1) How can Crystal Ball be used to determine the level of risk for adding a new project to a firm's project portfolio? Explain the steps to take. Are there other tools that can be used to determine whether a project is too risky?

 

2) Explain why it would be appropriate for a project manager to use Crystal Ball when managing the project's critical path.

1-How can Crystal Ball be used to determine the level of risk for adding a new project to a firm's project portfolio? Explain the steps to take. Are there other tools that can be used to determine whether a project is too risky?

The answer to this question is attached below.

2-Explain why it would be appropriate for a project manager to use Crystal Ball when managing the project's critical path.

The Crystal Ball allows you to choose any form of probability distribution for each task. You specify all precedence relationships. The program then "shoots" random numbers into your probability distributions, simulating thousands of project completions. The result is a probability distribution of the project's overall duration, which you can use to answer what-if queries about how long the project might take. Assuming that the duration of an activity is known causes project durations to be underestimated. As a result, people tend to exaggerate their time estimations. This could lead to "student syndrome"—what is it? This, in turn, causes procrastination, which might lead to missing the deadline. Place safety time buffers at crucial places throughout the project network. A project buffer is a safety time buffer after the critical path. A feeding buffer is a safety time buffer located shortly before noncritical paths feed into the critical path.
 

Step-by-step explanation

1-How can Crystal Ball be used to determine the level of risk for adding a new project to a firm's project portfolio? Explain the steps to take. Are there other tools that can be used to determine whether a project is too risky?

Crystal Ball is basically a simulation program that helps one to analyze the risk and uncertainties connected with Microsoft Excel spreadsheet models. Simulation on the other hand analyzes and quickly generates possible results. Besides that, it is believed that Excel by itself cannot run simulations. Hence, one needs to add-in-program such as Crystal Ball or Microsoft Excel to do this. One can use Crystal Ball to determine the level of risk for adding a new project to the firm's project portfolio in the following way: Determine which business model inputs are uncertain; which values are estimates, which are averages. Once the researcher has identified which values are estimates or which are averages, use knowledge of the uncertainty around the input to create probability distribution of the cell which is taken as assumption. Identify a forecast. It basically refers to a formula that one wants to measure and analyze. A researcher can define multiple assumptions and forecasts Once the researcher defines multiple assumptions and forecasts, use Crystal ball command to run a simulation. It is noted that for each trial in the simulation, crystal ball enters a random values in the cell and recalculates the spreadsheet and saves forecast value for further analysis

Some of the tools that can be used to determine the proiect's risk are listed below: I Brainstorming: It is a technique under which a group of experts shares ideas and discusses the probable alternatives to minimize the risks and concerns of the company I Delphi technique: Under this method, a facilitator distributes a questionnaire to experts and responses are gathered and re circulated among the experts for comments I SWOT analysis: This technique gathers the strengths, weaknesses, threats and opportunities for a project I Assumption Analysis: This is a technique that may reveal inconsistency of assumptions or uncoyer problematic assumptions