At the September 2014 PMI Australia conference in Melbourne, Stephen Grey spoke about common methods for evaluating project contingencies and outlined serious flaws in those that are based solely on risk events or line item ranges. He described the risk factor approach that overcomes these deficiencies making the process more realistic and less arduous. The presentation includes diagrams illustrating how the method might be applied to IT and to construction projects.
He went on to explain how a careful approach can reduce the difficulty of obtaining estimates of uncertain quantities and yield more realistic assessments of the range of possible outcomes they might produce. It is based on attention to the context of the assessment and techniques that limit the danger of bias. Taken together, risk factor modelling and context based range estimation reduce the burden on analysts and their clients while at the same time producing more realistic and informative results.