Among Influence Diagrams: Decision Analysis Under Uncertainty

PMBOK v8 Definition

Influence diagrams are graphical representations of situations that can be used when making decisions under uncertainty. They show causal influences, time ordering of events, and other relationships among variables and outcomes. An influence diagram represents a project or situation within the project as a set of entities, outcomes, and influences, together with the relationships and effects among them.

Why It Matters for the Exam

Influence diagrams frequently appear in PMI exam questions related to quantitative risk analysis and decision-making techniques. You will encounter them in questions about risk analysis tools, simulation methods, and techniques for prioritizing risks based on their impact on project outcomes. The exam tests your ability to distinguish influence diagrams from other graphical risk representations like tornado diagrams and S-curves.

Key Points to Remember (for the exam)

• Primary Purpose: Graphical representation for making decisions under uncertainty
• What It Shows: Causal influences, time ordering of events, and relationships among variables and outcomes
• Uncertainty Handling: When elements are uncertain due to individual project risks or other sources of uncertainty, this is represented using ranges or probability distributions
• Evaluation Method: The influence diagram is evaluated using a simulation technique, such as Monte Carlo analysis
• Key Output: Indicates which elements have the greatest influence on key outcomes
• Similar Outputs: Outputs are similar to other quantitative risk analysis methods, including S-curve diagrams and tornado diagrams
• Common Confusion: Influence diagrams are NOT the same as decision trees; influence diagrams show causal relationships and influences, while decision trees show sequential decision paths

Typical PMI Exam Example

A project manager is analyzing which project risks have the greatest potential impact on the project's completion date. She uses a graphical tool that shows causal relationships between uncertain variables and the project schedule. She evaluates this diagram using Monte Carlo simulation. What tool is she using?

Answer: Influence diagram

PMI Exam Traps

• Trap: Confusing influence diagrams with decision trees

• Reality: Influence diagrams show causal influences and relationships; decision trees show sequential decision alternatives and outcomes

• Trap: Thinking influence diagrams are qualitative risk analysis tools

• Reality: Influence diagrams are quantitative risk analysis tools that use ranges, probability distributions, and simulation (Monte Carlo)

• Trap: Believing influence diagrams only show risks

• Reality: They represent entities, outcomes, and influences, including both risks and other sources of uncertainty

• Trap: Confusing influence diagram outputs with its evaluation method

• Reality: The influence diagram is the graphical representation; Monte Carlo analysis is the simulation technique used to evaluate it; outputs include S-curves and tornado diagrams

Important PMI Connections

Quick Review Questions

1. What is the primary purpose of an influence diagram in project management?

2. How is uncertainty represented in an influence diagram when individual project risks exist?

3. What simulation technique is used to evaluate an influence diagram?

4. Name two types of diagrams that are similar outputs from influence diagrams and other quantitative risk analysis methods.

5. What does an influence diagram indicate after evaluation using Monte Carlo analysis?

PMBOK v8 Reference

Section 11.4 - Perform Quantitative Risk Analysis (Influence Diagrams tool)