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Making Right Decisions in IT Project Management
The Role of Decision Science
What needs to be done to help project managers to make a correct decision? How people are processing huge amount of information? How they evaluate and select alternatives? How they assess and interpret probabilities of potential events or risks? Decision science, as a part of overall management science is trying to answer these and other questions. Decision science is the unique discipline because it is based on two seemingly not very well related knowledge areas: psychology and statistics. Psychology of judgment and decision-making helps to identify specific mental patterns people are using to come up with certain decisions. Statistical methods are used as a part of decision analysis to provide an aid to the
decision-makers.
In recent years decision analysis has become a practical tool in many disciplines. Companies routinely base their major investment strategies on the results of decision analysis. Moreover, in some industries, such as oil and gas or pharmaceutical, companies will never proceed with the major projects without comprehensive formal decision analysis. For example, if an oil company has a number of prospects, decision analysis will help to identify those which need to be developed first taking into account potential uncertainties in estimations of oil reserves. Decision science is used for analysis of mergers and acquisitions, capital investment, reorganization, new product development, and in other areas. Governments are using decision analysis for their policy decision. For example, US Government is applying decision science methods to decide whether strategic oil reserves should be based on analysis of potential disturbances of oil supply. Lawyers are using decision analysis for assessment of complex litigations with the uncertain outcomes. Decision analysis helps medical professionals to make a correct diagnosis and prescribe a most effective treatment.
Good decision analysis includes risk analysis, which is actively used in many areas including project management. Many organizations are trying to establish a formalized risk management process, which is proved to be very efficient practice. Various methodologies and tools to support decision-making are widely used in project management. It includes project scheduling and portfolio management tools and techniques, qualitative and quantitative risk analysis, as well as project performance measurement.
Still many project managers remain unfamiliar with some important concepts of decision analysis, particularly related to psychology of judgment and decision-making. If project managers knew some basics about human mental process, it would help them to avoid some psychological traps and make a correct decision.
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