Decision-making skills in project management

Revision as of 22:34, 2 October 2017

In project management, decisions need to be made on a frequent basis. Most are relatively unimportant, but others are critical and will cause the project to be successful or to fail. Decision-making is the act of choosing between two or more alternative options. In the wider process of problem-solving, decision-making involves choosing between possible solutions to a problem. The final decisions can be made through either an intuitive or reasoned process, or a combination of the two, depending on the nature of the decision. Reasoning has its roots in facts and knowledge, it ignores emotianl aspects and any other issues that may affect the way that the decision is implemented. On the other hand, intuition is more like a magical "sense", which comes from a combination of past experiences and personal values. It is definetely worth taking intuition into account, because it reflects life learnings, but also needs attention since personal perceptions may interfere with reasoning. More complicated decisions tend to require a more formal, structured approach, usually involving both intuition and reasoning. It is important to be wary of impulsive reactions to a situation, since hasty decisions may have big impact on a project, program or portfolio. ^[1]

Overview

Therefore, it is crucial to analyse the factors that decision-makers should consider before taking a decision. It depends on the type of the decision that needs to be taken, its magnitude and the knowledge and the skills of the decision-maker. The present article studies the different types of decisions and the methods that are used to approach them. Finally, not every individual can be considered capable of making any kind of decision. Thus, there has been defined a set of decision-making skills which will help groups or individuals to choose the best possible alternative.

Different types of decisions

Not all the decisions are the same. There are different types of decisions that the management needs to take during a project and at each case the decision-maker is different as well. Below it can be found a list with the most common ones:^[2]

a. Programmed and non-programmed decisions

Programmed decisions are concerned with the problems of repetitive nature or routine type matters. A standard procedure is followed for tackling such problems. These decisions are taken generally by lower level managers. Decisions of this type may pertain to e.g. purchase of raw material, granting leave to an employee and supply of goods and implements to the employees, etc. Non-programmed decisions relate to difficult situations for which there is no easy solution.

These matters are very important for the organisation. For example, opening of a new branch of the organisation or a large number of employees absenting from the organisation or introducing new product in the market, etc., are the decisions which demand more attention, resources and time and are normally taken at the higher level.

b. Routine and strategic decisions

Routine decisions are related to the general functioning of a project. They do not require much evaluation and analysis and can be taken quickly. Ample powers are delegated to lower ranks to take these decisions within the broad policy structure of the project manager or the organisation. The difference from the programmed ones is that they are not usually scheduled.

Strategic decisions are important which affect objectives, organisational goals and other important policy matters. These decisions usually involve a program’s orientation or huge investments on portfolios, are non-repetitive in nature and are taken after careful analysis and evaluation of many alternatives. These decisions are taken at the higher level of management.

c. Tactical (Policy) and operational decisions

Decisions pertaining to various policy matters of a portfolio are policy decisions. These are taken by the portfolio managers and have long term impact on the functioning of the concern. For example, decisions regarding how many projects can be running at each point of time according to the budget, etc. are policy decisions. Operating decisions relate to day-to-day functioning or operations of business. Middle and lower level managers take these decisions.

An example may be taken to distinguish these decisions. Decisions concerning payment of bonus to employees are a policy decision. On the other hand, if a bonus is to be given anyway to the employees, the calculation of bonus for each employee is an operating decision.

d. Organisational and personal decisions

When an individual takes a decision regarding their responsibilities and tasks within the project, it is known as organisational decision. But, if a decision is taken by the individual in regards with their personal matters (thereby affecting his personal life), it is known as personal decision.

This type is included because sometimes these decisions may affect functioning of the project as well. For example, if a project manager leaves the program, it may affect the program and its deliverables. The authority of taking organisational decisions may be delegated, whereas personal decisions cannot be delegated.

e. Major and minor decisions

Another classification of decisions is major and minor. Decision related to increase the number of resources by 50% is a major decision. Major decisions are taken by top management. Unlike for instance, a purchase of office stationery is a minor decision which can be taken by office superintendent.

f. Individual and group decisions

When the decision is taken by a single individual, it is known as individual decision. Usually routine type decisions are taken by individuals within the broad policy framework of the organisation. But when it comes to more crucial decisions, more stakeholders need to engage and assist to make a decision. Therefore, it is interesting to investigate in which cases a project manager should involve other members of the project.^[2]

Decision-making conditions

• Under certainty. A condition in which the decision-maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative.

• Under risk. A condition in which the availability of each alternative and its potential payoffs and costs are all associated with risks.

• Under uncertainty. A condition in which the decision-maker is not aware of all the alternatives, the risks associated with each, or the consequences of each alternative.

When project managers should involve others

Project managers are frequently responsible for managing situations where they influence contractors, consultants, or staff members over whom they have little or no direct control. In such situations of responsibility without authority, they need the acceptance and commitment of their direct reports to fully implement decisions. They could ask themselves two crucial questions; first when should they involve others and then to what extent this involvement should be.^[3] In case they decide to make the decision not individually, but with the assistance of the team, then the term changes to Group Decision-making^[4].

So one case would be if the project manager is self-confident enough to tolerate sharing power and the possibility of other's mistakes, the project manager can increase staff satisfaction with their job and the project manager's style of leadership through more participation. Or another reason could be because some decisions, e.g., changing work procedures or setting new standards, will not be effectively implemented if those responsible for following the new procedures or adhering to the new standards are not involved in the decision making process. They involve them because their wholehearted (or at least neutral) acceptance will be necessary to get the job done. It is not a matter of whether they will complain, it is whether their acceptance is essential to implement the decision. Acceptance is defined here as positive, or at least neutral, feelings about the decision and active commitment to the decision. Will such acceptance by others be needed to implement the decision? When compliance of others is all that is needed, then the answer to the acceptance question is “no.” Examples of this are requiring hard hats and safety glasses in a particular work area, deciding what is confidential information, or requiring legal department review of a contract before it is issued. If, on the other hand, the others' judgment would be needed, creativity, or initiative to implement the decision, the answer would be “yes”.^[3]

What makes a decision of high-importance and complex

Of the various elements that characterise a decision to be complex, the most significant is the inevitable changes that will occur in the business environment of a project, which will necessitate adjustments to all elements of the project. Knowing this, the successful project leadership team evolves, practicing situational project leadership, adapting and modifying their approach to accommodate the inevitable changes. In addition to adapting to change, the sheer size of the work involved for large projects weighs heavy on the project team. Research has demonstrated that the smaller the project team and the fewer deliverables, the greater the likelihood is for the decisions and the project to be successful. Therefore, the project leadership teams need to reduce the size of work packages to "seem like" many small projects, as opposed to one very large endeavour. As a final point, team fatigue and burnout lead to complex human interactions and unavoidable staff turnover, both of which are difficult to predict and manage.

Consequently, by nature project decision-making is difficult enough without daily challenges. The classic trade-offs of time versus cost are constantly encountered; or of time and cost, versus quality. Often, decisions must be made to act to prevent likely risks, or to ignore them. The complexity, the importance and the difficulty increases with poor project planning, poor status tracking or change control, slow reporting of open issues, or failure to make essential decisions quickly.^[5]

Decision-making methods and approaches

Griffin's process for decision-making. ^[6]Step 1 is split into two steps.

In order to structure and simplify the decision-making, there have been developed several processes to recognise and define the nature of a decision situation, identify the alternatives and put one of them into practice. Therefore an effective decision would optimise the factors of time, scope, budget and quality of a project.

Classical or Griffin’s Decision-Making Approach

Along the literature, there are many methods to approach a decision, with different number of steps. However, in this article it will be presented the classical approach to making decisions in management, which also has been described by Ricky Griffin, and has a very rational set of steps:^[7]

1. Identify the problem – recognize there is a problem, define the goals, and gather the information needed to make a rational decision.

2. Generate all possible solutions – brainstorm all solutions, preferably in a group. Don't filter anything even remotely reasonable at this point.

3. Generate objective criteria – generate the measurement criteria to assess the possible solutions for feasibility and reasonableness. Begin considering criteria for measuring the success or failure of the decision.

4. Select the best option – using the filtering criteria, make a decision on the best possible solution.

5. Implement the solution – put into place the preferred solution.

6. Evaluate and monitor the results – track and monitor the outcome of the implemented solution and the results that ensue. This may take some time for long-term outcomes to become apparent. Evaluate whether the proposed solution works or should another solution be implemented.

In some cases the steps are 7, separating the first one into 2 different ones, one for identifying the problem and a second for gathering information for it.^[7]

Comparison between project and program decision-making

Decision-making processes for projects and programs differ significantly in the timing, pacing, and number of major decisions, as well as the nature of the decision-making processes employed. Most large or important project decisions are bound by the project's basic assumptions, and project managers tend to have a preference for deductive mental processes when making decisions. The occurrence of large or important program decisions seems to persist throughout the program life cycle because they are prompted by setting the assumptions for each project when these programs kick off. Because the program delivers benefits, which cannot be as clearly defined as products or services, its environment is not as clearly defined or bound by set basic assumptions; hence, inductive reasoning seems more suited to meeting the decision-making needs of program managers.^[8]

Tools and techniques

Project managers often use some extra methods that can support the correctness of their decisions. While the basic principles might be the same, there are dozens of different techniques and tools that can be used. There can also be used a combination of these techniques to arrive at the final decisions. So, in that case, a skill that it would be an advantage for the project managers to have is to select which of the below are appropriate and relevant at any case.^[9]

• Decision matrix: A decision matrix is used to evaluate all the options of a decision. When using the matrix, create a table with all of the options in the first column and all of the factors that affect the decision in the first row. Users then score each option and weigh which factors are of more importance. A final score is then tallied to reveal which option is the best.
• T-Chart: This chart is used when weighing the plusses and minuses of the options. It ensures that all the positives and negatives are taken into consideration when making a decision.
• Decision tree: This is a graph or model that involves contemplating each option and the outcomes of each. Statistical analysis is also conducted with this technique.
• Multi-voting: This is used when multiple people are involved in making a decision. It helps whittle down a large list options to a smaller one to the eventual final decision.
• Pareto analysis: This is a technique used when a large number of decisions need to be made. This helps in prioritizing which ones should be made first by determining which decisions will have the greatest overall impact.
• Cost-benefit analysis: This technique is used when weighing the financial ramifications of each possible alternative as a way to come to a final decision that makes the most sense from an economic perspective.
• Conjoint analysis: This is a method used by business leaders to determine consumer preferences when making decisions.
• SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities and threats, which is exactly what this planning tool assesses.
• PEST Analysis: An acronym for political, economic, social and technological, PEST can improve decision-making and timing by analyzing external factors. This method considers present trends to help predict the future ones.

Skills that the decision-maker needs to be equipped with

Since it has been clarified what decision-making is, what types of decisions are usually met in projects and how complicated they can be, it should be analyzed what kind of skills and qualifications a project manager or generally a decision-maker needs to fulfill in order to be able to make effective decisions.^[10]

The ability to gather and select information

This task should not be underestimated and be viewed as simple. In our ages of endless sources of information, it is quite a challenging task to find the right sources of information. Project managers have to make informed decisions, based on the right information channels. Finding, sorting, selecting and using the right data are crucial decision-making skills. Selecting only proven sources and channels when searching information, consulting qualified specialists and professionals, sticking to information related to the problems and collecting information allow to find possible actions and alternatives.

Finding possible options and solutions

Before choosing the right option, you have to find, view and consider different possible solutions and alternatives. One of the most known and helpful tools and techniques to do that is brainstorm process which consists of listing down all the ideas and options and prepare to analyze.

Analysis skills

When there is a list of possible alternatives, the next question is which one to pick. The choice should be made based on a structured analysis. Hence analysis skills are vital decision-making skills for effective decisions. The analysis is about ability to break problems into parts to see relationships, reasons and factors. This is the basis for creating plans and finding right solutions. Analysis skills are a whole combination of abilities such as problem-solving skills, management skills, interpersonal skills, setting goals and more. There are several techniques and methods to identify the ‘pros and cons’ of each alternative, like SWOT, PEST and Porter analysis.

Selecting the best option

This is the most important ability in the decision-making skills list. Selecting the best alternative means an effective decision. If the analysis has been conducted in the right way, then it more likely to select the best option.

The ability to evaluate the final plan

Before the project manager starts to put into effect their decision, they take a final look at it. This process plays a key role to improve the decision-making skills. The ability to review and evaluate the plan will allow to see common errors and missed opportunities. Sometimes, due to various reasons, the decision-maker is prone to miss obvious points and giving it to a third party for review could be a way to address this.^[10]

Limitations

Facts about the Classical Model

However, there is virtually no support in real-life management studies for the utility of the rational model. There are a lot of assumptions that must be made in practice and in reality the circumstances are never ideal. Therefore there are some limitations that come along with the process and it would be more than optimistic to consider that the factors of the below list always are true:^[11]

a) The problem is clear and unambiguous

b) It has been identified the real problem and not just a symptom of the problem

c) Project managers have perfect information

d) Objectives are known and agreed to by everyone

e) The alternatives and their consequences are known or predictable

f) Project managers are rational, systematic, and logical

g) Project managers work in the best interests of their organizations

h) Ethical decisions do not arise in the decision-making process

i) Time and resources are not a consideration

j) Decisions will be implemented willingly and supported by all stakeholders

Inevitable issues in reality

Nevertheless, in conclusion, no matter how many structured methods and processes have been developed to perform successful decision-making, there is a number of factors that can negatively impact the process. In these cases the classical model can still be useful but it needs to be adjusted to fit each case. These factors come from different directions and it is not always easy to avoid them due to the circumstances.^[12]

• Inadequate information: If there is not sufficient information, decisions can be made without considering all the facts. The project manager needs to take time to collect the necessary data even if there is a particularly short timescale.
• Information overload: Too much information than it can be handled may also prove detrimental to the decision-making process. This can be overcome by a department or team coming together and deciding what information is the most important, relevant and the reasons for this.
• Too many stakeholders: Reaching a decision within a committee can be difficult, as everyone has their own views and values. Although it is important to take these into consideration, it is usually best to designate someone to make the decision.
• Vested interest: If any of the decision makers has an incentive to reach one particular result, a fair decision-making process could be compromised.
• Resistance to change: People are often attached to a specific way of doing business - particularly those in the management team - and for some the prospect of change can be difficult.
• No attachment: On the other hand, some decisions cannot be made because the decision-maker is comfortable with any decision. In this instance, a structured decision-making process can be beneficial.^[12]

Alternatives

Since the classical model has certain drawbacks, arises the need to use alternative approaches in order to make a decision. Depending on the factors that the decision-maker needs to take into account, the type of decision and the available information there are several project management tools that can be used in order to supplement the Griffin's model and validate the rightness of a decision. Some of these tools, that have also been mentioned above, are the SWOT analysis, the Maslow's pyramid of needs, the Pareto principle, the Analytical Hierarchy Method(AHP), the Monte Carlo simulation and the Decision Tree. Therefore, the project manager can use one or multiple of these to back up the selected decision.^[13]

Conclusion

Summarising the information of the present article, it becomes clear that decision-making in project management is not a simple process. There are different types of decisions and project managers should have certain skills to pick one of the alternative solutions or at least have the experience to implement the process and some of the tools and narrow down their options. Depending on the circumstances and the size of a project, the approach of decision-making can be different and it is never guaranteed that the right solution will be selected. However, experience, personal skills, information and project management knowledge are some coefficients that can show the right direction.

Annotated bibliography

1. Decision making for project managers: This article taken from the PMI web page is analysing which aspects should be kept from general decision-making to the project management decision-making. It captures the need that project managers need sometimes to consult one or more people before they make a decision and explains how the decision tree tool can be used efficiently.
2. Project Management Success and Decision-Making Under Difficult Contexts: The purpose of this scientific paper is to explain the various factors that influence the project manager before he takes a decision. It aims to make it clear to the reader that usually the circumstances are difficult and hence decision-making becomes complicated. It also includes examples that the challenges that the manager has to address demand a lot of attention.
3. Fundamentals of Management: This book of Ricky Griffin summarises all the factors that are taken into account to make a decision and formulates a process of reasonable steps. This process is recommended to project managers when they are called to take a decision. Certainly, this process is not the only one and it can be backed up and validated by other tools and techniques.
4. When it comes to decision making, are projects different from programs?: This paper points out the major differences between project and program decision-making and explores the more recent trends to help program managers when the increased volume and the complexity influences the use of a traditional decision-making approach.
5. Critical decision-making skills for project managers: The common decision-making approach is structured and very useful in many cases of project management. However, there are quite a lot flaws and limitations which can be an obstacle for picking the right alternative. This paper analyses what these liabilities are and tries to prove to the project management society that the Griffin's process alone is not enough.
6. Decision Making Models In Project Management: A comprehensive article by Snehal Joshi which explains the need of decision-making tools and gives a brief description for some of them to understand better the facts, the means, the ends and the values which will influence the final decision.

References

1. ↑ Decision Making, What is Decision-Making?. https://www.skillsyouneed.com/ips/decision-making.html
2. ↑ ^{2.0 2.1} Smriti Chand. Decision Types: 6 Types of Decisions Every Organization Need To Take. http://www.yourarticlelibrary.com/decision-making/decision-types-6-types-of-decisions-every-organization-need-to-take/25660/
3. ↑ ^{3.0 3.1} Smith, M. L. (1993). Decision making for project managers: when to involve others. Project Management Journal, 24(2), 17–22. https://www.pmi.org/learning/library/decision-making-project-managers-involve-others-2107
4. ↑ "Group decision-making", https://en.wikipedia.org/wiki/Group_decision-making
5. ↑ Stacy Goff. Project Management Success and Decision-Making Under Difficult Contexts. Page 2. International Project Management Association, December, 2011. http://www.ipma.world/assets/re-DiffContexts.pdf
6. ↑ Rafiq Elmansy. The Decision-Making Process Designers Should Use Daily. http://www.designorate.com/decision-making-process/.
7. ↑ ^{7.0 7.1} Griffin, Ricky W. Fundamentals of Management. Mason, OH: South-Western Cengage Learning, 2012. Print.
8. ↑ Deguire, M. (2010). When it comes to decision making, are projects different from programs?. Paper presented at PMI® Global Congress 2010—North America, Washington, DC. Newtown Square, PA: Project Management Institute.
9. ↑ Sammi Caramela, B2B Staff Writer. Techniques and Tools to Help You Make Business Decisions, http://www.businessnewsdaily.com/6162-decision-making.html.
10. ↑ ^{10.0 10.1} Marin Valchev. Decision Making Skills: List, Tools & Definition. http://www.businessphrases.net/decision-making-skills/
11. ↑ Parth, F. R. (2013). Critical decision-making skills for project managers. Paper presented at PMI® Global Congress 2013—EMEA, Istanbul, Turkey. Newtown Square, PA: Project Management Institute.
12. ↑ ^{12.0 12.1} WikiJob. Decision making, Which Factors Can Lead to Poor Decision Making?. https://www.wikijob.co.uk/content/interview-advice/competencies/decision-making
13. ↑ Snehal Joshi. Decision Making Models In Project Management. https://www.projecttimes.com/articles/decision-making-models-in-project-management.html