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.

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.