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An example Plan for a risky project decision

To see how Prenario Plans work in practice, we're going to create a Plan for a basic decision.

We'll be considering a decision about whether or not to proceed with a risky project.

Looking at a generic decision like this is a great way to learn the basics, so you can quickly get up to speed on making your own Plans.

Decision options

For our example risky project decision, we'll start by giving our Plan a name and listing the options for our decision. Our options are:

  1. Proceed with project
  2. Don't proceed
Entering the initial Plan details for our risk project decision

In the Plan editor, we can see these options are laid out in a decision card that forms the foundation for our Plan.

Our initial Plan in the Plan editor

Now let's imagine what would happen if we were to decide on each option.

If we decide not to proceed, we know nothing will happen so we can leave the "don't proceed" option as is.

If we decide to proceed, we know there will be an initial cost for committing to the project. We can easily specify this cost by adding a result to the "proceed" option in our decision card.

Adding a result (a financial cost) for proceeding with the project

Future events

After deciding to proceed, we can't say for sure what will happen next because our project has a degree of risk - it could succeed or it could fail.

We can represent this uncertainty in our Plan by adding a chance card for our "proceed" option. This makes it clear that, if we decide to proceed, there's a chance of ending up with either a successful outcome or failure.

Adding a new chance card to our Plan

We can quantify what success and failure will look like in financial terms by adding results for each event in our chance card.

Our new chance card with results added to each event

We can also adjust the chance card probabilities based on how likely we think each event is. In this case, we'll set the predicted likelihood as a 50:50 chance.

Setting chance card probabilities as a 50:50 chance

End results and insights

Our Plan is looking good! In a few simple steps we've been able to capture key information for making a decision about proceeding with this risky project.

Now lets take a step back to look at some other insights our Plan has revealed.

We can see that our Plan contains three potential end results:

  1. A chance of a financial gain if we decide to proceed
  2. A chance of a financial loss if we decide to proceed
  3. No financial outcome if we don't proceed with the project.
Viewing the end results for our Plan

Reviewing end results is a great way to quickly get a sense of the overall stakes for a decision.

In this case, we can see the best end result could be achieved if we decide to proceed. But deciding to proceed could also lead to the worst end result. So how can we possibly make a rational decision whether or not to proceed with this risky project?

Using Prenario's optimization tool, we can utilize the power of decision science to identify the most rational decision possible based on our current Plan and risk profiles. In a few simple clicks we can see that the most rational decision is to proceed with the project.

Running the optimization tool for our Plan

With the insights revealed from our completed Plan, a decision about our risky project can now be made with clarity, accountability and confidence.

Next up in this series: Elements of a Plan