Introduction to Probability Management
About this courseSkip About this course
This course assumes that you are comfortable with Microsoft Excel, but you do not need training in statistics. If you wish to receive a verified certificate, you must download the free SIPmath™ Modeler Tools for Excel from nonprofit ProbabilityManagement.org, and it is recommended that you procure The Flaw of Averages: Why we Underestimate Risk in the Face of Uncertainty, John Wiley & Sons, either the 1st or 2nd Edition.
At a glance
What you'll learnSkip What you'll learn
How to recognize the Flaw of Averages, a set of systematic errors that occur when uncertainties are represented by single numbers, usually an average. It explains why so many projects are behind schedule, beyond budget, and below projection.
The Arithmetic of Uncertainty , which performs calculations with uncertain inputs, resulting in uncertain outputs from which you can calculate true average outcomes and the chances of achieving specified goals.
How to create Interactive Simulations which may be shared with any Excel user without the need for add-ins or macros. The approach is just as at home in R, Python or any programming environment that supports arrays.
Section 1: Probability Management Basics
- Post Traumatic Statistics Disorder (PTSD)
- The Flaw of Averages
- The Arithmetic of Uncertainty
- Limbic Analytics: Connecting the Seat of the Intellect to the Seat of the Pants
- The Hindu/Arabic Numerals of Uncertainty
- The Probability Power Grid
- Data Table Simulation in Excel
Section 2: The Five Mindles of Uncertainty
A MINDle lets you grasp something with your mind as a HANDle lets you grasp something with your hand. Understanding the arithmetic of uncertainty requires grasping five concepts beyond the operations of standard arithmetic. They are:
- Risk vs. Uncertainty
- Uncertain Numbers
- Combinations of Uncertainties
- Plans Based on Uncertainties
- Interrelated Uncertainties
Section 3: Introduction to Applications
- Nonlinear cost functions
- Building a Risk Model
- Estimating distributions from forecasts
Section 4: The Human Element
The PTSD picked up in a statistics class may be addressed through the following concepts:
- The permission to be uncertain
- Unambiguous Uncertainty
- Limbic Analytics