Project risk modelling

This forum includes discussion about project risk analysis and risk management theory: Monte Carlo simulations, Event Chain Methodology, schedule and cost risk analysis. Please submit questions and case studies about your experience with our project risk analysis software.

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Project risk modelling

Post by Kathy » Fri Sep 04, 2015 10:01 am

I am using Risky Project pro and have a question regarding best way to model variability of an incoming task.

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Re: Project risk modelling

Post by bbadmin » Fri Sep 04, 2015 10:03 am

There are two types sources of variance that can affect the duration or cost of a task.
There is natural variance that is inherent in all activities and is caused by randomness and what might be characterized as “unknown unknowns” . They are modeled using statistical distributions. This is referred to aleatory risk. A key characteristic of this type risk is that it cannot be reduced.

The second source of variance is due to risk events. These are risks that are captured in the project risk register. These risks have a chance of occurring and impacts on project parameters like cost, schedule, and technical. This type is referred to as “epistemic” risk. A key characteristic of this type risk is that it can be reduced or managed.

With that in mind RiskyProject supports both models and best practice is to integrate both types of risk into your model. The effort that you put into risk analysis and management you perform should be in line with the size and importance of the project as well as the information you have available. In our experience, almost all projects will have a risk register and this is a good place to start.

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