When

considering decision-making under uncertainty, one may need to evaluate

which of several decision possibilities to select, and then conduct a

detailed risk analysis of that decision. Palisade Corporation’s Decision support

software (such as the PrecisionTree decision tree software and the

@RISK Monte Carlo simulation software) can be used in a wide range of

decision analysis contexts to support the selection and detailed

analysis in these situations. In addition, one may need to calibrate

models or explore and analyse existing data sets, and the statistics

software StatTools can facilitate certain forms of statistical analysis

that may not be possible when using Excel statistics functionality.

(Palisade’s DecisionTools Suite also contains other software products,

including RISKOptimizer and Evolver to deal with optimisation problems,

the neural network software NeuralTools, and TopRank to support model

auditing and sensitivity analysis).

Frequent

applications of the DecisionTools Suite include cost estimation

(project cost estimation, construction cost estimation, cost budgeting

and contingency planning), discounted cash flow analysis and financial

forecasting, risk registers (event risk modelling and operational

risk), options valuation and real options analysis, Six Sigma analysis,

product strategy, environmental risk analysis, veterinary risk

assessments, operations management, retirement planning and so on.

Indeed, the range and flexibility of the DecisionTools Suite means that

the number of applications is vast, and really only limited by a user’s

ability to appropriately formulate their own situation in a way that is

suitable for quantitative analysis.

Whilst

the software can be used essentially in applications in all industries

and functions, the oil and gas sector is a very active one. The

increasing cost of discovery and recovery of oil from more remote and

hostile environments means that an effective resource allocation and a

rigorous decision evaluation are key to business success in these

contexts. Decision tree software and Monte Carlo simulation software

are therefore widely used in exploration and production (e.g. seismic

testing decisions, reserves estimation, and production forecasting

using exponential decline curves or other methods) and for other

aspects of risk assessment for large projects.