BSBPMG508A Manage Project Risk

11.4 Perform Quantitative Risk Analysis

Adapted from PMBOK 4th Edition

Initiation Planning Execution Close

Monitor

Control

• The process of numerically analysing the effect of identified risks on overall project objectives

• Typically only applied to risks with high priority due to potential to substantially impact the project’s objectives

• Enables a more rigorous approach to risk decision making in the presence of uncertainly

• Often omitted depending on the organisation’s risk appetite and maturity of the project and risk management processes

• Occurs during Planning

BSBPMG508A Manage Project Risk

11.4 Perform Quantitative Risk Analysis

• Inputs to Perform Quantitative Risk Analysis -Draft Risk Register

Risk Management Plan

Cost Management Plan

Schedule Management Plan

Organisational Process Assets -– Risk management standards

– Risk management policies and procedures

– Risk categories and definitions

– Standard templates

– Lessons learned from previous projects

– Risk databases and checklists

Adapted from PMBOK 4th EditionAdapted from PMBOK 4th Edition

Initiation Planning Execution Close

Monitor

Control

BSBPMG508A Manage Project Risk

11.4 Perform Quantitative Risk Analysis

• Tools and techniques for Quantitative Risk Analysis include -

Interviews

SensitivityAnalysis

ProbabilityDistributions

Modelling &SimulationExpert

Judgement

Expected MonetaryValue Analysis

Decision TreeDiagrams

BSBPMG508A Manage Project Risk

11.4 Perform Quantitative Risk Analysis

Interviews• Draw on experience of experts and historical data to quantify the probability

and impacts of risks on project objectives. Often Three-point data is gathered on pessimistic, likely and optimistic outcomes.

Probability Distributions – Advanced technique

• Discrete distributions represent uncertain events such as risks. Requires high degree of statistical skill and statistical software.

Sensitivity Analysis – Advanced technique

• Helps to determine which risks have the most potential impact on project objectives. Prioritisation undertaken in Qualitative Analysis is often sufficient.

BSBPMG508A Manage Project Risk

11.4 Perform Quantitative Risk Analysis

Modelling and Simulation – Advanced techniques

• Uses a model to simulate the outcomes of the project, including the impact of uncertain events such as risks. Requires extensive data on past and similar projects, a high degree of statistical expertise and statistical software.

Expected Monetary Value Analysis – Advanced technique

• Extremely advanced technique. Rarely used except for Defence and Scientific projects such as space exploration. Specifically examines the impacts on cost of uncertain events.

Decision Tree Diagrams• Can be use in conjunction with Modelling and Simulation and Expected

Monetary Value Analysis, or can be prepared in a more informal manner. Enables analysis of different choices and paths.

BSBPMG508A Manage Project Risk

11.4 Perform Quantitative Risk Analysis

• Outputs of this process include –

Risk Register Updates– Probabilistic analysis of the project

– Probability of achieving cost and time objectives

– Prioritised list of quantified risks

– Trends in risk analysis results

Adapted from PMBOK 4th Edition

Initiation Planning Execution Close

Monitor

Control