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Sunday, February 10, 2013


Interviewing is one of the techniques that are used in Quantitative Risk Analysis. As mentioned in the previous chapter, it is part of the Data Gathering and Representation Techniques sub-group. 

At a high level, we all know what Interviewing is, isn’t it? But, in this chapter, we are going to learn what we need to know about interviewing from Quantitative Analysis perspective. What information we are looking to get through interviewing and what we are supposed to do with that information are a couple of questions that will get answered in this chapter. 

Interviewing in general, is used to quantify the probability and impact that risks may have on our projects objectives. The information gathered during these interviews would be dependent on the type of probability distributions that we are looking to use. Typically, we will conduct such interviews with SME’s (Subject Matter Experts) to get their take on the risk and its impact. Don’t worry too much about probability distributions just yet. We will be covering it very soon. For now remember that the data we gather could vary based on the type of distribution we use. That should be sufficient to understand the forthcoming section. 

For commonly used distributions, we gather three point estimates through these interviews. The three point estimate is calculated using the PERT Formula. Are you wondering what PERT is? If you are someone who has not studied the PMBOK Guide fully yet, I strongly urge you to do that because, the PMI RMP Exam uses a lot of terms and concepts that are part of the standard Project Management Framework as per the PMBOK. Anyways, PERT stands for Program Evaluation and Review Technique. It is a technique used to estimate durations for activities. In my earlier series on PMP Certification I had covered it in great detail in the chapter titled Estimating Activity Duration

In short – As per the 3 point formula, we try to arrive at 3 different estimates: 
a. The Optimistic Estimate (O) 
b. The Most Likely Estimate & (ML) 
c. The Pessimistic Estimate (P)

The 3 point estimate is a weighted average of these 3 estimates and is usually more accurate. The formula is as follows: 

3 point estimate = (O + 4 * ML + P) / 6 

The range here between the optimistic and pessimistic numbers is the range of uncertainty for our estimate. The more the uncertainty, the greater the range. Remember, the chapter titled Managing Uncertainty? Uncertainty causes risks and the whole purpose of Risk Management is to keep this uncertainty to the minimum. 

Whenever we calculate any numbers or values, we must always document how those values were derived, along with any assumptions or constraints that went into the calculation. 

Standard Deviation: 

The Standard Deviation (SD) is a measure of how far the actual estimate we have calculated is from the mean value. The formula to calculate SD is:

SD = P – O / 6 

Here again – P is the pessimistic and O is the optimistic estimate. 

An Example: 

Let us say, you are talking to an Engineer about construction of a brick wall. He is an expert and is going to give you his feedback during the interview. He feels that, the brick wall could be constructed in 10 days if everything goes smoothly but, if it rains then the construction may get extended to up to 20 days. He also feels that, the construction should be complete in around 15 days. 

So, as per this discussion: 

O = 10 days
P = 20 days and
ML = 14 days 

3 point estimate = (10 + 4 * 14 + 20) / 6 = 14.33 days 

SD = 20 – 10 / 6 = 1.667 days 

As per the 3 point estimate we can say that, the construction of the wall will be completed in 14.33 days while the standard deviation will be 1.667 days. The SD signifies the fact that the construction may get shortened or extended by this value based on the prevailing conditions. So, the work could complete 1.667 days prior to the planned 14.33 days or it could take 1.667 days more than the planned days. 

So, the expected construction duration will be 12.663 days to 16 days. 

All estimates provided must be justifiable. You can’t just take the word of the SME for the numbers. Ask them for justifications and note them down for future reference. 

In this chapter, we have covered a lot of items pertaining to interviewing, estimates etc. From the PMI RMP Exam perspective, you need to remember the following: 

1. Interviewing is a tool and technique that is part of the Perform Quantitative Analysis Process and a part of the Data Gathering & Representation Techniques sub-group
2. We use this technique to gather information using historical data (or SME’s) and help quantify the probability and impact of Risks on project objectives
3. Information gathered using this technique depends on the type of probability distributions used 
4. The 3 point estimate formula is: (O + 4 * ML + P) / 6
5. The Standard Deviation formula is: P – O / 6

Prev: Tools & Techniques Used in Quantitative Analysis - Introduction

Next: Introduction to Probability Distributions

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