Aim of Assessment 

Project Risk Management

Assessment 2 – Report (Project Budget) (40%)

Monte Carlo Simulation

Aim of Assessment


General                                To apply risk analysis quantitative techniques to projects

Learning Outcome          2. Apply quantitative risk analysis using specialist software to create a cost model, and evaluate and analyse the results


Select a project. The project can be from your work experience, or a social project (could be the same project as Part A of Assessment 1, but best for learning purposes if the project should be a real future project.  Students may use the project from Time Management or Cost Management units).


Budget Report (using Monte Carlo Simulation)

NOTE: This submission should be produced as a formal project management document, not an academic assignment.

Produce a Budget Report: The document is designed to be given to the Project Sponsor for approval. The sponsor is not knowledgeable about the cost estimating process or Monte Carlo simulation. The report must contain the following five sections:

  1. Introduction (25%)
    1. Executive Summary: This section establishes the key elements within the report, including project scope, budget, recommendations, and any other relevant information. Appropriate context must be provided when describing the project, this includes background information on the organization, the intended goals/benefits of the project, and the project and product scope.
    2. Recommended Baseline Budget: Provide a baseline budget composed of 10-30 cost variables (This is a deterministic estimate based on the most likely value for each cost variable, excluding risk events and contingency). You must structure the budget in a manner consistent with industry best practices. Furthermore, you must explain the source of information used to produce the estimate for each item in the budget (i.e. suppliers, subcontractors, historical costs, etc.).
      1. Justification of Probability Distribution for One Cost Variable – Explain and justify the selected values (minimum, most likely, and maximum) in the probability distributions for at least one of the cost variables in your Table


NOTE: Once you have completed the above deterministic baseline budget, then conduct Monte Carlo Simulation (including correlations). In your cost model for Monte Carlo Simulation you will:

  • Replace deterministic values in the Recommended Baseline Budget with probability distributions; and
  • Add two (2) specific risk events to the model.
  1. Explanation of Two Risk Events (20%): Provide a brief paragraph or two for each risk event that covers the following key points:

-briefly explain what the risk event is and what are the risk key causes.
– justify the Probability and Consequences of the risk event in terms of your selected probability distribution values for minimum, most likely, and maximum.
(Note: you must choose/explain risk events that if they eventuate they will increase the sponsor’s budget)

  1. Contingency & Risk Management (35%)
    1. Recommendation for Contingency: Recommend a contingency amount. Explain why you are recommending the contingency that you have selected.
    2. Risk Management: based on the Tornado Chart, explain to the sponsor how you will control and minimise the following to ensure that your contingency is sufficient:
      1. Most sensitive cost variable (use sensitivity analysis to determine)
      2. Most sensitive risk event (use sensitivity analysis to determine)
    3. Correlation Matrix: Select two correlated variables (i.e. one correlation) from your cost model. Explain why they might be And the likely nature and strength of this correlation
  2. Organisational Policy (15%): Compare and comment on your cost results against the organisational policy that states “it is expected that the Baseline Budget (i.e. excluding contingency) should have an 80% probability of being with a range of -5/+10%.”
  3. Appendix:

Quick Output Report (No marks):  Mandatory and must be included here with numbers and graphics fully legible (failure to include a readable report will likely compromise your marks in other sections).

Professional Report Style Presentation (5%)


Length 2500-3500 words.


All assignments should be thoroughly checked for typing, spelling and grammatical errors before being submitted.  Students must use the template found in the assignment folder for completing their assignment.  Do not change the font, spacing, etc.  Please do not add a cover sheet.


Submission must be through Turnitin (under the Assessments tab in Blackboard) in MS Word (not PDF) format.


All source material MUST be acknowledged and any form of plagiarism will result in the appropriate measures being taken.  Do not copy other students’ work or assist by showing your work to others.


Late submissions will be penalised as per the Curtin Late Assessment Policy in the Unit Outline.


Marking Criteria


1.      Introduction 25
2.      Explanation of Two Risk Events 20
3.      Contingency & Risk Management 35
4.      Organizational Policy 15
5.      Appendix  
          Quick Output Report No Marks
Professional Report Style Presentation 5
Total 100 (marks)