If a student was to give the two responses below as the answer to comparing and contrasting quantitative versus qualitative analysis qualitative and quantitative risk analysis techniques that warrant only the use of qualitative analysis. How would you reply to each example, considering the next steps you would take as project manager to assemble a group of experts to participate. Who would you select and why?
1. Risk analysis is done during project management to help the project team understand the likelihood that a potential risk will occur and the impact it will have on the project. Qualitative analysis is usually the first step in the risk analysis process where the project team creates a rating scale, for example high, medium, and low, for both probability and impact, and assigns ratings for each risk identified. Once that process is complete the project team can use a probability and impact matrix to determine the severity of the risk by combining the two rating scores. The team can then focus its attention on the risks that have the highest risk score.
Risks that require additional analysis can be assessed through a quantitative risk analysis. This method uses quantifiable data about the risk and applies probability analysis. This method is similar to qualitative in that it attempts to rank risks based on the probability they will occur and the impact to the project. However, it also uses real data and provides more specific information to quantify the impact to the project through the use of decision-making tools, such as the sequenced list, the decision tree, and the expected monetary value.
Depending on the project size and level of risk being evaluated a project team may only require the use of qualitative analysis, such as for small to medium size projects. Qualitative analysis is also less time consuming and requires fewer resources than quantitative and could be used in situation that don’t allow for extensive research or data analysis.
2. There are two types of risk analysis techniques, qualitative and quantitative. Qualitative risk analysis is finding out what the probability of a risk happening. Quantitative risk analysis is where the highest priority is analyzed and the risk is given a numerical rating. Qualitative is not as complex as quantitative analysis and it require less effort then quantitative as well. Quantitative risk analysis normally happens after qualitative analysis to retrieve precise information. The objective of both risk analysis techniques is the same, to give the project manager an up to date risk assessment.
One situation that would warrant only the use of qualitative risk analysis would be “What is the probability that a truck would be delayed on a waste shipment pickup?”
Another situation that would warrant only the use of qualitative risk analysis would be “What is the probability that the cost estimates given by the disposal sites will not change next month?”
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