Making Essential Choices with Scant Information: Front‐end Decision Making in Major Projects

This book is an interesting one and is very useful for project management (PM) practitioners, PM scholars and PM academics. I also believe that it would be of particular value to those in postgraduate studies that are studying PM as part of their courses in a business degree and somewhat of interest for those undergraduate students studying engineering degrees in which project procurement and performance measurement forms a core subject. It is mainly suitable for postgraduate level students.

The book's subject matter and content is advanced and so would appeal to those undertaking postgraduate studies and would be an excellent reference book. Its essence is about focussing on front‐end issues which applies for studies in PM as well as program/portfolio management as well as those in general management who may be specialising in strategy or in public sector management. It has a main focus on infrastructure projects of a range of types with most examples being on the tangible infrastructure outcomes but it does take pains to include consideration of the whole basis of these projects being the satisfaction of a need. The need in question is often a public good such as transport or health that also begs questions about how to best deliver the benefit through projects.

The book is divided into five parts. Part 1 is the introduction. In Chapter 1, Terry Williams provides an overview of the book stressing, as do other contributors, that projects are driven a strategy based on a perceived need and he outlines how each chapter links to the theme of the book. Chapter 2 by Knut Samset discusses challenges at the front‐end of projects. His chapter discusses the quality of the project concept at the entry of projects into their life cycle. He cites the European Commission's view that project success is viewed through the lens of efficiency, effectiveness, relevance, impact and sustainability. He outlines how the quality and quantity of information is critical to success. At the front‐end he stresses that options should be open so in many cases scant information actually helps by not overburdening decision makers and forcing them to consider and close off options prematurely. The actual and opportunity cost of information is important and Samset brings the information investment at the front‐end to our attention.

The theme in Part 2 is aligning projects. Chapter 3 has the kind of authoritative chapter on implementing strategy through PM that can be expected and hoped for from Peter Morris. He questions some long help beliefs about the linearity of process of strategy being linearly driving projects with the PM input arriving after program strategy is fixed. He argues that the project manager has a role to play in strategy development and feedback and that the distinction between programs and projects remains contestable. He asks was the channel tunnel or some of the major airports a program or project as this may be more of a perspective than reality. More importantly for the book theme, he stresses the need for feedback loops and thus information flow to improve decision making about choices and directions. This chapter also provides useful insights into activities undertaken at the front‐end from concept selection to commissioning and the kinds of activities and information flows that characterise these phases. This stresses the role and need for project managers to be engaged in strategy development and not just the hired guns that deliver up what was asked for. The chapter also provides a wealth of references for those interested in following up the arguments. Chapter 4 by Kees van der Heijden on scenario planning was for me, an eye opener. I was well aware what scenario planning is in theory and had some idea how it may be used but this chapter provided me with some excellent insights about how scenarios are undertaken and the example he uses provides wonderfully illuminating reading. For me, this chapter was valuable in extending my understanding of the process of scenario planning and how it can be effectively used at the front‐end of projects. Chapter 5 on up‐front assessment of needs by Petter Næss was another chapter than for me delivered fresh and new ideas, ones I could use. The discussion on needs and needs analysis takes this topic to a higher level than is often found in the PM literature text books. This links well into stakeholder analysis and engagement and also draws upon flaws identified by Næss drawing upon work with his collaborator Flyvbjerg (Flyvbjerg et al., 2002, 2003). He concludes by stressing the point he made that needs and business case development must be based on a variety of needs assessment categories and must transparently highlight both advantages and drawbacks of options considered. Terry Cooke‐Davies contributes Chapter 6 with a discussion of doing the right project. Many readers will be aware of his work on critical success factors for project success. He presents current findings on his work with a focus on the importance of projects have a sound business case, a clear project strategy and notion of the expected scope of the project. What was new to me in this chapter was his discussion of a stakeholder engagement strategy. Two strategies he offers to align strategy at the front‐end of projects with delivery is a well‐planned business case and a well formulated engagement program. This chapter resonated for me with the theses recently undertaken by several of my own doctoral graduates on the importance of vision (Christenson, 2007), linking tangible and intangible benefits into a engagement plan (Nogeste, 2006) and stakeholder engagement (Bourne, 2005). The last chapter in Part 2 by Mark Winter is Chapter 7 on using soft systems methodology (SSM) at the front‐end of a project using an example from his PhD thesis. Again this chapter is at the frontiers of PM knowledge as well as being well suited to the book's theme. Winter not only explains the use of SSM at the crucial stage of PM but also provides an illuminating example of how and why it was used so that we can understand its utility. This example draws upon more recent versions of SSM approaches (Checkland and Poulter, 2006) so it is a new contribution to PM knowledge. SSM has been gaining popularity as an action research‐based approach (Maqsood, 2006; Sankaran et al., 2009) so this chapter is also useful for those interested in SSM as a research methodology.

Part 3 has a theme of generating information. Chapter 8 entitled “Optimism and misrepresentation in early project development” by Bent Flyvbjerg follows the sort of content that those familiar with his work would expect. The advantage of this chapter is that it represents an update from the considerable body of work that Flyvbjerg's team has assembled it also, for me, contained some fresh ideas or perhaps a slightly fresh focus due to the book's theme. The chapter not only contains some very citable data relating to cost and time overruns of projects (as his earlier papers do) but it also provides what I felt was better explanations of biases that I have read in his other papers and also his descriptions of the use of reference class seems richer than I have seen before and this together with his summarised recommendations about how to best undertake public sector accountability and transparency and public control does seem to add new sights that may not have been so available before. Chapter 9 by Geir Kirkobøen entitled “Decision behaviour – improving expert judgement” provides a controversial opening, stating that most individual expert's judgements have been worse that the use of simple heuristics, however, this is placed in context. Experts often do not get sufficient timely feedback to calibrate their assessments of risk and compensate for their inherent biases when dealing with highly complex situations. At first, this seems incongruous. However, on further explanation in the chapter based upon early work of Simon (1955, 1956) and Kahneman (Kahneman and Tversky, 1979; Kahneman and Lovallo, 1993) that it becomes clear that complex situations present conditions in which experts cannot take the time to contemplate numerous options nor do they have sufficient relevant information to do so therefore they are subject to many inherent biases. Reflection can help them but as Kirkobøen argues, frequently the situations are so messy and the problems so wicked (numerous valid solutions where it is unclear which is optimal) that feedback information and cause‐and‐effect analysis can be misleading. A solution offered is to ensure diversity of views between experts for such problems so that biases can be exposed or compensated for by multiple perspectives and that an “outside view” is also taken. This builds on the suggestions made by Flyvbjerg in the earlier chapter with the explanation of reference benchmarking providing a view of the likely degree of variance between estimated and actual outcomes from a valid reference benchmark data while the “experts” can validly estimate their expectations. Thus, and inside view can provide a rigorous project‐specific context forecast and this can be mediated by results from the “outside view” from reference data which provide a broader reference class view. So, if the experts consistently show a bias to underestimate on a certain class of project where the distribution of that misestimating is known, then using simple statistical analysis can develop not only a more realistic forecast but also one that can be made with a given level of confidence. This chapter also endorses with reasons provided, why a Delphi approach can be so useful provided that it brings diversity of opinion, independence, expertise being decentralised with specific valid local knowledge and that this collective knowledge can be aggregated. Chapter 10 focuses on the role of useful heuristics in effective decision making. Scheibehenne and von Helversen state in this chapter after some detailed discussion of the literature of academics such as Gigerenzer (Gigerenzer and Goldstein, 1996) that:

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  heuristics are not an exception but rather the rule when it comes to decision making in dynamic real‐world environments; and

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  experts who rely on simple heuristics can be as good or even better at predicting uncertain outcomes that machines relying on complex statistical models.

[…] to make valid judgements, we contend that a prediction/outcome feedback loop must be in place to enable learnability. Also the judgement task itself should be matched with the expert's knowledge base, and the metric used to elicit probability judgement should be both familiar and acceptable to the expert (p. 225).

This has an impact on establishing learnings from problems and crises because many serious problems occur infrequently so learning from the past should be carefully undertaken to describe and detail lessons learned in terms that provide the necessary feedback loop for experts to actually learn from. Chapter 12 by Gregory Parnell entitled “Evaluation of risks in complex problems” has some useful ideas about risk types and risk management that students of this area of PM would benefit from. This chapter provides a very useful table (12.1) that describes dimensions of problem complexity in terms of low (technical problems), medium (complex problems) and high (wicked problems). It also provides useful examples of risk matrices and other tools for risk assessment that scholars of risk management would find a very useful reference. The last chapter in Part 3 is entitled “Obtaining distributions from groups for decisions under uncertainty' by Roger M. Cooke. This is an interesting but I found it a complex chapter to follow as it requires some existing understanding of theory of structured expert judgement and calibration modelling and I do not share that in‐depth knowledge. It certainly seems, however, a valid chapter for this book.

Part 4 relates to analysing information. This section starts with Chapter 14, “Exploratory quantitative analysis of emergent problems with scant information” by Tim Bedford. This chapter compares and contrasts Baysian robustness, Bayes linear, and minimum information methods for handing quantitative decision analysis for limited information situations. It addresses some of the aspects of uncertainty sources such as when there is a lack of understanding about the major uncertainties and their interactions that can impact on the project; lack of understanding about the degree to which this problem is similar to other problems; and lack of understanding of the way in which future decisions will affect outcomes. The chapter would be suitable for experts in this area more than the average generalist PM scholars. This chapter is followed by Chapter 15 “Analyzing information techniques and analysis” by Bjørn Andersen. This is a useful chapter for many students and practitioners as it gives a comprehensive overview of information analysis tools and techniques for making assessment of projects at the front‐end. This would be of particular interest to those involved in risk management with details on pure data presentation aids, methods for structuring data to make assessments, assessment ranking tools and analysis techniques. Figure 15.2, for example provides a very handy summary of the use of these tools over a project timeline. Chapter 16 “Parametric analysis” by Philip Pugh provides a useful follow‐on from Chapter 8 by Flyvbjerg in that it outlines how reference class benchmark measures can be constructed with Figure 16.5 providing a good summary of the architecture of a modern cost‐forecasting model. There is no mention of the standard cost planning parametric approach that has been standard practice in the general construction industry for many decades now however the quantity surveying profession has not extended its literature beyond general building types so this chapter does extend our appreciation of the principles being applied more broadly in PM.

Part 5, Making decisions, completes the book. Chapter 17 “The impact of new information” by Kjell Sunnevåg explains how the use of decision tree analysis can be used in assessing the value of using new information in decision making. The examples provided illustrate the ideas well and comparison with options in share trading draws in knowledge areas that may be new to many in the PM world. Certainly the discussion on the issue of the value of gaining new information and its impact on decision making is worthwhile in this book. Chapter 18 “The complexity of decision‐making in large projects with multiple partners: be prepared to change” by Roger Miller and Brian Hobbs draws on recent work on project and program governance and the role of project sponsors at the front‐end of projects. They make much of the main shaping episodes that need to take place as the project idea moves through initial inception to full commitment of a project to be realised. This I felt was a particularly valuable chapter for PM practitioners. I wish this kind of knowledge was widely available when one of my DPM candidates was formulating his thesis as this is so relevant in how a project concept can be shaped and contoured into an effective project vision that serves to inspire PM teams (Christenson, 2007). This chapter brought valuable human soft skill insights to the book. Chapter 19 “Project profitability from society's point of view” by Kåre Hagen provides a very interesting view of project viability from a value to society perspective. It does not go into any depth on triple bottom line issues that link the financial, social and environmental aspects of any enterprise to a more holistic view of value, however, it does discuss more from an economics approach, the social value justification of projects and how the business case for projects can be approached when deciding on an appropriate discount rate to use in assessments.

In conclusion, I felt that this is a milestone book worth more of a detailed review that many of the books reviewed in this journal. I would not think that it will be used as a mainstream text by postgraduate PM students which is I feel a pity because it is very comprehensive and I felt leading edge. It certainly should be used as a reference book for any risk management and project feasibility courses or by PM practitioners who are involved in undertaking analysis at the front‐end of projects. I have a feeling that many of the chapters will be cited in many papers on this aspect of PM in the future.