QRMBoK Guide · Free sample chapter

Heat maps hide the truth. Chapter 1 shows you the numbers underneath.

Two risks both scored 20. Once quantified, one was worth £16m and the other £8m. Chapter 1 of the QRMBoK Guide shows how to replace scores with values, read confidence levels properly, and set contingency a sponsor can defend.

  • Free, about an 11-minute read
  • Opens straight away, plus a copy by email
  • Written from live oil & gas, EPC and infrastructure work

Chapter 1 of 12

Core Concepts

From heat map scores to confidence and contingency

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Inside Chapter 1

Four ideas that change how your next risk review sounds.

£16m vs £8mSame heat map score of 20. Expected value shows a twofold gap the score hides.
P25 ≠ plan + 25%What a P-value actually means, and where your deterministic date really sits on the curve.
C = P − DContingency to a target confidence. Readiness to absorb risk, not mitigation.
21 daysPipeline welding case: one £10,000 mitigation on the top driver pulled P80 in by 21 days.
After reading it you can

Talk about risk in days and pounds, not colours.

  1. Explain why heat map scores cannot rank risks, total exposure or justify mitigation spend.
  2. Classify any item as a risk event, an uncertainty, an issue or a condition.
  3. Type each risk event as Bernoulli, binomial or Poisson.
  4. Name the three inputs to a Monte Carlo simulation and set a sensible iteration count.
  5. Read a histogram, a CDF and a P-value, and locate the deterministic value on the curve.
  6. Calculate the contingency needed to reach a target confidence level.
  7. Explain why contingency is readiness, not mitigation.
Written for
Planners and project controlsWho want to move from building the schedule to defending its confidence level.
Cost engineers and estimatorsWho are asked for P50 and P80 and want the method behind the number.
Risk managersWho know the register is qualitative and want to quantify it properly.
Project and programme leadersWho sign off contingency and want to know what they are signing.
"What particularly stood out was Rami's ability to bridge the gap between quantitative risk theory and practical application."
Ajay Patel · Head of Project and Programme Risk
"There is a gap in the market for people that can do QRA, particularly QSRA, there is an even bigger gap for people that can teach it well. Rami can do that."
Joseph, MBCI · Risk & Assurance Manager, JET Decommissioning and Repurposing Programme, UKAEA
Rami Salem, founder of IQRM
Author

Rami Salem

Founder of IQRM, the Institute of Qualified Risk Managers. 15 years of quantitative schedule and cost risk work on oil & gas, EPC and infrastructure capital projects, and 200+ risk workshops facilitated. Approved Saudi Aramco vendor. ADNOC approved consultant.

"If you are putting in a very bad assumption, Monte Carlo simulation will not help you."

Read Chapter 1 free →

Get Chapter 1 of the QRMBoK Guide

Core Concepts: from heat map scores to confidence and contingency. Free, about an 11-minute read.
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