Estimating Training Seminars

Estimating A-to-Z for the Process Industries

Total Cost Management (TCM)

Capital Project Cost Control Using Total Cost Management

Project Decision Analysis and Risk Management

Project Cost Uncertainty: Contingency, Reserves, and Escalation

Project Decision Analysis and Risk Management

Overview

Sound project decisions require a comprehensive analysis of project costs, benefits, risks, and other factors (both objective and subjective) that may potentially affect project outcomes. This 3-day course will discuss objective, systematic, and practical methods to deal with decision-making under uncertainty. Many practical group exercises will reinforce the concepts introduced throughout the course.

Who Should Attend

This seminar will be beneficial to project team members involved both with investment decision-making regarding project alternatives, as well as those involved in one or more functions related to managing and controlling capital projects; including project management, project controls, cost engineering, estimating, scheduling, etc.

Learning Objectives

The objective of the course is for each participant in the capital project process to understand the fundamentals of decision analysis and the closely related topic of risk management. The course will focus on developing an understanding of the decision process. We will discuss the various dimensions that affect our organization’s attitude towards risk, and how that affects our decision policies. We will learn how to define the potential alternatives to a problem or opportunity, identify the key drivers affecting our decision, and how to effectively assess between competing alternatives to maximize value in our decisions. Then we will focus on the issues of seeking team agreement for decisions, and ensuring implementation for our decisions. We introduce the related topic of risk management by discussing uncertainty and risk, including both threats and opportunities. This leads to understanding how to prioritize risk through a qualitative assessment, and evaluate risks through a quantitative assessment. Finally, we focus on the strategies we can employ to minimize the potential impact from threats, and maximize the potential value for opportunities. We will discuss how to monitor and review risks throughout the project lifecycle. This course concludes with understanding the integration of both decision and risk management.

Typical Course Outline

Day 1

• Introduction to Decision Analysis

• Decision Theory

• Decisions versus Outcomes

• Elements of High Quality Decisions

• Establishing the Decision Framework

• Determining Viable Alternatives

• Gathering Meaningful and Reliable Information

• Establishing Decision Characteristics and Variables

• Developing Decision-Making Models

• Commitment to Action

• Developing Decision Policies

• Dimensions of Decision-Making

• Objectivity

• Time Value of Money

• Risk Attitude

• Decision-Making Process

• Plan for Decision-Making

• Developing Deterministic Decision Models

• Identification of the Problem or Opportunity

• Identification of Alternatives and Options

• Qualitative and Quantitative Decision Models

• Decision Evaluation

• Identification of Key Drivers

• Probabilistic Modeling

• Dealing with New Information

Day 2

• Decision-Making Process (continued)

• Obtaining Agreement

• Formalize Team Agreement on the Selected Alternative

• Develop and Document the Implementation Plan

• Obtain Decision-Maker Approval

• Implementation

• Implementing the Approved Alternative

• Continuous Improvement of the Decision-Making Process

• Introduction to Risk Management

• Principles of Risk Management

• Definitional Issues for Uncertainty, Risk, and Opportunity

• Characteristics of Effective Risk Management

• Risk Management Process

• Plan for Risk Management

• Understanding the Appetite for Risk

• Risk Assessment

• Risk Identification and Risk Registers

• Qualitative Risk Analysis

• Quantitative Risk Analysis

• Risk Assessment Challenges

Day 3

• Risk Management Process (continued)

• Risk Treatment

• Strategies for Threats

• Threat Avoidance

• Threat Reduction

• Threat Transfer

• Threat Acceptance

• Strategies for Opportunities

• Opportunity Exploitation

• Opportunity Sharing

• Opportunity Enhancement

• Opportunity Acceptance

• Identifying Risk Owners

• Risk Reporting

• Risk Control

• Risk Monitoring

• Risk Review

• Integrating Decision and Risk Management

• Decision-Making Under Uncertainty

The Decision Analysis and Risk Management seminar can be customized to meet your needs.

Please contact Larry Dysert for additional information.