Managing a project with limited uncertainty
To start with, every project is subject to some uncertainty, but the amount of uncertainty can vary. Knowing a project’s uncertainty profile — ranging from simple variation to outright chaos — will help choose the right management strategy.
There are four uncertainty profiles along a spectrum:
Variation
Forseen Uncertainty
Unforeseen Uncertainty
Chaos
Where the project goal is clearly known and defined at the outset, as well as the solution or route for getting to it, it is very best suited for the application of what is commonly thought of as ‘traditional’ project management -
define the objective
make a plan to get there
execute the plan
monitor how well we are executing against the agreed the plan
course correct to bring as close as possible to the plan
This is a example of a Project with Variation, pretty low uncertainty.
Characteristics of a project with variation
All parties involved know exactly what they want to be built, and how the solution solves the problem/meets the objective
Team members have a good idea of what is coming, what tasks have to be performed to get there, how long these tasks will take on average, and what the dependencies between the tasks are, and where things could become tricky - they know the pitfalls to avoid
A similar project has been done before, particularly by the team doing this project. Even if they haven’t done it before, if the project has been done by others, and the information to replicate is readily available, this can still be a project with low uncertainty
Project Manager’s role
In projects subject primarily to variation, the project manager is first and foremost a troubleshooter who can identify deviations and push through solutions to get the project back on track. Radical changes to the plan are not the concern, nor even the root cause of deviations; it’s all about controlling slippage in the budget, schedule and deliverables.
Project setup
Account for variation during project planning and build in buffers — for example, tolerance, contingency, increased capacity or budget reserves. For project schedules, divide into phases, and then build contingency buffers into each phase - do similar for the project budget. Only use these buffers if you really need to, and don't bargain them away. Top management must also allow these buffers to exist, and respect them; they must avoid treating them as pressure points or bargaining chips to attempt to expedite. The project should be treated as a success even if it comes in within tolerance, not as a failure if it must use up some of these cushions.
Before beginning the project, set the baselines so you have something to measure against; none of this works if you don’t know what you were supposed to be doing. Don’t neglect this step.
Perform a critical path analysis to understand which tasks will have the greatest impact on the timeline - this will help to prioritise which tasks require the closest management and which can be allowed to float more freely without worrying overmuch about variation.
If no one has planned for any variation, or what is really important is not fully understood, the project manager must resort to constant firefighting to get the project back on track — a waste of resources and a drain on stakeholders.
Project monitoring and decision-making
Once the critical path is established and appropriate buffers are defined, project managers need procedures for monitoring progress and authorizing changes in the project plan, such as expediting certain tasks. They can track performance variables —such as days ahead of or behind schedule, or differences between the budgeted and current project cost using the baseline. As long as the variable stays within an acceptable range, no action is needed - not corrective action and not even reporting action. But once it falls outside the range, the project manager must identify causes and take action. The project manager and team must have the ability and authority to react quickly, for example, by shifting suppliers or bringing forward subcontractors’ delivery dates with an extra payment.
Reserve senior leaders for helping to decide how to react to significant deviations - this is much more effective than monitoring and deciding on every small critical-path variation in an endless battle to stay the course.
Key approaches & techniques
Add contingency and reserves to the schedule and budget
Set a baseline before project starts
Perform critical path analysis
Determine and agree an acceptable tolerance from the baseline, where the project manager has absolute and immediate authority to take any corrective action
Determine the point at which corrective action must be taken
Establish and agree data points and procedures for monitoring progress (typical - performance to time and cost baseline, overall spend, burndown charts)
Practice careful scope control to prevent widespread and rampant variation
References
DE MEYER, Arnoud; LOCH, Christoph H.; and PICH, Michael T. (2002). Managing project uncertainty: From variation to chaos. MIT Sloan Management Review. 43, (2), pp.60-67.
MONTEIRO MARINHO, Marcelo Luiz; DE BARROS SAMPAIO, Suzana Cândido; DE ANDRADE LIMA, Telma Lúcia; DE MOURA, Hermano Perrelli (2015). Uncertainty Management in Software Projects. Journal of Software. 10, (3), pp.288-303.