RESEARCH ARTICLES | RISK + CRYSTAL BALL + ANALYTICS

All Posts Term: Risk Analysis
12 post(s) found

Reducing Project Costs and Risks with Oracle Primavera Risk Analysis

.It is a well-known fact that many projects fail to meet some or all of their objectives because some risks were either: underestimated, not quantified or unaccounted for. It is the objective of every project manager and risk analysis to ensure that the project that is delivered is the one that was expected. With the right know-how and the right tools, this can easily be achieved on projects of almost any size. We are going to present a quick primer on project risk analysis and how it can positively impact the bottom line. We are also going to show you how Primavera Risk Analysis can quickly identify risks and performance drivers that if managed correctly will enable organizations to meet or exceed project delivery expectations.

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Dealing with Uncertainty

Change is constant. Or so the saying goes. However, even change is ever-varying. So perhaps we should say: Change is constantly changing. As occupants of planet earth, we intuitively know this and yet strive to keep everything the same, at least those things that do well by us. Uncertainty derails the best of our plans, even uncertainties that we recognize up front.

Algorithms and the New Millennium

Dr David Berlinski (2000) makes the historical observation that two great ideas have most influenced the technological progress of the Western world:

The first is the calculus, the second the algorithm. The calculus and the rich body of mathematical analysis to which it gave rise made modern science possible; but it has been the algorithm that has made possible the modern world. (Berlinski, p. xv)

Dr Berlinski concludes that:

The great era of mathematical physics is now over. The three-hundred-year effort to represent the material world in mathematical terms has exhausted itself. The understanding that it was to provide is infinitely closer than it was when Isaac Newton wrote in the late seventeenth century, but it is still infinitely far away…. The algorithm has come to occupy a central place in our imagination. It is the second great scientific idea of the West. There is no third. (Berlinski, pp. xv-xvi)

Source: Berlinski, D (2000). The Advent of the Algorithm: The 300-Year Journey from an Idea to the Computer. San Diego, CA: Harcourt.

Related Posts: Enter the Algorithm

Decision Warranties

According to Prof Ronald A Howard (1992):

Three of the warranties that I would like to have in any decision situation are that:
  1. The decision approach I am using has all the terms and concepts used so clearly defined that I know both what I am talking about and what I am saying about it;
  2. I can readily interpret the results of the approach to see clearly the implications of choosing any alternative, including of course, the best one; and
  3. The procedure used to arrive at the recommendations does not violate the rules of logic (common sense).

Plain and simple... Source: Howard, R A (1992), Heathens, Heretics, and Cults, Interfaces, 22(6), 15-27.

Collaborative modeling using predictive analytics

When building models we are often confronted with assumptions that evolve over time. In most cases it is important to capture these changes to keep our model relevant. Over the last decade, Business Intelligence solutions have created a culture of self-service IS information.  Given this democratization and decentralized access to data has created many opportunities and pitfalls for business analysts and decision-makers. We are going to outline some opportunities and pitfalls relating to shared modeling and a few strategies to get started.

This post presents the opportunities and challenges stemming from moving towards a distributed modeling paradigm in the organization. Also presented is a high-level integrated predictive/collaborative planning process.

Risk versus Uncertainty

Prof Frank H Knight (1921) proposed that "risk" is randomness with knowable probabilities, and "uncertainty" is randomness with unknowable probabilities. However, risk and uncertainty both share features with randomness. The illustration below explains the relationship of the concepts better than words...

Source: Knight, F H (2002/1921), Risk, Uncertainty and Profit, Washington, DC: BeardBooks.