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Risk Analysis Software for Project Managers

By AlRat Subscribe to RSS | December 2nd 2011 | Views:
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Project management is crucial to the success of any project. In most projects, there are many moving parts that rely on each other. In project management, budget and schedule are usually the two most important and sensitive components. Many project managers use schedule risk analysis and risk analysis software to help them understand the relationship between the project variables and to predict a project schedule. Most risk analysis software programs utilize probabilistic branching, conditional branching and sensitivity analysis measures.

Probabilistic branching is often used in schedule risk analysis.

Probabilistic branching calculates the expected values (EV) of your project when you haven't yet chosen which action, or branch, will be taken. In probabilistic branching, measurements are based on the probability of whether a specific action, or branch, will be executed or not. Barbecana's Full Monte utilizes probabilistic branching to give you the best possible outlook for your project decisions. Conditional branching is another metric common to project management tools. While probabilistic branching is based on the probability of any one action, conditional branching measures against a specific set of conditions. Conditional branching allows you to calculate the expected values (EV) of your project under certain, specific conditions. Both conditional and probabilistic branching are utilized in most all project management tools. These risk analysis metrics are particularly useful when there are multiple actions for a project that could be taken, but you're unsure which action will be taken.

Sensitivity analysis is a technique used in numerous industries from stocks and bonds, to project risk and project cost management. Sensitivity analysis measures the effect of an independent variable on a dependent variable. In other words, sensitivity analysis is used to determine how different values of an independent variable will impact a dependant variable given a certain set of assumptions. Project management tools use this technique to help you better understand which project variables will impact your project the most - materials, supplies, shipping, budget, contractors, etc. Many project management tools will display your sensitivity analysis reports as tornado graphs. A tornado graph allows you to compare many different input variables again a single given output variable. In tornado graphs, the most sensitive variable or the variable that would have the biggest impact on your project, is displayed at the top with a long bar. The least sensitive variable is shown at the bottom of the tornado.

Risk analysis software is a great resource for all project managers. Some project management software programs are more general and can be used on any project type while others are more specific to certain industries like construction project management, technology project management, defense project management and others. When choosing a project management software and software provider, be sure to ask questions. You’ll want to be certain that you’re getting the right sort of risk analysis for your projects. You want to make sure that you choose a software and provider that you are comfortable with. Asking questions also gives you the opportunity to see that sort of help and support you can expect from that software provider or consultant.

AlRat - About Author:
Al Rat is a Houston native who simply loves writing. I enjoy writing articles about anything and everything that interests me – I hope others will be interested too!

If you want to learn more about risk analysis software, check out my favorite company, Barbecana and their new Microsoft Project add-in, Full Monte, at www.barbecana.com

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