Importance Of Quantitative Risk Analysis

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3.3 Qualitative Risk Analysis Perform qualitative risk analysis is the process of prioritizing risks by assessing and combining their likelihood and impact. Risk prioritization guides the effort and defines which risks require more attention and responses. The key risks then to be monitored more frequently, and included in detailed modeling in Quantitative Risk Analysis (QRA). Qualitative risk analysis evaluates the probability of each risk will occur and the effect of each individual risk on the project objectives. The likelihood and impact are defined in a risk matrix criteria, using a five-point scale, as recommended by ConocoPhillips Corporate (see Figure 1). In addition to cost impact and schedule impact, Project Manager may consider…show more content…
In early project execution, less than 50% of the risks in ROADS are at rank 3, while the rest of the risks are at rank 4. As the project progresses and now is approaching to provisional acceptance, the project risks are going lower, with only 20% of the risks are at rank 3. The outcome of qualitative risk analysis leads to the next process, quantitative risk analysis. 3.4 Quantitative Risk Analysis Quantitative Risk Analysis (QRA) provides a numerical estimate of the overall effect of risk on the objectives of the project, based on current plans and information, when considering risks simultaneously. It provides answers to questions: - The probability of the project to complete on the scheduled date - The probability of the project cost spent on budget - The project contingency for schedule and cost, to provide the project team with the desired degree of confidence in the result. - The individual risks that contribute the most to overall project risk - The activities contribute the most risk The implementation of quantitative risk analysis…show more content…
The CBR is prepared at the decision gate. The document is intended to transparently communicate quantitative risk analysis results and facilitate quick comprehension of key risks. It is also used by the Client project team as reference of an expected P50 schedule and contingency value. During project execution, in order to improve the quality, reliability and predictability of project schedule and cost forecasts, a disciplined process called Current Control Forecast (CCF) is performed, as guided by Corporate. The intent of the process is to incorporate input from the project team in evaluating work performed to date and the risks associated with remaining work in order to develop a revised schedule and forecast. The output of CCF is also summarized in CBR. The CBR includes: - Cost estimate summary and cost

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