Risk management - Correlated events part 3
Correlated events part 3
In summary, we identify the events for which a correlation exists.
In practice we then assume 100% correlation and ignore partial correlation.
Within a group of activities, one has to be designated as independent and the relationship to others in the group established.
Then during the iteration process in generating random samples, once the ‘independent’ one is set the others in the group are given values accordingly.
This will be carried out using suitable software and entering the relevant code.
The use of MONTE CARLO simulations to obtain distributions from many generated random samples will aid in project management [see ‘The Complete Project Management package’] and [see 'The Complete Project Management plus PRINCE2'].
It will focus the team’s mind on risk so that they don’t fudge the issue.
More realistic targets will be set for COST, DURATION and REVENUE which in turn will lead to better control.