Download NPV Risk Models
These NPV Models are referenced by the book Net Present Value and Risk Modelling for Projects and built using Excel 2010.
Two different tools have been used: @RISK for Excel (Palisade) ModelRisk (Vose Software). If you have either of these tools, the models will be fully functional. If you only have Excel, spreadsheet cells that are dependent upon the Monte Carlo simulation process will be indicated as not functioning e.g. with the label #NAME? However, you will still be able to view the relevant formulae by clicking on cells and viewing the address line.
A very simple model designed to demonstrate the mechanics of an NPV risk model
Early high-level risk model for a factory construction project. In the book, this is used to illustrate how tornado diagrams can be used for the purposes of risk prioritisation.
Variant of Model 5.1 that includes correlation between inputs for the purposes of simulating the effects of risk covariances.
Variant of Model 5.2 based on an option for project implementation: delivery of the project through a prime contractor rather than managing it in-house. The forecasts produced by Models 5.2 and 5.3 can be used to identify the relative merits of these two options.
Variant of Model 5.2 that includes an algorithm to simulate the effects of project implementation phase schedule risk on both costs and the commencement of benefits.
Risk model for a supermarket chain store modifications programme that includes an algorithm to simulate the combined effects of schedule risk and a benefits ramp-up period (project benefits ramp up as the number of stores that have been modified increases).
Variant of Model 6.3 that includes a conditional dependency (such that the stores modification programme only continues if the profitability of the first 10 stores to be modified exceeds a pre-determined hurdle).
Risk model for forecasting the cost risk associated with staffing a proposed training services centre for a large corporate client. Key points illustrated by this model is that risks may have a compound effect and that the mean values of probability distribution functions for certain inputs may differ very significantly from base estimates.
A simple example how to model probabilistic dependencies, thus allowing the model to switch between mutually exclusive outcomes during the simulation.
A simple example of the use of the negative binomial distribution, illustrating an approach to simulating the implications of uncertainty about how many remakes will be required to produce a specified number of products.
These risk models use the following colour / font coding:
- deterministic inputs - black / bold
- optimistic estimates for risk impact - green / bold
- mode estimates for risk impact - blue / bold
- pessimistic estimates for risk impact - red / bold
- simulated risk effects (risk model inputs) - brown
- calculations - black
- risk model output (Project NPV) - purple/ larger font / bold
- error check calculation - conditional formatting fills cell light red in the event of error
Please also read the notes at the bottom of the sheet in each model.