Risk analysis in project evaluation incorporating adaptive behaviour

Abstract

This thesis presents a method of representing the outcome of a project using Monte Carlo simulation which incorporates adaptive behaviour. The uncertain variables of which the project's cash flow is a function are represented by temporary and permanent effects. These effects are blended together through a learning curve model. A comparison is made between an adaptable and a non-adaptable simulation to show the effect of adaptable project execution on the expected value, variance, and probability distribution of the equivalent annual return.