The risk register is further updated to include a quantitative risk report, detailing quantitative approaches, outputs, and recommendations. Updates include the following main components:
• Probabilistic analysis of the project. Estimates are made of potential project schedule and cost outcomes, listing the possible completion dates and costs with their associated confidence levels. This output, often expressed as a cumulative distribution, can be used with stakeholder risk tolerances to permit quantification of the cost and time contingency reserves. Such contingency reserves are needed to bring the risk of overrunning stated project objectives to a level acceptable to the organization. For instance, in Figure 11-11, the cost contingency to the 75th percentile is $9 million US, or about 22% when compared to the $41 million US sum of the most likely estimates shown in Figure 11-8.
• Probability of achieving cost and time objectives. With the risks facing the project, the probability of achieving project objectives under the current plan can be estimated using quantitative risk analysis results. For instance, in Figure 11-11, the likelihood of achieving the cost estimate of $41 million US (from Figure 11-8) is about 12%.
• Prioritized list of quantified risks. This list of risks includes those that pose the greatest threat or present the greatest opportunity to the project. These include the risks that may have the greatest effect on cost contingency and those that are most likely to influence the critical path. These risks may be identified, in some cases, through a tornado diagram generated as a result of the simulation analyses.
• Trends in quantitative risk analysis results. As the analysis is repeated, a trend may become apparent that leads to conclusions affecting risk responses. Organizational history on project schedule, cost and performance should reflect new insights gained through the Perform Quantitative Risk Analysis Process. Such history may take the form of a Quantitative Risk Analysis Report. This report may be separate from or linked to the Risk Register.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.