Garman yawned as he sat at his kitchen table. His plans to corner the world's supply of peanut valves required detailed planning and an honest assessment of the risks involved in this highly speculative venture
He first identified the primary factors that might contribute to the project's failure. These factors were employee-related; market maturity-related; and health-related. The best estimates he could come up with for these probabilities were 0.6, 0.2 and 0.3, respectively. The consequences of failure were less certain, but he finally decided that the cost consequences rated a 0.2, the schedule consequences rated a 0.4, the reliability consequences rated 0.1, and the company goodwill consequences were a robust 0.6. What is the overall project risk factor for this undertaking?
The overall project risk factor is 0.5725, perhaps too risky for Garman and his henchman.
PF = (PE + PM + PH)/3 = (0.6 + 0.2 + 0.3)/3 = 0.3
CF = (CC + CS + CR + CG)/4 = (0.2 + 0.4 + 0.1 + 0.6)/4 = 0.325
RF = PF + CF - PFCF
RF = 0.3 + 0.325 - 0.3 × 0.325
RF = 0.5725
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