127R-23: Choosing Among Strategic Alternatives Using Branching Concepts in Decision Modeling
127R-23: Choosing Among Strategic Alternatives Using Branching Concepts in Decision Modeling
The purpose of this recommended practice (RP) is to describe risk analysis concepts that can be used when important alternative selection strategies are being developed by senior leaders. These selections are made well before there is a detailed project plan, schedule, and cost estimate. The RP describes the development of simplified models to assess alternatives under consideration. These models highlight key systemic and project-specific risk characteristics. They provide clarity, transparency, traceability, and repeatability consistent with recommended project risk analysis practices. Models are presented here to illustrate two of these methods, probabilistic branching and conditional branching.
During the “Select” phase 1 for any significant project, strategic alternatives are being evaluated, and one of the main considerations will include the balance of risk driving any alternative. This recommended practice (RP) addresses decision modeling using quantified risk analysis methods to conduct an analysis of alternatives (AoA). The model is simplified to highlight the key risks and feasible alternative configurations, to select the best alternative. This RP document is not intended to be a standard. Rather it is intended to provide a guideline for using project risk analysis simulation capabilities of probabilistic and conditional branching to evaluate alternative selection within a simplified model framework of the project’s strategy. RPs are considered by most practitioners to be good processes that can be relied on and that they would recommend be considered for use where applicable. The RP will be useful to organizational leaders and decision-makers, project management, and risk team leaders.
Contributors:
Keith D. Hornbacher (Primary Contributor)
Dr. David T. Hulett, FAACE (Primary Contributor)
James E. Arrow, DRMP
Jessica M. Colbert, PRMP PSP
Francisco Cruz, PE CCP
Larry R. Dysert, CCP CEP DRMP FAACE Hon. Life
John K. Hollmann, PE CCP CEP DRMP FAACE Hon. Life
Sagar B. Khadka, CCP DRMP PSP FAACE
Dr. Luis Henrique Martinez
Dr. Dan Melamed, CCP EVP FAACE
Abbas Shakourifar, PSP
Lance Stephenson, CCP FAACE Hon. Life
About Keith:
Keith D. Hornbacher is the founder and Principal Consultant of Hornbacher & Associates. His firm’s program/project risk management practice includes clients across industries and domains that include capital expansion projects in water management, energy, engineering, construction, transportation infrastructure, and aerospace/defense systems development. For over 35 years, Keith has implemented quantitative schedule, cost, and integrated cost-schedule risk analysis in the public and private sectors.
As a senior third-party risk analysis and planning specialist, Mr. Hornbacher has held several project risk management and control positions. For Raytheon, an aerospace and defense company, he was a Program Risk Manager on the U.S. FAA’s Wide Area Augmentation System (WAAS), a NextGen air traffic management system. Also, his firm lead the program/project risk assessments of a major metropolitan water bureau filtration and pipeline system upgrade. In addition to his role as a senior consultant, Mr. Hornbacher recently celebrated the conclusion of more than fifteen years as an affiliated faculty member in organizational dynamics graduate studies at the University of Pennsylvania, where he presented seminars and clinics on managing project risk, uncertainty, and the unexpected. Graduate students learned how to utilize best-in-class quantitative risk analysis tools and methods in his clinics. You may reach Keith at: Keith@HornbacherAssociates.com
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
This new RP may be found here: 127R-23: Choosing Among Strategic Alternatives Using Branching Concepts in Decision Modeling