Decision Making and Analysis in Projects

Vignesh Sivadass

MANG6312-Week34-IndDM-1624Feb22-Bb.pdf

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Week 3

“Decision Makers’ Aspect:

Individuals as Decision

Makers”

Dr Ramesh Vahidi [email protected]

MANG6312©RameshVahidi 2022 1

Southampton Business School

Lecture Content: Decision Makers’ Aspect of DM

• Strategies

• Success

• Context

• Stakeholders req., expec., goals, …

• DM Models

• DM in groups

• Problem identification & formulation techniques

• Human factors & Decisions

• Heuristics, Shortcuts, Approximate methods

• Perception of Reality

• Decision Types

• Related disciplines

• Classification of project decision

• Interdependence

• Reality in DM Conceptual Aspect

Decision Makers’

Aspect

Decision Elements

Aspect

Decision Methods & Processes Aspect

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Swiss federal Institute of technology in Zurich 800 technical failures

→ 504 fatal incidents,

→ 592 injuries and

→ loss of millions of dollars

• Insufficient knowledge (36%)

• Underestimation of influence (16%)

• Ignorance, carelessness, neglect (14%)

• Forgetfulness (13%)

• Relying upon others without sufficient control (9%)

• Objectively unknown situation (7%)

• Other factors related to human error (5%).

(Hall, 2005 cited in Virine and Trumper, 2008, p.16) (Could also see: https://hallassociateshsval.com/presentations)

People in projects … so what? MANG6312©RameshVahidi 2022

Psychology

Aims of Week 3

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• To enable you to appreciate the potential factors influencing your/others’ decisions and decision making style.

• To provide bases for analysing and reflecting on your/others’ decision making.

• To develop the ability of foreseeing consequences of your/others’ decisions.

“Let’s see, which factors

might affect our decisions,

judgments, actions,

reactions.”

MANG6312©RameshVahidi 20225

Southampton Business School

I am able to make my

best decision when I am

…

https://vevox.app/#/m/195734678

MANG6312 – Week 3

DM in PM

195-734-678

MANG6312©RameshVahidi 2022

https://vevox.app/#/m/195734678

Some (Main) Human Factors Affecting Individuals’ Decision Making

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(Frame, 2012, p.118) → Must Read!

Human Factors Affecting Individuals’ DM Psychological State

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Our psychological state:

• Anxiety

• Annoyance

• Identity crisis

• Morale

• Delusion (misunderstanding)

• Elation (excitement)

* These might affect our decisions: e.g. a big donation to a charity depending in case of extreme happiness … celebrities weddings donations!

- How could this inform your PM style?

Human Factors Affecting Individuals’ Cognitive State

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How our brain understands things, learns and reflects from experiences, e.g.:

• Perception

• Thinking

• Remembering

• Dealing with symbols

• Attention

• Handling information

• Problem solving

* The level of our capabilities in respect to any of the above will impact our decisions. - How could this inform

your PM or DM in PM style?

Stock Market

Human Factors Affecting Individuals’ Competence and Capability

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Competent and Capable People: • Know their job • Do things effectively (doing the right thing) • Take implementable approaches

They are good at formulating decisions through:

• Defining: clear definition of the scope of the problem and focus on relevant factors

• Determining: Identify the relation between problem components

• Deciding: use relevant data, anticipate the consequences and make a choice accordingly.- What actions you could

take to enhance these capabilities in DM in PM? Competent

in family relations?!

Human Factors Affecting Individuals’

Intelligence

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• Intelligence has different aspects (including Emotional Intelligence - IE)

• One cannot be equally intelligent in every aspect

• Anyone could have higher intelligence in some certain area(s) than the others

Intelligent people can:

• Frame certain decisions easier than others

• See positive and negative consequences

• See subtle points

- How could this impact the management of your team in making project decisions? Always +?!

Jack Ma

MANG6312©RameshVahidi 2022

Features of creative people:

- See and operate differently

- Reject the imposed constraints

- Look from new perspectives

- Wider range of options

Human Factors Affecting Ind. DM

Creative Capacity

- What are the impacts of having a highly creative

person in decision making process? Always +?!!

Zaha HadidPicasso

Human Factors Affecting Ind. DM ‘Personality’

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Sometimes predicting peoples’ approach to a decision might be easy if we know their personalities.

E.g., Possibility of an investment decision by pessimist vs. optimist

- How could this inform/affect your PM

style?

- One of the main things a PM

does is DM!

- Now you know the main

factors affecting our DM.

- In general: How could these

help you to become a better

project manager/decision

maker?

https://vevox.app/#/m/184965850

MANG6312 – Week 3

DM in PM

195-734-678

MANG6312©RameshVahidi 2022

https://vevox.app/#/m/184965850

“Let’s Extend on the Impact

of ‘Personality’ on our

Judgments and Decisions ”

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Southampton Business School

Main Personality Factors affecting Judgment

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Main influencing factors of Personality among numerous ones are:

Propensity towards risk

Openness to change

Judgment acumen (understand/decide things quickly & well - sharpness)

Main Personality Factors 1: Propensity toward Risk

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Low High

(Frame, 2012, p.126)

Main Personality Factors 2: Openness to Change

• New experiences are stored in brain

• They are embedded through repetition

• Become stereotypes and templates

• Guide us in perceiving reality in a simple, and orderly way

• To conserve energy, brain tries to maintain the same templates

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Education

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Main Personality Factors 3: Judgments Acumen

(Sharpness)

“The principal trait of people with bad judgment is the inability to assess the consequences of their words and actions. They are clueless decision-makers.” (Frame, 2012, pp.131-5)

Reasons for poor judgement

• Inexperience

• Transitory Lapse

• Habitual Cluelessness

What were they thinking?!

Judgment Acumen 3-1- Inexperience

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• Time

• Lessons learned

• Reflection

• Supervision

“Through experience, we start seeing the connection between our words and actions and their consequences, and we adjust our behavior accordingly.”

(Frame, 2012, pp.131-5)

Judgment Acumen 3-2 - Transitory Lapse

- Consequences vary from nothing to major

- We are “only human”

- Minimized and possibly avoided through constant thoughtfulness, watchfulness, attention

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“They can be experienced by anyone, even capable, responsible, self-disciplined professionals who possess flawless track records of good judgment.” (Frame, 2012, pp.131-5)

Judgment Acumen 3-3 - Habitual Cluelessness

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• Of greatest concern to managers

• Impact: depends on the decision/decision maker position

• Slow down the process, struggling to get things right, take inappropriate decisions leading to reworks, need supervision and monitoring.

• One theory: incompatibility of the person and

the job’s required capabilities and the time span

• Another theory: Poor empathy

“It characterizes people who are consistently unable to anticipate the consequences of their decisions. This does not stop them from making decisions.”

5% Exceptionally

High

5% Exceptionally

Low

90% Normal

https://vevox.app/#/m/184965850

MANG6312 – Week 3

DM in PM

195-734-678

Could you name the

factors that affect our

decisions?

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“Heuristics or

Approximate Methods or

Mental Shortcuts in DM ”

MANG6312©RameshVahidi 202224

Southampton Business School

https://vevox.app/#/m/184965850

MANG6312 – Week 3

DM in PM

195-734-678

Rate yourself:

How accurate do you

think you generally are?

MANG6312©RameshVahidi 2022

https://vevox.app/#/m/184965850

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Test Your Awareness : Whodunnit? https://www.youtube.com/watch?v=ubNF9QNEQLA

How observant are you?

Quick Quiz - How Observant Are You ? Aka Handbag Quiz (1944) https://www.youtube.com/watch?v=5bQlgo4yIN4

https://www.youtube.com/watch?v=ubNF9QNEQLA

https://www.youtube.com/watch?v=5bQlgo4yIN4

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MANG6312 – Week 3

DM in PM

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Rate yourself after the

video:

How accurate you were in

identifying the changes to

the scene?

(1 not at all ... 5 extremely)

Answer if you had not seen the video before or

answer based on the first time you watched it!

MANG6312©RameshVahidi 2022

https://vevox.app/#/m/184965850

Week 4

“Decision Makers’ Aspect:

Individuals as Decision

Makers”

Dr Ramesh Vahidi [email protected]

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Southampton Business School

Common DM Generalisations

General belief in traditional DM and in PM practice: “problems can be resolved if we are able to master the facts.”

General rule of effective DM: “Do not make uninformed decisions.”

But …

Neuroscience findings:

“… all decisions are uninformed in some measure.”

“facts cannot be objectively determined”

Psychological findings:

• We are not capable of making ‘perfect decisions’!

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Bounded rationality

Human mind has ‘limited capacity’ in processing all the aspects of ‘complex situations’ (Herbert Simon, 1957) .

• Mind looks for satisfactory rather than optimal solutions

Result: Satisficing → Satisfy + Suffice

• Mind uses a mental toolbox of available strategies

Approach/Strategies →‘Heuristics’ or ‘Approximate methods’

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Heuristics or Approximate Methods

• Heuristics: ‘mental shortcuts’ or general ‘rules of thumb’ used in selecting appropriate strategies for decisions to overcome bounded rationality.

• Outcome: varies from rational solutions and good estimates to inconsistencies and cognitive biases.

Three main heuristics:

– Availability heuristic

– Representativeness heuristic

– Anchoring and adjustment heuristic

“… people judge probabilities of the occurrence of the events by how easily these events are brought to mind”. (Virine & Trumper, 2008, p.301)

Our judgements sometimes can be affected by:

• The time and the way a new set of data becomes available

• Easier to recall or associate with an unusual, rare, vivid event or major issues, successes or failures

• The real probabilities are easily forgotten!

• E.g. in Projects: estimating or lessons learned based on the very recent project, recent news, most experienced expert, etc.

Availability Heuristic

https://twitter.com/wef

What would be your Decision?

• Do you check the reviews before online shopping?!

• How far they affect your decisions?

• Which one of the reviews you read more? • Positive • Negative • Most recent • Oldest • Probability

• Which ones affect your decision most?

“… people estimate probabilities by judging how representative the object, person or event is of its category, group or process”. (Virine & Trumper, 2008, p.301)

• Our judgment of events’ probabilities sometimes depends on ‘stereotypes’ or previous categories of data we have in mind.

• E.g.: Misconception of volume representing quality: 1) Long exam answers!

• 2) in Projects: a detailed report on risk plan or WBS in 100 pages for a small job means a perfect and accurate plan and work arrangement, compared to a precise report in 20-30 pages?

Representativeness Heuristic

Your Reaction

£300 → £210

You: £90 saved!

- Need the suit - Just few left your size - You know the shop - The shop always has bargains - Bought great bargains from before

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MANG6312 – Week 3

DM in PM

195-734-678

What would you do in

this shopping situation:

• Definitely buy

• Look at other shops

• Look at other brands

• Don’t buy

https://vevox.app/#/m/184965850

Your Reaction

£300 → £210

You: £90 saved! Great Bargain!

Seller: Good sales records ‘generally’! Hardly sold at £300!

Another Brand/Shop

- £150 - Better quality - Nicer

• “… people rely on one trait or piece of information (an “anchor”) when making decisions”.

• Human tendency to relying on one baseline or reference point without or with limited adjustment.

• Difficult to remove or adjust the bases.

• In PM: How likely is that you base the estimates for your new project on the estimates of your previous project and adjust them (rather than starting from scratch or going back to a much old one)?

Anchoring and Adjustment Heuristic

Heuristics or Approximate Methods

Could you think of examples for each of these three main heuristics in your own judgments and decisions:

– Availability heuristic

– Representativeness heuristic

– Anchoring and adjustment heuristic

• From now, reflect on the decisions you make see which one of the biases might have affected or is affecting you!

“‘Reality’ in Decisions”

Southampton Business School

1 2

4 5 6

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MANG6312 – Week 3

DM in PM

195-734-678

What makes different

painters draw or paint the

exact same thing so

differently? (and add the

number of your favourite

one!)

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Why/How do we see what we see?1

Training

Exercises

Technique

Experience

Personality

Capability

…

• Perception as an active process.

• We don't only and directly see the ‘facts’.

• We ‘select’ what we ‘want’ to see.

• Our filters: past experiences, knowledge, motivations, political considerations, …

• Outcome: estimates, predictions, judgment of the input data (→ why I ask you to give me background for your answers!) MANG6312©RameshVahidi 2022

(Virine & Trumper, 2008, p. 23)

Lens Model of Judgement

Perception Through Lenses (Value-Laden view)

Perception of a Decision

Questions to ask yourself before making a project decision:

• Are you inclined to see the project or people you work with in a particular way?

• What do you expect from this particular decision?

• Would you be able/willing to see the deficiencies and be critical of people/project situations regardless of your very personal preferences and lenses? (i.e., being flexible, keeping an open mind to differences, etc.)

Fundamental Question in DM

Learning Outcomes of Week 3

By actively attending the sessions and following up with further background studies you are

expected to be able to:

Appreciate and discuss how like is for us as human beings and professionals to make “perfect

decisions” or access and use “all the data” for making a decision.

What type of biases one might have in making decisions/judgments.

How our perceptions might affect our decisions.

What makes and informs our “perceptions”.

Be able to put the above in the context of a personal decision or project decision made by an

individual.

References

Boddy, D. and Paton, S. (2010) Management: an introduction. 5th ed. Imprint: Harlow : Financial Times Prentice Hall. [electronic resource via the Library]. Chapter 17: Section 7.2.

Frame, J.D. (2012) Framing decisions: decision making that accounts for irrationality, people, and constraints. Somerset, NJ, USA: John Wiley & Sons. Chapter 6.

Virine, L. & Trumper, M. (2008) Project decisions-The art and science. Vienna: Management Concepts Inc. Chapter 2.