Quantitative Risk Analysis for overall project risk

[@shirazmalik9579]

Hello doctor. Thanks for awesome presentation.indeed u r one of best in risk business. Looking forward for another exciting topic.

[@Risk-Doctor]

Thank you very much Shiraz, you are very kind.

[@nafiibrahimaj8870]

David, I thank you so much for such a great video trainings

[@Risk-Doctor]

I'm glad you found it helpful, thanks.

[@SIGMA456_32]

Dr. David, thank you for the wonderful presentation. Is there a place where you can direct me to a step by step process to help me achieve what you just presented. A walk-through sample or another presentation where you dig into detail a bit more. Appreciate your support on this. Thanks again

[@Risk-Doctor]

Thank you Adi for this positive and encouraging feedback. I'm glad you enjoyed this presentation. There are more details about this approach in a conference paper I presented in 2014, which is available online here: risk-doctor.com/docs/NA14TLD09%20Hillson%20paper%20-%20How%20risky%20is%20your%20project.pdf. I hope this is helpful.

[@belindaamo9166]

Great presentation. enjoyed it

[@Risk-Doctor]

Thanks Belinda, I'm glad you liked this one.

[@DmGrass]

Thank you for the presentation! Just a small question: what do we mean by expected value? Is it risk-free value?

[@Risk-Doctor]

+Dmitry Grass . Thanks for your positive feedback Dmitry. Earned Value is the nominal worth of work achieved at a given point in the project, usually measured in monetary terms ($, £, € etc). It is taken from the Planned Value baseline, and PV should take account of known risk. I hope this answers your question.

[@DmGrass]

+RiskDoctorVideo Thank you, David!

[@Risk-Doctor]

Hello again Dmitry. I've just realised that I didn't answer your question properly!! You asked about the meaning of "expected value", but in my answer I explained "earned value"! These are very different things!!Expected value is calculated by multiplying the impact value of a risk by the probability that the risk will occur. So if the risk impact is $100K and the risk probability is 10%, then the earned value is $100K x 10% = $10K.The problem with expected value is that it isn't useful. If the risk occurs it will cost $100K. If it doesn't occur it will cost zero. It will never cost $10K. So if you use the expected value to calculate contingency or risk budget, you will get the wrong answer.I hope this is helpful, and I'm sorry again for my earlier mistake.

[@imranzada937]

@@Risk-Doctor Dear Risk Doctor, I have confusion regarding the example you provided.The impact of risk on project is worth $100k if it happens (100% probability) but actually probability is 10% and at this probability EMV= $10k. My question is "what is the need of calculating EMV at 10% probability, if the risk occurs it will incur $100k, what is the need of adding $10k to the project? (Right now i am studying this topic and got stuck)

[@Risk-Doctor]

@@imranzada937. Thanks for asking this follow-up question. I agree with you completely! In my opinion and lots of other professional colleagues, EMV is a flawed metric, because it gives you a result that is not practically useful. In my previous answer to Dmitry, I was simply replying to his question "What do we mean by expected value?" I didn't mean to suggest that I agreed with its use - I don't! I'm sorry about this confusion, and thanks again for your question.

[@chetanasin9150]

Thanks

[@Risk-Doctor]

No problem