Stochastic budget simulation
By: ELKJAER, Martin
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Material type: 
ArticlePublisher: apr. 2000Subject(s): Cost Estimation | Stochastic Simulation | Uncertainty AnalysisInternational Journal of Project Management 18, 2, p. 139-147Abstract: The purpose of this article is to present a new method for cost estimation. The innovative idea is to combine the conventional calculation method stochastic simulation with basic facets of the successive principle. The purpose of this is to avoid the assessment of dependencies between cost items in the budget. The method is named Stochastic Budget Simulation (SBS), and it is made operational with a software application. The method can be applied to most projects with a simple cost structure at the early stages where uncertainty plays a significant role in estimating the overall cost. The most likely users are planners, project managers or consultants. It is not necessary to understand the calculations, the statistical theory or the simulation technique in order to use the method. However, users should be able to arrange items and overall influences in accordance with the urgent requirement of statistical independence. SBS is a new and radically different way to analyse and evaluate the economic consequences of large-scale projects by quantifying intervals for cost items and using simulation as tool to represent distributions of the possible costs
| Item type | Current location | Collection | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Periódico | Biblioteca Graciliano Ramos | Periódico | Not for loan |
The purpose of this article is to present a new method for cost estimation. The innovative idea is to combine the conventional calculation method stochastic simulation with basic facets of the successive principle. The purpose of this is to avoid the assessment of dependencies between cost items in the budget. The method is named Stochastic Budget Simulation (SBS), and it is made operational with a software application. The method can be applied to most projects with a simple cost structure at the early stages where uncertainty plays a significant role in estimating the overall cost. The most likely users are planners, project managers or consultants. It is not necessary to understand the calculations, the statistical theory or the simulation technique in order to use the method. However, users should be able to arrange items and overall influences in accordance with the urgent requirement of statistical independence. SBS is a new and radically different way to analyse and evaluate the economic consequences of large-scale projects by quantifying intervals for cost items and using simulation as tool to represent distributions of the possible costs
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