Introducing Project Risk Management - Preparing for Quantitative Risk Analysis

8 important questions on Introducing Project Risk Management - Preparing for Quantitative Risk Analysis

How do qualitative and quantitative risk analysis relate?

Qualitative risks analysis typically precedes quantitative risk analysis, where all or a portion of the identified risk are examined the quantitative risk analysis. Quantitative analysis is more time-consuming and thus more expensive.

What are the goals of quantitative risk analysis?

  • To ascertain the likelihood of reaching project success
  • To ascertain the likelihood of reaching project's objectives
  • To determine the risk exposure for the project
  • To determine the likely amount of the contingency reserve needed for the project
  • To determine the risks with the largest impact
  • To determine realistic time, cost, and scope targets

What do we mean with continuous probability distributions?

It is an examination of the probability off all possibilities within a given range. For each variable, the probability of a risk event and the corresponding consequence for the event may vary.

What is the goal of sensitivity analysis?

  • It is to determine which individual risks have the greatest impact on the project's success and then escalate the risk management processes on these risk events.
  • Each project risk is examined on its own merit.

What is the expected monetary value of a risk?

That is the costs if a risk occurs multiplied by the chance of the risk occurring.

What is the purpose of a decision tree?

It is a method to determine which of two or more decisions is the best to make. It uses the decision (1), the costs of the decision options (2) and the probability of the decision options (3) to determine the decision options values (4) and thus make a decision (5)

What should the end-results of quantitative risk analysis include?

  • Probabilistic Analysis  -
  • Probability of costs and schedule objectives -
  • A prioritized list of risks -
  • Trends -

When should quantitative risk analysis be completed?

When risks are identified and passed through qualitative analysis, as project conditions change or on a preset schedule.

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