Calculated risk probability is different than assigned probability.

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.

Moderator: Intaver Support

Post Reply
Col
Posts: 19
Joined: Fri Mar 09, 2007 7:58 am
Location: Orlando, FL

Calculated risk probability is different than assigned probability.

Post by Col »

I have assigned a risk to a resource(s) as a relative time increase and then also as a relative cost increase – both at 15% chance with 10% outcome. But the issue I seem to have when I do this is that the probability of it occurring goes above 15%. Do I potentially need to add the time delay to the task and cost increase to the resources(s) Or am I going about this all the wrong way.
Business Development Manager
Intaver Support
Posts: 1012
Joined: Wed Nov 09, 2005 9:55 am

Re: Calculated risk probability is different than assigned probability.

Post by Intaver Support »

Calculated probability can vary from the input. But normally not by much. The reason is similar to throwing a dice. At each iteration, the risk has a 15% of occurring, so after 1 iteration, the probability will be 0 or 100%, after 2 throws 0,50, or 100%. After 100 iterations, it could occur 15x (ie 15%) but could be less or more. The more iterations that are run, the closer the probability will be to 15%.
Intaver Support Team
Intaver Institute Inc.
Home of Project Risk Management and Project Risk Analysis software RiskyProject
www.intaver.com
Post Reply