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Project cost analysis under risk

Author

Listed:
  • Florica LUBAN

    (The Bucharest Academy of Economic Studies, Romania)

  • Daniela HINCU

    (The Bucharest Academy of Economic Studies, Romania)

Abstract

In this paper, an integrated approach based on Monte Carlo simulation and Six Sigma methodology is used to analyze the risk associated with a project's total cost. Monte Carlo simulation is applied to understand the variability in total cost caused by the probabilistic cost items. By Six Sigma methodology the range of variation of the project cost can be reduced by operating on the input factors with the greatest impact on total cost to cover the variation of 6? between the limits that were established in the design phase of Six Sigma.

Suggested Citation

  • Florica LUBAN & Daniela HINCU, 2010. "Project cost analysis under risk," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(2), pages 495-503, December.
    • Handle: RePEc:rom:econmn:v:13:y:2010:i:2:p:495-503
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    More about this item

    Keywords

    Project cost risk; Six Sigma; Monte Carlo simulation.;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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