Title of Training Presentation

Project ManagementSession 3Systematic Biases / Initiating

UCONN - OPIM 5270Acuna / TschieggWilkins / Van Dusen

Based on:Judgment in Managerial Decision Making by Max BazermanSystematic Biases and Culture in Project Failures by Barry Shore

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Sessions GoalsUnderstand how we use biases in decision makingIdentify common biases and what can be done to mitigate themRelate biases to Project ManagementUnderstand the balance to planningRecognize a Project Master PlanKnow the tasks in the Initiating GroupBe able to write an effective Project Charter

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Fall 2014What are Heuristics?Decision makers will forego the best solution in favor of the one that is acceptable or reasonableThey do not examine all possible alternativesThey search until they find a solution that meets a certain level of performance they satisfice (Combination of Satisfy and Suffice - A satisficing strategy may often be (near) optimal if the costs of the decision-making process itself, such as the cost of obtaining complete information, are considered in the outcome calculus)People rely on a number of simplifying strategies rules of thumb to satisficeHeuristics are these simplifying strategiesSometimes they can lead to severe errors3

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Biases Emanating From the Availability HeuristicEase of RecallIndividuals judge events that are more easily recalled from memory, based on vividness or recency, to be more numerous than events of equal frequency whose instances are less easily recalled.

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Biases Emanating From the Availability HeuristicRetrievabilityIndividuals are biased in their assessments of the frequency of events based on how their memory structures affect the search process.

Why are gas stations located together?Why are car dealerships located together?

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Biases Emanating From the Availability HeuristicPresumed associationsIndividuals tend to overestimate the probability of two events co-occuring based on the number of similar associations that are easily recalled, whether from experience or social influence.

Are couples who get married under the age of 25 more likely to have bigger families?

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Biases Emanating From the Representativeness HeuristicInsensitivity to base ratesIndividuals tend to ignore base rates in assessing the likelihood of events when any other descriptive information is provided even if it is irrelevant.

Bob is finishing his MBA at a prestigious university. He is very interested in the arts and at one time considered a career as a musician. Is he more likely to take a job:in the management of arts?with a management consulting firm?

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Biases Emanating From the Representativeness HeuristicInsensitivity to sample sizeIndividuals frequently fail to appreciate the role of sample size in assessing the reliability of sample information.

Four of out five dentist surveyed recommended sugarless gum for their patients who chew gum.

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Biases Emanating From the Representativeness HeuristicMisconception of chanceIndividuals expect that a sequence of data generate by a random process will look random even when the sequence is too short for those expectations to be statistically valid.

An exhaustive study of the 76ers and Celtics showed that immediately prior shot performance did not change the likelihood of success on the upcoming shot.

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Biases Emanating From the Representativeness HeuristicRegression to the meanIndividuals tend to ignore the fact that extreme events tend to regress to the mean on subsequent trials.

Short parents tend to have taller children. Great rookies have mediocre second years. Brilliant students frequently have less successful siblings.

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Biases Emanating From the Representativeness HeuristicThe conjunction fallacyIndividuals falsely judge that conjunctions (two events co-occuring) are more probable than a more global set of occurrences of which the conjunction is a subset.

Participants of a study rated a massive flood somewhere in North America in 1989 in which 1,000 people drown, as less likely that the probability of an earthquake in California sometime in 1989, causing a flood in which more than 1,000 people drown.

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Biases Emanating fromAnchoring and AdjustmentInsufficient anchor adjustmentsIndividuals make estimates for values based upon an initial value (derived from past events, random assignment, or whatever information is available) and typically make insufficient adjustments from that anchor when establishing a final value.

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Biases Emanating fromAnchoring and AdjustmentConjunctive and disjunctive events biasIndividuals exhibit a bias toward overestimating the probability of conjunctive events and understating the probability of disjunctive events.

You are planning a construction project that consists of five distinct parallel components. Your schedule is tight, and every component must be on time in order to meet a contractual deadline. Will you meet this deadline?Fall 201413

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Biases Emanating fromAnchoring and AdjustmentOverconfidenceIndividuals tent to be overconfident of the infallibility of their judgments when answering moderately to extremely difficult questions.

Write best estimate give upper / lower bound with 80% confidencePlastic waste generated in the USA in 1993 in tonsLive births in the USA in 1992Annual precipitation in Reno between 1961 and 1990 (in.)Crime rate per 100,000 population in the USA in 1993Industrial waste generated in USA in 1990 (tons)

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Two More General BiasesThe confirmation trapIndividuals tend to seek confirmatory information for what they think is true and neglect the search for disconfirmatory evidence.

When confirming your decision to hire a particular employee, it is probably easy to find supporting positive information on the individual, but in fact the key issue may be the degree to which negative information on this individual, as well as positive information on another potential applicant, also exists.

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Two More General BiasesHindsight and the curse of knowledgeAfter finding out whether or not an event occurred, individuals tend to overestimate the degree to which they would have predicted the correct outcome. Furthermore, individuals fail to ignore information they possess that others do not when predicting other's behavior.

Have you ever given someone what you believed to be very clear directions to your home, only to find out that they got lost? Fall 201416

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Fall 2014Challenges / Unresolved IssuesProjects are still failing in spite of good processSystematic Biases to blame?B. Shores paper suggests a bias relation to projectsLets see the class presentations at the end of the semesterContinued discussion So what can we do?17

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Fall 200918Planning - Two Extremes

Analysis Paralysis

Ready, Fire, Aim

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Fall 2014The Project PlanThe primary function of a project plan is to serve the PM as a map of the route from project start to finish . 11 Project Management in Practice, pg. 67-68The plan should contain sufficient information that, at any time, the PM knows what remains to be done, when, with what resource, by whom, when the task will be completed, and what specifications the output should meet. 119

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Fall 2014Project Master Plan?

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Fall 2014The Project Master PlanOverviewbrief description of projectdeliverablesmilestonesexpected profitability and competitive impactintended for senior managementObjectivesdetailed description of projects deliverablesproject mission statement21

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Fall 2014The Project Master Plan (cont.)General approachtechnical and managerial approachesrelationship to other projectsdeviations from standard practicesContractual aspectsagreements with clients and third partiesreporting requirementstechnical specificationsproject review dates22

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Fall 2014The Project Master Plan (cont.)Schedulesoutline of all schedules and milestonesResource requirementsestimated project expensesoverhead and fixed chargesPersonnelspecial skill requirementsnecessary traininglegal requirements23

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Fall 2014The Project Master Plan (cont.)Evaluation methodsevaluation procedures and standardsprocedures for monitoring, collecting, and storing data on project performancePotential problemslist of likely potential problems24

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Fall 2014Initiating Process Group1 PMP Exam Prep - Rita Mulchy pg 39

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Fall 2014Project Charter1 PMP Exam Prep - Rita Mulchy pg 39Not a Project PlanIssued by the Champion (not the Project Manager)Authorizes the projectDefines the PMs authority (money / resources)High-level requirementsLinks project to organization needs

Any subsequent change to the Project Charter calls into question if the project should continue. 126

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Fall 2014Project Charter (by Rita)11 PMP Exam Prep - Rita Mulchy pg 39Project Name and DescriptionProject Manager and Authority LevelBusiness NeedProject JustificationResources Pre-assignedStakeholdersStakeholder Requirements (as known)Product Description / DeliverablesConstraints and AssumptionsProject Sponsor Approval27

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Fall 2014Project Charter (by GE)22 GE Project Charter Template HeadingsProject OverviewProblem StatementGoals & ObjectivesProposed StrategyConstraints & Assumptions (Whats Out of Scope)Key Stakeholders (Champion, PM, Team, etc.)Business Linkage / Measure of SuccessSpecific Goals (Technical / Schedule / Cost)Cost Benefit Analysis (NPV)Risk / Issues28

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Fall 2014Project Charter (by SwissRe)33 SwissRe Business Case Template ContentProject Header (Name, Sponsor, PM, Start, etc.)Objectives / Goal StatementCase for Change / Problem StatementStrategic FitProject DeliverablesProject Costs (One-off, Annual) Project Benefits (One-off, Annual, Qualitative)Resourcing (IT resources, Business resources, Critical resources)Risk Management (Impact, scope, duration, risks, complexity)Business Case Sign-off (Sponsor, Beneficiary, Portfolio Comm.)29

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Fall 201430Project Charter: 1/2Case for change / Problem Statement .

Business Case

In ScopeOut of Scope

Constraint MatrixMOSTSOMELEASTSCOPETIMECOST

Top Risks (max. 5)Risk 1Risk 2Risk 3Risk 4Risk 5

Objectives / Goal statements

Assumptions

Project Costs (USD)Total:Internal:External:

Project BenefitsNPV:IRR: Break Even: Indirect Benefits:

Fall 201431Incoming DependencyOutgoing Dependency

Deliverables & Milestones (High Level Milestone Plan)Project Start Date:Project End Date:Key DeliverableMilestone Name (MN)Planned MS Date

SignoffRoleSignatureDateSponsorPSB MemberPSB MemberPSB MemberPSB MemberPSB MemberBeneficiaryBeneficiary

Project OrganizationSponsorSteering Board Members (PSB)Project ManagerWorkstream LeadersTeam Members

Project Charter: 2/2