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If project has 30% probability of success with benefit of 700,000$ and has 70% probability of failure with loss of 300,000$. What is the next step?

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Question added by BAO DANG TAN , Technical Manager , Vector Infotech
Date Posted: 2017/04/17

This is simple probability analysis to a policy makers, in business environment, the risk is everywhere but mitigation point is to be observed for loss recovery approach and meet economic return. Given 70% failure, for higher the risk is higher benefit (.7*300,000=210,000) against 490,000 benefit and lost is 280,000 then rejection should be good option and reverse goes true for success probability of 30%.

Krishna   KHASANIS  PMP
by Krishna KHASANIS PMP , Project Manager-Electrical , Larsen & Toubro Ltd, P T & D (International)

A project that has 30% probability of success should have 70% probability of failure and with an impact of 700,000$ , Loss ( EMV ) works out to be 490,000$ ( 0.7 x 700,000 ) . Another project has 70% probability of failure with a loss of 300,000$. If a project manager is forced to choose one of the project , obviously he chooses the project with comparatively lesser loss. 

Anish Ali
by Anish Ali , Head Projects , LM Energy & Software Pvt Ltd

Good signs if 30% success probability is fore seen with 70% probability of being failure.

70% failure probability itself must make you learn with the reasons can be the punch point or risks.

 

So what all need to do is just to work out on punch points or risk management factors before getting project start and make project profitable entirely 

Hala Sorour
by Hala Sorour , Accounting Trainer , CoE

But here is the thing, higher risk, means higher return. It depends on the policy of the company and/or the responsible for such project. If they have a risk aversion behavior, then either try and look for ways to make work, or drop it. If they have a risk taking behavior, then just go for it. But have to make sure that $300,000 loss is going to be covered by excess revenue of something else, which could be a current project, or a really promising one. 

Deleted user
by Deleted user

0.3*, =,.7*, = (,) Its a high risk project with no significant profit over loss. I would reject the offer.

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