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Project Decisions

Book Description

Project management is the art of making the right decisions. To be effective as a project manager, you must know how to make rational choices in project management, what processes can help you to improve these choices, and what tools are available to help you through the decision-making process. Project Decisions: The Art and Science is an entertaining and easy-to-read guide to a structured project decision analysis process. This valuable text presents the basics of cognitive psychology and quantitative analysis methods to help project managers make better decisions. Examples that portray different projects, real-life stories, and popular culture will help readers acquire the essential knowledge and skills required for effective project decision-making.

Readers will be able to:
•Understand psychological pitfalls related to project management
•Establish a creative business environment in their organization
•Identify project risks and uncertainties
•Develop estimates of project time and cost based on an understanding of human psychology
•Perform basic quantitative and qualitative risk and decision analysis
•Use event chain methodology in managing projects
•Communicate the results of decision analysis to decision-makers
•Review project decisions and perform adaptive project management
•Establish a project decision analysis process in their organization

PLUS — Test your own judgment through a quiz that examines your intuition!

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. About the Author
  5. Table of Contents
  6. PREFACE
  7. ACKNOWLEDGMENTS
  8. TEST YOUR JUDGMENT
  9. ANSWERS TO JUDGMENT QUIZ
  10. PART 1: Introduction to Project Decision Analysis
    1. CHAPTER 1: Project Decision Analysis: What Is It?
      1. The Burden of Poor Decision-making
      2. Why Do We Make Wrong Decisions?
      3. Approaches to Decision-making
      4. Decision Analysis as a Process
      5. Normative and Descriptive Decision Theory
      6. Driving Forces behind Project Decision Analysis
      7. A Little Bit of History
      8. Decision Analysis Today
    2. CHAPTER 2: “Gut Feel” vs. Decision Analysis: Introduction to the Psychology of Project Decision-Making
      1. Human Judgment Is Almost Always to Blame
      2. Blink or Think?
      3. Cognitive and Motivational Biases
        1. Cognitive Biases
        2. Motivational Biases
      4. Perception
      5. Bounded Rationality
      6. Heuristics and Biases
        1. Availability Heuristic
        2. Representativeness Heuristic
        3. Anchoring and Adjustment Heuristic
      7. Behavioral Traps
        1. Time Delay Traps
        2. Ignorance Traps
        3. Deterioration Traps
      8. Frames and Accounts
      9. Training for Project Decision-Making Skills
    3. CHAPTER 3: Understanding the Decision Analysis Process
      1. Decision Analysis
      2. When Decision-Makers Go Bad
      3. The Decision Analysis Manifesto
      4. The “3C” Principle of Project Management
        1. Consistency
        2. Comprehensiveness
        3. Continuity
      5. Decision Analysis Process vs. the PMBOK® Guide’s Project Risk Management
      6. Decision Analysis and Other Business Processes
      7. Phases of the Decision Analysis Process
        1. Phase 1. Decision-Framing
        2. Phase 2. Modeling the Situation
        3. Phase 3. Quantitative Analysis
        4. Phase 4. Implementation, Monitoring, and Review
      8. Big and Small Decisions
      9. The Value of Project Decision Analysis
    4. CHAPTER 4: What Is Rational Choice? A Brief Introduction to Decision Theory
      1. Decision Policy
      2. Which Choice Is Rational?
      3. Expected Value
      4. The St. Petersburg Paradox
      5. Risk-Taker vs. Risk-Avoider
      6. Expected Utility
      7. Expected Utility Theory
      8. Extensions of Expected Utility Theory
      9. How to Use Expected Utility Theory
      10. Descriptive Models of Decision-Making
    5. CHAPTER 5: Creativity in Project Management
      1. Creativity and Decision-Making
      2. Psychology of Creativity
      3. Creativity Blocks
        1. Framing and Perceptual Blocks
        2. Value-Based Blocks
        3. Cultural, Organizational, and Environmental Blocks
    6. CHAPTER 6: Group Judgment and Decisions
      1. Psychology of Group Decision-Making
      2. Aggregating Judgment
      3. Group Interaction Techniques
      4. Brainstorming
      5. Tools for Facilitating Discussions
      6. A Few Words about Game Theory
    7. CHAPTER 7: Are You Allowed to Make a Decision? Or the “Frustrated Developer’s Syndrome”
      1. What Is FDS?
      2. Why FDS Is a Problem
      3. How Does FDS Spread?
      4. Three Common Myths about FDS
        1. Myth 1: Our organization is not suitable for an FDS-free environment
        2. Myth 2: When companies implement organizational processes, FDS results
        3. Myth 3: An FDS-free corporate culture leads to anarchy
      5. The Roots of FDS
      6. Treating FDS
      7. The Second Russian Revolution
  11. PART 2: Decision-Framing
    1. CHAPTER 8: Identifying Problems and Assessing Situations
      1. Who Are the Players?
      2. Identifying Problems and Opportunities
      3. Assessing Business Situations
      4. Some Tools and Techniques
    2. CHAPTER 9: Defining Project Objectives
      1. Different Objectives and Different Criteria for Decision-Making
      2. Aligning Project Objectives
      3. Decision Analysis as an Art of Tradeoffs
      4. Project Objectives Hierarchy
    3. CHAPTER 10: Generating Alternatives and Identifying Risks
      1. Identifying Risks and Uncertainties
      2. Generating Alternatives
      3. Risk Breakdown Structures
      4. Risk Templates
      5. Risk-Response Planning
      6. Risk Registers
  12. PART 3: Modeling the Situation
    1. CHAPTER 11: The Psychology and Politics of Estimating
      1. How Do We Make Estimates?
      2. How We Think When We Make Estimates
      3. Impact of Politics on Estimation
      4. Impact of Psychology on Estimation and the Rule of Pi
      5. Student Syndrome
      6. Other Cognitive Biases in Estimating
      7. Other Explanations of Problems with Estimation
      8. Where Does the Problem Lie—In Psychology or Politics?
      9. Many Mental Errors and One Wrong Estimate
      10. Simple Remedies
        1. Never Make a Wild Guess
        2. Collect Relevant Historical Data
        3. Perform Reality Checks
        4. Conduct an Independent Assessment
    2. CHAPTER 12: Project Valuation Models
      1. Model of the Project
        1. Schedule Model
        2. Economic Model
        3. Alternative Models
      2. The Critical Path Method
      3. The Critical Chain Method
      4. Event Chain Methodology
      5. Modeling with Influence Diagrams
      6. The Agile Approach to Project Modeling
    3. CHAPTER 13: Estimating Probabilities
      1. Approaches to Estimating Probabilities
      2. Subjective Estimation of Probabilities
      3. How We Subjectively Assess Probability and Risk
      4. Methods of Eliciting Subjective Judgments in Project Management
      5. What If a Decision Is Sensitive to Probability?
      6. Qualitative Risk Analysis
  13. PART 4: Quantitative Analysis
    1. CHAPTER 14: Choosing What Is Most Important: Sensitivity Analysis and Correlations
      1. What Are Correlations? Why Do We Need to Analyze Them?
      2. Sources of Correlations in Projects
      3. Psychology of Correlation and Causation
      4. How to Improve Your Judgment
      5. Sensitivity Analysis
      6. Quantitative Analysis of Correlations
      7. Crucial Tasks
      8. Correlations between Tasks
    2. CHAPTER 15: Decision Trees and the Value of New Information
      1. What Is a Decision Tree?
      2. Why Project Managers Avoid Decision Trees (and Why They Shouldn’t)
      3. Converting Project Schedules into Decision Trees
      4. The Value of Perfect Information
      5. The Value of Imperfect Information
    3. CHAPTER 16: What Is Project Risk? or PERT and Monte Carlo
      1. How Much Will It Really Cost?
      2. PERT
      3. Statistical Distributions
      4. The Monte Carlo Technique
      5. Which Distribution Should Be Used?
      6. How Many Trials Are Required?
      7. Analysis of Monte Carlo Results
        1. Sensitivity and Correlations
        2. Critical Indices
        3. Probabilistic Calendars
        4. Deadlines
        5. Conditional Branching
        6. Probabilistic Branching
        7. Chance of Task Existence
      8. Is Monte Carlo the Ultimate Solution?
    4. CHAPTER 17: “A Series of Unfortunate Events,” or Event Chain Methodology
      1. How Events Can Affect a Project
      2. Basic Principles of Event Chain Methodology
        1. Principle 1. Moment of risk and state of an activity
        2. Principle 2: Event chains
        3. Principle 3: Critical event chains
        4. Principle 4: Analysis using Monte Carlo simulations
        5. Principle 5: Performance-tracking with events and event chains
        6. Principle 6: Event chain diagrams
      3. Event Chain Methodology Phenomena
        1. Repeated Activities
        2. Event Chains and Risk Mitigation
        3. Resource Leveling Based on Events
        4. Delays in Event Chains
      4. How to Use Event Chain Methodology
      5. Example of Event Chain Methodology
      6. Event Chain Methodology and Mitigation of Psychological Biases
      7. Work Breakdown Structure + Risk Breakdown Structure + Analysis = Event Chain Methodology
    5. CHAPTER 18: The Art of Decision Analysis Reporting
      1. How to Communicate the Results of Decision Analysis
      2. Motivational Biases in Reporting Decision Analysis Results
      3. Put It in Perspective
      4. Presentations Must Have Meaning
      5. Expressing Uncertainty
      6. The Power of Fear
    6. CHAPTER 19: Making a Choice with Multiple Objectives
      1. What is Multi-Criteria Decision-Making?
      2. The Psychology of Balancing Multiple Objectives
      3. Two Approaches to Multi-Criteria Decision-Making
      4. Ranking Criteria with the Scoring Model
      5. Advanced Methods of Multi-Criteria Decision-Making
  14. PART 5: Implementation, Monitoring, and Reviews
    1. CHAPTER 20: Adaptive Project Management
      1. Adaptive Management As Part of Project Decision Analysis
      2. Principles of Adaptive Management
        1. Principle 1: Use actual project data in combination with original assumptions
        2. Principle 2: Minimize the cost of decision reversals. (“Try not to kill the cow.”)252
        3. Principle 3: Make small, sequential decisions
        4. Principle 4: Support creative business environments
        5. Principle 5: Identify and fix problems early (avoiding behavioral traps)
      3. The PMBOK® Guide Approach to Project Executing, Monitoring, and Controlling
    2. CHAPTER 21: Did You Make the Right Choice? Reviewing Project Decisions
      1. Why Do We Need Post-Project Reviews?
      2. How Could We Not Foresee It?
      3. “I Knew It All Along”
      4. Overestimating the Accuracy of Past Judgments
      5. The Peak-End Rule
      6. The Process of Reviewing Decisions
      7. Corporate Knowledge Base
    3. CONCLUSION Does Decision Analysis Provide a Solution?
      1. Common Misconceptions about Decision Analysis
        1. Misconception #1: The decision analysis process is not beneficial because it does not ensure project success
        2. Misconception #2: Decision analysis adds new levels of bureaucracy
        3. Misconception #3: Only organizations with mature project management processes can benefit from decision analysis
      2. Why Do We Believe that the Decision Analysis Process Is Important?
  15. APPENDIX A Risk and Decision Analysis Software
  16. APPENDIX B Heuristics and Biases in Project Management
  17. APPENDIX C Risk Templates
  18. APPENDIX D Multi-Criteria Decision-Making Methodologies
  19. GLOSSARY
  20. FUTURE READING
  21. REFERENCES
  22. INDEX