Articles and White Papers

Project Risk Management, Project Risk and Decision Analysis White Papers

Topics Covered:

  • Project Project Management
  • Project Decision Analysis
  • Project Risk Analysis
  • Event Chain Methodology
  • Psychology of Project Management

Copyright Notice:

Materials published by Intaver Institute Inc. may not be published elsewhere without prior written consent of Intaver Institute Inc. Requests for permission to reproduce published materials should state where and how the material will be used.

Monte Carlo Schedule Risk Analysis

One of the fundamental questions of project management is, “What will be the duration and cost of the project given the multiple risks and uncertainties?” Program Evaluation and Review Technique (PERT) and Monte Carlo analysis may help to answer these and other questions. Monte Carlo analysis is a straightforward approach to deal with complex sets of project uncertainties. However, both Monte Carlo and PERT have a number of limitations that are related to the manner in which we identify and interpret uncertainties.

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Heuristics and Biases in Project Management

As we go about our lives, whenever we make decisions, whether they are relatively important, “what strategies or tactics should we use to reduce project cost?”, or relatively trivial, “is No-Name peanut butter really a better bargain than the brand-name version?”, we are forced to assess probabilities or essentially make bets, which is not an easy task. We often apply rules of thumb or heuristics when we make judgments about probabilities of future events. In many cases, using these rules will help us make good decisions. However, depending upon the situation, this type of decision making can lead to faulty judgments or biases. In this paper we will focus on a few common heuristics and biases which affect project management: availability, anchoring, representativeness, and others.

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How to Communicate Results of Risk Analysis

– Specific issues related to presentation of risk and decision analysis results
– How to deal with motivational biases when interpreting analytical reports
– Tips on presenting information about risks and uncertainties
– How to verbally express of probabilities
– How to interpret reports about rare events with catastrophic outcomes
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Behavioral Traps in Project Management

You are driving down a highway, and as usual, you have chosen the fast lane. However, today, it seems to be moving more slowly than usual and when you glance to the side, the adjacent lane appears to be moving faster. After 5 minutes without improvement, you are starting to wonder whether you should switch lanes, but because you have already spent some time what is normally the fast lane, you hope that it will eventually resume its normal pace. Essentially, you have become entrapped. In this paper we will discuss behavioral traps or situations where people become engaged in rational course of actions which later become undesirable.

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Memory Errors in Project Management

A lot of the mental mistakes we are prone to in project management are related memory. Often, we cannot properly assess events because we have forgotten similar events that occurred in our past. In this paper we will explore how certain features of our memory can affect project management and how we can improve our memory and hopefully improve our project management.

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Did Oswald Have a Chance to Kill The President? A Project Risk Analysis Perspective

To demonstrate how to use quantitative project risk analysis, we decided to use a well-known historical event, the assignation of U.S. President John Kennedy. We are trying to determine the chance that Oswald could complete his project – the assassination of President Kennedy – as it actually occurred. We do not claim to possess exact information especially with regards to the probabilities and impacts of certain risks; and therefore, cannot give a definite answer from the historical point of view. This example is only intended to illustrate project risk analysis methodology.

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Evaluating Project Decisions

– Importance of post-project evaluation of decisions
– Psychological biases in the evaluation of project decisions
– How to perform evaluations
– How to establish a corporate knowledge base
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Expected Value in Project Management

There are so many analytical techniques and tools, some of which are very complex and require a lot of effort to perform and others which are very industry specific. One of the very simple techniques is expected value analysis. This analysis is a choice engineering method, which means that it is more of a mental exercise rather than a strict and formal project management process. At the same time, going through the expected value thinking process may significantly improve quality of decisions.

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Emotions in Project Management

In this paper we will learn about how decisions in project management are affected by our emotions. People make choices under the influence of emotions all the time. Emotions can lead to mental mistakes; mental mistakes lead to low quality decisions. We will not attempt a comprehensive review of human emotions; instead, we will explain why even the most emotionally intelligent people make irrational decisions when they find themselves in stressful situations. We will also provide few choice engineering ideas that will help you to mitigate the negative impact of emotions on your decisions in project management.

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Introduction to Project Risk Management

In this paper we are going to learn how to deal with risk. You may be familiar with the PMBOK Guide which describes a formalized approach to risk management. We are going to use a slightly different approach and focus on how choice engineering can be used for anaging project risk. We will discuss a few simple techniques that you can use that will improve your ability to handle risk during the course of your projects.

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Project Schedules and Decision Trees

The article shows how to use decision tree analysis in project management as part of quantitative risk and decision analysis. Decision trees can be generated based on project schedules. It helps to make decisions during a course of a project. The article also explain a concept of value of information in project management.

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Project Risks Analysis: Sensitivity Analysis and Correlations

Identifying which activities have the most affect on the project and understanding how activities are correlated with each other is important for establishing project priorities. Our judgement about correlation and causation is affected by a number of biases, such as illusory and invisible correlations, covariation assessment, and others. Sensitivity analysis helps to discover correlations within a project.

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Project Risks and Mental Errors

In this paper we will learn how to estimate probability and impact of the different events. We will also try to answer another question, what to do with them. Risk assessment is not trivial as it is subject to multiple mental errors. Among them are zero risk bias, loss aversion, ignoring base rate frequencies, gambler’s fallacy, overestimating the probability of compound events, and others. People’s response to risk and uncertainty varies due to the different risk attitudes of individuals and groups. Risk attitude measures how much risk an individual or group is willing to accept and is based on different factors, including emotions and biases.

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Organizational Engineering and Project Management

In this paper you will learn how choice engineering can be used to improve corporate culture, and as a result, improve the bottom line of your company. In some most large companies, issues related to the corporate culture lead to disengaged employees and subsequent loss of productivity. You learn a few choice engineering tricks that will create a positive working environment for your team members, your boss, and yourself.

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Choice Engineering in Project Management

People often make poor choices because of illusions. At the same time, they don’t perform any analysis that would improve their decisions because of other illusions to which they are subject. Is there a solution to this problem? Establishing effective processes is always considered an effective way to improve project management. For example, if a project manager follows mandatory guidelines in time, scope, cost, risk management and other knowledge areas, this should improve the quality of the decisions made during the execution of the project and reduce chance of failure. But such processes are hard to implement, often expensive, and grudgingly followed if at all by some team members once they have been introduced. In many cases, especially for smaller projects, it would be more beneficial to create an environment within which people are encouraged on their own volition to make better choices, rather than mandate these choices. This is called choice engineering.

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Analysis vs. Illusions in Project Management

Structured analysis of the situation helps project managers to overcome illusions can improve their judgment. However, more likely than not, prior to making a decision people have not performed any structured analysis, or they misinterpret the results of the analysis. Complicating matters, sometimes the analysis is extremely complex and results may be incorrect. Even if the analysis is performed and is correct, often people do not realize its value. As a result, even now where we have highly trained experts with access to powerful computers, running the most advance advanced mathematical models, we still bear witness to the outcome of so many poor quality decisions.

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Event Chain Methodology in Project Management

Risk management become a critical component of project management processes. Quantitative schedule risk analysis methods enable project managers to assess how these risks and uncertainties will affect the project schedule. Event chain methodology is an uncertainty modelling and schedule network analysis technique that focuses on identifying and managing the events and event chains that affect projects. Event chain methodology improves the accuracy of project planning simplifying the modelling and analysis of uncertainties in the project schedules. As a result, it helps to mitigate the negative impact of cognitive and motivational biases related to project planning. Event chain methodology is currently used in many organizations as part of their project risk management process.

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Why Good Project Managers Make Bad Choices

It is not uncommon to see good and experienced project managers make poor decisions that led to issues and eventually project failures. What is the explanation: misjudgement, lack of experience, or do some project managers just run out of luck? People make similar repeatable mental mistakes when they make choices, whether they are mothers trying to decide which is the fastest route to their children’s soccer match or managers of large companies who are trying to decide which design they should use for their next product launch. These illusions are a primary source of human error in project management, errors that can eventually lead to project failures.

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Adaptive Project Management

Originally developed by ecologists, adaptive management has become a powerful framework for project management. It is a structured and systematic process to continually improve decisions and practices by learning from the outcomes of previous decisions. Adaptive management includes a number of organizational principles, such as iterative development and avoidance of irreversible decisions. Adaptive management relies of metrics and quantitative methods to integrate actual project performance to the management of projects.

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Frustrated Developer’s Syndrome

Frustrated developer’s Syndrome (FDS) is a “disease” that can afflict corporate culture, particularly decision-making, efficiency, and productivity. FDS is a problem because frustrated project team members will not produce good projects.

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Estimations in Project Management

Learn psychology of estimations in project management. Read about few simple remedies, how you can improve your estimations.

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Project Management Using Event Chain Methodology

Any projects are affected by a large number of events (risks), which can significantly change the course of a project. These events may form groups of related events or event chains. The event chains methodology can contribute to reducing uncertainties in project scheduling and significant simplification of process of modeling, tracking, and analysis of project schedule.

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Quantitative Risk Analysis with Microsoft Project

Quantitative Risk Analysis has become an important component of project management. Microsoft Project implements Qualitative Risk Analysis methodology. But what about quantitative analysis? Learn how to use Microsoft Project with third party tools to perform quantitative risk analysis.

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MindManager and Risk Analysis

Learn how brainstorming tools, such as MindManager by MindJet, can be used in the process of decision and risk analysis.

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Project Decision Analysis Process

Project management is the art of making right decision. Project managers are faced by huge array of choices. Should different supplier be used to improve the quality of a product? Should additional team member be brought in to improve the development performance? Learn how decision analysis process can be used on project management.

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Making Right Decisions in IT Project Management

Formalized decision analysis process helps IT project manager to make a right decision. Learn how to use decision analysis techniques to mitigate negative impact to psychological biases and select most effective project decision.

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Software Project Management under Uncertainties

Managing of risk and uncertainties during the course of a project has become one of the priorities of the software project manager. Event chains methodology is a practical approach to managing software projects that contain multiple uncertainties.

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Quantitative and Quantitative Risk Analysis

Learn how qualitative and quantitative risk analysis together can be help to improve project management process.

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