Project Management ToolBox, 3rd Edition

11ADVANCED RISK MANAGEMENT TOOLS

All projects should engage in risk management planning, risk identification, qualitative risk assessment, and planning risk responses as discussed in Chapter 10. Large, complex, and “risky” projects can benefit from quantitative risk assessment. These types of projects are also more likely to utilize risk reports and risk dashboards to convey information about the risk status of the project. This chapter will focus on the advanced risk management tools that can be used on these projects.

There are two aspects of quantitative risk assessment. One aspect involves analyzing individual risk events numerically. Similar to qualitative risk assessment that was covered in the previous chapter, quantitative risk assessment assesses the probability and impact. However, it requires more knowledge and precision than qualitative assessment. When conducting a quantitative assessment you generally use historical data to determine the probability of an event occurring. For example, if a risk event has occurred 6 out of the last 10 times on a similar project, the probability is 60%. The impacts are focused on time and budget. Therefore, you are assessing the time delay or the budget overrun.

Another aspect of quantitative risk assessment is evaluating the likelihood of meeting the cost and schedule objectives for the project. This involves looking at all the risk events and other sources of uncertainty to determine the probability of achieving the target delivery ...