Quantitative Risk Management and Analysis

Do you think your projects involve many risks and uncertainties? Maybe you are right. But, the truth is almost all projects in the world have risks and uncertainties. Most research and development projects suffer from the effect of this type of risk. And their impact is very significant and no one can overlook it.

The most unfortunate fact is that many managers are still aloof from the importance of a quantitative risk management system and they knowingly or unknowingly, don't bother to employ a solid system.

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Let's consider some examples-

There was a large oil company. They had a project to drill a well which would cost them about $2M. The project manager created a project schedule that was based on analogs: the cost of drilling wells in the same location. In the middle of the project, the drilling mud which was required for the technological process started to disappear.

The project manager tried applying many solutions but in vain. And due to this reason, the cost of drilling was almost doubled and it delayed the project completion timeline. In the end, they reached the conclusion that they needed an established quantitative risk management system. This system, according to their observation could have averted the disastrous results significantly.

The Physiological Issue-

Many project managers all across the globe still doubt the effectiveness of such a quantitative risk management system. Either they don't have complete information about these risk management- analysis methods or they simply ignore them hurriedly, without considering their benefits.