What is a Monte Carlo Simulation?

The video explains Monte Carlo simulation, a technique named after Monte Carlo's gambling tables, used in project management to assess schedule and budget risks. It involves estimating activity durations and probabilities, represented as probability distributions, often using the Beta function. The Monte Carlo method uses computing power to simulate project durations, providing a probability distribution for the project's end date. Challenges include making accurate estimates and the method's assumption of activity independence. Despite its complexity, understanding Monte Carlo is crucial for project managers focused on risk management.

What are the challenges associated with making estimates for Monte Carlo simulations?

What is a significant shortcoming of the Monte Carlo method as described in the text?

Why is it important for project managers to understand Monte Carlo simulations?