Correlation, Probabilistic Branching, and Probabilistic Calendars
Discuss the importance of correlation, probabilistic branching, and probabilistic calendars
and how those mentioned above are useful for project cost risk analysis. Discuss how you
would incorporate correlation, probabilistic branching, and probabilistic calendars into
your risk analysis.
As Hulett (2016) asserts, use of project planning and analysis tools to estimate the time
needed to complete a project often results in the underestimation of the project’s completion
time. This margin of error cannot be blamed on the analyst or the tool used but on the fact that
the estimates are decided upon the best-guess methodology. To mitigate this error, risk analysis
is used to come up with almost accurate estimates of the project’s duration and costs. In its
essence, risk analysis uses a quantitative methodology to model the project and thus uncover
some of the problems that could be encountered along the way before the completion of the
project.
A project here can be defined as a set of activities that utilize resources such as time,
money, machinery and people that are executed in order to achieve a set of goals (Kerzner &
Kerzner, 2017). Project risk analysis, therefore, helps the project officers identify the risks and
uncertainties that may hinder the project from achieving its goals or threaten the efficiency of the
project activities in the realization of the project’s goals (Hulett, 2016). The methods used in
Project risk analysis are intuitive and general and do not necessitate the project manager to have
a profound grasp of mathematical concepts. They, however, reward the project officer/manager
Correlation, Probabilistic Branching, and Probabilistic Calendars 2
with a clear understanding of the various risks the project may face throughout the execution of
the various activities and thus enable him/her come up with appropriate measures of averting or
mitigating the risks. Some of the methods used in project risk analysis include correlation,
probabilistic branching, and probabilistic calendars. Therefore, as highlighted in the definition
above, the project manager to identify risks more objectively can use these methods. For
instance, correlation analysis makes a comparison of two interrelated activities of the project
using numbers instead of opinions of people to identify risks that may affect one of the elements
in case the other is altered (Hulett, 2016). This way, the project manager identifies risks more
objectively. Probabilistic branching, on the other hand, helps the project manager come up with a
set of possible paths that the project may take and thus enable them to come up with a range of
possible expected outcomes. This way, the project manager can come up with a broader list of
risks that the project may face and thus design appropriate contingency and mitigation plans
(Hulett, 2016). Probabilistic calendars can also be used together with the probabilistic branching
method to enable the project manager come up with the various dates the project can be
projected to end depending on the identified possible paths uncovered by the probabilistic
branching method (Hulett, 2016).
These methods of Project risk analysis would be useful in the risk analysis project of
XYZ bank as it would have enabled me to identify the various risks in a more objective manner
that minimizes the margin of error to manageable levels.
Correlation, Probabilistic Branching, and Probabilistic Calendars 3
References
Hulett, D. (2016). Practical schedule risk analysis. Routledge.
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
