Project Risk Quantification
In the scheme of project management, project risk quantification - or simply risk quantification - is an important factor. The ability for the project manager to understand that things may go wrong in the course of a project and what the plan of action should be if things go wrong is a major attraction to ensure the success of any project that is being working on.
In this article, I’ll give a brief project risk quantification overview and how it relates to project management and why it is important for the project manager to make sure that it is covered within their scopes.
What is Project Risk Quantification?
Project risk quantification is the simple process of knowing that a risk may occur within the course of an active project and then coming up with a plan or course of action in order to prevent it or what to do if such a risk occurs. Within project management, it falls to the project manager and his or her team to go over any and all types of risks - or events and circumstance that may happen - that could possibly happen during work on the project at hand.
For example, a common type of risk that could hurt a project would be if it is not delivered within the specified timeline that the team is given. With project risk quantification, the team or the leader, would outline this as a reasonable event that could happen and then plan what they should do if the project starts to hit the deadline stage and it is not completed. This may include making sure that a month before the due date, a team meeting is called or that they find extra time to work on the project.
The two types of analysis that go along with risk quantification are qualitative and quantitative. Qualitative analysis is determining which risks need to be planned for and which ones don’t; this begins early in the project, right along with the planning stages. Quantitative analysis is assigning those risks a priority. This is usually measure on a type of scale or matrix. In general terms, once a risk has been identified and pointed as something the project needs to plan for, those risks are placed in order of importance, depending on the severity of the risk. In the example of not delivering the project on time, this could be considered a very high risk, as failure to deliver the project on time could affect everyone involve (like dismissals from employment) or could cost the company a lot of money.
There are many types of software and programs that can help and be used in evaluating risks. Analytical and monitoring tools such as Gantt and PERT charts, financial ratios, and fault tree analysis can all be used to help identify and prevent any risk that could potentially halt a project.
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