Saturday, November 29, 2008

Expected Monetary Value (EMV) Analysis

EMV is:

  • a method of calculating the average outcome when the future is uncertain (i.e. Opportunities will have positive values and risks will have negative values).

  • found by mulitplying the monetary value of a possible outcome by the probability it will occur.

  • used in decision tree analysis.

Interviewing Methods

Interviewing methods provide a structure for gathering data needed to quantify the probability and consequences of risk on project objectives. This includes:
  • Direct
    Asks an expert to assign subjective probabilities to a given range of values, providing a lowest possible value, most likely value and highest possible value.

  • Diagrammatic
    Uses diagrams for an expert to assign subjective probabilities to a given range of values, providing a lowest possible value, most likely value and highest possible values.

  • Delphi
    Group method allow experts to contribute their assessment anonymously.

Quantitative Risk Analysis - Introduction

Quantitative risk analysis is:
  • the process of numerically assessing the probability and impact of each risk.
  • determined the extent of the overall project risk.
  • determined by the cost and schedule reserves.
  • identified risks requiring the most attention.
  • created by realistic and achievable cost, schedule or scope targets.

Sunday, November 16, 2008

Methods to Perform Quantitative Risk Analysis

Methods to Perform Quantitative Risk Analysis:
  • Quantitative Risk Analysis

  • Subjective vs. Objective Probability

  • Interviewing Method

  • Quantitative Analysis Methods
    - Sensitivity Analysis
    - Expected Monetary Value (EMV) Analysis
    - Decision Tree Analysis

Output from Qualitative Risk Analysis

Risk Register (update)
  • Risk Ranking for the project compared to other projects.

  • List of prioritiesed risks and their probability and impact ratings.

  • Risk grouped by categories.

  • List of risk for additional analysis and response.
    - that wil move forward to quantitative risk analysis and/or response planning

  • Watch-list
    - Documented for later revisit during risk monitoring and control.

  • Trends
    - The PM should know if risk is increasing, decreasing or staying the same, so that trends can be analysed.

Recommended Books on PMP

Suggested Study Materials

  • PMP-Preparation Recommended Books
  • PMP Exam Prep, Fifth Edition: Rita's Course in a Book for Passing the PMP Exam
  • A Guide to the Project Management Body of Knowledge, Third Edition (PMBOK Guides)
  • The PMP Exam: How to Pass On Your First Try (Test Prep series)