Quantitative Risk Analysis for Project Management

Quantitative Risk Analysis for Project Management

Quantitative Risk Analysis for Project Management
Quantitative Risk Analysis for Project Management

This paper is the final report of the RAND Internal Research and Development (IR&D) project “Risk Management and Risk Analysis for Complex Projects: Developing a Research Agenda.” 

The aim of the project was to survey how quantitative risk management and risk analysis methods were applied to the planning and execution of complex projects, particularly those which planned to utilize new and untried technologies. 

One recent RAND study indicated that such methods, while widely advocated, were not used to plan and manage a critical government satellite development project. This paper recommends several research areas in which RAND could contribute to evaluating the utility of these methods and improving their applicability. 

This paper results from RAND’s continuing program of self-sponsored independent research. Support for such research is provided, in part, by donors and by the independent research and development provisions of RAND’s contracts for the operation of its U.S. Department of Defense federally funded research and development centers.

CONTENTS:
  1. INTRODUCTION
  2. PROJECT RISK ANALYSIS
  3. CRITICAL EXAMINATION OF PROJECT RISK ANALYSIS
  4. CONCLUSIONS AND RECOMMENDATIONS
Introduction about risk analysis:
One of the major intellectual triumphs of the modern world is the transformation of risk, the possibility of untoward events, from a matter of fate to an area of study.

Risk analysis is the process of assessing risks, while risk management uses risk analysis to devise management strategies to reduce or ameliorate risk. In project management, these techniques are used to address the questions “how long will this project eventually take?” (schedule risk), “how much will it finally cost?” (cost risk), and “will its product perform according to specifications?” (performance risk).

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