Monte Carlo Simulation is easy!

We previously discussed the challenges of applying Monte Carlo Simulation (MCS) correctly, but the way it is commonly applied in project analysis is not just bad—it is ugly.
How (do not) to apply MCS in project delivery:
1. Take whatever project model is available. An Excel table or a CPM schedule created for progress tracking will do.
2. Assume all required resources will magically be available exactly when needed. Ignore material shortages, cash-flow constraints, physical-space limitations, access restrictions, and other real-world constraints. It is not your problem to solve.
3. Quietly assume that activity durations represent carefully developed “most likely” estimates based on expert judgement and extensive historical data. No need to verify this assumption.
4. Take whatever Monte Carlo tool is available.
5. Add a few obvious risks to a deterministic risk register (where each risk effectively has a single impact). Assess probability and impact by categories. No need to define them – everyone knows what each category means. Focus mainly on threats. Opportunities can wait.
6. Configure a risk matrix in the MCS tool! Not sure about the settings? Defaults must exist for a reason.
7. Import the schedule and risk register. Map risks to activities. Spend plenty of time selecting the “correct” probability distribution for every activity.
8. Manufacture duration uncertainty by applying ± % or ± days around deterministic durations. If uncertainty data was collected when the estimates were originally developed, ignore it. There is a good chance your MCS tool can’t import it properly anyway.
9. Select the number of iterations and run the simulation. Fewer iterations mean more visible variability and a faster analysis. Win-win.
10. Review the results. Adjust assumptions, distributions, model parameters, or risk attributes until the desired outcome appears.
11. Auto-generate an impressive QRA report. Make it look as though producing the report required weeks of sophisticated analysis.
12. Ignore contradictions with previous reports – the previous analysis was completed months ago, so there is a reasonable chance nobody will notice. If someone does, explain that the latest analysis is “more comprehensive” and includes “new risks”.
13. Do not even try to calculate the current probability of achieving previous targets. It might expose uncomfortable truths about the credibility of your analysis. Instead, establish new P80 or P90 duration/cost and present them as the latest risk-adjusted targets.
14. Proudly present the results as a quantitative assessment of project uncertainty.
15. (Bonus step) Present the findings and explain how advanced quantitative risk analysis improves decision-making at the next project management conference.
Alex Lyaschenko
PMO | Portfolio Planning & Delivery | PMP | P3O Practitioner | AgilePM Practitioner | Six Sigma










