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Project Decision Analysis Process
Quantitative Analysis
The analysis should give project managers enough data to make an informed decision. Even with most advanced analytical tools and techniques, interpretation of the results of the analysis is the subject of multiple mental traps.
a. Determining what is Most Important
A model of a project may include a considerable number of variables: large numbers of tasks, resources, risks, and other parameters. For example, certain risks will cause failure of the project, while others risks will have no noteworthy affect on the project. To determine which project parameter is the most important, project managers can use sensitivity analysis.
In our software development example, the duration required for the training of the external contractor in one of the potential project scenarios can be very uncertain because the experience of the contractor in the particular subject area is unknown.
b. Quantifying Risks Associated with the Project
Uncertainties associated with input parameters were already quantified during modeling step. Now it is important to analyze how the combination of all these uncertainties could affect the project. A number of analytical techniques can be applied for this analysis.
In our example, quantitative analysis shows the following probability that project will be completed on time:
a. “Do nothing” – 32%
b. “Bring resource from another team” – 95%
c. “Hire external contractor” – 65%
c. Determining the Value of New Information
One of the useful decision analysis techniques is to assess a value of new information. For example, the goal is to select new development tools for the software project based on performance. Tests can be done to determine performance, but it could be costly and time consuming. Alternatively, it is possible to select the tools based on specifications, without specific tests. The analytical technique helps to establish the value of new information, which in this case would be the testing results, and to determine whether the money should be spent on the test.
d. Deciding on a Course of Action
In many situations, selection of alternatives is not so trivial. Sometimes, decisions are made using many criteria, which complicates the selection of the most efficient alternative. In our example, it is clear that according to our success criterion, we should select alternative (b) “Bring resource from another team”.
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