The word risk implies we know the probability. If we can say, "we are 90% sure our competitors are not working on the this." We are expressing a risk. With uncertainty, the best we can say is, "we don't think our competitors are working on this." One of the class put it this way: Risk indicates that a decision was made based on known expected values of alternative courses of action. In order to have known expected values, one must also know the expected outcome of an action and the probability that it will occur. If these things are not known or cannot be determined, then expected values of alternative actions cannot be calculated and decisions must be made under conditions of uncertainty.

**Q. The book definitions of "subjective" and "objective" were quite confusing. When I think about "internal" to a system, a computer comes to mind. How can performance within a computer at any point be viewed as subjective? It is all objective based on common industry fact/references.
A. A computer's clock might be subjective, if it set at the factory, or objective, if it goes on the net and gets a time check when it is turned on.

**Q. The muddiest item was the meaning of project management maturity.
A. Many organizations are functional organizations who "don't do projects" or have project managers. When a special task comes up, they pitch it to one of the functional managers. This organization is immature, as far as project management is concerned. After too many projects flub because of lack of leadership and project focus, the organization takes steps toward managing projects. This is the beginning of project management maturity.

*Q. In the reading I am still not clear about the way to assign weight or value to different aspects of a project. It seems to me most of it is still based on opinion and I am not sure attaching numeric values to opinions and coming out with one number to make a final decision is totally clear to me. However I do see the process
A. The models sometimes hide uncertainty, because after you make the assumptions regarding the input parameters into the model, then you get a definite answer out. GIGO.

Q. I found it interesting to see that so few organizations have a high level of project management maturity. (p39/40) However, I am unclear on what the author's recommendations are on how to achieve a high level and what the payoffs are. I had found that even though there was a low level of maturity in my first place of employment (a contractor) they still enjoyed financial success fairly continuously. My second place of employment was the state, third the federal government. Even though I expected to find higher levels of maturity at these latter places of employment, I was disappointed. I question both whether any places that are highly mature exist and whether or not a higher level of maturity necessarily is worth the investment it would take to get there. i.e. would the ends justify the means?
A. Construction contractors are almost always "fully projectized" organizations already. Each Job is a project. Labor and other Costs get charged to the job. More efficient management of each job is more or less automatically better project management. At the Corps of Engineers and the ADOT, you will see a mixture of functional and projectized organization. For example, the ADOT maintenance and the Corps Permitting sections are functional organizations. Both the ADOT of the Corps lack PM maturity, although they both do lots of projects, because they have divided their organizations into Design and Construction Branches and other Branches, such a Right-of-Way, which are not united by projects, but rather the project passes from one branch to another. There is not project manager over all the branches, except at the CEO level. At the Corps, there is a Project Management Branch, but it does not control the project. Both organizations get by at that level of maturity and they did not ask you or I for advice on how to manage their business. However if you learn about PM in this course, then observe, you will Probably note how that lack of project management maturity can cause problems.

Q. The most useful thing I learned from this module has to do with the maturity level. The company I work for successfully completes projects for other companies with a high degree of success but struggles with training new personnel and carrying out projects for itself. The main emphasis seems to be profitability followed by market standing. Several departments continue day by day and year after year with inadequate resources.
A. Very good. You work for a consultant, in a fully projectized organization. Construction contractors are the same. Both types of businesses often have trouble doing projects that are not client-job related, such as an office move, reorganization, new IT system, etc. They fail to see that these are projects too. Often they fail to see that large proposals or bids are themselves projects, that need budget and time resources, and especially a project manager, and should not just be lumped in overhead.

Q. I wonder if part of the popularity of consultancy firms is in that these firms are free to take the time to analyze (or submit) a proposal thoroughly and without extensive interference versus actually forming project management teams and allowing them the time without extraneous commitments to make an informed proposal of their own?
A. Perhaps, but the consultants often are not given much time to do their work and the management people who hire the "independent" consultant often tell them the results they want the consultant to report. "He who pays the fiddler calls the tune." Management will often use an outside consultant when their own people have too much inertia to get anything done, or when the thing that needs doing will be unpopular with the own people, layoffs for example.

An example of Operational Necessity versus Competitive Models:
I once owned a coffee shop in Nome, and our primary product was espresso coffee. The coffee machine was a two group machine which meant that espresso could be drawn from two locations, simultaneously. It was an operational necessity that the machine was dependable so it could produce coffee everyday. When the machine was not in operation, I was out of business. The coffee machine did break down, we were out of business for about two weeks, so that the machine could get overhauled in Anchorage. The cost of the overhaul was about $2,000 but we faced a problem of do we spend the money on the overhaul, or buy a new machine for $8,000. Dependability of the machine was the operational necessity. We were faced with the decision on how much money did we want to spend to ensure that dependability.

The competitive necessity part of this example is that if we spent $8,000 on a new machine we could have had a three group machine, which meant we could produce 50% more espresso in a give time. This would have allowed us to service our customers faster during rush hour, which would have given us an advantage over our competitors.

Q. The window-of-opportunity approach attempts to determine specific costs and performance levels that must be attainable by a new technology or process before it can be considered for R&D. It calculates the expected costs and performance as a fraction or multiple of the cost and performance of an existing process or technology. First, baseline data must be collected on the existing process or technology, then any differences in the new technology or parts in the existing process that may be affected are noted. This information is then used to calculate the economic impact of the new technology or process, and a decision can be made to go forward or hold off on the innovation.
A. Window of Opportunity is similar to a "break-even analysis" in engineering economics, where we determine the feasible range of the input parameters. Say we calculate that we must sell 5000 of the new product to break-even. If we know we can 10,000 easily, the project will be undertaken. If we have never sold more that 1000, of a similar product, it is unlikely we should undertake this project.

Q. The numeric model scoring is kind of useful to select some of projects. We use profit/profitability a lot for our projects. We also use political model/PR model to fund some of our projects. This model can be categorized to nonnumeric models.
After reading this chapter, there is not a model will fit your every need to select the project. Of course in page 44 section 2.3 it stated that the models do not make decisions but people do. Dr. Perkins, which project selection Models do you use most in your professional life?
A. I've been married 27 years and my wife makes most of the decisions. But, do you mean consulting or personal decisions? For both I use flow charts, which we will see more in a few chapters, then try to apply probability to the various courses of actions. I find I do that more and more as I get older, I seem to be able to keep less in my head and need to sketch things out. The great chess players are usually young, probably the same reason. For all financial decisions I use engineering economics, time-value-of-money calculations.

Q. If I was a betting man, I would bet that organizations with mature management utilize the sacred cow project selection process even if the project can be numerically proven to be financially a disaster and not in line with the organization's goals and strategy. Moreover, I would bet that the sacred cow project selection process is used more often in more mature and complex organizations that have "deeper pockets" than smaller organizations that tend to be less mature, but also have "shallow pockets" and more genuine concern for risk (they many not just loss money, they may go out of business). Based on my assumption, it is easy to see how a pet project of a senior member of management could be pushed through the acceptance process regardless of merit. So, why do organizations allow sacred cows? I assume it is just a part of "human nature," but an organization should have policies to prevent "human nature." What benefit could come from a train wreck of a project proposed by senior member of management (except a possible promotion for his/her subordinate when the sacred cow dies in the field)?
A. Yes, the sacred cow is prevalent in small organizations too, because the emperor is more often personally involved in the decision. There are some tools in the chapter that try to get around this inherent bias in the organization to do what the boss wants, but their effectiveness varies quite a bit, I'm sure. If the boss wants to be a dictator, he needs to be right. More of a problem is the shifty boss that tries to "set up" subordinates to make the difficult decisions, in such a way that if it turns out well, the boss gets the credit, while if it turns out badly, the subordinate gets the blame. Politics and governments are full of this type of manager. Give me the dictator any time.