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Expected Utility Theory as a Guide to Contingency Allocation

Barbara Thibadeau, Oak Ridge National Laboratory

Chanaka Edirisinghe, University of Tennessee Introduction
As a means of compensating for the uncertainty associated with projects, contingency (in terms of both cost and time) is generally included in an initial project estimate. Cost contingency, also referred to as management reserve or allowance, is the amount that is added to a project's cost estimate to allow for additional expenses that may likely be incurred during the project's lifetime (such as those that result from an incomplete design at the time the project cost estimate is established). Time contingency represents the time that is added to the project's anticipated finish date to guarantee that project's published finish date can be achieved with some reasonable certainty. Assuming that the technical challenges of the project can be met and thus can not (or will not) jeopardize successful project completion, the remaining risks to a project are over-budget and/or late completion. Both of these risks can be mitigated (or eliminated) with a proper contingency allocation strategy and exacerbated by an improper one. In some sense then, contingency management is one of the most important aspects of good project management. Yet, despite this importance, the cost contingency allocation problem has been sparsely addressed in academic literature. While a plethora of algorithms exist to assist project managers in assessing the health of a project and estimating its final cost, little exists in the area of optimized contingency allocation over time. The existing research (as it relates to cost contingency) is dominated by risk-based methods by which to establish a cost contingency reserve. In fact, only one mention of the importance of establishing an allocation plan has been found in existing literature. Those authors (Noor & Tichacek, 2004, p 3) propose the development of time-phased risk profiles, from which a time-phased contingency allocation profile can be developed. In this paper, we explore the relationship between expected utility theory and the contingency allocation challenge and introduce a utility-based approach for the development of a long range contingency allocation plan. All projects follow a similar sequence of activities that begins with feasibility or conceptual design studies. These are followed by detailed design efforts. Once the designs are finalized, fabrication or construction commences. The project finishes with installation, testing, commissioning or operations activities (Morris & Hough, 1987, p5). These can be separated into two distinct stages, the 'creativity' stage and the 'execution' stage. The 'creativity' stage is characterized by innovative, risk-seeking behavior. Once the designs have been finalized, the project is required to 'freeze' the existing configuration and proceed with construction activities. After this point, the designs must be adhered to, not improved; this is considered the execution phase of a project and can be viewed as risk averse. One of the more heavily researched areas in the project management community is that of project failures (see, for example, (Morris & Hough, 1987, p7-13). Scope creep and delayed finalization of requirements are two of the more frequently mentioned contributors. When these occur, the duration of the 'creativity' stage is increased and the start of the 'execution' stage is delayed. In practice, it is difficult to change the focus and behavior of a project team from a free-thinking, exploratory organization to one that is focused on execution of the project (as it stands in the current design). The utility-based contingency allocation plan proposed in this paper links these behavioral attributes to allocation decisions, providing a plan that offers appropriate decisions at appropriate times.

Related Research
While other researchers (Riggs, Brown & Trueblood 1994, p521) have observed that a project can be described in terms of a utility function, to the best of our knowledge, none of them have associated the behavioral aspects of expected utility theory to a project's contingency allocation decisions. Utility theory attempts to capture the behaviors of individuals (usually referred to as gamblers) in terms of the ways in which they make decisions. In general, decision making under uncertainty has been approached via expected utility theory (Wahlström, 1975, p. 483) and Morgan and Henrion (1990, p25) discuss the use of multi-attribute utility functions to help in the decisionmaking process. Piney (2003, p.28) applied utility theory to risk management and notes (in talking about a project manager's goal to make a profit for the corporation) that, ''it is in the project manager's interest to focus on actions that will limit the chance of budget overruns, even at the expense of abandoning the opportunity for larger potential gains.'' Bard (1990, p756-764) tackled uncertainty in the selection of inter-related R&D projects with the use of

@2006, Barbara Thibadeau 1 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington

In these types of complex value problems in which the consequence of a decision cannot be described by a single attribute and the decision maker is evaluating ‘trade-off’s rather than explicit changes.S). Schoemaker. p15). on time and within budget).C’. 83. in the positive domain. that same individual will behave in a risk-seeking manner. Hull and Thomas (Hull & Thomas. preferring a loss that is merely probable over a smaller loss that is certain. p13-27. staying within cost/budget limitations. by von Neumann and Morgenstern. Schoemaker. one behaves in a risk-seeking way.S’)=0 represents utter failure. noting that some people have a utility function that is discontinuous at the origin. independently. Kahneman & Tversky. Kahneman and Tversky (Kahneman& Tversky. 1979 p264-267.multi-attribute utility theory. a decision maker will select the alternative that provides the highest expected utility (Keeney. suppose contingency request r1 is submitted. Each contingency decision is evaluated in terms of its contribution to the technical.S)=1 represents complete success while u(T’. overweighting things they believe to be certain relative to those that are only probable. Luce. for example. This proposed utility function captures the characteristics of a successful project highlighted by other researchers (see. p806. Given the existence of a project utility function. 2000 p35-56. C and S represent achievement of the technical. S' and C' represent failure to meet them. Fishburn. Riggs et al (1994. competing design or technical approaches) and they select the alternative with the maximum expected utility. A Multi-Attribute Project Utility Function We propose a project utility function that incorporates technical superiority (the degree to which the project delivers state-of-the-art capabilities) as well as successful delivery of that technology (the degree to which the project is completed. They demonstrate that a risk-averse individual. 1944. the gamble is worth far less than its expected value. In utility theory a 'sure thing' is viewed in terms of a certainty equivalent and is the amount of money that a gambler would rather have for certain. 1996 p269-283. affects the cost attribute C with a consequence of c1 and affects the schedule attribute S with a @2006. p523) claim that. will behave in a risk-averse manner. when offered choices with positive outcomes. They attribute this to the adverse emotional reaction people have to the idea of negative cash flow. This represents the maximum amount that individuals are willing to pay for a particular gamble and has been described as the amount at which an individual is indifferent to a gamble. a meaningful contingency allocation decision strategy is one that maximizes this utility. a decision maker wants to chose the particular combination of attributes that maximizes his or her utility. Morris & Hough. when faced with a choice of negative outcomes. Empirical studies have shown that expected utility theory often violated when decision makers are asked to make intuitive judgments (see. 1980. 1993.'' They define a project in terms of these three attributes. the worth of a gamble to an individual exceeds the expected value of the gamble. Given these axioms.82.1979. PMI. cost and schedule objectives and T'. where T. in the concave case. u(T. 95) and is consistent with that proposed by Riggs et al. This request affects the technical attribute T and results in a consequence t1. Utility Theory and Observed Violations Modern utility theory for decision-making under uncertainty was developed.1987. p12. if the axioms are obeyed. they generate weighted utilties which are used to evaluate different project options (e.C. the intent is not to maximize profit but rather to maximize some subjective preference for achieving technical/performance criteria. the individual's attitudes toward risk can then determined by examining the utility of the expected value of the gamble and the expected utility of the value of the gamble (Fishburn. The Allais Paradox is a frequently cited example which shows that individuals do not consistently make choices in the same way. Even though attributes may not be comparable. These utility functions represent the decision maker's project success preferences (as measured by the status of the project at completion) and hence. Using the Analytic Hierarchy Process. as u(T. and meeting schedule milestones. That is. 1988 p11-15. preferring a small sure gain over a larger gain that is merely probable. In the negative domain. 1988 p11-15. p13). decision makers are risk-averse. cost and schedule dimensions of the project. however. instead of taking some risk. They argue that these violations occur because individuals tend to view events in a relative sense. p15-29). As an example. p 269) explore a number of cases in which observed behavior contradicts expected utility theory. Conversely.80. 68. 254)).2000 p 65. for example (Bernstein. multi-attribute utility theory provides a way of measuring outcomes (Keeney & Raiffa. p245) also comment on this idea of a negative domain.C. These axioms explore the preferences associated with different opportunities (or gambles) and highlight the mathematical properties that couple these preferences.g. Barbara Thibadeau 2 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington .VonNeumann & Morgenstern. They postulated a set of axioms about ordering and preferences so that.. In the convex (risk-seeking) case. 1973. ''In many project management situations.

technical or schedule baselines. If a project has insufficient cost contingency to respond to all realized risks. Requests for contingency originate in response to three very general conditions. That is. y 2 . a project's utility at period t can be described by t t t t t t U P ( x1t . n (1) Since there are two types of contingency. that threaten a project’s cost. a schedule component (that represents on time completion) and a scope component (that represents the degree to which the original project specifications are adhered to over the life of the project). those that call upon cost contingency and those that draw down the schedule contingency reserve. cost increases due to poor quality estimates or unforseen events) Incorporate new technology Exercise of options or economy of scale procurements Consequence Maintain existing project scope in baseline No scope is reduced Utility Scope Scope Variable x1t t x2 Enhance performance of project by improving project baseline Enhance reliability (by providing spares. This latter component reflects the within budget completion criteria of a successful project. Then. This utility is comprised of a performance component (that reflects the technological superiority).2. we introduce a novel form of a project’s utility. Additive utility functions must satisfy utility preference and utility independence criteria.3. As an example. one could reduce or eliminate non-essential items that would have enhanced the project but are not critical to its completion (such as reducing testing time or eliminating redundant systems) or substituting lower cost alternatives that meet specifications but are not those originally included in the project plan. w2 and w3 are scaling factors assigned to the individual utilities (with w1+ w2+w3=1 and wi ≥ 0 for i=1. These can be classified as technical risks.g.consequence of s1. ci . A project's schedule utility is defined by the degree to which it finishes on time. is the desired vehicle for the contingency allocation model. An additive utility function. z t ) + w3U 3 ( x1t . one must be able to translate these risk sources to quantifiable utility functions that satisfy these independence conditions. Therefore. the decision maker wants to be sure that. new opportunities and unforseen events. Source Cost Contingency Cost Contingency Cost Contingency Cost Contingency Decision Respond to realized technical risks (e. A project's performance utility is defined by the degree to which it exceeds the technical parameters promised to the sponsor. Schedule utility is impacted by risks as well as opportunities. called risk sources. To do so. y3 . y 2 ) + w2U 2 ( y 3 . The decision maker wants to be sure that. equipment failure) Respond to realized cost risks (e. Scope Utility ( U 3 ). x 2 ) (2) where w1. r1 ) ≥ u (t i .g. Performance Utility ( U 1 ). z t ) = w1U 1 ( y1t . using Riggs' notation. ri ) where i = 2. that the utility gained from this request exceeds the utility gained from all other n choices. The decisions that affect scope utility are responses to realized risks.Κ . A project's total utility is defined in terms of the cost and schedule contingency decisions that represent the project's response to risks that are realized and opportunities that arise and is represented by the sum of the component utilities described above. The decisions that affect technical utility are considered opportunities. c1 . u (t1 . there are two types of contingency decisions. cost contingency (measured in dollars) and schedule contingency (measured in days). Total Project Utility ( U P ). y1t . x 2 . The utility components are described as follows. A project's scope utility is defined as the degree to which the promised baseline scope is delivered to the sponsor. Barbara Thibadeau 3 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington . Let xit and yjt represent the cost contingency dollars allocated in period t towards type i risks and type j opportunities respectively (where the opportunities and risks are defined as in Exhibit 1).3). Schedule Utility ( U 2 ). The relationship between the different types of decisions and the individual component utilities (for a single period t ) is shown in Exhibit 1. Let zt denote the schedule contingency days allocated in period t. flexibility) Performance Performance y1t t y2 @2006. based on these decisions. then one alternative is to modify the attributes of the scope of work that is delivered. This includes performance improvements due to incorporation of new technology or enhanced reliability due to actions such as the purchase of additional spares or incorporation of redundant systems. if request r1 is approved.

is focused on the quest for technical superiority and hence is naturally risk-seeking. The initial phases of a project are largely comprised of design activities. project percent complete is evaluated against total project dollars. The 'creativity' phase. Barbara Thibadeau 4 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington . From this approach. In general. Enthusiasm is high. This creates a cumulative profile which is 'S' shaped. The decisions that are made in this phase are those that extend the state-of-the-art frontier. From a technological perspective.Source Cost Contingency Schedule Contingency Decision Procure schedule float Consequence Maintain project finish date by working additional shifts. Phase I. Cumulative plan data from an ongoing project is plotted in Exhibits 2 and 3. From the utility perspective. Uncertainty dimishes as actual costs for equipment and construction (vs the estimated value) become known and flexibility (and the ability to respond to design changes) decreases. As the detailed design is completed. the remainder of the project is just execution of the decisions made in the design phase. only testing or commissioning or operations activities remain and the costs per period once again stabilize. It is in the beginning of this phase that one sees large increases in costs from period to period. This marks the transition to the risk-averse phase. outsourcing or hiring additional staff Maintain project finish date by using schedule float Utility Schedule Variable t y3 Respond to realized schedule risks Schedule zt Exhibit 1 Project Contingency Allocation Decisions Actual Project Data Viewed from Utility Perspective All projects have a similar spending (or baseline) plan. they are encouraged. requests for contingency to support pursuit of these new and innovative concepts are rarely rejected. at the finish date is 100% complete. contracts are being awarded and subcontractor effort is being added to the project. one can view a project's progress (the percent complete) as a measure of the utility of the dollars spent on a project (U($)). over time). Towards the end of this phase. During this period. During the 'creativity' stage. procurement of equipment components and physical construction commences. innovation and exploration are not only desired. p24) remarks that “the possibility to influence and change the project is highest at the early stages because conceptual decisions have not been made or taken effect”. This 'execution' phase. At inception. most of the expenses incurred are associated with labor costs. convex functions represent risk-seeking behavior and concave functions signal riskaverseness. In fact. Numerous (and possibly parallel) paths are explored to ensure the the project is comprised of only the `latest and greatest' technology and can offer `state of the art' performance. the plan for this period is relatively stable. focuses on within budget and on-time completion and is more conservative. In Exhibit 3. Therefore. The 'creativity' stage is convex while the 'execution' stage is concave. Once the 'execution' stage begins. it is not unfair to say that all of the technical creativity and innovation of a project occurs while the design is being generated. Therefore. the contingency pool appears unlimited and the project finish date is many years into the future. the project is 0% complete and. While in the risk-seeking phase. Phase II. the conceptual designs that formed the basis of the original project proposal are `fleshed out' in more detail. This transition is at the intersection of the convex and concave utility functions and is graphically @2006. the profiles shown in Exhibit 2 and 3 suggest that risk-seeking and risk-averse behaviors are both present in a project and that these behaviors occur during different project phases (that is. Karlsen and Lereim (2005.

The latter is a politically dangerous option that could jeopardize the entire project (and diminish the contribution of scope utility to a total project's utility). Changes or modifications to designs become more costly and mitigation strategies that could have provided alternative solutions (that is. relative to work completed is shown in Exhibit 5. utility is defined in terms of project completion (delivery of the chosen technology. contingency requests that enhance the project's technical utility are highly valued. From a utility theory perspective. In this phase. relative to the progress on the project.represented by the shaded area in Exhibit 2. technical utility has little value in the later phases of a project. is shown in Exhibit 4. provided an alternative that did not require a call upon contingency) tend to diminish with time. 1) add resources (money) to resolve the issue or 2) eliminate a portion of the project scope. possibly even greater. The percent of the contingency reserve that was allocated. contingency requests that improve the project's likelihood of finishing on time become increasingly important. This approach is one that is focused on project completion (those requests that contribute to a project's scope and schedule utility functions) and elects to preserve contingency as a hedge against the future rather than approve 'discretionary' requests. the allocation of large dollars no longer makes large differences and the project is more interested in ensuring success than pursuing additional technologies. During the early phases of a project. technology will never occur unless that technology can be incorporated at no additional cost and in the existing time frame. Once a project enters this phase. Since flexibility diminishes once procurement and construction activities have begun. Scope preservation is important in both phases and it is the only utility that has the same form throughout the life of the project. @2006. These utlities can be explained in terms of contingency allocation decisions. The rate of contingency allocation. the project's utility is measured by technical superiority and the allocation of contingency dollars to state-of-the-art technologies can make a huge difference on the project's ultimate capabilities. One will note that. The first segment represents the greatest rate of change and occurs during the project start up and preliminary design phases. By the time the project was 25% complete. The second segment represents the detailed design effort as well as the beginning of construction and procurement activities. 44% of its contingency had been allocated and only 25% of the original contingency reserve was still available at the 50% point. risk-averseness (in this project sense) can be represented by a conservative contingency allocation strategy. One characteristic of this second phase is an increasing demand for a decreasing supply of contingency. Three different slopes (rates of contingency allocation) are highlighted by the straight lines. Incorporation of newer. in this concave period. Barbara Thibadeau 5 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington . A Utility Based Contingency Allocation Model The utility based contingency allocation model presented in this section links the risk-seeking and risk-averse behavioral attributes of a project to the allocation of contingency dollars. all changes have a cost impact since only two feasible alternatives remain. During those later phases. These data show that contingency allocation decisions are correlated with the state of the project (how much has been completed) and that failure to transition (in behavior and in action) from risk-seeking to risk-averse soon enough in a project could result in an insufficient contingency reserve to cover the uncertainties associated with the project's remaining work. In this period. This is consistent with the characteristic of convex utility functions in which small changes have little impact on the utility but large changes make substantial differences. Data from the same project shows that this qualitative discussion of contingency allocation can be validated by project data. The last segment represents the completion of construction and installation efforts. This is the transition phase. on time and on budget).

contingency decisions that enhance reliability also contribute to a project’s performance utility.5 17. linear decision model (LDM) in Exhibit 6.0 Maximized Linear Decision Model (LDM) Exhibit 6. Another is to assume that the impact can be determined solely in terms of contingency dollars where the adage 'you get what you pay for' is true and 'more expensive is better'. The better plan is the one that is able to address more of the project’s realized risks. practical realities such as the number of shifts in a day and the duration over which project personnel can continue to work safely and productively in a multiple shift scenario. Barbara Thibadeau 6 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington .0 1.8 2. Imagine that one is buying a computer. Maximized Utility Model (UM) Decision Type New Technology Optional Technical Technical Risk Cost Risk Schedule Risk Optional Schedule t=1 1. Conversely.9 5.6 0. impose an upper bound on this utility.0 15. In order to determine which formulation is better.8 2. These data are shown in Exhibit 7.g. In Phase II.6 t=2 97.7 4.3 1.1 0. the data were grouped into four periods. While it is theoretically possible for one to use all of a project's contingency to purchase schedule days.0 3.7 0.1 0. one can see that UM offers far superior results. the allocation of contingency dollars in Phase I to technical opportunities will substantially (nonlinearly) increase a project's technical utility.5 9.5 8. there is not enough time to pursue these alternatives and still finish the project on time.4 t=4 0.2 2.8 2. Over the critical period in a project (the last three periods). recalling Exhibit 1. However. the project has lost most of the flexibility required to incorporate technical innovations into the baseline and allocation of contingency dollars to technical opportunities will have no impact on the performance utility.8 5. the project finish date appears to be infinitely far into the future and the allocation of schedule float has minimal utility. This effect is linear and occurs in both project phases. meeting the requirements of realized risks in the latter portion of a project is much more important than @2006. ongoing project. Scope utility is a linear function in which each contingency dollar allocated retains one dollar of original scope. reflecting the increased utility of schedule float as a project nears the finish date.0 15. a decision that has little practical utility. While in Phase I. performance or criticality) and then use those weights to select the option that offers the greatest impact on the overall performance utility. However.0 t=3 0.0 0. Exhibit 1 identified the decision variables and the optimization problem is subject to applicable policy and business constraints (such as the amount of contingency and amount of funding remaining at the end of each period). however only up to some upper bound. One approach is to assign a weight to each technical component of the project based upon some qualitative criteria (e.0 3.5 17.0 0.2 t=4 4.9 6. The project risk register provided a detailed list of potential contingency requests.g. A random probability of occurrence between 0 and 1 was assigned to each risk. one gets standard RAM and standard performance. additional days of schedule float have a great deal of value. These values were assigned triangular distributions (as per the work of other researchers.Williams.5 0. LDM allocated contingency dollars for new technology in periods 3 and 4. two in Phase I and two in Phase II.6 0. Given these assumptions.7 4.2 0. randomly simulated futures from the same risk register data base (all assumed to occur with 100% probability). The solutions from the UM formulation are compared with the results of a more typical. e. For a low price. In this analysis.5 11.92. the same optional schedule dollars were allocated.8 t=2 31.7 0.p. A computer cluster is much more expensive yet provides exponentially more performance.2 2. these plans were compared against 50 different. Hence. Due to the limited length of this paper.94 .9 6.8 0.1 0. for all periods. Empirical Analysis Our proposed utility model (UM) was validated using data from an actual. Total Contingency Dollars Allocated by Period While both formulations allocated the same amount of contingency dollars over this planning horizon. there is time to pursue no-cost recovery plans.7 9. in Phase II. (Bowers.0 1. The realized risk requests were completely satisfied in both formulations. details of the exact formulation are not included.0 32. However. Crystal Ball Monte Carlo simulation was used to generate 80 random sets of these parameters for each type of request for each period. p268)).0 t=1 56. In both cases.12.5 0.The impact of a contingency decision on performance utility can be determined in a number of ways. over the life of the project.0 t=3 34.3 1. the distribution of the dollars over period and over type differs.0 1. UM allocated these later than LDM. The utility-based contingency allocation model (UM) maximizes the expected utility of the contingency allocation decisions. When a realized risk occurs at the beginning of a project. by type and by period. when risks are realized towards the end of a project.

7% 51. Barbara Thibadeau 7 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington . Luce. Newtown Sqaure.satisfying those that occur at the beginning of a project. in an expected sense. Keeney. A. PMI (2000) A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Schoemaker.3% 100. International Journal of Project Management.803. & H.0% 100. Hull.2% 100.Percent of Realized Risks Satisfied by Contingency Allocation Plan Summary In this paper. D.G & G. Tversky. Pennsylvania: Project Management Institute. S. Page.9% 100. P.0% 100. (2000) Utility of Gains and Losses.0% 59. B. Hough. P.3% 89.0% 49.0% 100.The Remarkable Story of Risk. 21(5). Utility Theory. N (1968). Project Management Journal.1% 63. Riggs.0% t=2 100. These utility functions are then maximized. Fishburn . The Expected Utility Hypothesis.W. (1980) Experiments on Decisions Under Risk. (1979.0% 56.C. J. Henrion. Lereim.1% 100. Operations Research. Bernstein. 47(2). This not only provides the project manager with a detailed plan on which to base the irreversable contingency allocation decisions.4% Average (t=2 thru t=4) 100. (1973) Utility and its Measurement. R.2% 100. AACE International Transactions 1-7. (2003. (1987) The Anatomy of Major Projects. L. J. (1994) Integration of Technical.5% 32.2% Exhibit 7. Econometrica. 47(9). we have shown that the behavioral attributes associated with expected utility theory are identically those exhibited on a project.2429. H. Piney. New York: John Wiley & Sons. Computers Operations Research.0% t=4 100. J. Cost and Schedule Risks in Project Management.0% 100. New Jersey: Lawrence Erlbaum Associates.7% t=3 100. A. Trueblood. P.L. R. September) Applying Utility Theory to Risk Management.C.0% 100.M. A Book of Readings. subject to business rules and policy constraints. Cambridge: Cambridge University Press.2% 93. 136(2).0% 73.263-292. we proposed distinct utility functions for the project’s major phases.T.L.755-766. & R. 12(1).0% 91. (1993) Decisions with Multiple Objectives.G. Morgan.226-247.34(3) 2631.3% 47. Cost Engineering. generating a long range contingency allocation plan which will be feasible.D. Using that information we developed utility functions for the three core metrics of project success. New York: Cambridge University Press.L. References Bard. Keeney. t=1 72. P. & M. A Study of the Reality of Project Management. F. (1988) Nonlinear Preference and Utility Theory. & Howard Raiffa.9-16. R. Series A. & A. over all uncertain futures envisioned. March) Prospect Theory. An Overview.0% 58. Karlsen. By recognizing that project behavior is dependent on the stage of the project. Journal of the Royal Statistical Society. Thomas. M. Tichacek. (1994) Data for project risk analyses. Aug) Using Multicriteria Methods in the Early Stages of New Product Development. the optimal solution is superior to a linear decision model with the objective to optimize the total contingency allocated.4% 60. Bowers . Noor. Sepember-October) Decision Analysis. Baltimore: The Johns Hopkins University Press. (1982. 30(5). & Robert L. P. (2005) Management of Project Contingency and Allowance.0% 100. New York: John Wiley & Sons. Kahneman. I. The Journal of the Operational Research Society.2% 60.838. J.0% Risk Type Technical Schedule All Risks Model UM LDM UM LDM UM LDM Average (t=1 thru t=4) 93.521-533. (2004) Contingency Misuse and Other Risk Pitfalls.8% 90. A Guide to Dealing with Uncertainty in Quantitative Risk Analysis. J.0% 87. New York: John Wiley & Sons.9% 49. (1996) Against the Gods. Morris.9% 100. (1990.0% 61. 41(8). & J. Boston: Martinus @2006. (1990) Uncertainty. Brown.G. technological excellence delivered on time and within budget. An Analysis of Decision under Risk. Inc. P.

Morgenstern.265-270. European Journal of Operational Research. Department of Energy under contract DE-AC05-00OR22725 @2006.S. an application to risk analysis. for the U. LLC. Barbara Thibadeau 8 Originally published as part of 2006 PMI Global Congress Proceedings-Seattle Washington . Journal of the Operational Research Society.Nijhoff Publishing. (1992.M. Mar) Practical Use of Distributions in Network Analysis. 75. ORNL/SNS is managed by UT-Battelle. Williams. (1944)Theory of Games and Economic Behavior. B. (1975) Models. modelling and modellers.477-487. 43(3). New York. John Wiley & Sons. Wahlström. von Neumann & O. T.