## Monte Carlo Simulation Convergence

General discussion and questions about project risk management and risk analysis software RiskyProject. Includes discussion on how to perform efficient project risk analysis using our software.

Moderator: Intaver Support

RodHersnam
Posts: 15
Joined: Mon Jul 09, 2007 6:54 am

### Monte Carlo Simulation Convergence

I defines maximum number of simulations 2000, however simulations stop before it. I believe it is because of convergence. How does it work? How can I correctly define convergence criteria? Do you calculate convergence based on cost?
Construction Engineer, PMP

Intaver Support
Posts: 856
Joined: Wed Nov 09, 2005 9:55 am

### Re: Monte Carlo Simulation Convergence

Convergence monitoring allows to stop Monte Carlo simulations when additional iterations don't contribute to improve accuracy of analysis. Please remember that in most cases we don't define uncertainties very accurately. For example, task duration can be between 5 and 7 days. However it is possible that task duration can be between 4.5 and 7.5 days. In many cases we don't have reliable historical data to definitely say that low duration will be 4.5 or 5 days. In other words we define uncertainties with 10% accuracy. Therefore it does not make sense to perform very accurate Monte Carlo simulations with accuracy 0.1%.

Convergence parameters are defined in Project Options Dialog, Calculation tab (click on Schedule -> Project Options):

To enable convergence you may just click on "Stop simulation when converged". If this box is not checked, number of Monte Carlo simulations will be exactly as shown above this check box (Maximum number of simulations). Default Monte Carlo convergence parameters are usually applicable to most schedules, so you don't need to change anything. RiskyProject calculates mean and standard deviation of project duration on each iteration. The different between mean (and standard deviation) calculated on current and previous iteration should be no greater than certain number. The default value is 0.15%. This criteria should be met on certain number of iterations. The default value is 20 iterations. If within 20 iterations between mean (and standard deviation) calculated on current and previous iteration is greater than 0.15%, RiskyProject would check this criteria over next 20 iterations. RiskyProject tests convergence criteria only for duration, not for cost.
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