Differences Between Qualitative and Quantitative Risk Analysis
Qualitative and quantitative risk analysis techniques, the basic backbone that allows every project to be delivered on time per customer expectation. Yes, you read it correctly; identifying any threat in advance will provide room for making necessary corrections in the project. This in turn will reduce the negative impact and enhances the positivity driving towards achieving the goal called the desired outcome.
Project management is an art and every individual in the project should understand things better for saving time and money. PMP certification course is designed to explain every concept precisely and carve out each project manager successfully.
Why risk analysis – When we design any project we must be aware of the risks proactively to address them and avoid any last-minute surprises. Especially in complex projects analyzing possible risk in advance is a must. The very word qualitative and quantitative risk looks obvious that the former deals with the risk quality and the latter with the numbers. However, there has always been confusion among people when it comes to these two analyzing techniques. Only when you understand their key differences you can apply them at the right time for efficient results.
Qualitative Vs Quantitative risk analysis
|What is the qualitative and quantitative risk assessment approaches||This is a subjective approach that primarily focuses on risk identification for measuring the possibility of the occurrence of the risk event during the entire project. Severity identification is the primary goal ||This is an objective approach wherein the data verified are used to analyze the risk effect |
|2||Which is the most important one qualitative or quantitative||This helps in gauging the chances of risk and prioritize them to make it clear to the team as to take action on which issue first and hence this is the most important technique in risk analysis ||At the same time making numerical calculations to correct the risk also becomes important which is done in this phase. Therefore a combined analysis of both qualitative and quantitative risk assessment helps to assess and minimize the risk |
|3||Complexity||Qualitative risk analysis is complex because it does not involve straightforward math and hence one must know how to rank the risk for which expertise is required||Direct calculating methods and tools are available making the process simple but still one must know the right way to use these formulas and tools to complete the corrective action |
|4||Speed ||Time-consuming to identify each risk, record and rank them||Tools are used to speed up the process|
|5||Ease of use ||Can be used easily as there is no need for any tool||Reliability on tool sometimes makes it difficult for the team to use it|
|6||The complexity of the project||Used in all projects irrespective of the complexity of the project||Used only in complex projects |
|7||Volume of risk||It deals with all risk and then ranks them in order of the impact||Deals only with the risks marked for further analysis by qualitative risk analysis |
|8||How is performed||Risk is ranked between 0 to 1||Risk closer to 1 ranking are taken first and calculation is done to predict the project outcome based on the effects of risk |
Here we have tabulated the difference between qualitative and quantitative risk analysis in detail in table format for a glance and better understanding. Followed by we will also explain other details to give you a clear picture of these techniques.
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Qualitative and quantitative risk analysis
1. Steps involved in Risk identification
2. Recording them in a matrix
3. Ranking them based on the impact it has on the project outcome
4. Mark the risk which requires further analysis and identify the action for them
5. Probability distributions are used to describe the risk probability along with the impact.
6. Make use of project models like a cost estimate, mathematical and simulation tools for calculating both the probability and its impact
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From the above table we now clearly understand the difference between qualitative and quantitative risk analysis. We are sure that no longer you will feel confused between them. Yes, you are right, qualitative risk analysis is a must to identify, record, and rank risks. Every project will have numerous risks and it is not possible to use a calculation to minimize that which is time-consuming.
Therefore the qualitative process will assign resources to handpick risks that will cause a major negative impact on the project outcome. Later the most harmful risks will be worked upon to rectify them. This is exactly done in the quantitative method.
If you were thinking that both independent, then your project results might never reach the satisfaction of the customer. Also, if you have thought that quantitative is difficult because it involves math, again you are wrong because one can be trained to use tools and learn math. But understanding the risk requires real skills.
We suggest you allocate the right resources to identify risk in the qualitative risk analysis technique and train even amateurs to deal with the qualitative part.
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