Understanding Monte Carlo Method Using Risk for Project

All the elements of the risk management cycle are important. But risk assessment provides the foundation for all the other elements. In particular, risk assessment represents the basis for establishing the appropriate policies and for selecting the most efficient techniques from the point of view of the implementing costs of these policies. As long as risks and threats change in time, it is important for the organization to periodically perform a risk re-assessment and a reconsideration of the efficiency of the established policies and control methods. The risk assessment process involves actions of risk analysis and quantification and of the interaction between risks, with the purpose of anticipating the results of the project. It is a difficult process, because many events can influence it in unexpected ways (i.e. the mathematical techniques used can create a false impression of precision and trust, a single risk can cause multiple effects).One of the methods of performing the risk assessment within a project or a practical situation is that of simulation. Simulation represents a process for determining the decisions with the help of some models that constitute simplified representations of some real systems.In the Monte Carlo model, which is based on the decisional simulation, a series of estimations are provided that represent the most favorable case, the most likely case and the most unfavorable case with the purpose of showing how the project will progress and how it will fulfill an estimated closing date.The Monte Carlo simulation is used by various risk analysis software programs. One such product is also @Risk – an operational risk management solution in projects that transforms Microsoft Project into a strong instrument for risk analysis and assistance in making strategic or operational decisions.In the present paper we will present the connection between decisional simulation, the Monte Carlo method and the stages of solving a problem with the @Risk for Project instrument having as model a software product development and implementing project