The American University in Cairo

Construction Engineering Department

Risk Quantification
Using

CrystalBall Sofware

By
Eng: Ahmed Mahdy
 What Is Risk?
 Uncertainty about a situation can often indicate risk.

 Risk is the possibility of loss, damage, or any other

undesirable event.

 Low risk is desired, which would translate to a high

probability of success and profit.
 Where is the risk?
 How significant is the risk

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 Traditional Spreadsheet Risk
Analysis
 Identifying risks in your
spreadsheet
 e.g., costs, rates,
demands
 Best estimate or known
fact?
 Uncertainty

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 Cost Breakdown
Trade Earth Work
Activity Soil Replacement and Compaction Unit: m3

Item Data
Name Unit Quantity U. Price Price
Materials
Water (0.25/m3) m3 0.2500 3.5 0.88
Gravel (2G:1S) m3 0.6670 21.5 14.34
Sand m3 0.3330 7.5 2.50
Labor
Crew Crew 1.0000 0.3 0.3
Equipment
Crew Crew 1.0000 2.5 2.5
Direct Cost * * Other Direct Cost Besides Materials and Labor and Equipment
Testing every 25 cm m3 1.0000 0.25 0.25
Sub Total * * Total Direct Cost
20.76
Indirect Cost
Overhead = 3 % 0.62
Total Cost * * Total of Direct Cost + Indirect Cost
21.39
Contingency
Contingency = 5 % 1.07
Profit
Profit = 10 % 2.14
Total 24.59

Total Price 24.59

B.O.Q 23.25
% Change 5.78%

Thesis II: CENG 491 Spring’ 03

 Traditional Spreadsheet Risk
Analysis
 The traditional modeling landscape
 Point estimates
 most likely values, easiest, and misleading results.
 Range estimates
 Three scenarios: the best, worst case, and the
most likely case.
 Range of outcomes, but no probabilities
 What-if scenarios
 Many scenarios, time consuming, lots of data
 No probabilities
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 What Is Monte Carlo Simulation?
 What do we mean by "simulation?"

 How did Monte Carlo simulation get its name?

 What do you do with uncertain variables in your

spreadsheet?

 What happens during a simulation?

 How do you analyze the results of a simulation?

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 Procedures
 Select Items to be used in the analysis.
 Assume probable Minimum and Maximum cost for each
item.
 Assign probability distribution for each item.
 Create an Excel module using Crystal ball.
 Run the simulation.
 Analyze the results.

Thesis II: CENG 491 Spring’ 03

 Data Selection
Item Cost Left Limit Right Limit %dec %inc

RC 6,929,606 6,583,126 9,008,488 5.00 30.00

PC 460,325 446,515 506,357 3.00 10.00
CMU 476,251 452,438 500,063 5.00 5.00
Hand Rails 313,692 298,007 345,061 5.00 10.00
Wood Flooring 1,225,200 1,188,444 1,470,240 3.00 20.00
Plaster 415,986 403,506 457,584 3.00 10.00
Granite 2,806,480 2,722,286 3,227,453 3.00 15.00
Painting 372,227 364,783 409,450 2.00 10.00
Toilet Partitions 478,215 473,433 573,858 1.00 20.00
Total Cost 13477981.42

Thesis II: CENG 491 Spring’ 03

 Assumption
• The Height represents
relative likelihood
• X-Axis value determine
the impact on Cost

Thesis II: CENG 491 Spring’ 03

Which distributions?
Forecast

Thesis II: CENG 491 Spring’ 03

Results

Thesis II: CENG 491 Spring’ 03

 Crystal Ball Results
Fo re c as t: To tal Co s t Ce ll: B14

S ummary:
Fo re c as t:Displa
To taly Co s t (ciso from
Ra nge nt'd) 13071945.04 to 15378191.05 LE Ce ll: B14
Entire Ra nge is from 13071945.04 to 16172941.39 LE
P e rceAfte
ntiler s:
25,000 Tria ls, the S td. Error of the Mea n is 3148.28

S ta tistics: P e rce ntile LE

Va lue
Trials 0% 13071945.04
25000
Mea n 10% 13496725.04
14083945.89
Media n 20% 13644731.67
14011563.74
Mode 30% 13766462.15---
40%
S tanda rd De via tion 13884504.22
497786.60
Varia nce 50% 14011563.74
2.48E+11
S ke wne ss 60% 14147716.22
0.67
Kurtosis 70% 14304558.80
3.10
80%
Coe ff. of Va ria bility 14498722.69
0.04
Range Minimum 90% 14780105.24
13071945.04
Range Ma ximum 100% 16172941.39
16172941.39
Range Width 3100996.35
Mea n S td. Error 3148.28

Thesis II: CENG 491 Spring’ 03

Sensitivity and Trend Charts

Thesis II: CENG 491 Spring’ 03

 Tornado and Spider Charts
Spider Chart Tornado Chart Total Cost
Total Cost
12,500,000 13,000,000 13,500,000 14,000,000 14,500,000 15,000,000

14,500,000 RC 6,713,455 7,950,411

Granite 2,762,117 3,133,563 RC

Granite
14,000,000 Wood Flooring 1,207,202 1,395,501

Wood Flooring
Toilet Partitions 479,639 547,239
Toilet Partitions
PC 451,973 498,318 PC
13,500,000
Plaster
Plaster 408,432 450,243
CMU
CMU 458,746 493,755
Hand Rails
13,000,000
Painting
10.0% 30.0%
Hand Rails
50.0%
302,773 331,938
70.0% 90.0%
Percentiles
Painting of367,795
the variables
395,723

Thesis II: CENG 491 Spring’ 03

 Crystal Ball Analysis
 The Cost Fluctuate between 13071945.04 to 16172941.39 LE
 The probability that the actual cost would be less than or equal
the estimated Cost (13,477,981.42) is only 8.88 %
Probability Contengency Probability vs Contengency
8.88 0.00 16

25.53 1.72 14

50.43 4.00 Contengency (%)

12

75.12 6.80 10

85.25 8.51 8

95.10 11.47 6

4
98.64 14.10 2

Probability Contengency 0
0 10 20 30 40 50 60 70 80 90 100

60.00 5.00 Probability (%)

Thesis II: CENG 491 Spring’ 03

 Cost Breakdown
Trade Earth Work
Activity Soil Replacement and Compaction Unit: m3

Item Data
Name Unit Quantity U. Price Price
Materials
Water (0.25/m3) m3 0.2500 3.5 0.88
Gravel (2G:1S) m3 0.6670 21.5 14.34
Sand m3 0.3330 7.5 2.50
Labor
Crew Crew 1.0000 0.3 0.3
Equipment
Crew Crew 1.0000 2.5 2.5
Direct Cost * * Other Direct Cost Besides Materials and Labor and Equipment
Testing every 25 cm m3 1.0000 0.25 0.25
Sub Total * * Total Direct Cost
20.76
Indirect Cost
Overhead = 3 % 0.62
Total Cost * * Total of Direct Cost + Indirect Cost
21.39
Contingency
Contingency = 5 % 1.07
Profit
Profit = 10 % 2.14
Total 24.59

Total Price 24.59

B.O.Q 23.25
% Change 5.78%

Thesis II: CENG 491 Spring’ 03

 What Are The Benefits Of Risk
Analysis With Crystal Ball?
 You stop guessing

 You break free from the limitations of spreadsheets

 You have a competitive advantage

 You know what matters

 You look sharp

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