What is Monte Carlo simulation?

Monte Carlo simulation is a statistical modeling method used to estimate the probabilistic outcomes of complex processes or systems. The essence of the method is to perform multiple random scenario simulations using random input data to obtain a distribution of possible outcomes.

In project management, Monte Carlo helps assess risks and uncertainties, such as forecasting project completion times or budgets, considering variations in tasks and resources. The result is not a single number but a range of probable values with corresponding probabilities.

Example: if the duration of a task varies from 3 to 7 days, Monte Carlo simulation repeatedly selects random values within this range and calculates the overall project time, helping to understand the likelihood of meeting deadlines.