Understanding Quantitative and Qualitative Project Risk Management
Monitoring the likelihood of a project’s success as it evolves is crucial to being able to develop contingency plans and adapt to unforeseen circumstances. Such contingency plans often mean the difference between a project’s success or failure. There are two primary ways of accessing this risk of a project failing–quantitative and qualitative project risk management.
Quantitative vs. Qualitative Project Risk Management
Quantitative Risk Management Is All About Numbers
Using this management theory, the project leader looks at things like where the team is towards meeting the projected monetary goal or if the project’s costs are in line with the initial estimate. The leader assesses the risk by giving a series of three numbers to each line item. These numbers represent the optimistic, most likely and pessimistic probability of hitting that projection.
Qualitative Risk Management Analyzes Trends
Unlike quantitative risk evaluation, which looks at numbers, the qualitative method of evaluating risk looks at trends within the project life cycle. For instance, are vendors consistently later than anticipated delivering merchandise or collateral material? Or, perhaps sales are consistently lower than projected for one-day events. Qualitative analysis allows you to make adjustments in the way parts of the project are set up to better insure success.
Understanding the Difference Between the Two
Some projects are better suited to qualitative risk assessment; for other projects, it makes better sense to use a quantitative approach. For instance, if the project’s success depends on actions, such as getting so many people to attend an event or sign-up for a free trial, then the qualitative approach is usually best. On the other hand, if success depends on hitting financial goals, it’s usually more appropriate to use the quantitative method. Of course, most methods are designed to help the team leader and members make adjustments during the course of a project to lessen the risk of failure and get back on the track of reaching the desired goals.
Benefits of Using Oracle Primavera Risk Analysis Software
One good way to easily access project risk is by using Oracle’s Primavera Risk Analysis software. This program uses both methods to continually monitor your project’s risk of falling short of its goals. This project also uses common project pitfalls to help you identify problem areas and create new strategies.
Few, if any projects, will flow smoothly as planned from start to finish. The sign of a good project leader and a good team is to be able to identify risk areas early and make effective adjustments in the plan. Quantitative and qualitative risk assessment are both tools to help make this process easier. Using a software program like Oracle’s product can make knowing which method to use much less complicated.
Takeaway points
- Quantitative risk management looks at numbers.
- Qualitative risk management analyzes trends.
- Both risk assessment methods are designed to help project teams make adjustment to insure success.
- Oracle’s Primavera Risk Analysis software can make monitoring project risk easy.
Resources: Hearding Cats