Frances is the project manager of a project in her organization. This project has a budget of $567,000 and is schedule to last for three years. Frances wants to examine the risk events to determine which risk events have the most potential impact on the project. Which modeling technique can help Frances to accomplish this goal?
A.
Quantitative risk analysis
B.
Sensitivity analysis
C.
Modeling and simulation
D.
Expected monetary value
Explanation:
The sensitivity analysis approach helps the project managers to determine which risks have the most potential impact on the project.
Sensitivity analysis is the study of how the variation (uncertainty) in the output of a mathematical model can be apportioned, qualitatively or quantitatively, to different sources of variation in the input of a model. In other words, it is a technique for systematically changing parameters in a model to determine the effects of such changes. Sensitivity analysis is useful for computer modelers for a range of purposes, including:
Support decision making or the development of recommendations for decision makers Enhancing communication from modelers to decision makers Increased understanding or quantification of the system Model developmentSensitivity Analysis is common in physics and chemistry, in financial applications, risk analysis, signal processing, neural networks, and any area where models are developed.
Answer option A is incorrect. Quantitative risk analysis does include the review of risk events and their affect on the project, but not to the extent of sensitivity analysis.
Answer option D is incorrect. Expected monetary value is a statistical concept to calculate the average outcome when the future includes scenarios that may, or may not, happen.
Answer option C is incorrect. Modeling and simulation technique translates the specified uncertainties of the project into their potential impact on project objectives.
Reference: "Project Management Body of Knowledge (PMBOK Guide), Fourth Edition"