Monte Carlo Simulation in Risk Analysis of Investment Projects

Abstract:

The aim of the paper is to analyze the investment risk of the project using the Monte Carlo simulation on the example of the expansion and modernization of the sewage treatment plant with the throughput rate of Qavr = 830m3/day in one of the rural municipalities in south-western Poland. The project was accomplished, the adopted operational objective was reached, which contributed to the fulfilment of specific objectives, included in the municipality’s development strategy in the area of arrangement of water and sewage management and the quality improvement of surface and ground water. Conducted ex-post analysis is to verify and ascertain the reasons of exceeding the established time limits, delays associated with the investment beginning and releasing of the subsequent project stages. Simulation of the risk level will indicate its impact on the time and cost parameters of the project and mutual correlation of obtained results.

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