PETROENG 4027 - Decision Making & Risk Analysis

North Terrace Campus - Semester 1 - 2014

This course teaches the skills required for a key component of a Petroleum Engineer's job - creating value by making decisions that yield optimal returns on the allocation of human and financial resources. The many uncertainties inherent to the oil and gas business (estimating current 'states-of-the world/nature' and predicting future events) create considerable uncertainty in the value that can be realised from resource-allocation decisions. Consequently, there will be a strong emphasis on evaluating the impacts of uncertainty, managing its resultant risks and planning to exploit its up-side potential. Topics to be addressed are the decision-making process, multi-objective decision making, decision-tree analysis, decision criteria, Monte Carlo Simulation and Value of Information & Flexibility. In addition, Utility Theory will be introduced as a means of rationally accounting for risk attitudes. Some of the psychological and judgemental aspects of how people respond to uncertainty will be discussed. The techniques learned in this course will also be useful in making personal decisions.

  • General Course Information
    Course Details
    Course Code PETROENG 4027
    Course Decision Making & Risk Analysis
    Coordinating Unit Australian School of Petroleum
    Term Semester 1
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Intensive course of lectures, examples and computer-based exercises
    Incompatible PETROENG 4024
    Assumed Knowledge Introductory Petroleum Geology & Engineering, SACE Stage 2 Maths, basic Excel
    Restrictions Available to BE(Petroleum) students only
    Course Description This course teaches the skills required for a key component of a Petroleum Engineer's job - creating value by making decisions that yield optimal returns on the allocation of human and financial resources. The many uncertainties inherent to the oil and gas business (estimating current 'states-of-the world/nature' and predicting future events) create considerable uncertainty in the value that can be realised from resource-allocation decisions. Consequently, there will be a strong emphasis on evaluating the impacts of uncertainty, managing its resultant risks and planning to exploit its up-side potential. Topics to be addressed are the decision-making process, multi-objective decision making, decision-tree analysis, decision criteria, Monte Carlo Simulation and Value of Information & Flexibility. In addition, Utility Theory will be introduced as a means of rationally accounting for risk attitudes. Some of the psychological and judgemental aspects of how people respond to uncertainty will be discussed. The techniques learned in this course will also be useful in making personal decisions.
    Course Staff

    Course Coordinator: Professor Steve Begg

    Course Timetable

    The full timetable of all activities for this course can be accessed from Course Planner.

  • Learning Outcomes
    Course Learning Outcomes
    1 Learn decision and risk analysis (D&RA) concepts & terminology that are most used in industry
    2 Understand the impact of uncertainty in decision-making
    3 Learn specific tools & processes for analysing & making decisions - useful both professionally and personally
    4 Practice using these tools & processes in Excel
    5 Develop a critical-thinking, problem-solving, value-creating approach to decision-making
    6 Learn how people often actually make decisions as opposed to how they should
    7 Demonstrate D&RA software commonly used by industry
    8 Ancillary
    • Review relevant probability & statistics, and introduce new ideas as necessary to support this course
    • further develop and practice general Excel skills
    9 As part of a team, perform and present a critical review of a paper/topic related to the course material
    10 Read and understand a range of papers and articles related to decision and risk analysis
    University Graduate Attributes

    This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

    University Graduate Attribute Course Learning Outcome(s)
    Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised. 1,2,3,6,10
    The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner. 9
    An ability to apply effective, creative and innovative solutions, both independently and cooperatively, to current and future problems. 9, 5
    Skills of a high order in interpersonal understanding, teamwork and communication. 9
    A proficiency in the appropriate use of contemporary technologies. 4, 7, 8
    A commitment to continuous learning and the capacity to maintain intellectual curiosity throughout life. 5, 10
    A commitment to the highest standards of professional endeavour and the ability to take a leadership role in the community. 2,5,7
    An awareness of ethical, social and cultural issues within a global context and their importance in the exercise of professional skills and responsibilities. 2,3,5,6
  • Learning Resources
    Required Resources
    PDFs of powerpoints and additional readings. Additional exercises.

    A free copy of “Making Good Decisions” by Prof. Begg will be provided. This is the text for the course.



    Recommended Resources
    The following are good general decision analysis texts (ie not oil & gas specific). They may be useful if you would like further reading on some of the course material. They are available in the Library.
    • Clemen, R.T., & Reilly, T.: Making Hard Decisions with Decision Tools. Pacific Grove, CA, Duxbury, (2001).
    • Goodwin, P. and Wright, G.: Decision Analysis for Management Judgment 3rd Ed, Wiley, Chichester, 2004
    An extended list of reference materials and sources will be provided in class.



    Online Learning
    Powerpoints and Exercises (& their solutions) will be distributed on MyUni along with additional handouts.

    Good sources of help with learning are the downloadable learning guides (Writing, Effective Reading, Making Notes, Time Management, Exam Prep, etc) and links to other learning resources at -
    http://www.adelaide.edu.au/clpd/all/stud_resources/ http://www.adelaide.edu.au/clpd/all/learning_guides

    The “Writing and Speaking at Uni” course will help with assignments. I can provide further tips on preparing presentations for those that would like them.
  • Learning & Teaching Activities
    Learning & Teaching Modes
    The block-course format (sometimes, misleadingly, called short-course) is commonly used in industry (continued professional development) and is the norm for 4th year and post-graduate courses in the ASP.

    It also represents a stage when you are expected to take greater responsibility for your own learning – lectures cover the main ideas and are pointers to the topics you should learn about – rather than comprehensive coverage of the curriculum.

    One of the advantages of the block-course format is that you can immerse yourself in a single subject, without distraction or having to “re-load” for each session. Another is that there is no need to force-fit the material to the 1hr lecture/tute format – each topic can be addressed in the time it needs. Yet another advantage is that it provides an opportunity for immediate feedback as exercises are carried out, and solutions presented, in-class, after the concept has been taught.

    Laptops will be provided for in-class exercises – and you are welcome to bring your own if you would like. Students are expected to engage with class discussions.

    A disadvantage is that the compressed time-scale means that you do not have as much time to let one concept sink in before moving on to another. For this reason
    • ­ we integrate the exercises to practice concepts immediately after learning them, before moving on to the next concept. The amount of time for in-class exercises is set such that 90% or more of students should be able to finish them.
    • ­ you are STRONGLY ADVISED to take a break after the end of class each day and then revise the day’s material for a couple of hours.
    Learning tips (not just for block courses):
    For most people it takes about 4 repetitions to get information into your long term memory. Apparently (can’t remember where I learnt this from) the best way to do it is to revise the information the day you learn it (2nd time) , then one week later (3rd time), then one month later (4th time).

    At the start of a course section, I usually provide grey-scale versions of the PowerPoint slides shown in class Students often find it useful to have several highlighter pens for use with these handouts, because I make a lot of use of colour. PDF files of the full colour PowerPoint slides will be available on MyUni after the class.

    After-class consultation and Provision of Feedback to Students
    Solutions to in-class exercises and the mid-course test will be provided in-class. Solutions to after-class exercises will be posted on My Uni within two weeks of end of class.

    I will arrange several mutually convenient time-slots when I will be available, in the weeks following the class, for questions related to exercises and course content.



    Workload

    The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

    This course involves approximately the same number of contact hours that would be delivered in a semesterised course (45). During a semesterised course, you would be expected to spend a approximately twice the number of hours outside of class – learning the material, revising notes, reading more widely about the topics covered, practicing examples, finishing exercises, etc. The same is true for block-course – but this must occur after the course. Do not be fooled into thinking that, apart from the follow-up assignment, “it's an intense week (and a bit), then I’m done”. To do so is likely to lead to decreased learning and poorer performance in the exam than you would otherwise achieve – you have been advised!



    Learning Activities Summary
    The main topics will include:

    · Introduction to Decision and Risk Analysis
      .  Decision Elements,ard Decisions, H Decisions & Outcomes, Hard decisions
    · Multi-objective decision-making methodology
      .  Structuring/Framing the decision situation
      .  Evaluating/Modelling the decision
      .  Deciding, sensitivity analysis and assessing trade-offs
    · Review of relevant probability, statistics and economics concepts
    · Monte Carlo simulation
    · Influence Diagrams and Decision-tree analysis and expected values
      .  Application to Value of Information and Flexibility
    · Risk Attitudes (if time)
    · Psychological and judgmental aspects of decision-making & uncertainty assessment
    · Self-directed learning on decision-making topics

    A detailed schedule of when topics will be covered over the two course blocks will be provided during the first session.
  • Assessment

    The University's policy on Assessment for Coursework Programs is based on the following four principles:

    1. Assessment must encourage and reinforce learning.
    2. Assessment must enable robust and fair judgements about student performance.
    3. Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
    4. Assessment must maintain academic standards.

    Assessment Summary
    Mid-course test – 10%:
    Assignment – 30%:
    Final exam – 60%:

    Additional assessment: if additional assessment is required for any student, the course co-ordinator reserves the right, as per university policy, to use a range of assessment measures. Such measures may include oral assessment, additional assignments, questions of the same type as the main exam and Excel-based exercises.

    Formative assessment will occur through
        a. Example questions/answer and mid-course test (see below)
        b. In-class exercises with immediate feedback, and help with, answers.
        c. After-class exercises, with answers provided and associated post-course consultation. Advice on 
           getting the most out of after-class exercises will be provided during class.



    Assessment Related Requirements
    Final mark will be a weighted average of each component as per above. There is no requirement to achieve a minimum mark in any individual component of the assessment.



    Assessment Detail
    Mid-course: 35min, around 5 short-answers questions at 3:30pm on 5th March. The main function of the mid-course test will be to provide further examples of the main exam and to illustrate the standard of answers expected. To facilitate this, and to provide rapid feedback, the mid-course test will be marked, and ideal answers discussed, in-class. Although the main purpose of the mid-course test is formative, a 10% contribution to final grade is awarded to incentivise full participation and therefore deriving maximum value from it. An example question and ideal answer will be provided prior to the test.

    Assignment: will be in the form of a group project. Full details will be provided during the PM session on 7th March and posted on MyUni. The purpose of the assignment is two-fold. First as a component of assessment, second as a part of course content – all class members will listen
    to each group presentation, on 1st & 2nd May. Submission of materials is by 5pm on 28th April. A rubric will be provided to illustrate expected achievement levels for each marking criterion.

    Final exam: 2.5 hours, closed-book. About 15 short-answer questions, no choice, in the same style as the course examples & the mid-course test. There will be a discussion, and illustration, of expectation levels for exam questions in the first session, and at the mid-course test.

    Further details, and tips, will be discussed in class and recorded via Powerpoint slides and Handouts.

    Submission
    Submission of Assignment
    Details will be provided in the Assignment Handout on 7th March and posted on MyUni thereafter

    Extensions for Assessment Tasks
    Extensions of deadlines for assessment tasks may be allowed for reasonable causes. Such situations would include compassionate and medical grounds of the severity that would justify the awarding of a supplementary examination. Evidence for the grounds must be provided when an extension is requested. Students are required to apply for an extension to the Course Co-ordinator before the assessment task is due. Extensions will not be provided on the grounds of poor prioritising of time or minor illness.

    Penalty for Late Submission of Assessment Tasks
    Part of this course is risk analysis – plan for the fact that something might delay you! You will get ZERO marks for a late submission, unless you have previously arranged this with Prof Begg for extenuating circumstances as per above (note that poor time planning, conflicting activities and minor illness are not extenuating circumstances).

    An examiner may elect not to accept any assessment task that a student wants to submit after that task has been marked and feedback provided to the rest of the class.



    Course Grading

    Grades for your performance in this course will be awarded in accordance with the following scheme:

    M10 (Coursework Mark Scheme)
    Grade Mark Description
    FNS   Fail No Submission
    F 1-49 Fail
    P 50-64 Pass
    C 65-74 Credit
    D 75-84 Distinction
    HD 85-100 High Distinction
    CN   Continuing
    NFE   No Formal Examination
    RP   Result Pending

    Further details of the grades/results can be obtained from Examinations.

    Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

    Contact Admin for School policy on remarking of exams.

    Final results for this course will be made available through Access Adelaide.

  • Student Feedback

    The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

    SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.

    Communication
    It is important that all students maintain active communication channels throughout the year. The primary communication channels to students in this course are as follows.

    Email: Each student should regularly check his or her University-provided email account (firstname.lastname@student.adelaide.edu.au) for information from academic staff concerning course work matters and other announcements as they arise. Make sure you clean up your Inbox regularly as if it is full you will not receive our email! We will regard an email message to your student email address, or an announcement posted on the MyUni site, as our having communicated with each member of the class. Not reading email or MyUni announcements will not be a valid excuse for missing important deadlines etc.

    MyUni: Students should regularly check the MyUni website (http://myuni.adelaide.edu.au/).
  • Student Support
  • Policies & Guidelines
  • Fraud Awareness

    Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student’s disciplinary procedures.

The University of Adelaide is committed to regular reviews of the courses and programs it offers to students. The University of Adelaide therefore reserves the right to discontinue or vary programs and courses without notice. Please read the important information contained in the disclaimer.