Project managers should be prepared to perform different types of risk analysis. For many projects, the quicker qualitative risk assessment is all you need. But there are occasions when you will benefit from a quantitative risk analysis. Show Let’s take a look at this type of analysis: What is it? Why should we perform it? When should it be performed? And how do we quantify risks? What is Quantitative Risk Analysis?Quantitative risk analysis is a numeric estimate of the overall effect of risk on the project objectives such as cost and schedule objectives. The results provide insight into the likelihood of project success and is used to develop contingency reserves. More... Individual risks are evaluated in the qualitative risk analysis. But the quantitative analysis allows us to evaluate the overall project risk from the individual risks plus other sources of risks. Better Business DecisionsBusiness decisions are rarely made with all the information or data we desire. For more critical decisions, quantitative risk analysis provides more objective information and data than the qualitative analysis. Keep in mind: While the quantitative analysis is more objective, it is still an estimate. Wise project managers consider other factors in the decision-making process. Better EstimatesA project manager estimated a project's duration at eight months with a cost of $300,000. The project actually took twelve months and cost $380,000. What happened? The project manager did a Work Breakdown Structure (WBS) and estimated the work. However, the project manager failed to consider the potential impact of the risks (good and bad) on the schedule and budget. First, we identify risks. Then we can evaluate the risks qualitatively and quantitatively. Consider using Quantitative Risk Analysis for:
What is the Difference Between Qualitative and Quantitative Risk Analysis?Quantitative Risk Assessment Tools & TechniquesQuantitative Risk Analysis tools and techniques include but are not limited to:
Quantitative Risk Analysis ExampleLet’s look at a simple Expected Monetary Value (EMV) example: Keep in mind that risks include both threats and opportunities. Threats have adverse impacts on cost. Opportunities are benefits that reduce cost. Expected Monetary Value = Probability x Impact.
Notice we subtracted the benefit of the Opportunity from the EMV. The Total EVM represents the project risk exposure and the amount of our Contingency Reserve. Once you've performed the Quantitative Risk Analysis, be sure to update your risk register with the additional risk information. 43.Which technique will the manager usewhenevaluatingalternative usingqualitative evaluation?A.Comparison techniqueB.IntuitionandsubjectivejudgmentC.Rational techniqueD.Analytical technique44.Which technique will the manager usewhenevaluatingalternative usingquantitative evaluation?A.RationalandanalyticaltechniquesB.IntuitionandsubjectivejudgmentC.ComparisoninnumbertechniqueD.Cost analysis45.What refers to the strategic statementthat identifies why an organization exists,its philosophy of management, and itspurpose as distinguished from othersimilar organizations in terms of products,services and markets?A.Corporate missionB.Corporate visionC.Corporate characterD.Corporate identity46.What refers to a process of influencingandsupportingotherstoworkenthusiasticallytowardachievingobjectives?A.PowerB.LeadershipC.TeamworkD.Charisma47.What describes how to determine thenumber of service units that will minimizeboth customer’s waiting time and cost ofservice?A.Queuing theoryB.Network modelC.Sampling theoryD.Simulation48.What refers to the rational way toconceptualize, analyze and solve problemsin situations involving limited or partialinformationaboutthedecisionenvironment?A.Sampling theoryB.Linear programmingC.Decision theoryD.Simulation49.What is quantitative technique wheresamples of populations are statisticallydetermined to be used for a number ofprocesses, such as quality control andmarketing research?A.Sampling theoryB.Linear programmingC.Statistical decision theoryD.Simulation50.The engineer manager must beconcern with the needs of his humanresources. What refers to the need of theemployees for food, drinks, and rest?A.Physiological needB.Security needC.Esteem needD.Self- actualization need51.What refers to the learning that isprovided in order to improve performanceon the present job?A.Training |