How to Perform Quantitative Risk Analysis for Projects
performing Quantitative Risk Analysis enables the project team to prioritize risk according to the threat they pose or the opportunities they present to the project.
The prioritized list quantitative risk analysis can be used to develop an effective response plan for each risk.
Here are the guidelines…
#1 Review
There is a need for you to review the risk, cost and schedule management plan. This will allow you to identify project risks and come up with mitigation strategies for the project.
#2 Original estimate
You also have to begin with original estimates of time and cost. You need to break out the various components of the estimates into manageable chunks.
You must determine the variable that you wish to investigate and identify it’s likely to range of variation.
#3 Calculate
As part of your quantitative risk analysis for projects, you have to calculate and assess the impact of changing the range of results on the overall project estimate for each value in the range.
#4 Historical Information
You have to consult historical information such as similar completed projects, studies of similar projects by risk specialists and risk databases for information that may be useful for quantitative risk analysis on your project.
#5 Interviewing technique
There is a need for you to use appropriate interviewing techniques and obtain probability distribution from stakeholders and Subject Matter Experts.
If expert resides with more than one person and the person and the problem does not lend itself to precise analytical techniques but can benefit from subjective judgement on a collective basis, consider using the Delphi technique.
You should also consider using the direct method when time or resource constraints do not allow for more couple resource-intensive methods and questions can be phrased clearly and concisely.
If your experts have a solid understanding of probability concepts and are familiar with probability distribution frequencies, consider using the diagrammatic method.
There is a need for you to depict the information in a PDF which is a diagram that shows where risk is concentrated most in a project.
You also need to perform sensitivity analysis to determine which risk has the most potential impact on the project by examining the extent to which the uncertainty of each element factors the objective being examined if all other uncertain elements are held at the baseline values.
Use the decision tree analysis technique to examine the implication of choosing alternatives by incorporating the probabilities of risk and the cost or rewards of each logical path of events and future decisions.
You need to conduct a project simulation using a model to translate uncertainties at a detailed level to into their potential impact on project objectives at the total project level.
You have to prioritize the quantified risks according to the threats or opportunities they posed to the project.
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