According to the PMBOK® Guide, the Perform Quantitative Risk Analysis process is the process of numerically analyzing the combined effect of identified individual project risks and other sources of uncertainty on overall project objectives (such as schedule and cost).
Numerical Analysis: Unlike Qualitative analysis, which uses subjective scales (Low, Medium, High), Quantitative analysis uses mathematical modeling and data to assign specific numerical values to risk impacts. It often uses techniques such as Monte Carlo simulation, Decision Tree analysis, and Influence Diagrams.
Focus on Overall Project Risk: The primary focus is to quantify the project ' s exposure to uncertainty. It helps the project manager understand the probability of achieving specific milestones or completing the project within a specific budget.
Support for Decision Making: It provides a quantitative basis for determining contingency reserves and helps prioritize risks that have the greatest potential impact on the project ' s " bottom line " objectives.
Sequence: It is usually performed after Perform Qualitative Risk Analysis, focusing only on those risks that have been prioritized as having a high potential to significantly impact the project.
Analysis of Other Options:
A. compiling a list of known risks and preparing responses to them: This describes the Identify Risks and Plan Risk Responses processes. Quantitative analysis happens after identification.
B. assessing the probability of occurrence and Impact for every risk in the risk register: This is the definition of Perform Qualitative Risk Analysis. Qualitative analysis is performed on all risks to prioritize them; Quantitative analysis is usually reserved for a subset of major risks.
C. evaluating the contingency and management reserves required for the project: While Quantitative Risk Analysis is a key input for calculating reserves, the focus of the process itself is the numerical analysis of the risks. Evaluating and establishing the reserves is a result of this analysis and is formalized in the Determine Budget and Plan Risk Responses processes.
