Project Uncertainty in Novel Projects
Journal: Managing Project Uncertainty: From Variation to Chaos
Authors: Arnoud De Meyer, Christoph H. Loch, and Michael T. Pich
Managers consistently fail to recognize that there are different types of uncertainty, each of which requires a different management approach.
This lack of awareness is understandable given that the definition of a project is a unique interrelated set of tasks with a beginning, an end and a well defined outcome. which assumes that everyone can identify tasks at the outset, provide contingency alternatives and keep to the same overall project vision throughout.
A more forward-thinking approach is uncertainty based management, which derives planning, monitoring and management style from an uncertainty profile comprising four uncertainty types: Variation, foreseen uncertainty, unforeseen uncertainty, and chaos.
Variation
Project managers must plan ahead and account for variations that may occur. Examples of variation include slippage in budget, schedule, and deliverables. Building strategic buffers in the project plan allows PMs to manage these variations. At the same time it is essential for top management to respect these buffers and not try to negotiate them away. Additionally, once the buffers are implemented, there needs to exist a way to monitor variations and appropriate authority needs to be given to PMs to quickly act on variations as per plan.
Foreseen Uncertainty
PMs must identify a list of possible events that could affect the project. Once done, a decision tree approach provides a quick way to remedy these foreseen uncertainties. It then becomes important to monitor what branch of the decision tree has materialized and what potential events lie ahead.
Unforeseen Uncertainty
Managing unforeseen uncertainty is difficult and requires teams to constantly monitor emerging influences. It is not possible to prepare contingency plans in advance and therefore PMs must move from troubleshooting to opportunistic orchestrating and networking.
Chaos
Greatest flexibility required for managing projects in chaos. To keep the chances of success high despite chaos, teams must be willing to try fundamentally different approaches either in series or in parallel. During chaos project tracking is more focused on the current status of 'learning' about basic project assumptions.
Conclusion
Often the uncertainty projects face come in a blend of all types. Therefore, managerial flexibility in adopting new methods and striking the balance between learning and planning becomes a crucial determinant of success. It is evident though that higher degrees of uncertainty and chaos require greater learning as compared to variation and foreseen uncertainty. Very few companies are generally open to learning and in an environment where uncertainty is the rule, those that understand the importance of learning have the greatest chance of producing spectacular project success.