Quantitative Risk Analysis

Improved Essays
Quantitative risk analysis is the one which follows the Qualitative analysis, and gives a numerical priority rating to project risks (PMI, 2009). Based on the PMBOK (PMI, 2013) quantitative risk analysis “… is the process of numerically analyzing the effect of identified risks on overall project objectives (p. 333).” This is also a process for the PM and project team to get risk data to support making decisions, which can help to reduce project uncertainties (PMI, 2013, p. 333). Based on the prior researchers’ statement, the Quantitative Risk Analysis is more complicate and even the most difficult part within risk management since it requires statistical and mathematical methods to be operated (Purnus & Bodea, 2013, p. 145).
Inputs of this
…show more content…
10).” As we can figure out that EMV analysis can translate risks into measureable versions- values. It gives the PM a directly explanation of potential opportunities and disadvantages at the same time. As Pritchard (2015) suggested in his book, the first step for applying EMV method is to identify the alternations which the decision maker can take into consideration, both in the predictable and unpredictable ways (pp. 207-208).
I would prefer to use this type of quantitative risk analysis method, because it provides measurable and interchangeable description of the potential risks; also, it provides alternative options for stakeholders to compare. If my project team have to deal with a project which puts the cost at the top priority of the triple constrains, I would definitely use the EMV analysis to give my sponsors and other stakeholders a clear and valid risk analysis report.
Finally, the third type of quantitative analysis and modeling techniques is the modeling and simulation, which means that one can translate the specified detailed uncertainties into future impact on project object (PMI, p.

Related Documents

  • Great Essays

    Briargrove Risk Management Techniques Anthony Redhead Grantham University Project Management Integration Framework (BA 647) Introduction This paper will discuss questionnaires and surveys as tools of project risk assessment. In the paper, I provide a clear guideline to Briargrove concerning how to manage risk using these tools in any project. The paper has also attached to it an example of a questionnaire that could be utilized in the Briargrove project. The paper has provided a proper description of how to employ questionnaires and surveys in monitoring and assessing risks in projects. Briargrove Risk Management Techniques A project comprises of a range of activities, for instance scope, timeline, budget, tasks among…

    • 1400 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    A Risk Analysis Essay

    • 1188 Words
    • 5 Pages

    Gibson says, “A risk assessment (RA), also referred to as “Risk Analysis”, is a process used to identify and evaluate risk” (2015). It differs from Risk Management Plan (RMP) as RA is about classifying the risks quantitatively and qualitatively, but RMP is about avoiding and mitigating risks, threats and vulnerabilities. Risk assessment is a subset of RMP. RA helps an organization to prioritize the risks based on their likelihood and degree of impact. RA is a very important instrument when an organization is trying to evaluate their risks, plan the control/solution and monitor their effectiveness.…

    • 1188 Words
    • 5 Pages
    Improved Essays
  • Superior Essays

    Kallman Assessing Risk

    • 965 Words
    • 4 Pages

    (Kallman, Risk Management Solutions, 2008) Risk management is in the eye of the beholder. But in finance, Kallman explains that the ultimate solution to risk management is prevention. There are several other tactics to employ when assessing risks such as creating a risk management solution tree, deciding whether to accept or avoid the situation, and what resources you will spend on controlling the risk. Creating a risk management solution tree is an important step towards measuring risk. It is important for one to have a clear understanding of the organization’s goals and procedures before utilizing the risk…

    • 965 Words
    • 4 Pages
    Superior Essays
  • Improved Essays

    A PMO must fully integrate a risk management process that is able to identify potential risks, with a proactive approach, in order to promptly address each issue and minimize the effects on the project and organization. Along with completing a full risk analysis for every project, common risk factors and the risk tolerances of the organization and stakeholders should be included in the risk management assessment. By considering all of these attributes within the risk management process, a PMO can effectively implement a mitigation plan that will minimize the impacts on projects and present a competitive advantage for the organization…

    • 946 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Establishing Estimate Value To fully employ earned value analysis (EVA), project managers and stakeholders, but understand the standard lexicons of EVA such as earned value (EV), actual cost (AC), and (PV). The formulas are also standard such as cost variance, schedule variance, cost performance index, and schedule performance index (Dow et al., p. 207, 2015). Regardless if a project is large or small, earn value analysis reporting and the communication tools used to establish and report on them are advantageous to project managers and stakeholders. The typical questions from stakeholders as pertain to projects are how much and when. Earned value analyses furnish that information in great detail.…

    • 702 Words
    • 3 Pages
    Improved Essays
  • Great Essays

    Project Management Guru

    • 1556 Words
    • 7 Pages

    When you compare planned risk to actual risk, it is easier to identify room for improvement. Identify trends: variances can be ‘point in time’ or they can be trends. If we are consistently experiencing the same risks (trends), we can identify and solve the root of the issue. According to Project Management Guru (2012), two reasons why comparing planned risk to actual risk performance should be an iterative process include: i) Timely response: comparing planned risk to actual risk performance should be performed iteratively so that risks are looked at more closely so that potential problems can be identified timely and corrective action can be taken to control the project evolution. ii) Ever changing: the project risk is constantly changing.…

    • 1556 Words
    • 7 Pages
    Great Essays
  • Improved Essays

    Qualitative Risk Matrix

    • 1364 Words
    • 6 Pages

    The risk matrix can display the basic properties, aftermath, and likelihood of the disadvantage in a well-organized graph. For risk qualitative analysis process, the Probability and Impact matrix is the most useful one. Within this type of risk matrix, main components are required to make better description of the risk analysis result. It’s crucial to have dimensions of risk probability and impact, which would be shown by scales of how to rate these two dimensions. Furthermore, a rule of how the results of rating would be defined, which will be used to declare which how a specific risk’s priority would be decided (Duijm, 2015, p.…

    • 1364 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    The scrutiny of quantitative experiments provide a filter that clarifies external factors, based upon the design, so the results collected can be regarded as authentic and equitable. Quantitative method creates a strategic pathway leading to a final answer by narrowing down the possible directions for follow up research to take place (Gatrell, 2002). The analysis brought forth through this study will develop further ideas and uncover progressing trends in the area of adaptation, integration and understanding of technology operations. Thereby, the findings brought to the forefront will expose the deeper problem, reasons for rejection and reveal the thought process behind embracing the fullness of these devices within their…

    • 1160 Words
    • 5 Pages
    Improved Essays
  • Great Essays

    The metrics associated with qualitative methods used by baseline advocates include: 1. The impact of each alternative solution impacting stakeholders and perspectives are considered comparably using the stakeholders data and questions; 2. The discussion is comprehensive and balanced by alternatives but points assertions and data that are controversial; 3. The intangibles or human elements are highlighted and put into context. These metrics provide government decision-makers with the compatibility to weigh the impacts from each of the alternative positions relevant to the issue.…

    • 1228 Words
    • 5 Pages
    Great Essays
  • Improved Essays

    The ability of users to better understand about the amount of feedback, the IASB decided to receive the most effective way to solve these problems and improve the financial statements, time and uncertainty of future cash flow of information is to replace the existing category classification and measurement of financial assets. Hedge Accounting The project involves hedge accounting for financial instruments and non-financial issues relating to the project. The goal of the project is based on the feedback from the preparation of opinions, auditors, users and other stakeholders received to hedge accounting model targeted improvements (FASB,…

    • 873 Words
    • 4 Pages
    Improved Essays