Project Risk Management Page 8
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17Risk Qualification provides information so that:
The project can be compared to the overall risks of other
projects
The project could be selected, continued or terminated
Resources could be moved between projects
A full benefit/cost analysis of the project may be able to be
completed
Trends in project risk identified if risk qualification is repeated
STEP 4: QUANTITATIVE RISK ANALYSIS: Is a numerical analysis of the
probability and consequences (amount at stake or impacts) of the highest
risks on the project to:
Determine which risk events warrant a response
Determine overall project risk (risk exposure)
Determine the quantified probability of meeting project
objectives – e.g. “We only have an 80% change of completing
the project within the six months required by the customer: to
“We only have 75% change of completing the project within the
$80,000 budget.”
Determine cost and schedule reserves
Identify risks requiring the most attention
Create realistic and achievable cost, schedule or scope targets
Risk quantification involves the following activities:
Further investigation into the highest risks on the project
Determine the type of probability distribution that will be used –
e.g. triangular, normal, beta, uniform, or log normal distributions
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