Use of Monte-Carlo Analysis to Estimate Cost to Closure for Environmental Sites
There are a number of approaches to estimating cost-to-closure, from simplistic “best guesses” to more sophisticated cost modeling techniques using Monte Carlo simulations. The challenge for accurately determining cost for closure comes down to the client risk tolerance, regulatory acceptance, available reserves, timeframes, and other variables. Cost modeling provides a more statistically rigorous analysis of all the potential costs and their likelihood of being incurred as the site proceeds to closure. The interpretation of the results provides a mathematically defensible estimate of the cost-to-closure. However, like with all models, it is only as good as the data used to build it. The more that is known about a site, the more confidence can be placed on the model results.