Making Essential Choices with Scant Information: Front-End Decision Making in Major Projects

428 Pages·2009·3.073 MB·English

by  Terry M. Williams, Knut Samset, Kjell J. Sunnevåg (eds.)

MakingEssentialChoiceswithScantInformation
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Making Essential Choices with
Scant Information
Front-End Decision Making in Major Projects
Editedby
TerryM.Williams
Professor,UniversityofSouthampton,UK
KnutSamset
Professor,NorwegianUniversityofScience,Norway
and
KjellJ.Sunnevåg
HeadofResearch,NorwegianCompetitionAuthority,Norway
Selectionandeditorialcontent©KnutSamset,TerenceM.WilliamsandKjell
J.Sunnevåg2009
Individualchapters©contributors2009
Softcover reprint of the hardcover 1st edition 2009 978-0-230-20586-4
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Firstpublished2009by
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10 9 8 7 6 5 4 3 2 1
18 17 16 15 14 13 12 11 10 09
Contents
ListofFigures vii
ListofTables x
Acknowledgements xi
Contributors xii
Part I Introduction
1 DecisionsMadeonScantInformation:Overview 3
TerryWilliams
2 Projects,TheirQualityatEntryandChallengesinthe
Front-endPhase 18
KnutSamset
Part II AligningProjects
3 ImplementingStrategyThroughProjectManagement:The
ImportanceofManagingtheProjectFront-end 39
PeterW.G.Morris
4 ScenariosPlanning 68
KeesvanderHeijden
5 Up-FrontAssessmentofNeeds 85
PetterNæss
6 Front-endAlignmentofProjects–DoingtheRightProject 106
TerryCooke-Davies
7 UsingSoftSystemsMethodologytoStructureProject
Definition 125
MarkWinter
Part III GeneratingInformation
8 OptimismandMisrepresentationinEarlyProjectDevelopment 147
BentFlyvbjerg
9 DecisionBehaviour–ImprovingExpertJudgement 169
GeirKirkebøen
v
vi Contents
10 UsefulHeuristics 195
BenjaminScheibehenneandBettinavonHelversen
11 ExpertJudgementofProbabilityandRisk 213
GeorgeWright,FergusBolgerandGeneRowe
12 EvaluationofRisksinComplexProblems 230
GregoryS.Parnell
13 ObtainingDistributionsfromGroupsforDecisionsUnder
Uncertainty 257
RogerM.Cooke
Part IV AnalysingInformation
14 ExploratoryQuantitativeAnalysisofEmergentProblems
withScantInformation 279
TimBedford
15 AnalyzingInformation.TechniquesandAnalyses 301
BjørnAndersen
16 ParametricAnalysis 331
PhilipPugh
Part V MakingDecisions
17 TheImpactofNewInformation 353
KjellJ.Sunnevåg
18 TheComplexityofDecision-MakinginLargeProjects
withMultiplePartners:BePreparedtoChange 375
RogerMillerandBrianHobbs
19 ProjectProfitabilityfromSociety’sPointofView 390
KåreP.Hagen
Index 413
List of Figures
2.1 Uncertaintyversusavailableinformationinaproject.In
general,uncertaintyishighestattheoutsetandreducesas
timepassesandrelevantinformationisgenerated 21
2.2 Threeplanningperspectivesonaproject 23
2.3 Amodeloftechnocraticdecision-makingupfrontinprojects 26
2.4 Costandutilityofinformationwhenadditional
informationiscollectedtoimprovemanagementofa
project.Asageneralrule,thegaininutilitytendsto
decreaseandcosttendstoincrease.Consequently,interms
ofcostefficiency,thereisalimittotheamountof
informationthatshouldbecollected 33
2.5 Investmentsininformationduringthefront-endand
planningphaseaimedtoimprovethetacticalversus
strategicperformanceofaproject,respectively 34
3.1 Thelinearnatureofprojects 41
3.2 Wheredoesprojectmanagementsit?Isproject
managementhighlyexecution-oriented,orisitthe
disciplineofmanagingprojectssothattheyaredeveloped
anddeliveredtogivebestbusinessvalue? 43
3.3 Surveyfindings–valuemanagement 44
3.4 Theportfolio-programme-projecthierarchicalcascade 51
3.5 Front-endloadingactivities 54
3.6 ProcessengineeringindustryVIPs(valueimproving
practices) 55
3.7 Corporate,businessunitandprojectenvironments 56
3.8 Drugdevelopmentprojectstrategy 59
3.9 Kotter’sdistinctionsbetweenmanagementandleadership 60
4.1 ExampleofaBusinessIdea 74
4.2 Stagesinscenarioplanning 80
4.3 ScenarioframeworkforIndianagriculture 82
5.1 Examplesofneedsandwants(Basedonanillustration
fromMonroeCountyWomen’sDisabilityNetwork,
http://www.mcwdn.org/ECONOMICS/NeedWant.html) 87
6.1 Twoclassesofactivitynecessarytoimplementstrategy 108
6.2 RangeofresponsestoQuestion#3 118
6.3 RangeofresponsestoQuestion#56 119
6.4 Rangeofresultsforagility(consistentprojectsuccess) 120
6.5 Rangeofresultsforefficiency(projectmanagement
success) 120
vii
viii ListofFigures
6.6 C&RTanalysisofcapabilitiescorrelatingtoagility 121
6.7 PartialC&RTanalysisoffactorscorrelatingtoefficiency 122
7.1 SchematicforBSRworkshopinApril1996 129
7.2 AgenericmodelofBSRforuseasastartingpointfor
discussion 132
7.3 ThefinalmodelofBSRproducedbytheprojectteam 133
7.4 ThegeneralprocessofSSManditsuseinstructuringthe
BSRworkshop 135
7.5 Suggestedactivitymodelforthe2-dayworkshop 141
8.1 Inaccuracyofconstructioncostforecastsforrailprojectsin
referenceclass.Averagecostincreaseisindicatedfor
non-UKandUKprojectsseparately.Constantprices 158
8.2 RequiredadjustmentstocostestimatesforUKrailprojects
asfunctionofthemaximumacceptablelevelofriskforcost
overrun.Constantprices 159
10.1 Flowchartofasimplelexicographicdecisionrule 201
12.1 UnitedStatesDepartmentofDefenseacquisitionriskmatrix 245
12.2 Illustrativelargedatacentrevaluehierarchy 250
12.3 Valueandcostcomparisonofsolutions 251
12.4 ValueandcostcomparisonofsolutionswithMonteCarlo
simulation 252
13.1 Predictedandobservedpercentagesofstakeholderrankings
inmarinecoastalecosystemstudy 260
13.2 CombinedscoresofEWDM,PWDMandbestexpert 271
13.3 Calibration(p-values)andinformationscoresofEWDM,
PWDMandbestexpert 271
13.4 Performanceversusequalweightcombinationsforreal
estaterisk,seedvariablesandvariablesofinterest 273
14.1 Bayeslinearnetwork 287
14.2 Adjustedstandarddeviationwithouthistoricaldata 287
14.3 Adjustedstandarddeviationusinghistoricaldata 288
14.4 RangeofvaluesforE(XY)asafunctionoftheLagrange
multiplier 292
14.5 Minimuminformationdistributionwithgiven
product-momentcorrelation(leftλ=2,rightλ=−2) 293
14.6 Minimuminformationcopulawithquantileconstraintson
lifetimedifferences 294
15.1 Spectrumoftoolspresentedinthechapter 303
15.2 Theprojecttimelinewiththedifferenttoolsplacedin
logicalphasesofapplication 304
15.3 Projectstakeholders 309
15.4 Matrixforclassifyingstakeholders 311
15.5 TheKanomodelandthethreetypesofstakeholder
requirements 312
ListofFigures ix
15.6 Principaluncertaintymatrix 317
15.7 Samplesensitivitydiagram 319
15.8 Forcefielddiagram 320
15.9 Spiderchart 321
15.10 Samplecriteriatestingmatrix 322
15.11 Genericmatrixforpairedcomparisons 324
15.12 ThebasicstructureofQFD 325
15.13 AchainofQFDcharts 325
15.14 Thehouseofquality 326
15.15 Symbolsfortherelationalmatrix 326
15.16 Symbolsfortheroofmatrix 326
16.1 Componentsofacostestimate 332
16.2 Forecastingofcostsviaparametricanalysis 336
16.3 Examplesoftemporaltrendsinspecificcost(allcostsin
£at2004prices) 339
16.4 Geometricinterpretationofteststatistics 343
16.5 Thearchitectureofamoderncost-forecastingmodel 346
17.1 Thegradualprocessofreducinguncertaintyasproject
planningproceeds 355
17.2 Challengesinmakingachoicebetweentwoconcepts
whereestimatesoverlap 355
17.3 Decisiontreefortunnelexample 358
17.4 Probabilitiesforthetesttothecorrectanswer 360
17.5 Decisiontreeforextendedtunnelexample 362
17.6 Aprioriandaposterioriprobabilities 363
17.7 Aposterioridistributionsareseenasthefunctionoffour
levelsofcredibility 363
17.8 Optionvalueandnetpresentvalueasafunctionof
investmentcost 371