What is Monte Carlo Analysis?

Monte Carlo simulation runs thousands of project scenarios using random sampling to show the full range of possible outcomes and their likelihood.

How It Works

Instead of a single-point estimate ("the project will cost $500K"), Monte Carlo gives you a probability distribution ("there's an 80% chance the project costs $550K or less").

Why It Matters

Single-point estimates hide uncertainty. Monte Carlo reveals it, so you can plan contingency appropriately and communicate risk to stakeholders.

Key Outputs

• P50: 50% confidence level (median outcome)
• P80: 80% confidence level (common for budgeting)
• P90: 90% confidence level (conservative estimate)
• Sensitivity: Which inputs drive the most uncertainty