Another look at uncertainty and risk management when evaluating manufacturing technology

Abstract

Many quantitative methods have been developed in an attempt to acknowledge uncertainty under decision making and to manage the inherent risk during economic planning for technology implementation. Current methods range in complexity from simple heuristics to elaborate mathematical modes. They are applied with varying levels of success, but there is no ‘best’ method. In reality, resources devoted to complex models of oversimplified situations may compound the problem by creating an illusion of risk management which diverts attention from real problems. This paper outlines a relatively simple and practical risk analysis procedure accompanied by an application example. It employs the proven Analytical Hierarchy Process (AHP) coupled with confidence intervals from data gathered through simulation techniques or through observations and empirical sampling.