Cornerstone Ideas, Concepts and Paradigms

This review chapter introduces all cornerstone ideas, concepts and paradigms utilized by particular PRM methodologies, which are outlined in consecutive chapters. The review starts with the traditional PRM and its limitations. Features of project contexts when the traditional PRM does not work well are described paving the way for introduction of more advanced PRM methodologies. General concepts of project complexity, risk interactions and deep uncertainties are introduced. All reviewed methodologies are divided into two groups. The first group—the traditional PRM, linear Monte Carlo, cost escalation modelling, risk-based and economic-based selection of project alternatives, non-linear Monte Carlo, project rework cycle systems dynamics modelling—obeys the traditional predict-then-act decision-making paradigm. The second group, based on dynamic adaptive methodology (DAM), obeys the monitor-and-adapt decision-making paradigm. It is based on a concept of deep uncertainty pointing to multiple possible future states of the project external environment. Four definitions of project risk relevant to different project contexts are formulated. Assays on the economy, systems thinking and game theory are provided to properly anticipate external project environment futures required for the selection of adequate project alternatives and to adopt the right decision-making criteria. Some practical PRM examples related to reviewed topics are talked about.