Suppose the contract contains a penalty clause of $40,000 per month for a late delivery of THE SYSTEM. There is general agreement among the technical team that they have a 50% probability of being late by one month, a 10% probability of being late by two months and a 5% probability of being late by three months. What is your risk exposure?
scheduled delivery is after 24 month and 3 month for beta testing ..(info if needed)
Dear Shailesh Wagh,
For simple and clear understanding of Project Risk Management in 20 minutes, please may view the YouTube video given in the below link
https://youtu.be/1MjY-mchvZY
Regards,
R. Jagadeesan
This problem as presented is based on a single dominant chain. While it looks like both methods can give the same result it is not necessarily valid for the common case where more than a single chain occurs. In order to avoid the Flaw of Averages and falling into the Merge Bias issue it is better to use Monte Carlo methods.