# Examining Sensitivity Analysis for Projects

### Examining Sensitivity Analysis for Projects

Sensitivity Analysis is a method of assessing the relative impact of changing a variable in the project to gain an insight into possible outcomes of one or more potential course of action.

This analysis places a value on the effect of changing a single variable within a project by analysing the effect on the project plan.

Sensitivity Analysis is probably the simplest method of analysing the impact of potential risk and its results are easy for project managers to understand. However, it does not lend itself well to assessing combinations of risks and how they may affect a project.

Furthermore, the sensitivity diagram does not provide an indication of the anticipated probability of occurrence of the risk event.

Often, sensitivity analysis is performed independently on a number of variables. When displayed on a single graph or sensitivity diagram, the result allows you to compare which variables have the highest likely impact on project performance.

Typically, it is only performed for variables that are likely to have a major impact on project performance in terms of cost, or economic returns.

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