Dr. David, thank you for the wonderful presentation. Is there a place where you can direct me to a step by step process to help me achieve what you just presented. A walk-through sample or another presentation where you dig into detail a bit more. Appreciate your support on this. Thanks again
Thank you Adi for this positive and encouraging feedback. I'm glad you enjoyed this presentation. There are more details about this approach in a conference paper I presented in 2014, which is available online here: risk-doctor.com/docs/NA14TLD09%20Hillson%20paper%20-%20How%20risky%20is%20your%20project.pdf. I hope this is helpful.
+Dmitry Grass . Thanks for your positive feedback Dmitry. Earned Value is the nominal worth of work achieved at a given point in the project, usually measured in monetary terms ($, £, € etc). It is taken from the Planned Value baseline, and PV should take account of known risk. I hope this answers your question.
Hello again Dmitry. I've just realised that I didn't answer your question properly!! You asked about the meaning of "expected value", but in my answer I explained "earned value"! These are very different things!!Expected value is calculated by multiplying the impact value of a risk by the probability that the risk will occur. So if the risk impact is $100K and the risk probability is 10%, then the earned value is $100K x 10% = $10K.The problem with expected value is that it isn't useful. If the risk occurs it will cost $100K. If it doesn't occur it will cost zero. It will never cost $10K. So if you use the expected value to calculate contingency or risk budget, you will get the wrong answer.I hope this is helpful, and I'm sorry again for my earlier mistake.
@@Risk-Doctor Dear Risk Doctor, I have confusion regarding the example you provided.The impact of risk on project is worth $100k if it happens (100% probability) but actually probability is 10% and at this probability EMV= $10k. My question is "what is the need of calculating EMV at 10% probability, if the risk occurs it will incur $100k, what is the need of adding $10k to the project? (Right now i am studying this topic and got stuck)
@@imranzada937. Thanks for asking this follow-up question. I agree with you completely! In my opinion and lots of other professional colleagues, EMV is a flawed metric, because it gives you a result that is not practically useful. In my previous answer to Dmitry, I was simply replying to his question "What do we mean by expected value?" I didn't mean to suggest that I agreed with its use - I don't! I'm sorry about this confusion, and thanks again for your question.
