigned
probability of the risk element involved. The sum of the risk element values
(costs) of each simulation represents one possible project cost outcome. These
outcomes are used by the program to calculate the standard deviation and other
analysis output parameters such as average cost, maximum cost, minimum costs,
cost at p=5%, cost at p=1%, the z-score. The number of simulation outcomes in
one scenario can be up to 32,000, with any number of scenarios.
- Analysis yields risk curves and standard probability
curves for each scenario. They allow the project risk engineer to assess the
most probable project risk cost for any given probability. In addition, similar
result are also provided for the Mean Scenario, that is one comprising average
values of all individual scenarios generated previously and stored in the
database of the project.
- Execution time of this analysis varies depending on the
number of risk elements and the number of samples. Approximately 13 minutes are
needed to perform this Monte-Carlo analysis for 36 risk elements and 1,000
samples; or 2 hours and 10 minutes for 10,000 samples, or as much as 6 hours and
30 minutes for 30,000 samples.
Who will benefit from using RISKCOST?
Project risk managers, project managers, regulatory authorities, clients and
any party or person who is interested to see the project risk expressed in the
probability versus monetary form.
Where and when to use RISKCOST?
On any project that requires presentation of project risk in form or
probability curves and related reports.
How to use RISKCOST?
It is a very user-friendly computer program, comprising 24 screens and
generating 21 types of reports. See our demonstration and review the user
manual, both the printed one as well as the on-line one.