This title confidently puts forward a practical, new approach to decision making in an uncertain business world. Many variables are accounted for and the authors are innovative in integrating previous types of decision-making approaches with a more fluid, and therefore realistic model that can be applied across a wide range of contexts and decisions. A new title on a important topic that not only stands well on its own, but also complements Chapman and Ward's previous title "Project Risk Management". This book is practical and rigorous yet written in an engaging way. It is perfect for courses, or to be used by practitioners.
CHRIS CHAPMAN is a Professor of Management Science in the School of Management of the University of Southampton. He was the founding chair of the Association for Project Management Specific Interest Group on Project Risk Management. He is a past president of the Operational Research Society and the current chair of the Committee of Professors in Operational Research. He is an Honorary Fellow of the Institute of Actuaries. For more than 25 years his research interest has focused on risk and uncertainty management. Much of his research is consultancy based, giving him a broad spectrum of practical experience across a wide range of organizations, which he combines with a thorough conceptual understanding from which to write. He has authored and co authored six books and more than 50 refereed papers. His books include Management for Engineers (Wiley 1987), Risk Analysis for Large Projects: Models, Methods and Cases (Wiley 1987) and Project Risk Management: Processes, Techniques and Insights (Wiley, 1997). STEPHEN WARD is a Senior Lecturer in the School of Management of the University of Southampton. He too combines his academic role with consultancy projects, and has published widely, including contributions to Management for Engineers (Wiley 1987) and joint authorship of Project Risk Management: Processes, Techniques and Insights (Wiley, 1997). He is the founding director of Southampton s MSc in Risk Management.
Preface. Acknowledgements. 1. Introduction. MANAGING UNCERTAINTY, RISK, THREAT AND OPPORTUNITY. THE SCOPE FOR UNCERTAINTY IN MANAGERIAL DECISION PROCESSES. TEN TALES ABOUT UNCERTAINTY MANAGEMENT. A GENERAL PROCESS FOR SUPPORTING MANAGERIAL DECISION MAKING. CONSTRUCTIVELY SIMPLE MODELS. OTHER ASPECTS OF CONSTRUCTIVE SIMPLICITY. KEEP IT SIMPLE SYSTEMATICALLY. 2. Nicola s tale: sizing inventories and other buffers. INTRODUCTION. A STOCKHOLDING ISSUE. FOCUSING THE PROCESS. CONSTRUCTING A MODEL. REFINING THE ANALYSIS: CONSIDERING SAFETY STOCK POLICY. FURTHER REFINEMENTS: INFLUENCES ON HOLDING COSTS. INTERPRETING THE RESULTS OF ANALYSIS CREATIVELY. ALTERNATIVE CREATIVE INTERPRETATIONS. OTHER STOCK CONTROL CONTEXTS. OTHER BUFFER CONTEXTS. CONCLUSIONS. 3. Martha s tale: setting bids and other pricing decisions. INTRODUCTION. A BIDDING OPPORTUNITY FORASTRO. A PRELIMINARY PROPOSAL DOCUMENT. A PROPOSED MULTIPLE PASS PROCESS. FIRST PASS UNCERTAINTY MANAGEMENT: IDENTIFYING NON STARTERS. SECOND PASS UNCERTAINTY MANAGEMENT: IDENTIFYING NO HOPERS. THIRD PASS INITIATION. THIRD PASS COST UNCERTAINTY ANALYSIS. THIRD PASS PROBABILITY OF WINNING ANALYSIS. THIRD PASS UNCERTAINTY SYNTHESIS. THIRD PASS BID SETTING DISCUSSION. MANAGING REQUISITE CHANGE. SOME GENERAL IMPLICATIONS. OTHER BIDDING CONTEXTS. CONCLUSION. 4. Eddy s tale: estimating measures of uncertain performance. INTRODUCTION. SOME BASIC CONCEPTS. EDDY STARTS WORK. EDDY S FIRST PASS MINIMALIST APPROACH. FIRST PASS INTERPRETATION AND ANTICIPATION OF FURTHER PASSES. ANTICIPATION OF CORPORATE LEARNING. SCOPE FOR AUTOMATION. ELIMINATING THE USE OF PROBABILITY IMPACT MATRICES. MANAGING AND SHAPING EXPECTATIONS. ROBUSTNESS OF THE MINIMALIST APPROACH. THE USER PERSPECTIVE: CONDITIONAL ESTIMATES AND CUBE FACTORS. CONCLUSION. 5. Ian s tale: aligning buyer and supplier motivation. INTRODUCTION. A DEVELOPMENT PROJECT. A CONSULTANT IS HIRED. A FRAMEWORK FOR PROJECT RISK MANAGEMENT. A CRITICAL ASSESSMENT OF CURRENT COMMON PRACTICE. FORMULATING AN INCENTIVE CONTRACT. THE WAY FORWARD. BIARS CONTRACTS. CONCLUSION. 6. Roger s tale: assigning ownership of project uncertainty. INTRODUCTION. A CORPORATE UNDERSTANDING OF UNCERTAINTY OWNERSHIP. ROGER S DEFINING MOMENT. A SIMPLE ANALYSIS OF ANCHOR RISK. DISTRIBUTING THE OWNERSHIP OF UNCERTAINTY. ROGER S SIMPLE ANALYSIS OF DISTRIBUTED UNCERTAINTY OWNERSHIP. AN INTERNAL TRIGGER CONTRACT TO MANAGE GOOD LUCK. DESIGNING AN EXTERNAL TRIGGER CONTRACT. A REVISED CORPORATE UNDERSTANDING OF UNCERTAINTY OWNERSHIP. EPILOGUE. CONCLUSION. 7. Sarah s tale: facilitating the precautionary principle. INTRODUCTION. THE RAIL PASSENGER SAFETY TRUST. A CONVENTIONAL ANALYSIS OF RAILWAY BUFFER EVENTS. A SIMPLE SCENARIO ANALYSIS OF BUFFER EVENTS. RISK EFFICIENCY FOR A RAILWAY SYSTEM. RISK REWARD BALANCE: HOW SAFE IS SAFE ENOUGH? AMBIGUITIES IN THE RELEVANT PUBLIC . AMBIGUITIES IN EQUIVALENT FATALITIES. REGULATION VIA MANDATORY INSURANCE. CONCLUSION. 8. Norman s tale: discounting future performance measures. INTRODUCTION. NORMAN S SITUATION. A FIRST PASS MODEL AND PARAMETRIC ANALYSIS. PROBABILISTIC ANALYSIS TO SUPPORT THE FIRST PASS. A SECOND PASS PROBABILISTIC ANALYSIS. A THIRD PASS PROBABILISTIC ANALYSIS. A SUDDEN FLASH OF HINDSIGHT. IS A REAL OPTIONS APPROACH REALLY USEFUL? CONCLUSION. 9. Tess s tale: making decision analysis practical. INTRODUCTION. A MACHINE SELECTION PROBLEM. A BASIC MODEL AND FIRST PASS ANALYSIS. EXPLORING THE VALUE OF MORE INFORMATION. DIFFICULTIES WITH THE MODEL. A PROJECT PORTFOLIO PERSPECTIVE. ABANDONING A COMMON SET OF DISCRETE EVENTS WITH CERTAIN PAY OFFS. AN EXPLICIT THREAT AND OPPORTUNITY MANAGEMENT STRUCTURE. AN EXPLICIT MULTIPLE ATTRIBUTE STRUCTURE. EXPLICIT ANALYSIS OF MULTIPLE ATTRIBUTE TRADE OFFS. CONCLUSION. 10. Sam s tale: concepts and issues in portfolio management. INTRODUCTION. SAM S ASSIGNMENT. A BASICMARKOWITZ MEAN VARIANCE MODEL. EXTENDING THE BASICMARKOWITZ MODEL. SAM S BASIC SYSTEM. FURTHER CONSIDERATIONS WITH A SIMPLIFIED PORTFOLIO. ROBUSTNESS OF SAM S SYSTEM. CONCLUSION. 11. Conrad s tale: formulating strategy. INTRODUCTION. CONRAD S SITUATION. PLANNING HORIZONS. LONG TERM STRATEGY FORMULATION. MEDIUM TERM STRATEGY FORMULATION AND INTEGRATION UPWARDS. SHORT TERM STRATEGY FORMULATION AND INTEGRATION UPWARDS. INTEGRATING SOCIAL, ENVIRONMENTAL, ETHICAL AND POLITICAL ISSUES. A CRISIS. CONCLUSION. 12. From concepts to culture. SIMPLE EFFICIENCY. BASIC CONCEPTS. KEY MODELLING CONCEPTS. KEY PROCESS CONCEPTS. UNCERTAINTY MANAGEMENT SYSTEMS. ADDRESSING CULTURAL BARRIERS TO UNCERTAINTY MANAGEMENT. CULTURE CHANGE MANAGEMENT. CONCLUSION. Bibliography. Index.