Why Better Decisions Start with Better Questions: How Structured Decision Analysis Improves Capital Project Outcomes
Chuck Centore | President of PM&E
In the energy sector, we do not have the luxury of certainty. Whether selecting a project concept, defining a contracting strategy, or navigating a final investment decision, we are often making high-consequence choices under conditions of uncertainty, ambiguity, and competing priorities.
At GATE Energy, we have committed to transforming the way decisions are made in capital projects. We have built a structured methodology, rooted in formal decision theory, utility modeling, and risk quantification, that integrates seamlessly with front-end planning, owner’s engineering, and project execution.
This is not management by intuition. It is management by design.
Decisions Under Uncertainty:
A Recognized Discipline Decisions under uncertainty is a well-established field of study grounded in decision science, economics, and operations research. It examines how individuals and organizations can make rational, consistent, and value-aligned decisions when outcomes are uncertain. Foundational concepts such as expected utility theory, Bayesian inference, decision trees, and risk-adjusted value modeling have been widely applied in domains such as aerospace, healthcare, defense, and increasingly, capital-intensive industries like oil and gas, renewables, and power.
The central insight of this field is that uncertainty is not the enemy of decision-making; it is a defining feature. Ignoring it or simplifying it away can lead to systematically flawed outcomes. Instead, effective decision-making involves explicitly modeling uncertainty and using it to inform structured choices.
Empirical research by groups such as Independent Project Analysis (IPA), RAND Corporation, and the Society of Decision Professionals confirms what experienced project managers know: decisions made without structured analysis of uncertainty often lead to cost overruns, rework, and late-stage reversals. Conversely, applying formal methods improves consistency, transparency, and alignment across the organization.
What Does This Look Like in Practice?
1. Framing the Decision All high-quality decisions start with asking the right question. A clear and shared frame defines the objective, scope, and success criteria. It prevents the all-too-common failure mode of solving the wrong problem, pursuing false alternatives, or missing critical stakeholder expectations.
2. Modeling Uncertainty Explicitly Uncertainty must be modeled, not ignored. This includes technical uncertainty (e.g., subsurface conditions, novel technology performance), external uncertainty (e.g., regulatory delays, commodity prices), and strategic uncertainty (e.g., future market adoption of new technology). We use tools such as decision trees, Monte Carlo simulations, and scenario planning to represent these variables with precision and clarity.
Each alternative is evaluated not as a single-point estimate, but as a distribution of outcomes. We assess the probability and impact of each possible scenario. This allows us to answer critical questions like: What is the likelihood of exceeding the budget? What’s the downside risk of delay? Under what conditions does Option B outperform Option A?
3. Accounting for Risk Appetite through Utility Theory. Expected monetary value (EMV) is a useful starting point, but insufficient on its own. Most organizations exhibit some level of risk aversion, especially when the downside could materially impact financial health, license to operate, or safety.
By using utility theory, we translate monetary outcomes into a subjective value scale that reflects the organization’s tolerance for risk. This allows us to calculate certainty equivalents, the guaranteed value that is equally desirable to a risky alternative, and compare options in a way that reflects true organizational preferences. It is not just about maximizing upside, but minimizing regret and protecting long-term stability.
4. Integrating with Governance and Risk Management Our methodology embeds decision analysis directly into stage-gate governance. We align decision quality with gate readiness. At each gate, decision-makers are presented with a structured evaluation of options, risk-adjusted recommendations, and clarity around trade-offs. This improves transparency and ensures that the organization is not just approving projects; it is making deliberate, informed commitments.
By integrating decision analysis with the broader risk management process, we ensure that identified risks are not treated as background noise but as fundamental drivers of decision outcomes. This enables risk mitigation to be evaluated as a decision problem in itself: what value is gained by spending now to reduce uncertainty later?
Why It Matters:
Capital projects are won or lost in the early phases. The biggest impacts on cost, schedule, and value occur long before execution begins. By bringing empirical discipline to front-end decision-making, we reduce the likelihood of rework, increase stakeholder confidence, and create resilient project strategies.
At GATE Energy, we do not leave major project decisions to chance or convention. We rely on a decision-making process that is structured, transparent, and grounded in industry best practices. Our goal is simple: make better decisions, earlier, and with greater clarity—because success is not just about delivering a project, but about making the right commitments from the start.
Let’s make better decisions together. If your team is facing a strategic choice or a complex investment decision, we are happy to share our approach and lessons learned. Reach out to us at GATE Energy.
About the Author
