When I first heard about this it seemed exotic and exciting - but hard to understand. In this video, I aim to make it easy to understand, so you can know if and when to use a Monte Carlo simulation.
Hello again from Coastal Virginia. My latest graduate school course is Fundamentals of Business Analysis. Is this particular methodology related to sensitivity analysis and capital budgeting analysis? Thank you.
I am not knowledgeable in capital budgeting, but Monte Carlo Analysis is fundamentally a way to model the interactions of many estimates under statistical uncertainty. So you could use it for sensitivity analysis if you are interested in sensitivity to random variation. It's main use in project management (which is the only domain I know about) is for risk analysis.
Yes it is nice and at the same time it deos not answer the questions "What is a Monte Carlo Simulation". I am clearly able to understand that questions when I am looking at a circle and a square with random arrows.
I'm sorry. A monte carlo simulation creates many random results to give the range of outcomes. What do I not cover that you need to know? I don't get what you mean by 'a circle and a square with random arrows'.
@@Onlinepmcourses I actually spend time into looking at the reason. Now I see that from now on need to pay attention to not only the title "What is a Monte Carlo Simulation" also hash tags. This wasn't what I was looking. (Project Management) So it really has nothing to do with you or the video. thanks,
@@Ch-do6dg I have many videos covering all aspects of Project Management. This one covers a fine detail of Project Risk Management. For a general intro, I suggest you start with my Project Fundamentals playlist: ruclips.net/p/PLsz8d8r2a996dLF6xCFwYdLxxlUK4IXPt
@@Onlinepmcourses ok now you loved. You liked and I liked. You commented then I commented +++ everyone is happy. Congrats you are doing a great job T growing your channel. Like and love.
Your video is the first to accurately, honestly describe Monte Carlo Simulations (MCS). If one loads a MCS with poor data they will get an output of poor data. MCS is just an arithmetic tool that calculates numbers you give it. Example: The American presidential election of 2016 using MCS predicted right up until election day that Hillary Clinton would win the presidency with 92% certainty. But Donald Trump easily beat her. This is because those loading the data into the MCS were heavily biased for Clinton. MCS give the "appearance" of razor sharp, mathematical accuracy but in reality their accuracy is driven by good Qualitative assumptions up front.
Indeed. MCS can give precision (a very sharp range) without accuracy (a sharp range around the wrong midpoint). As always, GIGO - Garbage in, Garbage out.
Dude ty for that input. I have to write a discussion on simulation models and how its used in real world situations. Its due today and you come in clutch
Useful to learn... anything, or useful to learn this? We learn to become better people: better project managers, better professionals, better members of our society. This knowledge (MC simulations) and any other knowledge will either help us to do our jobs today, or help us frame our choices tomorrow. maybe both. And, as the QI organization points out... 'Whatever is interesting we are interested in. Whatever is not interesting, we are even more interested in. Everything is interesting if looked at in the right way.'
Is it possible to use monte carlo for binary data. I have kpi data which is pass or fail denoted by 1 or 0. Can i use it or it is only valid for normal distributions?
I think that, in principle, you can. But you only need to if P(1) is different for different elements, If the probabilities are all the same, then the MC result will just match P(1). If I remember my stats correctly (and I am no statistician), as you move toward a binary situation, the limit of a normal distribution is the Poisson distribution. I really do not. know if MC makes sense for the case you are interested in, I am afraid.
Yes, it's the same thing. You say 'tomayto' I say 'Tomahto'. If that bothers you enough to switch off, I'm sorry, but I think it says more about you than it does about me!
Not so agree with the shortfall you mentioned. Correlations could be defined between activities or cost elements. That means, dependent activities or cost elements will be sampled based on their correlations in each iteration. i.e. price and demand have negative correlation in real life and in any iteration they should not be sampled from their high values. A good scheduler or cost estimator or risk expert could take correlations into considerations when building a model/schedule.
You are right that we should take correlations into account. My point (if I have correctly identified where your concern lies) is that simplistic application of ranges in the MC method can produce nonsense. Done well, of course, we can work around that.
@@thecrown4423 Tx. For people with fluent English, faster is fine. I speak slowly and clearly because a lot of my audience use business English as a 2nd or 3rd language.
Well, I do take understanding very seriously. And you are the first person with this comment. So, all I can say is that I continue to work hard to make my explanations easy to understand. And, 'sorry'.
Showed this to my 9th grade class today- they really enjoyed it and learned a lot, thanks!
Glad it helped!
When I first heard about this it seemed exotic and exciting - but hard to understand. In this video, I aim to make it easy to understand, so you can know if and when to use a Monte Carlo simulation.
🎲
Thank you. I found that very interesting. I’ll have to watch it again.
Great - glad you liked it.
What is it used and for what target and what are the benefits please?
Did you watch the video? I answered those questions.
Hello again from Coastal Virginia. My latest graduate school course is Fundamentals of Business Analysis. Is this particular methodology related to sensitivity analysis and capital budgeting analysis? Thank you.
I am not knowledgeable in capital budgeting, but Monte Carlo Analysis is fundamentally a way to model the interactions of many estimates under statistical uncertainty. So you could use it for sensitivity analysis if you are interested in sensitivity to random variation. It's main use in project management (which is the only domain I know about) is for risk analysis.
@@Onlinepmcourses Thank you for the clarification.
Thank you for explaining the Monte Carlo Simulation!
You're very welcome, Patrick.
Nice sir
Thank you.
Love Mike's videos
Thank you.
Yes it is nice and at the same time it deos not answer the questions "What is a Monte Carlo Simulation". I am clearly able to understand that questions when I am looking at a circle and a square with random arrows.
I'm sorry.
A monte carlo simulation creates many random results to give the range of outcomes. What do I not cover that you need to know? I don't get what you mean by 'a circle and a square with random arrows'.
@@Onlinepmcourses I actually spend time into looking at the reason. Now I see that from now on need to pay attention to not only the title "What is a Monte Carlo Simulation" also hash tags. This wasn't what I was looking. (Project Management) So it really has nothing to do with you or the video. thanks,
@@Ch-do6dg I have many videos covering all aspects of Project Management. This one covers a fine detail of Project Risk Management. For a general intro, I suggest you start with my Project Fundamentals playlist: ruclips.net/p/PLsz8d8r2a996dLF6xCFwYdLxxlUK4IXPt
@@Onlinepmcourses ok now you loved. You liked and I liked. You commented then I commented +++ everyone is happy. Congrats you are doing a great job T growing your channel. Like and love.
@@Ch-do6dg Thank you.
Can we use it for estimation of uncertainty of measurement?
No, the uncertainties of individual estimates are inputs. The result is the uncertainty in the outcomes that combine the individual events.
Your video is the first to accurately, honestly describe Monte Carlo Simulations (MCS).
If one loads a MCS with poor data they will get an output of poor data.
MCS is just an arithmetic tool that calculates numbers you give it. Example:
The American presidential election of 2016 using MCS predicted right up until election day that Hillary Clinton would win the presidency with 92% certainty. But Donald Trump easily beat her. This is because those loading the data into the MCS were heavily biased for Clinton.
MCS give the "appearance" of razor sharp, mathematical accuracy but in reality their accuracy is driven by good Qualitative assumptions up front.
Indeed. MCS can give precision (a very sharp range) without accuracy (a sharp range around the wrong midpoint). As always, GIGO - Garbage in, Garbage out.
Dude ty for that input. I have to write a discussion on simulation models and how its used in real world situations. Its due today and you come in clutch
For what purpose is it useful to learn?
Useful to learn... anything, or useful to learn this?
We learn to become better people: better project managers, better professionals, better members of our society. This knowledge (MC simulations) and any other knowledge will either help us to do our jobs today, or help us frame our choices tomorrow. maybe both.
And, as the QI organization points out... 'Whatever is interesting we are interested in. Whatever is not interesting, we are even more interested in. Everything is interesting if looked at in the right way.'
Thank you, very clear explanation!
You're welcome.
Thanks for clarifying
You're welcome.
Is it possible to use monte carlo for binary data. I have kpi data which is pass or fail denoted by 1 or 0. Can i use it or it is only valid for normal distributions?
I think that, in principle, you can. But you only need to if P(1) is different for different elements, If the probabilities are all the same, then the MC result will just match P(1). If I remember my stats correctly (and I am no statistician), as you move toward a binary situation, the limit of a normal distribution is the Poisson distribution. I really do not. know if MC makes sense for the case you are interested in, I am afraid.
I am still confused.
What's confusing you? If you're more specific, I may be able to help.
Absolutely BRILLIANT explanation thank you so much!
Glad you enjoyed it!
"Absolutely briliant" such a British replay.🤣🤣
Sorry, switched off after the fifth utterance skedual. Is that similar to a schedule?
Yes, it's the same thing. You say 'tomayto' I say 'Tomahto'. If that bothers you enough to switch off, I'm sorry, but I think it says more about you than it does about me!
Skedule and shedual are both ok to say when you know monte Carlo
@@ryanhamdogg9762 I tend tp use the US form here - largely because I like it better: schedule/school
Thanks :)
You're welcome.
Beautiful
Thank you.
Not so agree with the shortfall you mentioned. Correlations could be defined between activities or cost elements. That means, dependent activities or cost elements will be sampled based on their correlations in each iteration. i.e. price and demand have negative correlation in real life and in any iteration they should not be sampled from their high values. A good scheduler or cost estimator or risk expert could take correlations into considerations when building a model/schedule.
You are right that we should take correlations into account. My point (if I have correctly identified where your concern lies) is that simplistic application of ranges in the MC method can produce nonsense. Done well, of course, we can work around that.
2X
?
@@Onlinepmcourses I think he meant he thinks 2x video speed is better
@@thecrown4423 Tx. For people with fluent English, faster is fine. I speak slowly and clearly because a lot of my audience use business English as a 2nd or 3rd language.
Very sorry sire, but I didn't get a clue about your talking, please make sure that some of your close people understand you, before making any video
Well, I do take understanding very seriously. And you are the first person with this comment. So, all I can say is that I continue to work hard to make my explanations easy to understand. And, 'sorry'.