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Decision Quality Tools and Techniques

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Decision Quality Tools and Techniques

  1. 1. Decision Quality in Total Cost Management: Tools & Techniques Fadi Najdi, M.Eng, MBA, CPA, CMA
  2. 2. Agenda • Need for Decision Quality in Capital Projects • 6 Elements of Decision Quality & Failure Mode • Process for Complex Decisions • Extended Role of Cost Engineering Professionals • Questions and Answers April 5, 2016 Fadi Najdi - AACE Montéal 2
  3. 3. TCM: Need for Decision Quality April 5, 2016 Fadi Najdi - AACE Montéal 3 Source: http://www.hrv.is/Businesssegments/EngineeringAlliance/
  4. 4. FEL4: Project Controls Tools April 5, 2016 Fadi Najdi - AACE Montéal 4 Critical Path Method Monte Carlo Simulation Earned Value Management Project Controls Dashboard
  5. 5. FEL 1, FEL 2, FEL 3 April 5, 2016 Fadi Najdi - AACE Montéal 5 • Front End Loading phases entail complex decisions • Cost Engineers Professionals do not contribute much during these phases • Sometime Complex decisions to be taken during the execution phase FEL4 • TCM Framework proposed some tools but they are rarely applied. TCM Framework: 3.3.1.2 Decision Quality Decision Chain TCM Framework: 3.3.2.2 Develop Deterministic Decision Model Influence Diagram
  6. 6. Value Management in SAM April 5, 2016 Fadi Najdi - AACE Montéal 6 TCM: 11.5 Value Management Influence Curve High Incremental Potential to influence Value FEL1 FEL2 FEL3 FEL4
  7. 7. Decision and levels of Complexity April 5, 2016 Fadi Najdi - AACE Montéal 7 Organizational Complexity Analytical Complexity HighLow Low High Facilitation Decision Analysis Rigorous Decision Process • Uncertainties • Unclear value drivers • Multiple attributes • Organizational Conflict • Different Perception • Different risk attitude • Lack of due diligence Simple Decision Quality FEL2 FEL3 FEL1 FEL4 Content Complexity
  8. 8. Six Elements of the Decision Quality April 5, 2016 Fadi Najdi - AACE Montéal 8 Elements of Decision Quality Like a chain, overall quality is no stronger than the weakest link. 3. Meaningful, Reliable Information 4. Clear Values and Trade-offs 5. Logically Correct Reasoning 6. Commitment to Action 1. Appropriate Frame 2. Creative, Doable Alternatives
  9. 9. Decision Quality Failure Modes April 5, 2016 Fadi Najdi - AACE Montéal 9 Appropriate framework • Missing Stakeholders • Wrong Perspective • Jumping to solution Doable Alternatives • Not too many alternatives • No outside the box thinking Reliable Information • uncertainty is not considered • Biases Clear Values • Different Expectations • No tradeoffs • Missing Stakeholders Sound Reasoning • Using intuition • Analysis paralysis Commitment to Action • Appropriate resources are not allocated • No buy in from all stakeholders Quality of the Decision
  10. 10. Complex, strategic decisions Process April 5, 2016 Fadi Najdi - AACE Montéal 10 Decision Board Project Team Dialogue Decision Process Recog- nize Situation Assess Situation Frame Agree on Frame Develop Alternatives Alternatives Agree on Alternatives Evaluate Alternatives Evaluated Alternatives Make Decision Plan for Implementation Evaluated Alternatives Plan Agree on Plan The process provides insight and clarity, which lead to alignment and commitment to high-quality decisions.
  11. 11. Tools for Decision Quality April 5, 2016 Fadi Najdi - AACE Montéal 11 Appropriate framework Doable Alternatives Reliable Information Clear Values Sound Reasoning Commitment to Action
  12. 12. Decisions and Level of Complexity April 5, 2016 Fadi Najdi - AACE Montéal 12 Organizational Complexity Analytical Complexity HighLow Low High Facilitation Decision Analysis Rigorous Decision Process • Uncertainties • Unclear value drivers • Multiple attributes • Organizational Conflict • Different Perception • Different risk attitude • Lack of due diligence Simple Decision Quality Content Complexity
  13. 13. Redefined Role of Cost Professionals • FEL1, FEL2, FEL3 are complex phases with high uncertainty and substantial value at stake • Dialog Decision Process would be very helpful • Decision Analysis and Decision Quality shall be more explored in the organization • During FEL4 some complex decision might appear. • Project Controls Manager and Cost Engineering Professionals are better positioned to lead such role. April 5, 2016 Fadi Najdi - AACE Montéal 13
  14. 14. Questions ?? Questions and Answer April 5, 2016 Fadi Najdi - AACE Montéal 14

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