Four Simple Questions: Decision-Centered Risk and Project Management

Abstract

A decision-centric approach to projects creates confidence, improves value, and shortens time to revenue. A straight-forward objective based approach to managing project decisions is presented in the form of four primary questions. Those questions are:Does the issue/threat/opportunity make a material difference to the project? (Materiality)Can anything be done to affect the outcome? (Influence)Can you afford to do anything about it? (Value)What if you are wrong? (Confidence) Materiality – An issue/threat/opportunity must make a material difference to a project decision to be worth receiving attention. The concept of materiality will vary in size and consequence from project to project, so it is important to maintain a decision focus. Understanding the variability in the project with respect to decision thresholds can provide an indication of materiality. We must also ask how different our current assessment of the project, or its environment could get before we would like to change our decision. Affective ability – Accepted risk-management options of avoidance, mitigation, transfer, and acceptance present the decision options within this category. In considering the consequences the options, decision tools such as Indifference Assessment and Pain and Regret Assessment. Avoidance, Mitigation, or Transfer – while most projects can benefit through risk reduction, such effort must make economic sense. Risk reduction paths must add value to the project through added upside or elimination of at least a portion of downside threat. The value of these efforts is aided by use of tools such as Value-of-Information, Value-of-Control, and Value-of-learning. Being wrong – Making a regretful decision is always a possibility but the source of the "wrongness" and its likely impact is often overlooked by teams. In project planning and execution, decision-makers are often presented with a plethora of issues, threats, and opportunities. From development planning through implementation significant time and resource waste can be cut by prioritizing effort to the issues that matter. Understanding the issues in the context of materiality and then what to do, if anything, about an issue, becomes key to maximizing success. This approach cuts waste and focuses the attention on what matters. Decision Intelligence not only increases the probability of making the best decisions, but it also prioritizes work to those items that matter either for value or decision path. While most of the decision tools referenced are well documented in the literature, placing them into the context of the Four Question Approach allows teams and management to focus more closely on efficiently mitigating issues, shortening workflow, and creating significantly higher decision confidence. This novel approach works well in all phases of project planning through project management implementation.