ABSTRACT
An important objection against traditional methodology for assessing economic risk in project management, is that the sequential nature of the management process is not taken into account. During the different phases of a project, many decisions, having large impact on the final utility, are made. Hence, when the economic risk is to be evaluated, one should incorporate not only uncertainties in prices, incomes, durations, but also uncertainty due to future decisions. Since, however, future decisions eventually are made by the decision maker himself, such uncertainty must be treated in a way unlike the way one handles uncertainty due to uncontrollable sources. In this paper we shall discuss different approaches to this problem in the light of some simple example.
