Project Management: Achieving Competitive Advantage, Fifth Edition

Solved Problem

7.1 QUANTITATIVE RISK ASSESSMENT

Refer to the risk factors shown in Table 7.1. Assume your project team has decided upon the following risk values:

$$\begin{array}{rrrrrr}\hfill P_m& \hfill \text{=}& \hfill \text{.1}& \hfill C_c& \hfill \text{=}& \hfill \text{.7}\\ \hfill P_c& \hfill \text{=}& \hfill \text{.5}& \hfill C_s& \hfill \text{=}& \hfill \text{.5}\\ \hfill P_d& \hfill \text{=}& \hfill \text{.9}& \hfill C_r& \hfill \text{=}& \hfill \text{.3}\\ \hfill & \hfill & \hfill & \hfill C_p& \hfill \text{=}& \hfill \text{.1}\end{array}$$

You wish to determine the overall project risk using a quantitative method. Following the formulas shown in Table 7.2, we can calculate both the probability of project risk score and the consequences of project risk score, as follows:

$$\begin{array}{rrr}\hfill P_f& \hfill \text{=}& \text{(}\text{.1 +}\text{.5 +}\text{.9)/3 =}\text{.5}\hfill \\ \hfill C_f& \hfill \text{=}& \text{(}\text{.7 +}\text{.5 +}\text{.3 +}\text{.1)/4 =}\text{.4}\hfill \\ \hfill RF& \hfill \text{=}& \text{.5 +}\text{.4 - (}\text{.5)(}\text{.4) =}\text{.70}\hfill \end{array}$$

Conclusion: Medium risk to overall project.