Risk and Decision Analysis in Projects
Most of the world’s assets are built or developed as projects. With so much money and resources devoted, it is alarming that so many projects are failures or only marginally successful. One reason for the failures is inattention to project planning and risk management. This book shows how risk and decision analysis is applied to project decisions, from feasibility analysis, to project execution, to end of life.
Probability is the language of uncertainty. A few basic concepts in probability and statistics go a long way toward making better decisions. The evaluation calculations are straightforward, and many everyday analyses can be solved with a hand calculator.
There are three major features of the decision analysis approach: (1) best judgments are expressed as probabilities; (2) a project model forecasts outcome and outcome values; and (3) probability-weighted average value (expected value) is calculated for decision-making.
A key benefit of the process is improved accuracy in evaluation. A decision analysis result oftentimes is substantially different than the answer obtained with single-point estimates. Further, decisions can be made faster and with more confidence.
Risk and Decision Analysis; Decision Analysis Process; Decision Policy; Utility and Multi-Criteria Decisions; Decision Trees; Value of Information; Monte Carlo Simulation; Project Risk Management –by the Numbers; Modeling Techniques; Probability Distribution Types; Judgments and Biases; Relating Risks; Stochastic Variance; Exploiting the Best of Critical Chain and Monte Carlo Simulation; Optimizing Project Plan Decisions; Probability Rules; Expert Systems in Project Management; Appendices: Summary of Methods; Decision Analysis Software; Glossary
Author: John Schuyler
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