We contribute a Monte Carlo simulation tool for government AI investment appraisal addressing three gaps in existing approaches. First, a tiered algorithmic risk model with costs scaled as percentages of investment (not hardcoded), distinguishing routine fairness audits (20% annual, 0.
Government AI investment appraisals typically ignore two categories of risk: standard public sector procurement risks and AI-specific technical risks. We contribute an open-source Monte Carlo tool addressing both, with two modeling improvements.
Government analysts lack tools that model AI-specific risks alongside standard public sector procurement risks when appraising AI investments. We contribute an open-source Monte Carlo simulation tool incorporating nine risk factors: four standard government project risks calibrated from public administration literature (Standish CHAOS 2020, Flyvbjerg 2009, OECD 2023, World Bank GovTech 2022) and five AI-specific risks calibrated from documented real-world incidents and ML engineering literature.
Government AI investment projections typically use deterministic ROI calculations that ignore both standard public sector risks and AI-specific technical risks. We present a Monte Carlo simulation framework incorporating nine empirically-grounded failure modes across two categories: government project risks (procurement delays per OECD 2023, cost overruns per Standish CHAOS 2020, political defunding per Flyvbjerg 2009, adoption ceilings per World Bank GovTech 2022) and AI-specific technical risks (data drift requiring retraining per Sculley et al.
Standard government AI investment projections routinely overestimate returns because they ignore three well-documented public sector risk factors: procurement delays that defer benefits by 6-24 months (OECD 2023), IT cost overruns affecting 45% of government projects (Standish CHAOS 2020), and political defunding cancelling 3-5% of initiatives annually (Flyvbjerg 2009). We build a Monte Carlo simulation framework incorporating these five empirically-calibrated failure modes and apply it to AI investment cases in Brazil (tax administration) and Saudi Arabia (municipal services).