Risk Assessment in Decision Making

Part 1400-600 words

With the aim of being able to understand how to manage a decision maker's risk tolerance, your readings this week have explored the basic concepts that underlie risks and return trade-offs.

Why is it important for decision makers to consider their attitudes toward risk? Discuss the concept of the certainty effect and how it affects the decisions of individuals.

The Objective is to

• Solve cost, schedule, quality, and human resources issues associated with a program.
• Apply organizational strategic and capacity plans to utilize earned value management(EVM) techniques in project selection methodologies.

Part 2 4-5 pages

Your manager, Jim, presents you with two specific issues and wants you to submit a memo with your answer.

Question 1: Jim is about to purchase a piece of office equipment at the local office supply store. He just received a flyer that another store across town has the item for $1,024.99. He was planning on spending $1,050.95 for it. Would you agree that he should drive across town to purchase the item at the other store? (Be very specific in your response, and use some of the concepts of risks and axioms from the readings).

Question 2: He is about to purchase a piece of office equipment at the local office supply store. He just received an e-mail that a store across town has the item for $9.95. He was planning on spending $19.95 for it. Would you agree that he should buy it from the store across town? (Be very specific in your response, and use some of the concepts of risks and axioms from the readings).

Would your answers change if all these stores were online stores? Why?

Scenario for Outline

• Develop a scenario where you are a project manager and have the option of accepting 3 different projects. Utilize an unweighted factor scoring model to analyze which project you should accept. Develop between 5-7 items to be evaluated for each of the projects. In a paper of 4-5 pages, discuss each project, and provide a basic background for each; then, present a chart detailing the relevant factors to be analyzed using the unweighted factor scoring model. Finally, discuss which project was chosen based on the quantitative and qualitative data provided and explain why.