quantitative decision making and risk management cs3300 fall 2015
TRANSCRIPT
Quantitative Decision Making and Risk Management
CS3300Fall 2015
Review
Critical Path
Scope
Staffing Plan
Activity-Based Costing
Making Decisions
Is this decision the right one. Quantitative techniques can HELP with the
process Decision Trees help with multistage or
sequential problems.
Tree Syntax
Decisionpoint
Course of action 2
Course of action 1
Chanceevent
Branch probability
Branch probability
Branch probability
Draw the Decision Tree
RULE 1: The net value at the end of a branch equals the sum of the costs and benefits along the tree from the first decision event to the end of the branch in question.
RULE 2: Trees are evaluated in reverse order from the sequence of events. If evaluating from right to left, a chance event where 2 or more branches converge, the expected value is the sum of the net value for each branch times the probability of that branch.
Draw the Tree
Rule 3: At each decision point, select the expected value which best meets the objective from among the expected values. For minimization, pick smallest value, for maximizing pick the largest value.
Example Situation
You have the option of taking an income tax prep course. If you attend the course, it costs $35. The course claims that 75% of the students save an average of $60 on their taxes. The course also says 20% of the students save $35, and 5% find they save nothing. Should you take the course?
Take theCourse??
No (no cost, no benefit)EV = 0
Yes, -35
Save 60 (60- 35)*.75 = 18.75
Save 35
P=.75
P=.20
Save 0
(35 -35) * .2 = 0
(0 – 35) * ,05 = -1.75
EV = 18.75 + 0 – 1.75 = 17
P=.05
Decision Matrix
Need to choose an option from a list. Need team members buy-in and a way to show upper management how you arrived at a decision.
Matrix Step 1: Generate a list of choices Step 2: Generate criteria for selection Step 3: Assign a weight to criteria based on
priority Step 4: Assign a value to each choice/criteria
intersection that shows how well it is supported
Step 5: Multiply number by weight of criteria Step 6: Sum total values for each column and
choose maximum
Example
Want to buy a new laptop
Alienware Mac
Weight (3) 3 / 9 5 / 15
Screen Quality (2) 3 / 6 5 / 10
Compile Speed (5) 5 / 25 3 / 15
Graphics Card (5) 5 / 25 3 / 15
Sum 65 55
exercise
What should the target language be for a T-square clone.
Risk Management
Risk Assessment – what are risks and potential impact
Risk Control – how will we resolve the risk
A measure of the likelihood and loss of an unsatisfactory outcome affecting the software project, process or product.
Risk in itself is not bad; risk is essential to progress, and failure is often a key part of learning. But we must learn to balance the possible negative consequences of risk against the potential benefits of its associated opportunity. (Van Scoy, 1992)
If you don’t actively attack the risks, they will actively attack you. (Tom Gilb)
Software Risk
Project Risk – resource constraints, external interfaces, supplier relationships, contract restrictions.
Process Risk – planning, staffing, tracking, quality assurance, configuration management, requirements, etc.
• Product Risk – requirements stability, performance, complexity, test specs.
Risk Identification
What is risk? Probability of occurrence Impact of risk Exposure (probability * cost) or qualitative (see
next graphic)
Software Engineering Institute paper on Risk Management
Mitigation Strategies
Acceptance Avoidance Protection Reduction Research Reserves Transfer
Taxonomy Analysis of Our Project