Expected Loss
Moderator: Intaver Support
Expected Loss
In RiskyProject Expected loss is calculated parameter. Could you please explain the calculating algorithm?

 Posts: 1005
 Joined: Wed Nov 09, 2005 9:55 am
Re: Expected Loss
Expected cost of risk is calculated based on formula:

(Mean cost of project  Original (deterministic) cost of project) * cost correlation coefficient of this risk

It means that expected cost is this is a contribution of each risk to total cost increase of project. Interestingly that the mean cost of task, where this risk is assigned, is not in this formula directly. It is a correlation, which is used. The correlation coefficient is calculated based on total project cost and cost increase due to risk.

(Mean cost of project  Original (deterministic) cost of project) * cost correlation coefficient of this risk

It means that expected cost is this is a contribution of each risk to total cost increase of project. Interestingly that the mean cost of task, where this risk is assigned, is not in this formula directly. It is a correlation, which is used. The correlation coefficient is calculated based on total project cost and cost increase due to risk.
Intaver Support Team
Intaver Institute Inc.
Home of Project Risk Management and Project Risk Analysis software RiskyProject
www.intaver.com
Intaver Institute Inc.
Home of Project Risk Management and Project Risk Analysis software RiskyProject
www.intaver.com