In large scale CAPEX projects, uncertainty is constant. From adverse weather conditions, to staggered delivery timelines or shortage of skilled labor, the delay register keeps getting populated.
A well defined schedule can also be dissected down to the grass level through a detailed DCMA analysis for evaluating the hard/soft constraints, impractical duration estimates etc.
So, that’s exactly when I proposed to deep dive into a Monte Carlo simulation through a 10,000 trial & error process:
1. Quantifying the impact of uncertainty on completion timelines and allocated budget.
2. Identifying possibilities of probable cost overruns.
3. Stress testing assumptions across design engineering, statutory approvals and material delivery across all work packages
4. Evaluating a 3-point estimate for all activities as optimistic, most likely and pessimistic durations.
5. Deriving a tentative completion timeline for the project based on multiple scenarios.
What outcomes did we receive after the simulation?
1. Only 45% of the defined targets were achievable on a practical scenario.
2. P90 (90% probability) showed a more realistic timeline for completion.
3. Delay in the above timelines indicated a possible 5-6% of the total cost allocated as a potential overrun.
Why do we need such simulations?
1. Identifying pro-actively high risk activities
2. Restructuring of contingency planning
3. Alligning financier’s expectations w.r.t real time project progress.
I write often on Capital Projects and Infrastructure trends across India predominantly and cost optimization solutions for maximal revenue generation.
Pls let me know, if you’ve ever faced a similar scenario and pro-actively mitigated delays
#PMO #ProjectControls #Projectmonitoring #Sensitivityanalysis #ManagementConsulting #Capitalprojects #CAPEX
Lead Planner
3wB