Risk management - Branching networks
Branching networks
The diagram is not an exact calculation and is provided for only for demonstration purposes.
The first ‘peak’ of the curve represents the pathway of 70% probability.
If the project took this pathway then it should start to ‘flatten’ out with a total duration reflecting this path, say, about 13 or 14 weeks.
The second ‘peak’ of the curve begins to appear at about 30% and represents the second pathway.
If the second pathway comes into play then it will naturally take longer.
Setting the total project duration anywhere on the ‘flat part’ of the graph has its problems.
If this ‘flat’ point represents a 30% risk of exceeding it we could choose quite a wide range of ‘total duration’ any of which will have a ‘risk of exceeding it’ associated with it of 30%.
The ‘total duration’ may be either too easy (high end) or too difficult (low end).
However, we could do one of the following:
- Set the ‘total duration’ based on the short pathway and retain a contingency allowing for the long pathway, or
- We could set the ‘total duration’ based upon the longer pathway and retain a proportion as contingency reflecting the total for the longer pathway.
There are a few aspects of implementation and control of a project that are worth considering [see Markov chain].