Smart Choices (2) | Eight Elements in PrOACT Approach

 

The following is the summary of  the PrOACT approach taken out from the book, Smart Choices, by Hammond et al (1999). 

The first part of the book review: Smart Choices (1) | Focus and Defining Problem 

As said in the first part, this PrOACT approach is to resolve a complex decision problem by breaking it into the following eight elements, think systematically, focus on those that are critical  to the problem.

 

The Eight Elements in PrOACT Approach

The eight elements in PrOACT approach are:

 

1. Problem Definition: Work on the right decision problem by identifying the most essential elements of the problem, and stay focus on the problem you want to solve. You can challenge yourself by using different perspectives to reframe the problem in order to test and see if you are having the right problem.
 

2. Objectives: Specify your objectives clearly (which are criteria) to achieve a right decision.
 

3. Alternatives: Create better and more alternatives (options) for you to choose from. Think out of the box.

 

4. Consequences: Describe consequences for each objective in the alternative using appropriate measuring parameters, either quantitative or qualitative, you should know what you really mean. Using the common scale of consequences through all alternatives to make decision.

• For a less complicated situation, a consequence table may be able to assist you to make decision. 
  

 

5. Tradeoffs: Make compromises to eliminate objectives and/or eliminate alternatives with the use of Even Swaps method to simplify your decision.

 

6. Uncertainty: Estimate the risk profile of all alternatives by: 

• (i) identifying the key uncertainties that can significantly influenced the consequences of alternatives, 
• (ii) assigning chances of occurrence to alternatives (e.g. probability or word description such as somewhat likely, most likely, least likely) using your own subjective judgement, available information, collecting new data, asking experts, 
• (iii) thus you can narrow the possible outcomes which are enough the describe the key uncertainties using the measures of quantitative (e.g. money, length, width, time) or descriptive (e.g. high, low, moderate, clean, dirty, etc).
  
• (iv) developing a decision tree in relatively complex situation, from which you can better picture the uncertainty and the linked consequence in each path branches out from a decision point.

 

7. Risk Tolerance: Understand your own risk appetite or willing to take risk by giving desirability scores (or utility value) for all consequences. 

• The overall desirability is calculated by multiplying the desirability scores with the chance of occurring in the alternative. We should choose the higher the overall desirability. 
• This desirability (or utility) takes into account of how much of our willingness to get the outcome, which is not merely measured by probability but also by our preference. 

 

8. Linked Decisions: Very often, the consequence of one decision will lead to the outcome of the other decision over time. So, if this is the case, we should think ahead of time to what the outcome of the future decision can affect the present decision, and think back to the present one to make a wise decision. 

• The trick is to identify what are the key factors at play in this series of decisions now and future, focus on those factors. 
• The other thing is to identify the uncertainties that are critical to the decision, usually there are only one or two that are most crucial. 
• Then try to minimise those uncertainties by seeking information, personal judgement, asking experts, collecting data, etc. 
• We also show have a bigger picture to examine how the linkage among the present decision and the future ones. One way to do this is to draw up a decision tree, assign different decision points in time, together with uncertainties with chances of occurring, and different consequences at each branch at the end of it. 
• You should also look up your own desirability and risk appetite to assist your decision. Thus, you can plan ahead in time for a full plan of your decision, and with your contingency plan if things do not turn up as you'd hope for. 
  

The PrOACT approach are a thinking framework used for analysing and resolving complex decisions, via the tools like:

• Consequence Table: Using the meaningful and significant objectives together with creative alternatives, a consequence table can be built, where a direct comparison can be made in one go. Or by ranking the consequence in the consequence to pick the alternative that has the lowest number.
  
• Simplification of a Consequence Table: Eliminate alternatives or objectives using simple rule of Even Swap method
• Identification of the most significant uncertainty: Seek information particularly for the critical uncertainties to your decision.
  
• Decision Tree: Construct a decision tree with uncertainties, chances and consequences
  
• Risk Tolerance: Evaluate your own risk tolerance by assigning desirability score of the consequence in the alternatives and their chance of happening to come up with the overall desirability

More Topics:

Smart Choices (1) | Focus and Defining Problem

Smart Choices (3) | Comparing with Consequence Table

Trade-offs in Decision Making

Uncertainty and Assigning Chance

Decision Tree

Assessing Risk Tolerance for Decision Making

Subjective Probability Estimation

Reference

John S. Hammond, Ralph L. Keeney, Howard Raiffa, Smart Choices - A Practical Guide to Making Better Life Decisions, Broadway Books, 1999.

Project Management Skills, PrOACT Decision Making Model, available from: https://www.project-management-skills.com/decision-making-model.html 

Practical Risk Training, available from: https://practicalrisktraining.com/proact-31000

 

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