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11 - PROJECT RISK MANAGEMENT

11.4.2.3 Expert Judgment

Expert judgment (ideally using experts with relevant, recent experience) is required to identify potential cost
and schedule impacts, to evaluate probability, and to define inputs such as probability distributions into the tools.

Expert judgment also comes into play in the interpretation of the data. Experts should be able to identify the
weaknesses of the tools as well as their strengths. Experts may determine when a specific tool may or may not be
more appropriate given the organization’s capabilities and culture.

11.4.3 Perform Quantitative risk Analysis: outputs

11.4.3.1 Project documents updates

Project documents are updated with information resulting from quantitative risk analysis. For example, risk
register updates could include:

• Probabilistic analysis of the project. Estimates are made of potential project schedule and cost 11
outcomes listing the possible completion dates and costs with their associated confidence levels.
This output, often expressed as a cumulative frequency distribution, is used with stakeholder risk
tolerances to permit quantification of the cost and time contingency reserves. Such contingency
reserves are needed to bring the risk of overrunning stated project objectives to a level acceptable to
the organization.

• Probability of achieving cost and time objectives. With the risks facing the project, the probability
of achieving project objectives under the current plan can be estimated using quantitative risk analysis
results. For instance, in Figure 11-17, the likelihood of achieving the cost estimate of US$41 million is
about 12%.
• Prioritized list of quantified risks. This list includes those risks that pose the greatest threat or present
the greatest opportunity to the project. These include the risks that may have the greatest effect on cost
contingency and those that are most likely to influence the critical path. These risks may be evaluated, in
some cases, through a tornado diagram generated as a result of the simulation analysis.
• trends in quantitative risk analysis results. As the analysis is repeated, a trend may become apparent
that leads to conclusions affecting risk responses. Organizational historical information on project schedule,
cost, quality, and performance should reflect new insights gained through the Perform Quantitative Risk
Analysis process. Such history may take the form of a quantitative risk analysis report. This report may
be separate from, or linked to, the risk register.

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