Ranasinghe, M and Russell, A D (1992) Analytical approach for economic risk quantification of large engineering projects : Validation. Construction Management and Economics, 10(1), pp. 45-68. ISSN 01446193
Abstract
Validation and the computational efficiency of an analytical alternative to Monte Carlo simulation for quantifying risks in project performance measures such as time, cost, net present value and internal rate of return are explored in this paper. The analytical approach is based on the use of the Pearson family of distributions, a four moment characterization of uncertainty for input and output variables and a modijied version of the PNET algorithm for modelling time uncertainty. The approach is applied to a generalized hierarchical description of a project’s economic structure. Results show that the analytical approach can duplicate results of a full-scale Monte Carlo simulation with approximately 0.033 of the computational eflort.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | economic risk quantification; large engineering projects; Monte Carlo simulation; probability analysis; validation |
| Index terms: | probability analysis, validation, quantification, efficiency, Monte Carlo simulation, net present value, project performance, modelling |
| Subjects: | economic analysis, analytical methods, modelling and simulation, statistical analysis, measurement and scaling, project management theory and practice, professional development, performance management |
| Topics: | Business Strategy, Project Management, Research Practice, Engineering Principles, Information Management, Quality Management |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here