Project Risk Management (by Process Groups) — PMBOK® Guide, 6th Edition Update
Perform Qualitative Risk Analysis
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Perform Quantitative Risk Analysis 101
What Does Perform Quantitative Risk Analysis Involve and When Do You Perform It in a Project Life Cycle?
 WHAT Perform Quantitative Risk Analysis Is. Perform Quantitative Risk Analysis implies backing up the project team’s subjective judgments on the magnitude of risks with a numerical evaluation of the probability and impact of risks moved forward from qualitative risk analysis. The process considers also how risks could affect the objectives of the project.
 WHY Perform Quantitative Risk Analysis Is Important. Plan Risk Responses and Monitor Risk – following processes in the Project Risk Management Knowledge Area – use the risk register information updated during Perform Quantitative Risk Analysis process. Moreover, calculations of contingency reserves for time or cost include the aggregate quantitative estimates that results from the quantitative risk assessment process.
 WHEN Perform Quantitative Risk Analysis Is Executed. A project manager gathers numbers to evaluate risks right after or at the same time as Perform Qualitative Risk Analysis. It is also common practice to repeat quantitative analysis of risks after the application of risk responses, when the overall project risk should drop significantly.
 HOW Perform Quantitative Risk Analysis Operates.
Inputs  Tools and techniques  Outputs 




Source: PMBOK® Guide, 6th ed., Chapter 11, section 11.4, p. 428.
Perform Quantitative Risk Analysis Key Terms
What Are the Key Terms to Fully Understand the Process of Performing Quantitative Risk Analysis?
 Decision Tree Analysis. A tool for making decisions that diagrams out all of the option forecasted to address the identified risks based on known probabilities and outcomes, to calculate the expected monetary value of each of them.
 Expected Monetary Value (EMV) Analysis. A statistical technique that calculates the probability and impact of all the paths one can take through the project and assign a monetary value to each decision. It is often used in conjunction with the decision tree analysis technique. The formula of EMV is probability (P) times impact (I). Expressed as EMV = P x I.
 Monte Carlo Analysis. A statistical and mathematical method for extrapolating from observed data what a likely future scenario or scenarios will be in terms of possible total project cost or completion dates.
 Sensitivity Analysis. A mathematical technique used to determine which parts of the project are most sensitive to risk.
 Tornado Diagram. A special type of bar chart used in sensitivity analysis for comparing the relative importance of those parts of the project that can be affected by risk, from most likely down to least likely.
Perform Quantitative Risk Analysis Tips
What Are the Best Tips to Answer Correctly the PMP Certification Exam Questions on Perform Quantitative Risk Analysis Process?
 EMV Vs. Decision Tree Analysis. Both tools calculate risk costs in a very similar way, but EMV uses numbers, whereas decision tree analysis uses a diagram.
 Monte Carlo Analysis. For the PMP exam, you only need to know that it is a statistical and mathematical method to model out random data on possible risks on the project using a software.
 Occurrence of Costs in Decision Trees. A decision tree models all the possible choices to resolve an issue. Thus, costs can occur anywhere in the diagram, also early or in the middle of the project, not just at the end.
 Opportunities and Threats in EMV Analysis. Opportunities are usually expressed as positive values. Threats are expressed as negative values.
 PERT Equation. The PMP exam uses the PERT (Program Evaluation and Review Technique) equation. That equation is (optimistic + 4 (most likely) + pessimistic) / 6
 Qualitative Risk Analysis Vs. Quantitative Risk Analysis. Qualitative risk analysis is a subjective evaluation and, quick and cost effective, it is required for all projects. Quantitative risk analysis is a more objective or numerical evaluation and, slower and more expensive than its qualitative counterpart, it is usually reserved for the megaprojects and/or on those risks that are identified as having a higher probability and impact on the project.
 Categories of Quantitative Tools. 3 categories of quantitative tools:
 1. Tools to get more information about risks – data gathering and representation techniques –
 Interviewing
 Probability distribution
 2. Tools to help you analyze the information you have – quantitative risk analysis and modeling techniques
 Sensitivity analysis
 Expected monetary value analysis
 Modeling and simulation.
 3. Tools to help you put it all together – expert judgment.
 1. Tools to get more information about risks – data gathering and representation techniques –
Click here for a detailed analysis of each project management process group and knowledge area.
SOURCES: Project Management Institute (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 6th ed. Newtown Square: Project Management Institute.
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