123R-22: Integrated Cost and Schedule Risk Analysis
and Contingency Determination Using Estimate Ranging and Expected Value with
Monte Carlo Simulation
AACE International, August 17, 2023
Price: $0 (Member) / $100 (Non-Member)
1-CLICK DOWNLOAD FOR MEMBERS
AACE International, August 17, 2023
Price: $0 (Member) / $100 (Non-Member)
1-CLICK DOWNLOAD FOR MEMBERS
This recommended practice defines general practices
and considerations for integrated cost and schedule risk analysis and
estimating contingency using a combination or hybrid of estimate ranging and
integrated cost and schedule expected value analysis with Monte Carlo
simulation methods. R+EV is used as a shorthand designation for this
quantitative risk analysis (QRA) combination.
The R+EV method is a fit-for-use, practical, risk-driven method intended to support management’s need for integrated distributions of bottom-line project cost and schedule outcomes. It is intended to support investment or tender decision making for well-defined, relatively simple, low-technology projects at the sanction or tender phase (i.e., Class 3 or better-defined estimates).
This method is not recommended for projects with significant systemic risks including projects at early scope definition phases (Class 10, 5 or 4) or with significant complexity, and/or with significant levels of technology. While this method can provide limited insight of risks to some activities or milestones, this method is not recommended for projects needing to understand schedule risk at a detailed level such as the impact of risk on specific schedule activities or on intermediate milestones. This exclusion from usage results from expected value method limitations regarding schedule. The method also excludes quantification of escalation risks.
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The R+EV method is a fit-for-use, practical, risk-driven method intended to support management’s need for integrated distributions of bottom-line project cost and schedule outcomes. It is intended to support investment or tender decision making for well-defined, relatively simple, low-technology projects at the sanction or tender phase (i.e., Class 3 or better-defined estimates).
This method is not recommended for projects with significant systemic risks including projects at early scope definition phases (Class 10, 5 or 4) or with significant complexity, and/or with significant levels of technology. While this method can provide limited insight of risks to some activities or milestones, this method is not recommended for projects needing to understand schedule risk at a detailed level such as the impact of risk on specific schedule activities or on intermediate milestones. This exclusion from usage results from expected value method limitations regarding schedule. The method also excludes quantification of escalation risks.
[Look Inside]