Perform Quantitative Risk Analysis in Project Management

In predictive project lifecycles, the classical methodologies are still applicable. That means you may still use pre-tailored processes according to the needs of your project with the condition of following project management principles. All we need to do is adding value by using the system for value delivery at the end. So the perform quantitative risk analysis process is still in our archive. 

Quantitative risk analysis is essentially based on the numerical analysis of project risks and is a complement to qualitative risk analysis. If you perform a quantitative risk analysis you should think of these two as a whole. When adequate and reliable numerical data are obtained, the risk table that is revealed at the end of the quantitative risk analysis is always more reliable and consistent.

The main thing that we will have to focus on in quantitative risk analysis will be to digitize everything. The actual figures of the priority risks that are prioritized in the process of qualitative risk analysis and the probability-effect dimensions that are qualitatively estimated are determined in this process. For example, if the financial impact of a risk is given a score of 5 out of 10 in qualitative analysis, then in the process of quantitative analysis we need to talk about how many dollars this impact is.

Perform quantitive risk analysis should be considered as in;

Along with the performance domains, it should be conducted with guidance of project management principles such as; the guidance for dealing with complexity.

Quantitative Risk Analysis Tools

  • Interviews: Helpful to extract information about quantity of risk factors.
  • Decision tree analysis: It is an analytic tool with numerical values. So it is helpful to perform a quantitative analysis.
  • Influence diagrams
  • Facilitation
  • Representations of uncertainty
  • Simulation
  • Sensitivity analysis
  • Expert judgment

After the risks of the project have been identified and qualitative risk analysis has been carried out, a quantitative risk analysis may also be needed. Qualitative risk analysis is a process that should be applied in all projects, while quantitative risk analysis may not always be applied according to the nature of the project and the risk. It can be said that it is mostly implemented in large-scale and complex projects. 

If it is applied, it should always be done after the qualitative risk analysis process. When we think about quantitative risk in the PM certification exams, we should think of numbers. Quantitative risk analysis is part of the project risk management knowledge area and it is considered as a natural part of uncertainty performance domain and planning performance domain.

Quantitative risk analysis is aimed at prioritizing these risks in order to understand the numerical impact of risks on project goals is and to plan effective risk responses.

See also;

Risk adjusted backlog

1- Sind 02.01.2022
Qualitative, quantitative... I always misuse each one. I think I will never learn.

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