Course
COST MANAGEMENT
- ASSIGNMENT 2 -
Instructor:
Student:
TABLE OF CONTENT
Page 1
Problem:
1. Assume 7 work items with its distribution as normal, lognormal and triangular.
The total cost of project (TPC) y:
7
y xi
i 1
2. To conduct simulation for TPC if all cost components are correlated with
coefficient r1= 0.3; r2 = 0 and r3= -0.3 respectively.
Simulation 50 times with 20 sets
3. Draw TPCs PDF and CPF and discussing your results.
4. Simulating the problem by using sofware (Crystal Ball or @Risk) and
comparing the result from manual spread and from software.
Solution:
1. Assuming data of project cost items
It is considered a high-rise building project with below basic information about
main items and cost distribution.
Table 1: Project cost items
Distribution:
-
Page 2
ln x
FX x
Triangular distribution:
for
:
0
y*
m
a
(b
a)
ba
F1 (y | a, m, b, n)
b 1 y b m b a for : m a y 1
ba
Matrix of r value
Matrix of r
2
0.30
1.00
0.30
0.30
0.30
0.30
0.30
3
0.30
0.30
1.00
0.30
0.30
0.30
0.30
4
0.30
0.30
0.30
1.00
0.30
0.30
0.30
5
0.30
0.30
0.30
0.30
1.00
0.30
0.30
6
0.30
0.30
0.30
0.30
0.30
1.00
0.30
7
0.30
0.30
0.30
0.30
0.30
0.30
1.00
2
18.04
68.81
12.89
12.13
12.32
18.52
48.72
3
11.26
12.89
26.81
7.57
7.69
11.56
30.42
4
10.60
12.13
7.57
23.77
7.24
10.88
28.64
5
10.77
12.32
7.69
7.24
24.50
11.05
29.07
6
16.19
18.52
11.56
10.88
11.05
55.38
43.71
7
42.59
48.72
30.42
28.64
29.07
43.71
383.38
C (Covariance matrix)
Matrix C
1
2
3
4
5
6
7
1
1.00
0.30
0.30
0.30
0.30
0.30
0.30
1
2
3
4
5
6
7
1
52.56
18.04
11.26
10.60
10.77
16.19
42.59
Page 3
COV X i , X j h 1aih a jh
i 1
aij
Matrix A
1
2
3
4
5
6
7
1
7.25
2.49
1.55
1.46
1.48
2.23
5.87
2
0.00
7.91
1.14
1.07
1.09
1.64
4.31
aii
3
0.00
0.00
4.81
0.85
0.86
1.30
3.41
4
0.00
0.00
0.00
4.44
0.71
1.07
2.82
5
0.00
0.00
0.00
0.00
4.46
0.91
2.40
6
7
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
6.64 0.00
2.10 17.34
Check A
1
2
3
4
5
6
7
1
52.56
18.04
11.26
10.60
10.77
16.19
42.59
2
18.04
68.81
12.89
12.13
12.32
18.52
48.72
3
11.26
12.89
26.81
7.57
7.69
11.56
30.42
4
10.60
12.13
7.57
23.77
7.24
10.88
28.64
5
10.77
12.32
7.69
7.24
24.50
11.05
29.07
6
16.19
18.52
11.56
10.88
11.05
55.38
43.71
7
42.59
48.72
30.42
28.64
29.07
43.71
383.38
Matrix C
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
1.00
0.00
0.00
0.00
0.00
0.00
0.00
2
0.00
1.00
0.00
0.00
0.00
0.00
0.00
3
0.00
0.00
1.00
0.00
0.00
0.00
0.00
4
0.00
0.00
0.00
1.00
0.00
0.00
0.00
5
0.00
0.00
0.00
0.00
1.00
0.00
0.00
6
0.00
0.00
0.00
0.00
0.00
1.00
0.00
7
0.00
0.00
0.00
0.00
0.00
0.00
1.00
1
2
3
4
5
6
7
52.56 0.00 0.00 0.00 0.00 0.00 0.00
0.00 68.81 0.00 0.00 0.00 0.00 0.00
0.00 0.00 26.81 0.00 0.00 0.00 0.00
0.00 0.00 0.00 23.77 0.00 0.00 0.00
0.00 0.00 0.00 0.00 24.50 0.00 0.00
0.00 0.00 0.00 0.00 0.00 55.38 0.00
0.00 0.00 0.00 0.00 0.00 0.00 383.38
Page 4
Matrix A
Check A
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
7.25
0.00
0.00
0.00
0.00
0.00
0.00
2
0.00
8.30
0.00
0.00
0.00
0.00
0.00
3
0.00
0.00
5.18
0.00
0.00
0.00
0.00
4
0.00
0.00
0.00
4.88
0.00
0.00
0.00
5
0.00
0.00
0.00
0.00
4.95
0.00
0.00
6
7
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
7.44 0.00
0.00 19.58
1
2
3
4
5
6
7
52.56 0.00 0.00 0.00 0.00 0.00 0.00
0.00 68.81 0.00 0.00 0.00 0.00 0.00
0.00 0.00 26.81 0.00 0.00 0.00 0.00
0.00 0.00 0.00 23.77 0.00 0.00 0.00
0.00 0.00 0.00 0.00 24.50 0.00 0.00
0.00 0.00 0.00 0.00 0.00 55.38 0.00
0.00 0.00 0.00 0.00 0.00 0.00 383.38
1
2
3
4
5
6
7
1
7.25
-2.49
-1.55
-1.46
-1.48
-2.23
-5.87
2
0.00
7.91
-2.12
-1.99
-2.02
-3.04
-8.00
3
0.00
0.00
4.46
-3.15
-3.20
-4.81
-12.66
4
0.00
0.00
0.00
2.78
-8.47
-12.73
-33.49
5
0.00
0.00
0.00
0.00
#NUM!
#NUM!
#NUM!
6
0.00
0.00
0.00
0.00
0.00
#NUM!
#NUM!
7
0.00
0.00
0.00
0.00
0.00
0.00
#NUM!
i 1
We occured this error #NUM! because the equation: aii COV Xi, Xi a 2ij
j 1
Page 5
r = -0.15
Matrix of r
Matrix C
Matrix A
Check A
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
2
3
4
5
6
7
1
1.00
-0.15
-0.15
-0.15
-0.15
-0.15
-0.15
2
-0.15
1.00
-0.15
-0.15
-0.15
-0.15
-0.15
3
-0.15
-0.15
1.00
-0.15
-0.15
-0.15
-0.15
4
-0.15
-0.15
-0.15
1.00
-0.15
-0.15
-0.15
5
-0.15
-0.15
-0.15
-0.15
1.00
-0.15
-0.15
6
-0.15
-0.15
-0.15
-0.15
-0.15
1.00
-0.15
7
-0.15
-0.15
-0.15
-0.15
-0.15
-0.15
1.00
1
2
3
4
5
6
7
52.56 -9.02 -5.63 -5.30 -5.38 -8.09 -21.29
-9.02 68.81 -6.44 -6.07 -6.16 -9.26 -24.36
-5.63 -6.44 26.81 -3.79 -3.84 -5.78 -15.21
-5.30 -6.07 -3.79 23.77 -3.62 -5.44 -14.32
-5.38 -6.16 -3.84 -3.62 24.50 -5.53 -14.54
-8.09 -9.26 -5.78 -5.44 -5.53 55.38 -21.86
-21.29 -24.36 -15.21 -14.32 -14.54 -21.86 383.38
1
7.25
-1.24
-0.78
-0.73
-0.74
-1.12
-2.94
2
0.00
8.20
-0.90
-0.85
-0.86
-1.30
-3.42
3
0.00
0.00
5.04
-1.02
-1.03
-1.55
-4.08
4
0.00
0.00
0.00
4.63
-1.28
-1.93
-5.08
5
0.00
0.00
0.00
0.00
4.53
-2.55
-6.71
6
7
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00
6.31 0.00
-9.96 13.28
1
2
3
4
5
6
7
52.56 -9.02 -5.63 -5.30 -5.38 -8.09 -21.29
-9.02 68.81 -6.44 -6.07 -6.16 -9.26 -24.36
-5.63 -6.44 26.81 -3.79 -3.84 -5.78 -15.21
-5.30 -6.07 -3.79 23.77 -3.62 -5.44 -14.32
-5.38 -6.16 -3.84 -3.62 24.50 -5.53 -14.54
-8.09 -9.26 -5.78 -5.44 -5.53 55.38 -21.86
-21.29 -24.36 -15.21 -14.32 -14.54 -21.86 383.38
Page 6
r = 0.3
501.04
499.61
506.57
501.04
503.14
506.30
507.94
497.74
501.46
500.82
500.29
510.95
511.08
502.83
501.70
497.91
500.01
514.80
506.27
502.14
503.68
4.68
0.15
497.74
514.80
503.44
503.93
r=0
r = -0.15
503.87
503.39
500.09
504.09
501.83
500.27
499.44
500.67
499.67
502.84
502.70
503.40
503.60
498.12
500.73
503.62
500.01
507.48
505.88
508.07
502.70
501.32
507.83
503.92
504.64
504.76
506.73
500.52
503.16
506.85
505.13
501.51
512.32
504.08
501.19
502.01
504.79
503.79
508.42
503.74
503.74
503.22
3.35
2.48
0.11
0.08
499.44
498.12
512.32
508.07
503.56
503.09
503.91
503.35
Page 7
When we simulate TPC with 50 times and 20 sets, result is showed as follow:
E (TPC)
503.45
Var (TPC)
1,438.93
s (TPC)
37.93
Assume TPC is Normal
Dicussion:
In positive correlation condition r = 0.3, the result we got after simulating for total
cost is different from independent result because the standard deviation is greater than
the standard of the first case.
In negative correlation condition r = -0.15, the result we got after simulating for
total cost is different from independent result because the standard deviation is smaller
than the standard of the first case.
Three scenarios show three levels of risk prefer status, the lowest risk seeker or
risk averse in case of correlation coefficient r = 0.3 and the highest risk seeker or risk
averse in case of correlation coefficient r = -0.15
Based on risk assessment, in case of correlation condition r = 0.3, the CDF line is
lowest, that mean it will be got more uncertainty for decision maker. However, in
positive risk aspect, decision maker have a trend seek risk to gain more benefit than
original plan, and otherwise.
Page 8
Page 9
Page 10
r = - 0.15
Comment:
The two results from Crystal Ball look similiar. But the chart from CB are smoother.
And, clearly, using CB is quicker, more efficiently.
Page 11
5. Appendix
APPENDIX 1: Simulation case r = 0.3
#
s1
s2
s3
s4
s5
s6
s7
x'1
x'2
x'3
x'4
x'5
x'6
x'7
x1
x2
x3
x4
x5
x5
x6
Min-Mid
Mid-Max
x7
502.95
TPC
12 0.762 2.240 -1.108 -0.222 -0.027 0.007 1.771 63.07 107.40 43.25 66.69 55.34 74.60 164.71 62.82 109.23 42.99 66.52 55.66 55.71 55.71 74.60 164.71 576.58
13 -1.620 -0.377 -0.162 -1.165 -2.752 0.025 -1.455 45.80
77.56 46.59
89.70 74.74
93.23 51.26
77.56 406.48
89.70 481.85
93.23 452.54
Page 12
95.63 46.49
98.64 57.45
99.83 56.46
99.33 60.76
95.63 453.17
98.64 488.10
99.83 486.13
99.33 486.26
Page 13
s1
s2
s3
s4
s5
s6
s7
x'1
x'2
x'3
x'4
x'5
x'6
x'7
x1
x2
x3
x4
x5
x5
x6
x7
Min-Mid Mid-Max
503.49
TPC
1 -0.278
0.357 -0.371
0.454
82.71 55.13
54.12
82.71
451.93
2 -1.117
1.250
0.610
0.985
1.673 49.44
57.36
556.15
55.95
472.78
58.47
482.50
0.006
1.176
1.019
0.480
0.766 -0.211
0.558
1.347 -0.646
52.25
502.86
0.669 42.34
58.11
485.48
7 -0.975 -0.829
0.065
0.422 -0.192
2.084
0.422 50.47
52.36
514.53
8 -0.356
0.725
1.809
0.564 -0.278
0.290
0.915 54.96
51.86
537.85
9 -1.392
0.669
1.191
0.366 47.45
43.52
509.16
0.513
50.77
482.60
46.06
478.30
1.898
10 -0.196 -0.671
11
1.761
0.579 47.87
57.22
513.62
13 -0.233 -1.451
0.186 55.85
44.85
490.45
14 -0.633 -1.166
0.070
0.699 52.95
49.74
500.75
15
0.459 62.35
48.47
491.15
16
0.117
0.152 -0.184
0.815 65.18
54.20
520.76
1.454
0.139
54.14
503.95
1.140 -0.400 65.48 100.84 44.43 58.59 42.08 79.36 116.49 65.50 101.38 44.14 58.75
42.22
507.83
17 -0.672 -0.751
2.269
18
1.095
19
20
1.619
0.930
0.700
1.283
1.653 -0.131
0.961 -0.524
0.232 58.25
58.50
506.57
50.39
525.07
0.306
46.64
494.91
21 -0.935
22
1.300
1.771
0.225 66.96 102.47 61.10 70.83 55.55 65.61 128.73 67.20 103.27 63.94 70.88
55.83
555.54
23
0.691 60.99
49.40
499.36
24
2.328
0.540 74.41 108.89 43.63 67.37 53.77 74.80 134.89 76.46 111.09 43.36 67.22
54.22
562.03
3.141
2.545 -0.233
1.175
0.465
0.514 -0.708
0.155
0.528
0.214 50.76
Page 14
25
26 -0.272 -0.282
1.187
0.587 66.16
54.86
506.95
0.420
55.45
489.84
0.787 -0.619
49.82
487.12
1.102
0.289 -0.192
27 -2.454
0.461 -0.593
28 -0.572
1.413
0.512 53.39
50.32
502.00
29
0.348
0.484
0.186
0.653 -0.652
0.744 60.06
56.36
527.98
30
1.352 63.67
48.30
515.22
0.170 52.46
31 -0.700
0.120
0.388
0.060
1.220
53.74
519.22
32
0.467
1.206
0.818 -0.497 60.93 101.23 39.88 58.31 58.97 76.96 114.58 60.53 101.82 39.90 58.49
57.86
511.33
33
0.525 -1.332
0.614 61.35
44.84
490.65
34
0.697
1.398
1.070
0.989
52.06
510.50
0.372
1.191
0.954 55.89
55.24
523.63
36 -0.368
0.373
0.080 54.87
51.23
501.44
37
1.552
96.06 69.37
51.88
96.06
471.02
38
0.488
0.449 -0.896
0.886
82.97 60.70
47.50
82.97
469.76
0.612 47.43
52.04
502.06
0.645 -0.358
1.522 53.90
56.33
536.43
0.807 44.29
53.32
502.28
0.112
0.962 62.79
57.81
532.03
53.53
466.74
53.53
475.37
0.891
99.45 56.72
57.11
99.45
478.27
0.853 -0.234
52.11
496.38
47 -0.191 -0.036
2.413
0.905 56.16
52.56
533.14
48 -1.511
0.681
49 -0.715
0.429
0.405 -0.121
39 -1.394 -1.241
40 -0.502
0.482 -0.249
41 -1.827 -0.546
1.343 -1.010
0.154
0.159 -1.919
0.864
42
0.724
43
44 -0.007
50
1.183
0.894
52.29
474.61
1.341 52.36
57.90
530.93
58.38
473.28
1.226 -0.513
Page 15
s1
s2
s3
s4
s5
s6
s7
x'1
x'2
x'3
x'4
x'5
x'6
x'7
x1
x2
x3
x4
x5
x5
x6
x7
Min-Mid Mid-Max
1 -1.116 -1.118 -1.149 -1.456 -1.158 -1.623
2 -0.146
0.721
506.68
TPC
0.335 49.45
52.98
527.43
54.01
499.80
53.61
496.82
54.09
491.92
4 -0.908
0.585
0.910 61.78
50.24
532.99
54.01
507.78
0.413
0.794
0.824
0.353 66.17
57.13
500.86
0.049 -1.040
1.106
0.680 60.27
49.55
515.66
0.811 61.46
53.46
523.88
0.229
0.520 50.18
55.50
518.45
0.489 60.35
55.76
522.31
1.162 49.53
53.62
523.27
42.31
499.28
10 -1.015
11
12 -1.105
13
0.428
0.079
2.588 -0.839
0.887
0.123
56.19
485.72
1.017
58.35
498.25
16
1.627 60.36
48.31
536.25
17
0.336
0.649 59.98
52.25
520.84
18
0.187 -0.852
1.715
95.73 58.44
58.30
95.73
476.40
19
51.76
494.15
55.55
498.17
55.00
484.11
0.543 -0.640 57.82 101.13 38.40 57.51 54.18 76.85 117.11 57.37 101.71 38.61 57.79
54.62
504.05
0.188
0.647 67.75
56.11
508.40
0.756 58.04
44.13
528.33
0.183
20 -1.286
21 -2.383
0.450
22
0.039
23
24
0.070
0.535
1.039
0.580
0.657
Page 16
25
0.313 -0.401
0.624
0.057
0.535 59.81
55.71
502.80
26
1.127
0.121
46.47
506.77
52.24
515.82
0.853
0.662
0.430
27 -0.173
28 -1.428
1.309 -1.318
1.658
1.758 -1.457 -0.141 47.18 100.29 38.12 74.05 60.12 55.94 121.84 47.72 100.75 38.36 74.48
29
1.415
0.390 -0.467
0.878
30
0.773 -0.073
0.177 56.29
0.016 63.14
58.25
499.06
57.68
492.94
53.19
506.79
31 -1.635
0.872 45.69 101.26 35.28 65.44 55.04 62.01 166.04 46.50 101.86 36.01 65.26
55.41
533.11
32 -0.983
0.791
0.300 50.41
55.66
509.97
33 -0.872
55.67
499.87
34
0.218
41.67
493.50
0.409
0.483 40.08
57.89
517.19
55.48
497.96
37 -1.083
0.194
0.370
0.300 49.69
52.17
505.02
38
0.518 -0.226
1.354
0.207 -0.706
0.796
0.296
0.359
0.365
0.353 -0.342
0.286
0.823 -2.737
0.335 -0.208
42.08
483.41
39 -0.994 -0.370
1.165
0.817 -0.244
77.75 50.39
50.75
77.75
458.70
40
0.205
0.631
57.64
489.50
1.156 -1.802
2.469 -0.940
1.497 49.50
58.75
530.27
0.852
1.023 58.99
49.26
518.13
0.571 -0.521
0.471 61.60
55.54
508.85
42
0.200 -1.707
43
0.560
0.209
0.354 -0.447
44
0.037
0.702 -1.356
45
46
47 -0.626
0.372
0.115
0.609 57.81
48.18
515.86
48.36
500.32
52.26
497.95
0.212 53.00
49.55
507.53
0.068 -0.474
0.591 57.00
49 -1.694
2.095
50
0.116
2.893 -0.934
0.146
0.237
52.48
514.94
51.50
94.30
491.73
2.481 58.38 100.65 38.01 61.99 55.82 69.32 156.42 57.93 101.15 38.27 61.89
56.05
541.15
0.537 -0.123
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