Risk management - Quantitative method part 3
Quantitative method part 3
In the above example, the potential 4 man week delay is carried out over a 2 week period, using 2 men each week.
Therefore there is only a 2 week delay.
However, we have to take into account that the chances of this happening is not certain.
Cost
So, 4 man weeks (2 weeks using 2 men or indeed women) are required to provide the extra resource to complete the task. However, there is only a 1 in 5 or 20% chance of this happening.
So the actual resource will be 0.2 x 4 = 0.8 man weeks.
This is the amount that would be added to the budget, see comments earlier.
Duration
There is a potential 2 week delay but only a 1 in 5 risk, 20%.
So the value of the delay is 0.2 x 2 weeks = 0.4 weeks.
Remember, this delay is not bound to happen. What we are doing is assessing the ‘risk’ of the delay. Hence, the potential cost would be an extra 0.8 man weeks to be added to the project.
For this we estimate that this will reduce the ‘risk’ of non completion to 1 in 10 (10%).
We will look at this scenario next [see Quantitative part 4].