ABSTRACT
This chapter provides an overview of statistics and discusses some risk analysis techniques. It aims to familiarize the reader with general statistics principles and techniques to better understand risk analysis techniques. Statistics play an important role in risk analysis. List of techniques for risk analysis: Three-point estimate, decision tree, monte Carlo simulation and heuristics. Three-point estimate technique displays three variables: optimistic, pessimistic, and most likely. They are the basis to calculate the expected values. For example, a schedule slippage occurs. Occurrences with a finite number of outcomes and given probabilities are called ‘stochastic processes’. A tree diagram is used to describe these processes and in computing the probability of an occurrence. Heuristics has been used over the millennia to estimate, calculate, uncover, discover, purify, and simplify solutions to problems. The precedence diagramming method for risk analysis is a technique that takes an ordinal approach for determining priorities.
