We use qualitative risk analysis all the time on projects and in our non-project personal work to quickly assess how much effort we want to invest in managing a risk. Quickly assessing the probability and impact of a risk can help us be efficient about risk management.
The most common form of quantitative would be EMV - use historical data or an educated guess from a group of SMEs to determine the maximum impact and likely probability and multiply the two...
Kiron
Kiron, thanks for your feedback,so with EMV most probably you are using calculations of PERT triangular Beta equation right and more complicated to calculate SD and Bell curve Saving Changes...
Ruth Marina Lopez PerezResponsable TI| INSTITUTO DE PREVISION SOCIAL MILITAR - NICARAGUAMasaya, Los Madrigales, NindirÃ, Nicaragua
In my experience I have used qualitative and quantitative analysis. Although the qualitative is objective, I always do it mainly because of the characteristic of our country, which has suffered volcanic eruptions, earthquakes, wars and social outbreaks, floods due to rain and hurricanes.
Quantitative I do it because we are always affected by the failure to meet the deadlines with suppliers, and then by nature.
Last year I had the experience of change of supplier preferred by the organization, with a track record of many years of relationship in infrastructure works of networks and servers. The change was not good, because we expected excellence from the new provider. The costs increased.
I agree with Sante Vergini.
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1 reply by Riyadh Salih
Dec 30, 2019 12:06 PM
Riyadh Salih
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Ruth thanks for the feed back, I thought that force majeure is already built in the contract that you don't have to calculate well we don't have it here may be that's why, good informative
Perform qualitative and perform quantitative risk analysis are two processes within the project risk management knowledge area, in the planning process group. I used both qualitative and quantitative analysis in my projects to understand what type of risks I am going to face with. Here you can find real life examples for the difference between them https://www.projectcubicle.com/difference-...-risk-analysis/ Saving Changes...
Vladimir LiberzonR&D Director| Spider Project TeamMoscow, Russian Federation
Qualitative risk analysis is used for risk prioritization and selection of those risks that must be modeled in quantitative risk analysis.
It is previous step in risk planning and management process. Saving Changes...
Luis BrancoCEO| Business Insight, Consultores de Gestão, LdªCarcavelos, Lisboa, Portugal
Dear Riyadh
Interesting your question
Thanks for sharing
Once the risks are identified, a probability and impact matrix can be created with a scale of (Very Low, Low, Medium, High and Very High)
For some risks (very high probability and very high impact) several techniques can be used:
- Expected Monetary Value
- Sensitivity Analysis
- PERT Analysis
- Monte Carlo Analysis
- Joint Confidence Level (JCL) Analysis Saving Changes...
Though I haven't used both but as far as I know that the qualitative risk is a process of prioritizing risks as per the probability and impact. highest risks probability and impact will subject to quantitative risk process to translate the impact on the schedule and costs by numbers. For example if there is a high risk in getting a particular information from a major stakeholder (as qualitative risk), then a forecast for 2 days overrun and additional cost of 1000$ in regular time wages (quantitative risk).
I Hope that the above is worthwhile!
Omar, thank you for your example, please keep plug in Saving Changes...
Sometimes, when there is not any previous records or data to quantify the risk you may need to use a qualitative approach. For example, you can quantify the risk of machine malfunction or production defects if you keep a record of them. But, when it comes to a new machine/technology for your company, you probably have no recorded data, so you may choose to apply the categorical/qualitative analysis.
Thanks Aboalfazl yes it is harder when we don't have statistic data. Saving Changes...
Many organizations will use qualitative risk analysis to identify and prioritize risks, which will allow the use of quantitative analysis on the most important/impactful risks.
Ivo, thanks for your feedback some organization they use just different approach as such they don't use same terminology of PMI Saving Changes...
Quantitative: If what we are building does not meet performance target X, we will lose Y% of our potential sales market, directly impacting our business case.
Qualitative: If what we are building does not meet performance target X, there are no contractual performance guarantees but our currently contracted customers will be very unhappy.
Keith thanks for your example looks brilliant but if they put performance bond the quality must be maintained otherwise. Saving Changes...
