Project Management

156 Project Management

This is fairly common.
Figure 8-8(b) is a probability curve. I believe this chart offers
the greatest opportunity to illustrate important points when mak-
ing proposals or presentations. For example, this chart clearly
illustrates that there’s a 50% chance that the project will exceed
$1,118 K. This is not only a statistically sound judgment; it
makes a strong point about the concept of ranges and probabili-
ties, when it comes to predicting outcomes. Among other things,
it underscores the futility in the use of point estimates.
Finally, Figure 8-8(c) is called a tornado diagram, based
upon its obvious resemblance to one. This chart illustrates
where the uncertainty (and therefore the greatest potential for
variability) is greatest.
Together, these graphical outputs—and what they repre-
sent—make a strong case for the uncertainty and inherent vari-
ability that exists in all projects.

Project Manager’s Checklist for Chapter 8

❏ Don’t let a “can do” attitude inhibit your ability to under-

stand that bad things can happen to your project. If you

don’t manage risk, it will manage you

❏ In the world of project management, risk is directly related to

uncertainty and the extent to which you can predict a specif-

ic outcome or understand the nature of a given situation.

Min Max Min Max

Min Max Min Max

A B

CD
Figure 8-7. Risk profiles