Managing Project Uncertainty: From Variation to Chaos
The word of the hour is uncertainty; it permeates all of modern life and business. Uncertainty so strongly affects companies’ project management, for example, that three project-management experts decided to study companies that successfully embrace it. The authors acknowledge the challenges of increased complexity, the shrinking of development cycles and the inadequacy of traditional risk management in shifting markets. But they observe that, counterintuitively, projects conducted in such environments often have high returns. The secret is a willingness to redefine everything in midcourse on the basis of the predominant type of uncertainty.
Arnoud De Meyer, Christoph H. Loch and Michael T. Pich, professors of technology management at INSEAD Singapore, observed 16 major projects in a variety of industries. Using interviews and research on project documentation, they identify four major uncertainty categories. In variation, the project plan is detailed and stable, but project schedules and budgets drift from their projected values. Foreseen uncertainty is characterized by identifiable and understandable influences that the team cannot be sure will occur. Unforeseen uncertainty and chaos are the hardest categories to address because they require a balance between planning and learning. Projects featuring unforeseen uncertainty or chaos are common when the technology is in upheaval or when research, not development, is the main goal. At such times, a project may have successful results that are completely unexpected.
Companies must learn to ascertain what kind of uncertainty is likely to dominate a project. For those that do, the authors reveal the best mix of tools and techniques to select when managing each type. Uncertainty is here to stay. Successful companies will be those that keep adapting.