Skip to Main Content
Skip to Navigation
Project Management Orientation

Estimating Probability Using a Quantitative Analysis

Another approach to estimating probability and impact is a quantitative analysis.  A quantitative method uses a numeric scale, usually from 0 to 1, to measure the probability of an event occurring, where 0 means an event would not occur and 1 means it will occur.  The impact is measured in the same way, where 0 means no impact and 1 means the maximum impact possible.
  
Using the parachute example, the risk of an FAA licensed dual-parachute (a back-up chute is required) failure as determined from US FAA data collected in 2005 is .000016 (35 incidents from over 2,000,000 jumps), but since death is the result, the impact of a dual-parachutes failure is 1.0.
  

Assessing Risk Exposure

Risk exposure is a combination of the probability and the impact of the risk.  The project manager is responsible for determining the risk exposure, using probability and impact estimates and the following matrix tool.  Risk exposure has more than one dimension, such as cost, schedule, quality, and customer satisfaction, that should be considered.

In this matrix, the risk decreases as you move from right to left, or top to bottom.  To illustrate, in the parachute example, low probability and high impact results in a medium risk exposure.

Table that shows the severity of a risk depending on the impact and the probability
1: Getting Started
2: Define the Project Team
3: Team Management
4: Identify and Validate Requirements
5: Create Decomposition Structures
6: Risk Management
7: Project Estimates
8: Project Schedules
9: Change Management
10: Project Control and Execution
Defining the Project
11: Project Management Review
12: Project Closeout
13: Project Management Tool Suite
14: Self-Assessment and Final Exam
Fast Points
Concepts
Seven Keys
Case Study
WWPMM
Mentor
Check Point
Previous button
Next button
Print button
Help button
Glossary button
Exit course button