Open AccessMonte Carlo simulation in an elementary school building
Author(s) -
Anderson Edwin Antialon Macias,
Deiby Luis Medina Corilloclla,
Marcia Yesenia Jeremias Porras,
Roy Monteagudo Venero,
Jimmy Alberth Deza Quispe
Publication year - 2022
Publication title -
journal of project management
Language(s) - English
Resource type - Journals
eISSN - 2371-8374
pISSN - 2371-8366
DOI - 10.5267/j.jpm.2022.3.001
Subject(s) - sustainability , statistic , monte carlo method , profitability index , attendance , environmental economics , poverty , investment (military) , business , risk analysis (engineering) , actuarial science , computer science , economics , economic growth , finance , political science , mathematics , ecology , statistics , biology , politics , law
Education is the future. Education is the only way for a country to start developing and reducing poverty. In countries with medium incomes like Peru, the resources to spend on education is not unlimited. Therefore, it is necessary to have quality in investment. However, risks and uncertainty can make a project surpass its initial budget. Therefore, statistic based methods like Monte Carlo simulation is a powerful tool to forecast possible events that might endanger the profitability and sustainability of a project. Although there is not plenty of academic literature about Monte Carlo empirical usage, many projects employ this method to manage the possible risks the project could have. In consequence, the current research analyzed both risk and sensitivity of an elementary school building project. Both analyses showed that this project had huge probabilities to surpass the current profit and return estimations. However, the sensitivity analysis portrayed that the project could be endangered because of infrastructure overspending. Moreover, it indicated that students’ attendance is also a critical factor to ensure the sustainability of the project.