Project Management Institute

Risk analysis

how good are your decisions? Part 1

Risk analysis is about using an interpretation of past events to inform decisions about the future. This article focuses on computer modeling as the most powerful method for providing detailed information to project managers. When working with a simulation planner, be clear about what you want and expect, use a simple model, input your best data into it, and take everything into consideration. Ranges of estimates provide more flexibility than a single estimate; the 10-30-10 rule and Baye's risk are approaches to selecting estimate ranges. Verification is the process of checking to see if your risk simulation performs as expected, and validation is checking to determine if your model actually simulates the behavior of the projects that it is applied to.
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