Probabilistic analysis of project

Quantitative Risk Analysis:

Probabilistic analysis of project 

Probabilistic analysis of the project. Forecasts of potential project schedule and cost results listing the possible completion dates or project duration and costs with their associated confidence levels.

How probable are we to achieve our Project Schedule? How probable are we to complete the project within budget? These are some of the probabilities that we aim at identifying and updating the Risk Register during this step

he PMBOK guide says that, the result of this kind of analysis is typically displayed as a Cumulative Distribution. These distributions are then used along with Stakeholder Risk Tolerances to allow for the quantification of Cost and Contingency Reserves. As with any value that is calculated by us, these reserves must be appropriate and realistic.

Quantitative Risk Analysis

Quantitative risk analysis – and how to perform it
Quantitative risk analysis assigns a projected value(usually this value is stated in terms of cost or time) to the risks that have already being ranked by the previous process ‘perform qualitative risk analysis’.
People often confuse these two processes which are normally performed at the same time. Perform quality of risk analysis however is determining the probability and impact of the risks to the project and going on to prioritize and rank them on the risk register. The outputs from this process will be used to plan risk responses and also to monitor and control risks.

There are five inputs to perform quantitative risk analysis:

The risk register. This contains a list of all of the identify risks so far on the project, and includes information on each such as their responses, their records is an categories.
The risk management plan. This document is in fact the risk management strategy because it defines the level of risk which is seen as tolerable, how such risks will be managed, who will be responsible for carrying out the risk activities, the time and cost aspects of each risk activity and how the communication of risk is to occur.
Schedule management plan. Because the schedule timings are presented in a quantifiable manner then risks concerned with timing and time scales can easily be quantified within this process.
Cost management plan. Similar to the above, costs are also quantifiable and can be used as an input for this process. Note that the scope management plan is not quantifiable and is therefore normally used within the qualitative risk analysis process.
Organizational process assets. These may consist of risk templates, policies procedures or guidelines, lessons learned from previous or similar projects, and any quantitative risk tools.