Assignment No. 3
Assignment No. 3
Assignment No. 3
determine which individual project risk or other sources of uncertainty have the most
Sensitivity analysis is important because it helps you identify and measure the
sources and magnitude of project risk. Project risk is the uncertainty about the actual
cash flows and returns of a project. By using sensitivity analysis, you can see how
To perform sensitivity analysis, you must first identify the key variables that
affect the project cash flows and returns, such as internal production costs or external
market demand and interest rates. Assign a base case value and a range of possible
values for each variable, with the base case representing the most likely or expected
value and the range representing the uncertainty or variability of the variable.
Calculate the NPV or IRR of the project using the base case values of all variables to
create a benchmark or reference point for comparison. Then, change one variable at a
time and recalculate the NPV or IRR of the project using the new value, recording all
results in a table or graph. Finally, analyze the results and draw conclusions about the
the outputs which are the risk impact (₱100,000) and risk probability (50%) applies
numerical values and uses verifiable data. The effect of risk was also represented by a
monetary value (cost) and the risk is also represented in percentages and indicates the
objectives.
3. What is the monetary value of project threats in the expected monetary value
positive. Depending on the numerical signs that are set for the impact cost before the
calculation, the EMV of project threats can both be positive or negative as long as the
impact cost of project opportunities are set to an opposite sign based from the
assigned numerical sign to project threats in order to assess the gain or loss of a
risks to measure both the likelihood of a specific risk event occurring during the
project life cycle and the impact it will have on the overall schedule should it hit. It
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Polytechnic University of the Philippines
Open University System
Sta. Mesa, Manila
prioritizes risks according to probability and impact, identifies the main areas of risk
Quantitative Risk Analysis takes more time to carry out and accomplish due to
its more complex analysis and has more detail, contingency reserves and a go/no go
decisions. Quantitative risk analysis is also often applied to larger projects and more
Risk Severity or Impact - the extent of the damage to the institution, its people, and
its goals and objectives resulting from a risk event occurring. It is the expected harm
or adverse effect that may occur due to exposure to the Risk. In other words, it
towards risks.
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Polytechnic University of the Philippines
Open University System
Sta. Mesa, Manila
Risk Appetite - the level of uncertainty an organization or stakeholder is willing to
take on with the anticipation of reward at the end. The risk appetite of an organization
Risk Categories - made up of risk causes that fall into common groups. These groups
can include risks such as technical risks, internal risks, external risks, group risks,
7. Which of the following is NOT an input required for the qualitative risk analysis?
The inputs of the Qualitative Risk Analysis are the risk register, project scope
Risk Register - the source of all of the known risks that are to be analyzed.
Risk management plan - affect a risk management strategy document for the project,
it will clarify the overall approach that needs to be taken to risk management on this
particular project as well as stating how much risk is acceptable and who should be
involved in carrying out the qualitative risk analysis of the project risks.
Project scope statement - this key document describes both the project and product
deliverables along with the objectives of the project and to the requirements, along
with the constraints and assumptions. When it was first created within the define
scope process, it also included all the identified risks known at that time, and these
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Polytechnic University of the Philippines
Open University System
Sta. Mesa, Manila
will be used along with the other information within this document for qualitative risk
analysis.
Organizational process assets - these will include aspects such as tools to help carry
out qualitative risk analysis, policies, procedures and guidelines for risk management,
and historical information including lessons learned from previous similar projects.
Risk data quality assessment – a qualitative risk analysis that requires accurate
technique to evaluate the degree to which the data about risks are useful for risk
management. It involves examining the degree to which the risk is understood and the
accuracy, quality, reliability, and integrity of the data regarding the risk. If data
their project and organizational objectives. Organizations and stakeholders are willing
to accept varying degrees of risk. Risks that are threats to the project may be accepted
if the risks are within tolerances and are in balance with the rewards that may be
What would RISK EVENT 6 be based on the following information: Engr. Martin
is 60% certain that he can get the facility needed for P45,000, which is P 7,000 less
0.60, 7,000, 4,200. Marty is 60 percent certain he can save the project