Cost Impact Scale
A cost impact scale converts the expected cost impact of a risk (e.g. this risk will result in additional expenditures of $10,000 if it occurs) into a simple numerical scale value. A numerical scale value is required if you want to display the risk on a risk matrix.
A cost impact scale is defined in terms of a series of cost values. These values are entered via the Cost Impact Scale form, which is accessed via the Risk Impacts form.
The number of levels in your scale is determined by the risk matrix size.
Constructing a Scale
When constructing a scale, start at the upper and lower limits of the scale.
Think of the smallest cost overrun that would be considered catastrophic. For example, if your project has a million-dollar budget, a 10 million dollar overrun would presumably be catastrophic. However, would 1 million be catastrophic? $500,000? $250,000? The smallest amount that would be considered catastrophic becomes the highest level on your scale. If this amount is, say, $250,000 then your top level would be ‘cost increase of $250,000 or more’.
Think of the largest amount that can be considered as acceptable day-to-day variation. For example, in a million-dollar project a cost overrun of $10 is probably quite insignificant. How about $100? $1,000? $10,000? Estimate the largest amount which can be considered as acceptable day-to-day variation, and call this level 1. If this amount is $5,000, for example, then level 1 in your cost scale would be ‘cost increase of less than $5,000’.
Once you have set the upper and lower limits for your scale, you can fill in the intermediate values. For example, if you are developing a 5-level scale and levels 1 and 5 are $5,000 and $250,000 respectively, you might set the intermediate values at $25,000 and $100,000. Your scale then becomes:
- Level 1: less than $5,000
- Level 2: $5,000 or more but less than $25,000
- Level 3: $25,000 or more but less than $100,000
- Level 4: $100,000 or more but less than $250,000
- Level 5: $250,000 or more
The units in which the data is entered can be in ones, thousands or millions. This is a typing convenience only, and does not affect the actual values which are stored.
The scale will normally be in your base currency. However, you can choose to express the scale in any other currency.
You can change the scale at any time. Mandrel will automatically change any existing cost impact assessments to comply with the new scale.