1. Project Risk Management A Preparation Guide for the PMI-RMP Exam Scott Reynolds MBA, PMP, PMI-RMP

26. Perform Quantitative Risk Analysis Tools and Techniques of Quantitative Analysis EMV – Expected Monetary Value – What is the probability of the risk occurring multiplied by the impact if the risk does occur? If the risk occurs, what could the financial or time loss be to your project? In the example below, this project has an EMV of ($58,250), this means that you need to put aside $58,250 in your risk reserve account for potential risks Risk Probability Impact EMV A 20% $ (100,000.00) $(20,000.00) B 90% $ 10,000.00 $ 9,000.00 C 5% $ 30,000.00 $ 1,500.00 D 65% $ (75,000.00) $(48,750.00) Total $(58,250.00)

28. Perform Quantitative Risk Analysis

29. Perform Quantitative Risk Analysis Decision Tree * It is cheaper to make the units rather than buying them Setup Cost Cost/Unit Units Needed Cost for Units Defects/Unit Defect Cost Total Cost Make $200,000 $27.50 500,000 $13,750,000 20/10,000 $1,375.00 $13,951,375 Buy $0 $30.00 500,000 $15,000,000 10/10,000 $1,500 $15,001,500