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Project Decision Analysis and Risk Management
Table of Contents
Test Your Judgment
Answers to Test Your Judgment Quiz
Part 1: Introduction to Project Decision Analysis
Chapter 1 Project Decision Analysis: What Is It?
The “Burden of Wrong Decisions”
Why do we make wrong decisions?
Approaches to Decision-Makings
Decision Analysis as a Process
Normative and Descriptive Decision Theory
Driving Forces Behind Project Decision Analysis
A Little Bit of History
Decision Analysis Today
Chapter 2 “Gut Feel” vs. Decision Analysis: Introduction to Psychology of Project Decision-Making
Human Judgment Is Always to Blame
Blink or Think?
Cognitive and Motivational Biases
Heuristics and Biases
Frames and Accounts
Training Project Decision-Making Skills
Chapter 3 Understanding Decision Analysis Process
Decision Analysis Manifesto
3C Principle of Project Management
Decision Analysis Process versus PMBOK® Guide’s Project Risk Management
Decision analysis and other business processes
Phases of Decision Analysis Process
Big and Small Decisions
The value of project decision analysis
Chapter 4 What is Rational Choice or a Brief Introduction to Decision Theory
Which choice is rational?
The St. Petersburg Paradox
Risk Taker versus Risk Avoider
Expected Utility Theory
Expected Utility Theory Extensions
How to Use Expected Utility Theory
Descriptive Models of Decision-Making
Chapter 5 Creativity in Project Management
Creativity and Decision-Making
Psychology of Creativity
Chapter 6 Group Judgment and Decisions
Psychology of Group Decision-Making
Group Interaction Techniques
Tools for facilitation discussions
A Few Words About Game Theory
Chapter 7 Are You Allowed to Make a Decision or the Frustrated Developer’s Syndrome (FDS)
What is FDS?
Why FDS is a problem
How does FDS Spread?
A few common myths about FDS
The fundamental roots of FDS
The Second Russian Revolution
Part 2: Decision Framing
Chapter 8 Identifying Problems and Assessing Situations
Who Are the Players?
Identifying problems and opportunities
Assessing Business Situations
Some Tools and Techniques
Chapter 9 Defining Project Objectives
Different Objectives and Different Criteria for Decision Making
Aligning Project Objectives
Decision Analysis as an Art of Trade-Offs
Project Objectives Hierarchy
Chapter 10 Generating Alternatives and Identifying Risks
Identifying Risks and Uncertainties
Risk Breakdown Structures
Risk Response Planning
Part 3: Modeling the Situation
Chapter 11 The Psychology and Politics of Estimating
How do people make estimates?
How we think when we make estimates?
Politics and Motivational Biases
Psychological Problems with Estimation and Rule of PI
Other Cognitive Biases in Estimates
Other Explanations of Problems with Estimation
Where Is The Problem: Psychology or Politics?
Many mental errors and one wrong estimate
Chapter 12 Project Valuation Models
Model of the Project
Critical Path Method
Critical Chain Method
Event Chain Methodology
Modeling Using Influence Diagrams
Project Model and Agile Approach
Chapter 13 Estimating Probabilities
How people assess probability and risk
Methods of Eliciting Judgment in Project Management
What If Decision Is Very Sensitive to Probability
Qualitative Risk Analysis
Part 4: Quantitative Analysis
Chapter 14 What Is Most Important or Sensitivity Analysis and Correlations
What Are Correlations And Why Do We Need to Analyze Them?
Sources of Correlation in Projects
Psychology of Correlation and Causation
How to Improve Your Judgment
Quantitative Analysis of Correlations
Correlations between Tasks
Chapter 15 Decision Trees and the Value of New Information
What is Decision Tree?
Why project managers avoid decision trees (and why they shouldn’t)
Converting project schedules into decision trees
Value of Perfect Information
Value of Imperfect Information
Chapter 16 What Is Project Risk? or PERT and Monte Carlo
How much will it really cost?
Monte Carlo Technique: How it Works
Which Distribution Should Be Used?
How many trials are required
Analysis of Monte Carlo Results
Conclusion: Is Monte Carlo the Ultimate Solution?
Chapter 17 Series of Unfortunate Events or Event Chain Methodology
How events can affect a project
Basic Principles of Event Chain Methodology
Event Chain Methodology Phenomena
How to Use Event Chain Methodology
Event Chain Methodology Example
Event Chain Methodology and Mitigation of Psychological Biases
WBS + RBS + Analysis = Event Chain Methodology
Chapter 18 The Art of Decision Analysis Reporting
How to Communicate Results of Decision Analysis
Motivational Biases and Reporting Decision Analysis Results
Put it into perspective
Presentations must be meaningful
Expression of uncertainty
The power of fear
Chapter 19 Making a Choice with Multiple Objectives
What is Multi-Criteria Decision Making?
Psychology of Balancing Multiple Objectives
Two approaches to multi-criteria decision making
Ranking criteria with the Scoring Model
Advanced methods of multi-criteria decision making
Part 5: Implementation, Monitoring and Reviews
Chapter 20 Adaptive Project Management
Adaptive Management as a part of project decision analysis
Principle 1: Using actual project data in combination with original assumptions
Principle 2: Minimizing the cost of decision reversions (“Trying not to kill the cow”)
Principle 3: Making small sequential decisions
Principle 4: Supporting creative business environments
Principle 5: Early identification and fixing of issues (Avoiding Behavioral Traps)
PMBOK® Guide approach to project executing, monitoring, and controlling
Chapter 21 Did You Make the Right Choice or Reviewing Project Decisions
Why Do We Need Post-Project Reviews?
How could we not to foresee it?
I knew it all along
Overestimating the Accuracy of Past Judgments
Process of reviewing decisions
Corporate Knowledge Base
Conclusion: Does Decision Analysis Provide a Solution?
Common Misconceptions about Decision Analysis
Why do we believe that the decision analysis process is so important?
Appendix A. Risk and Decision Analysis Software
Quantitative Project Risk Analysis Software
Enterprise Level Risk Management Software
Brainstorming Software Used in Project Management
Other Decision and Risk Analysis Software Used in Project Management
Appendix B. Heuristics and Biases in Project Management
Why we included this list
Behavioral Biases and Biases Related to Perception
Biases in Estimation of Probability and Belief
Social and Group Biases
Memory Biases and Effects
Appendix C. Risk Templates
Generic Risk Template #1
Generic Risk Template #2
Risk Template for Software Development Project
Appendix D. Multi-Criteria Decision-Making Methodologies
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