--- title: "Manage risk; qualitative and quantitative system" subject: "Project Engineering" chapter: 5 key: "semester_7/project_engineering:risk-manage-qualitative-quantitative" source: https://www.bctengineer.com/q/semester_7/project_engineering/risk-manage-qualitative-quantitative site: BCT Engineering --- # Manage risk; qualitative and quantitative system Project Engineering · Chapter 5: Project Risk Analysis and Management - Asked in: 2080 Bhadra, 2+4 marks - Video: [Risk Analysis | Qualitative & Quantitative Risk Analysis | Project Risk Management | HSE STUDY GUIDE](https://www.youtube.com/watch?v=Kb2zSdzNESM) — HSE STUDY GUIDE - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/project_engineering/risk-manage-qualitative-quantitative - Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-5 ## Question How could you effectively manage risk in a project? Explain the qualitative and quantitative risk management system. ## Short answer Plan risk process, identify risks, analyze qualitatively and quantitatively, respond, and monitor. Qualitative analysis ranks risks by probability and impact using a matrix. Quantitative analysis estimates numerical effect using EMV (EMV = P × Impact), decision trees, sensitivity analysis, and Monte Carlo simulation. ## Answer #### Managing risk effectively 1. Plan the risk process and assign responsibility. 2. Identify risks early with the team and stakeholders; keep a risk register. 3. Analyse and rank the risks (qualitative, then quantitative). 4. Plan responses: avoid, transfer, reduce, accept; add contingency reserve. 5. Monitor, control and update the risks through the project life. #### Qualitative risk analysis It assesses each risk by probability and impact on a descriptive scale to set priority. It is quick and needs no detailed data. ```text Impact -> Low Medium High Prob. High Medium High High Medium Low Medium High Low Low Low Medium ``` Tools: probability-impact matrix, risk categorisation, urgency assessment, expert judgement. #### Quantitative risk analysis It gives a numerical estimate of the effect of the priority risks on cost and time. - **Expected monetary value:** EMV = probability x impact (money) - **Decision tree:** compares choices with probability and money outcomes - **Sensitivity analysis:** which variable (e.g. cement price) most affects the result - **Monte Carlo simulation:** repeated random runs to get the probability of finishing within a given cost or time - **PERT:** three-point estimates for duration ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. In the probability-impact matrix, which risk gets the top (High) priority? A. Low probability and low impact B. High probability and high impact C. Low probability and medium impact D. Medium probability and low impact Answer: B. A high probability with high impact falls in the High zone and gets the first response. (Key point: Probability-impact matrix) 2. Which is the correct formula for expected monetary value? A. EMV = probability + impact B. EMV = probability x impact (money) C. EMV = impact / probability D. EMV = (a + 4m + b)/6 Answer: B. EMV is probability multiplied by the monetary impact. (Key point: EMV formula) 3. What does sensitivity analysis show? A. Which variable, e.g. cement price, most affects the result B. The best insurance company C. The rank of risks by colour D. The date of completion only Answer: A. It varies one variable at a time to find which has most effect on the result. (Key point: Sensitivity analysis) 4. What is the main difference between qualitative and quantitative risk analysis? A. Qualitative gives numerical money values; quantitative gives only ranks B. Qualitative ranks risks by probability and impact on descriptive scales; quantitative gives numerical effects on cost and time C. Qualitative is done only after the project ends D. They are the same process with different names Answer: B. Qualitative analysis sets priority using ordinal ratings; quantitative analysis puts numbers (money, days) on the effect. 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