Lecture 3 4 CM

LECTURE 3: DECISION- MAKING DECISION PROCESS

DECISION A. IDENTIFY THE PROBLEM

> A JUDGMENT. The focal point of the process. The decision-maker must identify
the following criteria:
> A CHOICE between ALTERNATIVES.
1. CAPITAL
RULE: 2. TIME
3. PROFIT
One does not make a decision unless there is disagreement.
4. MAINTENANCE
Right decision demands adequate disagreement.
5. RETURN OF INVESTMENT
LIMITING FACTOR 6. INCREASE IN COST
7. RISK
Time is the limiting factor in decision- making. Time is a unique
resource and its supply is totally inelastic and absolutely B. SPECIFY OBJECTIVES AND THE DECISION CRITERIA
C. DEVELOP ALTERNATIVES
irreplaceable.
D. ANALYZE AND COMPARE ALTERNATIVES
Time budgeting is very important in decision-making. Effective
The use of mathematical and statistical techniques.
manager does not start with his work. He starts with his time.
E. SELECT THE BEST ALTERNATIVE
ANALYSIS PARALYSIS
F. IMPLEMENT THE CHOSEN SOLUTION
An inability to make a decision due to over-thinking a problem.
The carrying out the action. indicated by the chosen alternative.
An individual or a group can have too much data. The result is
endless wrangling over the upsides and downsides of each G. MONITOR RESULTS TO ENSURE ACHIEVEMENT
option, and an inability to pick one.

DECISION-MAKING
DISAGREEMENT BEFORE DECISION MAKING
The fundamental process of management. The process of
making choices by identifying a decision, gathering information, • Safeguard against the decision maker's becoming
and assessing alternative resolutions. hostage of the organization.
• Provide alternatives to a decision.
POOR DECISION
• Stimulate the imagination.
ERROR MADE INTHE DECISION PROCESS
Some managers demonstrate an inability to make a decision, ELEMENTS OF DECISION PROCESS

sitting down on matters, when the decision should have long
1. See if the problem is generic and could only be solved
been rendered.
through a decision established by a rule or principle;
BOUNDED RATIONALITY 2. Define the specifications which the answer to the
problem had to satisfy, i.e., of the boundary conditions;
Refers to the limit as control in making decision because of
costs, human abilities, time, technology and the availability of DEFINE THE SPECIFICATIONS
information.
• What the decision has to accomplish?
SUB-OPTIMIZATION • What are the objectives the decision has to
reach?
The result from each different department's attempt to reach a • What are the minimum goals the decision has to
solution that is optimum for their department. attain?
EFFECTIVE MANAGER • What are the conditions the decision has to
satisfy?
1. Makes effective decision.
2. Concentrates on the important decision with the 3. The thinking through what is right, i.e., the solution will
highest level of conceptual understanding. satisfy the specifications before attention is given to the
3. Knows that a decision must be based on principles. compromises, adaptations, and concessions needed
4. Distinguishes between right and wrong compromise. to make the decision acceptable;
5. Insists on alternatives. 4. The building into the decision of the action to carry it
6. Monitors the result of the decision to ascertain the out; and,
objectives. 5. The feedback, which tests the validity and
effectiveness of the decision against the actual course
of events.
DECISION TREE ANALYSIS
A diagram that describes a decision under consideration and the

implications of choosing one or another of the available
alternatives. It is used when same future scenarios or outcomes
of actions are uncertain.
It incorporates probabilities and the costs or rewards of each

logical path of events and future decisions, and uses expected
monetary value analysis to help the organization identify the
relative values of alternate actions.
EV = px
EV=P1X1 + P2X2+ PnXn
Where:
E.V.: Expected Value
p: Probability that the event will occur
x: amount to receive in the occurrence
EXAMPLE:
The owner of the company has to decide whether to prepare a

bid or not. It costs P3,000 to prepare the bid. If the bid is
submitted, the probability that the contract will be awarded is
40%. If the company is awarded the contract, it may earn an
income of P50,000 if it succeeds or pay a fine of P10,000 if it
fails. The probability of success is estimated to be 70%. Should
the owner prepare a bid?
The starting point (A) is a rectangle. The
owner has to choose between preparing a bid or not. If he

decides to prepare, the contract may be awarded or not.
A→ PREPARE
NOT PREPARE
Monday, February 26, 2024
LECTURE 4: PROJECT, PROJECT LIFE-CYCLE, AND

PROJECT PHASES
PROJECT
A temporary endeavor undertaken to create a unique product,

service, or result.
PROJECT CREATION FACTORS
PREDICTIVE LIFE CYCLE
The project scope, time, and cost are determined in the early
phases of the life cycle. Any changes to the scope are carefully
managed. Predictive life cycles may also be referred to as
waterfall life cycles.
ITERATIVE LIFE CYCLE
The project scope is generally determined early in the project

life cycle, but time and cost estimates are routinely modified as
the project team's understanding of the product increases.
Iterations develop the product through a series of repeated
cycles, while increments Successively add to the functionality of
the product.
INCREMENTAL LIFE CYCLE
The deliverable is produced through a series of iterations that

successively add functionality within a pre- determined time
PROJECT LIFE-CYCLE frame. The deliverable contains the necessary and sufficient
capability to be considered complete only after the final iteration.
The series of phases that a project passes through from its start
to its completion. It provides the basic framework for managing ADAPTIVE LIFE CYCLE
the project.
Are agile, iterative, or incremental. The detailed scope is defined
and approved before the start of an iteration. Adaptive life cycles
are also referred to as agile or change-driven life cycles.
HYBRID LIFE CYCLE
A combination of a predictive and an adaptive life cycle. Those

elements of the project that are well known or have fixed
requirements follow a predictive development life cycle, and
those elements that are still evolving follow an adaptive
development life cycle.
PROJECT PHASE
A collection of logically related project activities that culminates

in the completion of one or more deliverables.
PHASE GATE
Is held at the end of a phase.

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LECTURE 3: DECISION- MAKING DECISION PROCESS

DECISION A. IDENTIFY THE PROBLEM

Some managers demonstrate an inability to make a decision, ELEMENTS OF DECISION PROCESS

A diagram that describes a decision under consideration and the

It incorporates probabilities and the costs or rewards of each

DECISION TREE ANALYSIS

EV=P1X1 + P2X2+ PnXn

E.V.: Expected Value

p: Probability that the event will occur

x: amount to receive in the occurrence

DECISION TREE ANALYSIS

The owner of the company has to decide whether to prepare a

The starting point (A) is a rectangle. The

owner has to choose between preparing a bid or not. If he

LECTURE 4: PROJECT, PROJECT LIFE-CYCLE, AND

A temporary endeavor undertaken to create a unique product,

PROJECT CREATION FACTORS

PREDICTIVE LIFE CYCLE

ITERATIVE LIFE CYCLE

The project scope is generally determined early in the project

INCREMENTAL LIFE CYCLE

The deliverable is produced through a series of iterations that

HYBRID LIFE CYCLE

A combination of a predictive and an adaptive life cycle. Those

A collection of logically related project activities that culminates

Is held at the end of a phase.

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