Influence diagramming for analysis of project risks

The process of identifying and analyzing project risk plays a key role in negotiating contract terms, organizing project teams, and controlling project progress for the purpose of minimizing cost overruns and schedule delays. Project managers, however, have traditionally perceived this process as complex, a view that obstructs their ability to achieve maximum levels of cost effectiveness. This article discusses a risk analysis process known as influence diagramming and explains how this process can help project managers more effectively and more easily analyze project risks. In doing so, it details the process's four foundational elements: decision alternatives, risk factors/uncertainties, given qualities, and calculated qualities or value models. It describes the process of using influence diagramming and the concerns of developing large and complex diagrams that enable project managers to graphically consider a project's numerous risks.