Uncertainty-Based Project Management

• Uncertainty is a common aspect of many projects, and managers find it challenging to handle.
• Despite using decision milestones, risk management and sequential iteration, projects often face schedule overruns, budget issues, and compromised specifications.
• Projects sometimes fail entirely.
• Managers often fail to recognize the different types of uncertainty, each requiring a unique management approach.
• A project often defined as a "unique interrelated set of tasks with a beginning, an end and a well-defined outcome," assumes task identification, contingency alternatives, and a consistent project vision.

Uncertainty-Based Management

• Involves deriving planning, monitoring, and management style from an uncertainty profile that includes variation, foreseen uncertainty, unforeseen uncertainty, and chaos.
• Managers move from approaches based on fixed task sequences to strategies allowing vision changes.

What Uncertainty Looks Like

• Projects can have few uncertainties (task complexity) or multiple uncertainties, classified by source (technical issues, market, people, cost, schedule, quality) or impact.
• A single project can encounter a combination of four types of uncertainty.

Types of Uncertainty

• Variation stems from small influences, yielding a range of values on an activity, with managers knowing activity sequences and objectives.
• Foreseen Uncertainties have identifiable influences that the team knows will occur.
• Unforeseen Uncertainties involve influences that the team cannot be sure will occur, with full-blown risk management required

Variation

• Comes from many small influences and yields a range of values on a particular activity, such as activity X taking between 32 and 34 weeks.
• Managers know activity sequences and have defined objectives.
• Project plans are detailed and stable, but budgets and schedules vary from projections.
• A shifting schedule causes the critical path to move, requiring variations across the board, not just critical activities.
• Influences are too small to plan for individually, but the team can monitor resulting expense and time variations.

Foreseen Uncertainty

• Identifiable and understood influences which the team cannot be sure will occur.
• Requires full-blown risk management
• Involves identifying and addressing individual sources.
• To address, managers need to go beyond traditional risk management, adopting roles and techniques oriented less towards planning and more towards flexibility and learning.

Unforeseen Uncertainty

• Impossible to identify during project planning (no Plan B).
• Occurs from unanticipated interactions of events, each possibly foreseeable.
• Occurs in projects pushing a technology envelope or entering a partially known market.
• Viagra started as a heart medication to improve blood flow but became a blockbuster drug when it improved sexual performance.

Chaos

• The basic structure of the project plan is uncertain.
• Projects end with results completely different from their original intent.
• Java conceived in 1991 as software for household appliances became a programming language for Web pages by 1995.

Creating Uncertainty Profiles

• A project that has little uncertainty makes the manager primarily a coordinator and scheduler.
• Greater uncertainty requires redefining tasks and structures in midcourse.
• Agreement is ensured using an uncertainty profile, a qualitative characterization of the degree to which each uncertainty type affects the project.
• Uncertainty profile reflects the team's estimate, indicating potentially most important uncertainty

Managing Variation

• The project manager must control slippage in budget, schedule and deliverables.
• Account for variation during project planning, build-in buffers by strategic points.
• Top management must respect those buffers and avoid treating them as bargaining chips.

Managing Foreseen Uncertainty

• Project managers must first identify events that could affect the project.
• The decision tree is a useful approach.
• To track projects featuring unforeseen uncertainty, teams must monitor not only which activities are complete, but also which branch of the decision tree has materialized.
• The manager shifts from master scheduler and troubleshooter to reactive consolidator of what the team has achieved so far.

Managing Unforeseen uncertainty

• Contingency planning more difficult because the project team cannot anticipate everything.
• Teams must go beyond mere crisis management and continually scan for emerging influences.
• Project managers must move from troubleshooting to opportunistic orchestrating and networking.

Managing Chaos

• Requires even greater flexibility
• Management should work with conceptual models that may be redefined repeatedly as feedback spurs learning.
• Tracking is less focused on the current status of the project relative to its target and more on the current status of learning about basic project assumptions.
• The project team should be willing to try fundamentally different approaches, either in series or in parallel.
• Team managers must have a high degree of autonomy.
• Iteration obliges project managers to cope with constant change.
• They become entrepreneurs - developing and maintaining close but loose contacts with customers and opinion leaders.
• They must continually verify the original project idea, quickly run experiments to collect feedback on new ideas and consolidate what they learn.

Striking a New Balance

• Many projects are characterized by one dominant type of uncertainty, they often will display a blend of types along with different management styles and project infrastructure.
• The challenge in managing uncertainty, to whatever degree, is to find the balance between planning and learning.
• Openness to learning is new to many companies that comes as a result of project failures due to ignoring unforeseen or chaos projects.