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Project management inherently involves high levels of risk, because projects by definition are being done for the first time. There are a number of classical project domain types, each with their own characteristics. Some are more predictable, such as those encountered in civil engineering. Highly unpredictable projects are encountered in software engineering, and projects involving massive undertakings or emergency response typically faced by government bureaucracies.
The chapter gives a framework for project risk analysis, based on PMBOK. This included a number of qualitative elements which can be extremely valuable in project management. But they are less concrete, and therefore we found it easier to focus on quantitative tools. We want to point out that qualitative tools are also very important.
The qualitative tools presented start with the deterministic critical path method, which assumes no risk in duration nor in resource availability. We present simulation as a very useful means to quantify project duration risk. Simulation allows any kind of assumption, and could also incorporate some aspects of resource availability risk through spreadsheet models.
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- Enterprise Risk Management in Projects
David L. Olson
- Springer Berlin Heidelberg