All project work is uncertain. This uncertainty comes in two forms - Aleatory and Epistemic. Aleatory Uncertainty is irreducible, Epistemic uncertainty is reducible. More can be found on this in Both Aleatory and Epistemic Uncertainty Create Risk.
But now what to do about it. Here's a collection of papers that has served me well in defining the processes needed to make decisions in the presence of uncertainty when managing projects using other people's money:
- "Beyond project decisions. Deciding on how to decide," Luiz Rocha
- "Decision Analysis for the Professional," Peter McNamee and John Celona
- "Decision Making Using Probabilistic Inference Methods," Ross Shachter and Mark Peot
- "Decision Theory: A Formal Philosophical Introduction," Richard Bradley
- An Introduction to Decision Theory, Statistical Techniques in Business and Economics, 13th Edition, Douglas A. Lind, William G. Marchal, and Samuel A. Wathen, Chapter 20,
- "Lecture Notes for Introduction to Decision Theory," Itzhak Gilboa, 6 March 2013
So when you hear about making decisions in the presence of uncertainty without estimating the outcomes of those decisions, you'll have a basis of knowledge to realize that is completely bogus, a violation of the principles of microeconomics, and a violation of the principles of managerial finance.
