crystal ball presentation
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The American University in CairoThe American University in Cairo
Risk QuantificationRisk Quantification
UsingUsing
CrystalBall SofwareCrystalBall Sofware
Construction Engineering DepartmentConstruction Engineering Department
ByBy
Eng: Ahmed MahdyEng: Ahmed Mahdy
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What Is Risk?What Is Risk?
Uncertainty about a situation can often indicate risk.Uncertainty about a situation can often indicate risk.
Risk is the possibility of loss, damage, or any other Risk is the possibility of loss, damage, or any other
undesirable event.undesirable event.
Low risk is desired, which would translate to a highLow risk is desired, which would translate to a high
probability of success and profit.probability of success and profit.
Where is the risk?Where is the risk?
How significant is the riskHow significant is the risk
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Traditional Spreadsheet RiskTraditional Spreadsheet Risk
Analysis Analysis Identifying risks in your Identifying risks in your
spreadsheetspreadsheet
e.g., costs, rates,e.g., costs, rates,
demandsdemands
Best estimate or knownBest estimate or known
fact?fact?
UncertaintyUncertainty
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Cost BreakdownCost Breakdown
Trade
Activity Unit: m3
Name Unit Quantity U. Price Price
Materials
Water (0.25/
3)
3 0.2500 3.5 0.88
Gra¡
el (2G:1¢
)
3 0.6670 21.5 14.34¢
and
3 0.3330 7.5 2.50
Labor Crew Crew 1.0000 0.3 0.3
Equipment
Crew Crew 1.0000 2.5 2.5
Direct Cost * * Ot£ er
¤ irect Cost Besides
¥ aterials and
¦ a
§ or and
̈ q
© i
ent
Testin
e¡
er
25 c
3 1.0000 0.25 0.25
Sub Total * * Total ¤ irect Cost
20.76
Indirect Cost
O¡
er £ ead = 3 % 0.62
Total Cost * * Total of ¤ irect Cost + Indirect Cost
21.39
ContingencyContin
enc
= 5 % 1.07
Profit
Profit = 10 % 2.14
Total 24.59
Total Price 24.59
B.O.Q 23.25
% Change 5.78%
Earth Work
Soil Replacement and Compaction
Item Data
T esis II: C NG 491 rin ¶ 03
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Traditional Spreadsheet RiskTraditional Spreadsheet Risk
Analysis Analysis The traditional modeling landscapeThe traditional modeling landscape
oint estimatesoint estimatesmost likely values, easiest, and misleading results.most likely values, easiest, and misleading results.
Range estimatesRange estimates Three scenarios: the best, worst case, and theThree scenarios: the best, worst case, and the
most likely case.most likely case.
Range of outcomes, but no probabilitiesRange of outcomes, but no probabilities
WhatWhat--if scenariosif scenariosMany scenarios, time consuming, lots of dataMany scenarios, time consuming, lots of data
No probabilitiesNo probabilities
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What Is Monte Carlo Simulation?What Is Monte Carlo Simulation?
What do we mean by "simulation?"What do we mean by "simulation?"
How did Monte Carlo simulation get its name?How did Monte Carlo simulation get its name?
What do you do with uncertain variables in your What do you do with uncertain variables in your
spreadsheet?spreadsheet?
What happens during a simulation?What happens during a simulation?
How do you analyze the results of a simulation?How do you analyze the results of a simulation?
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ProceduresProcedures
Select Items to be used in the analysis.Select Items to be used in the analysis.
Assume probable Minimum and Maximum cost for each Assume probable Minimum and Maximum cost for each
item.item.
Assign probability distribution for each item. Assign probability distribution for each item. Create an Excel module using Crystal ball.Create an Excel module using Crystal ball.
Run the simulation.Run the simulation.
Analyze the results. Analyze the results.
Thesis II: CEN Spring¶
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Assumption Assumption
The Height represents
relative likelihood
X-Axis value determine
the impact on Cost
Thesis II: CEN Spring¶
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Which distributions?Which distributions?
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ForecastForecast
Thesis II: CEN Spring¶
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ResultsResults
Thesis II: CEN Spring¶
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Sensitivity and Trend ChartsSensitivity and Trend Charts
Thesis II: CEN Spring¶
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Crystal Ball AnalysisCrystal Ball Analysis
The Cost Fluctuate between . to . LEThe Cost Fluctuate between . to . LE
The probability that the actual cost would be less than or e ualThe probability that the actual cost would be less than or e ualthe estimated Cost ( , , . ) is only .the estimated Cost ( , , . ) is only .
Thesis II: CEN Spring¶
robability Contengency
. .
robability Contengency
. .. .
. .
. .
. .
. .
. .
Probability vs Contengency
0
2
4
6
8
10
12
14
16
0 10 20 30 40 50 60 70 80 90 100
Probability (%)
C
o n t e n g e n c y ( % )
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Cost BreakdownCost Breakdown
Trade
Activity Unit: m3
Name Unit Quantity U. Price Price
Materials
Water (0.25/2
3)2
3 0.2500 3.5 0.88
Gra3
el (2G:14
)2
3 0.6670 21.5 14.34
4 and
2 3 0.3330 7.5 2.50
Labor Crew Crew 1.0000 0.3 0.3
Equipment
Crew Crew 1.0000 2.5 2.5
Direct Cost * * Ot5 er
6 irect Cost Besides
7 aterials and
8 a
9 or and
@ q
A i
B 2 ent
TestinC
e3
er D
25 c2 2
3 1.0000 0.25 0.25
Sub Total * * Total 6 irect Cost
20.76
Indirect Cost
O3
er 5 ead = 3 % 0.62
Total Cost * * Total of 6 irect Cost + Indirect Cost
21.39
Contingency ContinC enc
D
= 5 % 1.07
Profit
Profit = 10 % 2.14
Total 24.59
Total Price 24.59
B.O.Q 23.25
% Change 5.78%
Earth Work
Soil Replacement and Compaction
Item Data
T esis II: C NG 491 rin ¶ 03
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What Are The Benefits f RiskWhat Are The Benefits f Risk
AnalysisW
ith Crystal Ball? AnalysisW
ith Crystal Ball? You stop guessingYou stop guessing
You break free from the limitations of spreadsheetsYou break free from the limitations of spreadsheets
You have a competitive advantageYou have a competitive advantage
You know what mattersYou know what matters
You look sharpYou look sharp
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