Other meanings of QRM. In finance, quantitative risk management refers to market and credit risk measures such as Value at Risk. In pharmaceuticals, QRM usually means quality risk management (ICH Q9), and in manufacturing it can mean Quick Response Manufacturing. This entry covers QRM for capital projects.
What QRM covers on a capital project
- Quantitative risk registers: risks written with a clear cause and effect, a probability and a cost or time range.
- QSRA and QCRA: schedule and cost risk models that produce P50 and P80 figures.
- Integrated analysis and JCL: the joint probability of meeting cost and schedule together.
- Decision analysis: comparing options by their full range of outcomes, not just their base case.
- Reporting: turning model outputs into decisions a board or sponsor can take.
How QRM changes decisions
| Decision | Without QRM | With QRM |
|---|
| Contingency | 10% by rule of thumb | P80 minus base estimate, from the project's own risks |
| Completion date | The P6 finish date | A P80 date with the schedule contingency it needs |
| Mitigation spend | Top of the heat map first | Ranked by weeks or dollars saved at P80 |
| Option choice | Lowest base cost wins | Best risk-adjusted outcome wins |
The skills behind it
QRM sits between planning, cost engineering and leadership. Practitioners need schedule logic and estimating knowledge, probability and distributions, tool skills in Safran Risk or Primavera Risk Analysis, and the ability to explain a model to people who will never open it. The Institute of Qualified Risk Managers (IQRM) trains and certifies practitioners in this discipline across the UK and GCC.
Common mistakes
- Treating QRM as software training. The tool is the easy part; the inputs and the interpretation are where models fail.
- Modelling after the decision is made. QRM adds most value at FEED, tender and sanction.
- Reporting charts, not decisions. A board needs a recommended budget, date and action.
Related terms
