Decision-MakingIn Project Management

Decision Framing

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What is decision framing?

• Identifying problems and assessing situations • Defining project objectives • Generating alternatives and identifying risks using qualitative and

quantitative risk analysis (e.g. Monte Carlo simulations)

Assessing Business Situation

1. Resource availability, including material and human resources

2. Cost of labor, materials, and supplies

3. Competition

4. Market situation, including potential market trends

5. Expertise available in the organization for the specific project

6. Business processes and best practices in the organization: are they suitable for the particular project

7. Organizational performance and corporate culture: are they suitable for the project

8. Legal and regulatory environment

9. Site specific issues, related to doing business in the particular area or country

10. Customer relationships

11. Weather and other environmental factors

12. Project funding

“The Checklist”

Decision Conferencing

Decision-maker

Expert

Expert

Decision Analysts

Brainstorming

IdeaGenerator

Moderator

Erudite

Devil'sAdvocate

Scribe

PositiveReviewer

Filter Diagrams

Problem

Solution

Block

Block

Block

Filter 1 Filter 2

Solution

Solution

Solution

Solution

Solution

Solution

Solution

Solution

Filter diagram is powerful tool for new product development

Example of Filters for New Idea, Technology, Solution

• Your idea should not be completely new. Avoid being a technology pioneer, they rarely succeed in business. Try to provide a better solution for existing problems.

• Your idea should be extendable. You should be able to build a number of products and services around this idea.

• Your idea should not be trivial. All trivial ideas have either been implemented or cost a lot of money to produce and market.

• Your idea should have a hidden technological value that would be difficult for somebody else to implement.

Creativity

Creative thinking is key to developing alternative solutions

Example of Blocks

• Stereotyping• Not Seeing the Forest for the Trees• Inability to See the Problem from

Another Perspective• Fear of the “Far-Out” Alternative• “Do Nothing” Bias• Premature closing

Mind Mapping Tools

Project Risks

Technical

Requrements

Technology

Complexity

Performance

Quality

Safety

Subcontractor

Components

Legal

Market

Customer relationship

Site specific issues

External

Project

Organizational

Project dependencies

Resources

Funding

Prioritization

Estimating

Planning

Control

Communication

Material

Personnel

Management

Use mind mapping tools to identify risks

Force Field Diagrams

Land Purchase

FOR AGAINST

Location

Low cost

Potential appreciation

Lack of infrastructure

Legal issues

Use Force field diagrams to identify threats and opportunities

Multi Criteria Decision Making

1. Economic indicators, such as net present value (NPV), rate of return (ROR), and project cost

2. Project duration indicators, such as total duration, finish time, duration of particular phase

3. Resource usage, including material and work resources

4. Project scope indicators, such as number of features implemented

5. Quality indicators, such as number of defects

6. Safety indicators, such as number of accidents

7. Environmental indicators, such as level of emissions

Fundamental and Mean Objectives

Find Spouse

Find good lookingspouse

Find richspouse

Find spousewith common

Find spousewith similar cultural

background

interests

Find spouse

activitieswho likes outdoor

movieswho likes sci-fiFind spouse

Joint localchamber of commerce

Jointhiking club Attend cultural

society meetingInvite somebody

to watch sci-fi movie

Mos

t im

por t

ant

obj

ecti v

es

Identifying Risks

1. Duration and cost of activities

2. Lags between tasks

3. Resource allocation

4. Calendars: for example, certain days an be lost for example due to weather conditions

5. Work breakdown structures: certain tasks will be or will not be executed under certain conditions

Techniques For Risk Identification

Documentation review: a review of relevant project documents associated with current and previous projects. If a plan is inconsistent with requirements, it can be a source for potential risks.

Information Gathering Techniques: including brainstorming, the “Delphi” technique (see Chapter 11), interviewing, decision conferencing, and SWOT analysis. (strength, weaknesses, opportunities, and threats).

Assumption Analysis; identify risks by reviewing inconsistencies or inaccuracies in original project assumptions.

Diagramming Techniques, including flow charts, cause and affect diagrams, and influence diagrams, event chain diagrams, and mind maps

Generation Alternatives

PurchaseMaterialsOffshore

ReduceCost ofLabour

HedgeFuelCosts

Testingon Each ProjectPhase

Use QATools

Hire MoreQA Analysts

ClarifyRequirementsUpfront

DemonstrateProduct to theClient Regularly

Use RequirementManagementSystem

Cost Quality Scope

Risk Breakdown Structures

Risk breakdown structures (RBS) can be used for risk assessment in performing quantitative risk analysis on project schedules, cost, and other parameters

Risk Response Planning

Dealing with threats:

1. Avoid

2. Transfer

3. Mitigate

4. Accept

Dealing with opportunities:

1. Exploit

2. Share

3. Enhance

4. Accept

Risk Register

The risk register should include a risk matrix that lists, ranks, and prioritizes project risks

Future Reading

Lev Virine and Michael Trumper

Project Decisions: The Art and Science

Management Concepts, Vienna, VA, 2007

Project Think:Why Good Managers Make Poor Project

Choices

Gower, 2013

Questions?