Qualitative risks are typically categorized by a group of experts to determine the probability and the impact to project objectives. In responding to your peers consider the next steps you would take as project manager to assemble a group of experts to participate. Who would you select and why?
Peer 1
Qualitative analysis is developing a safety net to risks and to keep stakeholders in the know about the ongoing progress. Quantitative analysis is a more detailed process to protect against each defined risks. Qualitative analysis protects the project from risks as a whole while quantitative protects each individual risks. Two situations that warrant only the use of qualitative analysis would include situations that rank low and medium in probability. The likelihood of them happening could be protected by one big resolution like adding to the crew while the quantitative analysis of a high probability action has to be dealt with on its own. One way Ive used quantitative analysis in my current job is with the devices we use each day. Each device is different and cant be fixed like the others so we handle each differently. One way I used qualitative analysis is in our control room building where we knew a known issue with the cables from a previous project would occur again so we made it a known rule that we stop using that cable and switch to a different brand. Stakeholders were happy especially the finance stakeholder because it was cheaper for the company.
Quantitative Risk Analysis Approach on Construction Project Feasibility Research. (2010). 2010 International Conference on E-Business and E-Government E-Business and E-Government (ICEE) 2010 International Conference on 2749. doi:10.1109/ICEE.2010.694
(2014). Module Six: Project Risk Management. Mindedge. Retrieved May 10 2017 from https://snhu.mindedgeonline.com/content.php?cid=87505
Peer 2
Every project carries some level of risk and the idea is to identify evaluate and create a plan for avoiding/mitigating those risks. Qualitative risk analysis is performed to determine how likely the risk is to happen and if it does what is the impact. By multiplying the likelihood and impact each risk is given a weighted score and compared against the probability and impact matrix to decide whether the risk is high moderate or low. There are two problems with this method it is subjective and it can be misleading. If you think about a wedding most people would be sad that it rained but the bride would be much more likely to say rain would be devastating. One way around this is to standardize the definition of low medium and high impact and streamline the evaluating process to minimize the personal bias.
The same idea of probability and impact also applies to opportunities the higher the number the easier the opportunity is to obtain. When a project has an incentive for early completion it is also evaluated for the probability the date can be met and what the (financial) impact would be. Back to the rebuilding of the 85 bridge the contractor was offered $3.1M if the project was completed by May 15th. This is a high impact opportunity but is it feasible to make it happen? Luckily the contractor decided it was and it is reopening this weekend. The goal with qualitative is to evaluate the risk to determine what the best response would be. You may not want to spend a significant amount of time or money preparing for a risk that is unlikely and will not impact the project significantly but you have to do the analysis to know where the possible hiccups may lie.
The high scoring risks are next evaluated in the perform Quantitative risk analysis process. Quantitative analysis uses modeling tool and mathematical models to determine a more detailed impact analysis. Decision trees are one way data can be modeled to help show the different paths and possible consequences. The main problem with this type of analysis is it can be time consuming and a lack of usable data. The biggest lesson in risk management is that it is not a one-time process the risk register is updated as the project progresses to ensure the most impactful risks are being watched.
A Guide to the project management body of knowledge: (PMBOK guide)(5th ed.). (2013). Pennsylvania: Project Management Institute.
Meyer W. G. (2015). Quantifying risk: measuring the invisible. Paper presented at PMIGlobal Congress 2015EMEA London England. Newtown Square PA: Project Management Institute.
MindEdge Inc. (2017).Module Six: Risk Management. [Interactive e-Learning material] Available from https://snhu.mindedgeonline.com