Quantitative risk analysis delves deeper into the potential impact of risks by assigning numerical values. This provides a clearer picture of the potential outcomes and aids in decision-making.

  1. Inputs:
    • Risk Register: This document, updated after qualitative analysis, contains prioritized risks, potential responses, and other relevant details.
    • Plans:
      • Risk Management Plan: Outlines the approach, tools, and data sources for risk management.
      • Cost Management Plan: Provides guidelines on how risks will affect costs.
      • Schedule Management Plan: Details how risks might impact the project timeline.
    • Organizational Process Assets: These include any templates, historical information, or lessons learned from previous projects that can inform the current analysis.
  1. Tools & Techniques:
    • Data Gathering and Representation:
      • Probabilistic Techniques: These techniques, like Monte Carlo simulations, use optimistic, pessimistic, and most likely estimates to determine potential outcomes.
      • Probability Distributions: Common distributions used include normal, triangular, and PERT. They help in understanding the variability of risks.
    • Quantitative Risk Analysis and Modeling Techniques:
      • Sensitivity Analysis: Determines how different risks will affect the overall project objectives.
      • Expected Monetary Value (EMV) Analysis: Multiplies the probability of a risk by its impact to get a monetary value.
      • Modeling and Simulation: Uses software to simulate the effects of different risks on a project, often using Monte Carlo simulations.
    • Expert Judgment: Engaging experts can provide insights into the potential impacts of risks and the best ways to mitigate them.
  1. Outputs:
    • Risk Register Updates:
      • Quantitative Risk Reports: These provide detailed insights into the numerical analysis of risks.
      • Probabilistic Analysis of the Project: This gives a range of possible outcomes (e.g., “There’s a 70% chance the project will finish within budget”).
      • Probability of Achieving Time and Budget: Provides a percentage likelihood of meeting project objectives.
      • Prioritized List of Identified Risks: Ranks risks based on their potential impact.
      • Trends in Quantitative Risk Analysis: As the project progresses and more data becomes available, trends that influence risk responses might emerge.
  1. Continuous Review:

As the project progresses, new risks may emerge, and old risks may change or be mitigated. It’s essential to periodically revisit the quantitative risk analysis to ensure that the project remains on track and that all potential risks are adequately addressed.

Conclusion:

Quantitative risk analysis offers a more detailed and numerical perspective on potential risks, allowing project managers to make informed decisions. By understanding the potential impacts and their likelihood, teams can allocate resources more effectively and increase the chances of project success.