Page 191 - DCAP304_DCAP515_SOFTWARE_PROJECT_MANAGEMENT

Unit 10: Risk Management

 A positive & supportive environment; Notes
 Proper time management;
 Use of open questions; and
 Challenging not confrontational atmosphere.
The results of interviews should be well documented.

Quantitative Risk Management Techniques

There are three main quantitative techniques:
 Decision trees
 Influence diagrams
 Monte Carlo Simulation

Decision Trees

Rather like flowchart diagrams these represent a method of looking at, for example, two options
and making a decision. By analyzing the impact each decision will have, the risks of taking that
decision can be forecast and used to anticipate problems or inform the direction the project
takes. This technique is best suited to simpler situations. In complex scenarios they can become
confusing and complicated.

Influence Diagrams

This technique results in a diagram, which is similar to a project network diagram or Microsoft
Project PERT charts. In this case each box will contain a variable or decision, which will have an
influence on future progress. By analyzing the impact each variable will have, the risks of
taking one path over another can be forecast and used anticipate problems or inform the direction
the project takes.

Monte Carlo Simulation (or 3-Point Estimation)

Looking at both best and worse case scenarios as well as most likely scenario and then planning
what the impact of each is. This can be plotted against the Project Baseline and the Critical Path
to show the consequence of risk and allow you to anticipate suitable response to risk.

10.2.2 Risk Estimation

Risk, at the general level, involves two major elements: the occurrence probability of an adverse
event and the consequences of the event. Risk estimation, consequently, is an estimation process,
starting from the occurrence probability and ending at the consequence values.
Risk estimation involves following activities:

 Discussion of source, exposure issues
 Communication of results with stakeholders
 Assess changes in knowledge/perception in light of new information
During the Risk Estimation step of risk management, the frequency and consequences associated
with each risk scenario are estimated and communicated with stakeholders. Stakeholders may
have important knowledge of sources and patterns of exposure that analysts will need to integrate
into a risk assessment.

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