Priorities may be set in different ways in the project management process. The previous chapter dealt with the allocation of priorities to individual risks that require specific remedial actions. This chapter addresses the allocation of priorities to systems, sub-systems, elements or stages of the project where management attention is recommended, without identifying any individual risks explicitly. Such priority-setting may be used to determine where the greatest attention, planning and detailed risk assessment effort should be focused in the project, or as part of a regular risk survey of a project’s risk management progress. The chapter illustrates an application of a semi-quantitative risk analysis approach. The previous chapter described simple qualitative approaches for risk assessment.
More complex quantitative methods require specific numerical estimates of probabilities and distributions of impacts, but probabilities are difficult for many people to estimate, since few use them in their everyday activities, and impacts may not be easily quantified in absolute terms at the early stages of a project. Semi-quantitative approaches to risk prioritization sit between the qualitative and quantitative approaches in terms of complexity. They do not use direct likelihood or
impact estimates – they begin with qualitative scales, then transform these into numerical values for use as indicators or indirect measures of likelihoods, impacts and priorities. Such indirect or semi-quantitative indicators are adequate when comparative results are required. In particular, when a quick survey of the elements of a project is needed to determine where management attention should be focused, the objective is to rank the elements from ‘most risky’ to ‘least risky’, and absolute measures are not necessary. Chapter 13 illustrates how the processes described here can be extended to provide a basis for the comparison of risks associated with different tenderers’ approaches to project delivery as part of project tender evaluation.