Quantitative Methods in Project Management
This book combines theoretical and practical applications and takes project managers through the most important quantitative methods, integrates them, and illustrates interrelationships.
TABLE OF CONTENTS Quantitative Methods in Project Management
Chapter 4: Making Quantitative Decisions
Overview
Decision analysis...is the discipline for helping decision makers choose wisely under conditions of uncertainty.
John Schuyler
Risk and Decision Analysis in Projects, 2001
In this chapter we will discuss making project decisions using quantitative methods. We will focus on the so-called decision tree and its companion, the decision table. Quantitative decisions, whether in trees or tables, often employ an interesting extension of statistical methods called Bayes' Theorem. We will take a look at Bayes' Theorem and see how it can help with making decisions conditioned on other decisions and events.
A Project Policy for Decisions
Quantitative decision making is most useful when there is a rational policy for obtaining the outcomes. Rationality, used in this sense, means that the decision is a consequence of all the inputs having been applied systematically to a decision-making methodology. Given the inputs and the methodology, the decision outcomes are predictable. If only it were so easy in real projects!
Decision Policy Elements
Consider what many would say are necessary policy elements in order that quantitative decisions can be made. [1]
Let's start with an obvious one. If we are trying to choose between one project or another, the first element of decision policy is that we would give priority to those projects that are traceable to goals through strategy. If such is the case, we are assured that the deliverables, applied according to the concept of operations, will yield benefits to the business.
Second, all things otherwise being equal, we would decide...
Copyright J. Ross Publishing, Inc. 2004 under license agreement with Books24x7
