Effective Project Risk Management through Statistics and Quality Tools: Exploring tools and techniques for effective project risk management

Abstract

Project risk management primarily comprises cost and schedule uncertainties and risks associated with each activity of the project network. We have identified the major risk sources and quantified the risks in terms of likelihood. Management of risk in project is one of the vital project management processes. There are numerous tools and techniques available to support project risk management (PRM) at different phases of a project. Whereas tools commonly utilized by large firms are much publicized, little is known about tools and techniques used by small-to medium-scale enterprise (SMEs) in managing project risk. The response data were analyzed to identify the techniques and tools which are most utilized. Proper project decision-making requires that risk management and risk analysis techniques be applied in order to guide management in making better decisions. Cost estimates attempt to define projects as single point values whereas virtually all project variables are variable and may deviate from the values assumed in preparing the original estimate. Some pieces of risk analysis software will be described and range estimating will be demonstrated as an effective tool for reducing risk and for determining how much contingency to add to reduce residual risk to an acceptable level.