Submitted by our tutor Liam Dillon from Turlon & Associates
Traditional analysis is deterministic (that without using probabilities) and in general most project software can be labelled as deterministic (i.e. Microsoft Project). As product professionals become competent in spreadsheet or project modelling software, came the advent of software that can represent uncertainty. Coupled with the deterministic software are the stochastic (probability and statistical) software packages. This has led to the inclusion of decision analysis software tools and techniques. The following lists five different stochastic software tools that are used for decision analysis, Monte Carlo simulation and recording project risks and actions:
Powerful for many types of calculations including payoff matrices, calculation of expected value and expected monetary value. It is easy to develop templates for small-to-medium sized decision trees. Can also be used to model and graph sensitivity analysis. Microsoft Excel provides various add-ins that can accommodate many of the stochastic tools. Examples are precision tools (for decision trees) and simulation ready (Monte Carlo simulation).
Monte Carlo Simulation: – For spreadsheets, there are two vendor choices available:Crystal Ball by Decisioneering Corporation (http://www.decisioneering.com): – Includes optimisation programs and information and is based on neural networks and heuristics.
Decision Tree Analysis: –
Modifying the decision tree will allow modification of the influence diagram with DPL only. Remember that value trees and decision trees use the same methodology and the difference is the units of measure (i.e. utility and money).
To read more of this article, please visit our training partner’s Turlon’s website
Sign up to receive the latest industry and company news direct to your inbox.