book

Project Decisions, 2nd Edition, 2nd Edition

by Lev Virine, Michael Trumper

November 2019

Intermediate to advanced

376 pages

9h 1m

English

Berrett-Koehler Publishers

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The Burden of Poor Decision-MakingWhy Do We Make Wrong Decisions?Decision Analysis as a ProcessNormative and Descriptive Decision TheoryDriving Forces behind Project Decision AnalysisA Little Bit of HistoryDecision Analysis Today
Human Judgment Is Almost Always to BlameBlink or Think?Cognitive and Motivational BiasesCognitive BiasesMotivational BiasesPerceptionBounded RationalityHeuristics and BiasesAvailability HeuristicRepresentativeness HeuristicAnchoring HeuristicBehavioral TrapsTime Delay TrapsDeterioration TrapsFrames and AccountsTraining for Project Decision-Making Skills

Example of Decision Analysis ProcessWhen Decision Makers Go BadThe Decision Analysis ManifestoThe “3C” Principle of Project Decision AnalysisConsistencyComprehensivenessContinuityDecision Analysis Process versus the PMBOK® Guide’s Project Risk Management ProcessPhases of the Decision Analysis ProcessPhase 1: Decision-FramingPhase 2: Modeling the SituationPhase 3: Quantitative AnalysisPhase 4: Implementation, Monitoring, and ReviewBig and Small Decisions
Decision PolicyWhich Choice Is Rational?Expected ValueThe St. Petersburg ParadoxRisk-Taker versus Risk-AvoiderExpected UtilityExpected Utility TheoryExtensions of Expected Utility TheoryHow to Use Expected Utility TheoryTarget Oriented Interpretation of UtilityDescriptive Models of Decision-Making
Creativity and Decision-MakingPsychology of CreativityCreativity Blocks1. Framing and Perceptual Blocks2. Value-Based Blocks3. Cultural, Organizational, and Environmental Blocks
Psychology of Group Decision-MakingAggregating JudgmentGroup Interaction TechniquesBrainstormingTools for Facilitating DiscussionsA Few Words about Game Theory
What Is FES?Why Is FES a Problem?How Does FES Spread?Three Common Myths about FESThe Roots of FESTreating FESThe Second Russian Revolution
Who Are the Players?Identifying Problems and OpportunitiesAssessing Business SituationsSome Tools and Techniques
Different Objectives and Different Criteria for Decision-MakingAligning Project ObjectivesDecision Analysis as an Art of Trade-OffsProject Objectives HierarchyMaximizing the Probability of Meeting Project Objectives
Identifying Risks and UncertaintiesGenerating AlternativesRisk Breakdown StructuresRisk TemplatesRisk-Response PlanningRisk Registers
How Do We Make Estimates?How Do We Think When We Make Estimates?Impact of Politics on EstimationImpact of Psychology on Estimation and Rule of PiStudent SyndromeOther Cognitive Biases in EstimatingFurther Explanations of Problems with EstimationWhere Does the Problem Lie—in Psychology or Politics?Many Mental Errors and One Wrong EstimateSimple RemediesNever Make a Wild GuessCollect Relevant Historical DataPerform Reality Checks and BenchmarkingConduct an Independent Assessment
Model of the ProjectSchedule ModelEconomic ModelAlternative ModelsThe Critical Path MethodThe Critical Chain MethodEvent Chain MethodologyModeling with Influence DiagramsThe Agile Approach and Project Decision Analysis
Approaches to Estimating ProbabilitiesSubjective Estimation of ProbabilitiesHow We Subjectively Assess Probability and RiskMethods of Eliciting Subjective Judgments in Project ManagementWhat If a Decision Is Sensitive to Probability?Qualitative Risk Analysis
What Are Correlations? Why Do We Need to Analyze Them?Sources of Correlations in ProjectsPsychology of Correlation and CausationHow to Improve Your JudgmentSensitivity AnalysisQuantitative Analysis of CorrelationsCrucial TasksCorrelations between Tasks
What Is a Decision Tree?Why Project Managers Avoid Decision Trees (and Why They Shouldn’t)Converting Project Schedules into Decision TreesThe Value of Perfect InformationThe Value of Imperfect Information
How Much Will It Really Cost?PERTStatistical DistributionsThe Monte Carlo TechniqueWhich Distribution Should Be Used?How Many Trials Are Required?Analysis of Monte Carlo ResultsSensitivity and CorrelationsCritical IndicesProbabilistic CalendarsDeadlinesConditional BranchingProbabilistic BranchingChance of Task ExistenceIs Monte Carlo the Ultimate Solution?
How Events Can Affect a ProjectBasic Principles of Event Chain MethodologyPrinciple 1: Moment of Risk and State of an ActivityPrinciple 2: Event ChainsPrinciple 3: Event Chain DiagramsPrinciple 4: Analysis Using Monte Carlo SimulationsPrinciple 5: Critical Event ChainsPrinciple 6: Project Control with Event and Event ChainsEvent Chain Methodology PhenomenaRepeated ActivitiesEvent Chains and Risk ResponseDelays in Event ChainsResource Allocation Based on EventsHow to Use Event Chain MethodologyExample of Event Chain MethodologyEvent Chain Methodology and Mitigation of Psychological BiasesWork Breakdown Structure + Risk Breakdown Structure + Analysis = Event Chain Methodology
How to Communicate the Results of Decision AnalysisMotivational Biases in Reporting Decision Analysis ResultsPut It into PerspectivePresentations Must Have MeaningExpressing UncertaintyThe Power of Fear
What Is Multi-Criteria Decision-Making?The Psychology of Balancing Multiple ObjectivesTwo Approaches to Multi-Criteria Decision-MakingRanking Criteria with the Scoring ModelAdvanced Methods of Multi-Criteria Decision-Making
Adaptive Management as Part of Project Decision AnalysisPrinciples of Adaptive ManagementPrinciple 1: Use actual project data in combination with original assumptionsPrinciple 2: Minimize the cost of decision reversalsPrinciple 3: Make small, sequential decisionsPrinciple 4: Support creative business environmentsPrinciple 5: Identify and fix problems earlyThe PMBOK Guide Approach to Project Executing, Monitoring, and ControllingAdaptive Management and Changing Requirements
Why Do We Need Post-Project Reviews?How Could We Not Foresee It?“I Knew It All Along”Overestimating the Accuracy of Past JudgmentsThe Peak-End RuleThe Process of Reviewing DecisionsCorporate Knowledge Base
Common Misconceptions about Decision AnalysisMisconception 1: The decision analysis process is not beneficial because it cannot ensure project successMisconception 2: Decision analysis adds additional levels of bureaucracyMisconception 3: Only organizations with mature project management processes can benefit from decision analysisWhy Do We Believe that the Decision Analysis Process Is So Important?

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Answers to Judgment Quiz

1. The correct answer is C (63 days). You cannot add together high estimates (40 days + 40 days = 80 days) to get the duration of the project with two activities associated with 90% confidence. It cannot be 50 days (2 × (10 days + 40 days) ÷ 2), which is the mean duration. The actual calculation can be performed using quantitative analysis tools based on Monte Carlo simulations. For more information, please read chapter 16, “What Is Project Risk? Monte Carlo Method.”

2. The correct answer is B (Strategy B is 17% faster than strategy A). A similar example is discussed in chapter 20, “Adaptive Project Management.” Splitting a risky project into smaller phases usually accelerates the project, but not as significantly as ...