New RP 133R-23: Using Decision Analysis Methodologies to Enhance Decision Quality
This recommended practice (RP) of AACE International defines the use of the discipline of decision analysis (DA) to structure, analyze, and generate stakeholder decision buy-in and commitment to important organizational decisions, whether made by a team, group or individual. It illustrates how modern decision analysis methods can be applied broadly to making decisions on projects, programs, and at the enterprise level in the presence of uncertainty.
Application of DA is intended to assure decision quality (DQ). DQ embodies DA concepts and processes that help assure both effectiveness and efficiency in analyzing decision problems, as well as organizational commitment to action around the best expected course of action. This RP encases DA methods in the DQ envelope throughout and provides a specific section giving an overview of DQ processes that can lead to high-quality decisions.
This document is intended to provide a guideline for decision support analysts that most practitioners would consider to be good practices that can be relied on and that they would recommend be considered for use where applicable. The document is intended to be a complement to AACE’s Total Cost Management Framework, Section 3.3 and Chapter 4, which embeds DA within TCM, and which includes helpful further discussion of DA and methods.
The intended audience includes project managers, decision analysts, and decision makers. DA can be applied during each stage of the project life cycle across industries. For example, it is frequently applied during concept selection, before the subject project has been fully defined. These early stage decisions, usually called “analysis of alternatives,” deal with the basic structure and strategy space that an ultimate project encompasses. As such, this recommended practice has broad application for decision makers and project managers. DA can also be applied in mid-project to make course corrections or to evaluate newly available alternatives.
When applied successfully in a demonstration project, organizations frequently adopt this decision-making framework organization-wide. Some corporations have created dedicated internal Decision Support organizations to assist in facilitating the process and carrying out the analytics embedded in the DA method. As the organization adopts the process, it frequently empowers the workforce and fosters a sense of responsibility. As it sees more examples and gathers data on outcomes of the process, they are able to compare them to the probabilistic assessments of key uncertainties made by the DA participants. Adjustments in the process can be made for subsequent decisions, fostering a culture of accountability throughout the organization. The goal is to strive for continuous improvement in decision making.
Contributors:
Dr. David T. Hulett, FAACE (Primary Contributor)
Dr. Harry D. Saunders (Primary Contributor)
James E. Arrow, DRMP
Larry R. Dysert, CCP CEP DRMP FAACE Hon. Life
John K. Hollmann, CCP CEP DRMP FAACE Hon. Life
Sagar B. Khadka, CCP DRMP PSP FAACE
John R. Schuyler, CCP DRMP
Lance Stephenson, CCP FAACE Hon. Life
About David:
Dr. David T. Hulett, FAACE is a Principal with Hulett & Associates, LLC, and has focused for the last 28 years on quantitative schedule risk analysis, integrated cost-schedule risk analysis, and project scheduling best practices. He has conducted many risk analyses, focusing on quantifying the risks and their implications for project cost and schedule, and many schedule assessments.
David has held strategic planning positions at TOSCO, an oil company, and at TRW in aerospace and defense. In the federal government, he managed offices in the Federal Energy Agency (FEA), the Department of Energy (DOE), and the Office of Management and Budget (OMB). He was an economist with the Federal Reserve Board of Governors. Dr. Hulett was also an Instructor in the Economics Department at Harvard University.
Dr. Hulett is a contributor to 11 recommended practices, with three as the primary contributor. He has authored two books, Practical Schedule Risk Analysis and Integrated Cost-Schedule Risk Analysis, as well as numerous articles for AACE. David is a frequent presenter at AACE’s annual conference and expo, and the current Vice-Chair of the Decision and Risk Management Technical Subcommittee.
Dr. Hulett was elected as a Fellow of AACE International in 2015 and received the Brian D. Dunfield Educational Service Award from the Association in 2018. He holds a Ph.D. in Economics from Stanford University. You may reach David at: david.hulett@projectrisk.com
About Harry:
The Managing Director of Decision Processes Incorporated (retired), Senior Fellow at The Breakthrough Institute, Visiting Investigator, Carnegie Institution for Science, Global Ecology Group, Stanford CA, and a founding member of the Society of Decision Professionals, Dr. Harry D. Saunders has consulted at numerous Fortune 100 companies including Chevron, General Motors, Eastman Chemical, and Hewlett Packard, helping executive teams make higher quality decisions in the face of risk. Harry has a PhD in Management Science and Engineering from Stanford University.
The ‘godfather of rebound,’ Harry Saunders is widely known as an international expert on energy efficiency and consumption and has also published articles in the fields of evolutionary biology and legal theory. He has published over 40 papers in peer-reviewed journals. Following Daniel Khazzoom and Leonard Brookes’ work on energy consumption and behavior, Saunders coined the “Khazzoom-Brookes Postulate” which broadly states that increased energy efficiency can lead to increased energy consumption. Most recently, Saunders surveyed and analyzed thirty sectors of the United States economy for historical evidence of rebound. Based on his analyses, Saunders was a contributing author for the 2018 UN Intergovernmental Panel on Climate Change’s analysis of the likelihood of meeting the goal of limiting global temperature rises to 1.5 degrees Celsius. A former Manager of Strategy at Tosco Corporation, Saunders has also worked at the U.S. Department of Commerce and the International Energy Agency. You may reach Harry at: hsaunders@earthlink.net
You can find the new RP here: 133R-23: Using Decision Analysis Methodologies to Enhance Decision Quality