Even the most experienced project managers struggle to deal with uncertainty. They place milestones and work to anticipate outcomes, apply risk management strategies, and implement controls to ensure that everyone is doing or making the right things at the right times. But schedules and budgets still get overrun, specifications are compromised, and projects fail.
Research shows that part of the problem stems from failure to recognize the existence of various types of uncertainty, each calling for different management approaches in response. The roots of this failure lie in the traditional definition of a project (a unique set of interrelated tasks with a beginning, an end and a well-defined outcome) and the assumption that planners can identify all tasks at the outset, emplace contingency alternatives, and maintain a consistent project vision from start to finish.
While this may hold true for routine and familiar projects, novel or breakthrough situations call for an uncertainty-based management approach that recognizes and allows for four types of uncertainty: variation, foreseen uncertainty, unforeseen uncertainty and chaos.
Variation arises from small influences but has significant impacts. Variation produces a range of potential values for a given activity. Variation is present when schedules and budgets change from projected values as laid out in the project plan, causing shifts in the critical path that force project managers to track effects that extend beyond the critical activities. The influences that cause variation are too small, numerous, and random to accurately plan for.
Foreseen uncertainty is the result of influences that are identifiable and understood but unpredictable. Because the causes of foreseen uncertainty are distinct, typical risk and contingency management approaches can be put in place to deal with it.
Unforeseen uncertainty is impossible to identify. Therefore, contingency plans are likewise impossible or very difficult to put in place. Unforeseen uncertainty may be caused by major events, but can also result from unanticipated interaction between multiple minor events which might be foreseeable on an individual basis.
Projects subject to chaos often arise in conditions of technological upheaval or in research and development environs. This project type is not based on a set of stable assumptions and goals, and uncertainty is a basic feature of the project plan. Chaotic projects often produce end results that are entirely unrelated to original project intent.
Creating an Uncertainty Profile
High degrees of uncertainty require project planning teams to be ready to redefine tasks or even restructure the project plan midstream. Formulating an uncertainty profile allows everyone to reach agreement regarding the management of mid-project changes. The profile is derived from a subjective estimate of which types of uncertainty are most likely to impact the project, and the degree of effect each type may have. Profile development is based on experience with similar projects or with the help of strategies like scenario planning, statistical analyses, technology and market forecasts, or other appropriate means.
With an uncertainty profile in hand, everyone will understand which uncertainty types might be faced and how they might affect project management. Planners can emplace project infrastructure to support a planned response or allow for the team to learn from and adjust to events. In any case, the potential impact of uncertainty can be reduced as long as flexibility and the ability to communicate change is maintained.