DECISION TREE Project Risk Management: A combined Analytic Hierarchy Process and Decision Tree Approach Dr.Prasanta Kumar Dey.

DECISION TREE Project Risk Management: A combined Analytic Hierarchy Process and Decision Tree Approach

Dr.Prasanta Kumar Dey

CONTENT

What is the decision tree? The example of decision tree The advantage of decision tree The application of decision tree

WHAT IS THE DECISION TREE?

Decision tree is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

Decision tree is commonly used in operations research, specifically in decision analysis, to help identify a strategy most likely to reach a goal.

Another use of decision trees is as a descriptive means for calculating conditional probabilities.

THE EXAMPLE OF DECISION TREE

THE ADVANTAGE OF DECISION TREE Are simple to understand and interpret.  Have value even with little hard data.  Use a white box model.  Can be combined with other decision techniques. 

Project Risk Management: A combined Analytic Hierarchy Process and Decision

Tree Approach

Dr.Prasanta Kumar Dey

CONVENTIONAL PROJECT MANAGEMENT MODEL

PROPOSED PROJECT MODEL

RISK MANAGEMENT PROCESS

Risk identification Risk analysis Risk response

RISK MANAGEMENT FLOW

METHODOLOGY Identifying the work packages for risk analysis. Identifying the factors that affect the time, cost, and

quality achievement of a specific work package. Analysis the effect and determining severity of

failure Driving various alternatives responses for mitigating

the effect of risk factors. Estimating cost for each alternative Determining the probability and severity of failure of

a specific work package Forming a decision tree. Deriving expected monetary value or the cost of risk

response in this case. Selecting the best option statistical analysis.

IDENTIFICATION OF WORK PACKAGES

Riving crossing Pipeline laying Stations construction Telecommunication and SCADA system

WORK BREAKDOWN STRUCTURE

AHP MODEL FOR DETERMINING RISKING OF PROJECT

IDENTIFICATION OF RISK FACTORS

Technical Risk scope change technology selections implementation methodology selection Equipment risk materials risk Engineering and design change

Acts of God normal natural calamities abnormal natural calamities

Financial, Economical and Political Risk inflation risk fund risk changes of local law changes in government policy improper estimation

Organization Risk capability risk of owner’s project group contractors failure vendor’s failure consultant’s failure

Statutory Clearance Risk environmental clearance land acquisition clearance from chief controller of explosives other clearance from government authorities

LIKELIHOOD OF RISK IN A PROJECT

PROBABILITY AND SEVERITY OF RISK FACTORS

DECISION ALTERNATIVES

do nothing carrying out detailed survey using superior technology engaging an expert project team taking all responses

THE COST DATA FOR EACH PACKAGE AGAINST VARIOUS RESPONSES

DECISION TREE FOR PIPELINE LAYING WORK PACKAGE

DECISION TREE FOR RIVER CROSSING WORK PACKAGE

DECISION TREE FOR STATION CONSTRUCTION WORK PACKAGE

DECISION TREE FOR TELECOMMUNICATION AND CATHODIC PROTECTION WORK PACKAGE

THE EMV FOR “ PIPELINE LAYING PROJECT”

THE EMV FOR” PIPELINE LAYING ACROSS RIVER”

THE EMV FOR ” STATION CONSTRUCTION”

THE EMV FOR “TELECOMMUNTION AND SCADA SYSTEM

THE DECISION EMERGE

RISK RESPONSES

To avoid To reduce To transfer To absorb

CONCLUSION

Risk management using a combined AHP and DTA provides an effective means for managing a complex project efficiently.

Risk management makes an effect to quantify risk by modeling its probability and severity in line with the perceptions of experienced project executives subjectivity.

REFERENCE

http://en.wikipedia.org/wiki/Decision_tree http://www.mindtools.com/dectree.html http://zh.wikipedia.org/zh-hk/%E5%86%B3%E

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