Areas of application of the Lichtenberg Principle

The analysis principle provides support for decision-making for any form of quantitative estimates or calculations, in which the input is uncertain and where those in positions of responsibility need to know the mean value and uncertainty of the result with the highest possible degree of reliability.

The Principle has proved to be particularly useful in the very early stages of a project, idea phases, authorisation and equivalent phases as well as in tendering and contract negotiation scenarios.

It supports optimization of plans and profitability. The Principle is also used to bolster teambuilding, communication and consensus between the different parties involved and to solve problems with overloading.

A range of practical procedures has been developed for estimating costs, project duration, Net Present Value calculations, etc. The Principle has been used in nearly all public and private social spheres. It is particularly appropriate before major decisions have to be made, e.g. on invitations to tender, firm offers and the start-up of major projects, the choice between various alternative proposals, impact audits of new strategies, etc.

Selected areas of application

The system operates both on an ad hoc basis and by implementing relevant procedures in the organisation in order to solve the following tasks, among others:

• Commercial risk analysis, risk control or risk management 
• Quality assurance of Net Present Value and other profit forecasts 
• Investment analyses, bid estimates etc. with a high accuracy
• Optimising productivity and competitiveness
• Alternative plans and projects, comparative financial audits 
• Analysis of the certainty of meeting crucial deadlines 
• Optimisation of tenders for major export projects 
• Pre analysis of critical aspects of contract negotiations 
• General project audits 
• Benefit/cost analyses 
• Introduction of efficient routines for internal and external handling of uncertainty 
• Socio-economic analyses 
• Quantitative analyses of energy, environmental factors, and environmental economics 
• Optimisation and reliability insurance for budgets and plans (see references) 

Typical examples of implementation

The Successive Principle has been used in most public and private spheres. A few examples follow.

Improve productivity and competitiveness

Companies have drastically improved their competitiveness

Commercial profit

Determining the potential commercial profit of strategic plans, programmes or projects 

Safeguarding deadlines

Safeguarding deadlines, accelerating schedules 

Commercial risk analysis

Risk analysis for proactive optimisation 

Risk sharing during contract negotiations

Clarifying and ranking ‘give-and-take’ possibilities before and during important contract negotiations 

Transition from sales to production and similar transitions.

This transition is often far from efficient. The principle safeguard a far more efficient transition.

Winning project competitions

Optimising the conditions for winning project competitions while nevertheless without sacrificing profit 

Start-up, team building and consensus

Facilitating start-up, team building  and consensus

Improving a multi-project situation

Improving the net benefit of a multi-project or portfolio situation, through systematic re-ranking 

A public body undergoing privatisation

Analysing optimal strategies for a public body undergoing privatisation 

Building development projects

Profitability and risk analysis in building development projects, Build-Operate-Transfer ventures etc. 

Cost/benefit analyses

Commercial and social cost/benefit analyses 

Improving the quality of budgeting

Improving the quality and consistency of budgeting in organisations 

Identifying long-range potentials

Identifying long-range potentials and threats for private concerns or companies 

Net asset value of going concerns

Determining the genuine net asset value of going concerns 

Stabilising

Stabilising budgets for infrastructure projects and other large projects 

Optimising tender prices

Verifying and optimising tender prices before tendering 

A proactive environmental strategy

Evaluating the social as well as the commercial impact of a proactive environmental strategy