Wednesday, 24 October 2012 09:13

Project Uncertainty & Estimating with Risk Management

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FEATUREOct24th"The need to relinquish our certainty lies at the heart both of modern science and ancient spirituality. From the Science of Complexity, Illya Priogogine tells us that "The future is uncertain...but such uncertainty lies at the heart of human creativity. It is uncertainty that creates the space for invention. We must let go, clear the space and leap into the void of not knowing, if we want to discover anything new."
-- Margaret Wheatley

Who doesn’t want certainty, particularly when it comes to project outcomes like meeting a scheduled delivery date, staying within a budget or producing something that people will happily and productively use or buy?

Well, it is clear that you can't always get what you want. When it comes to predicting the future uncertainty is pretty much certain (with the obvious exceptions of death and taxes, where even the certainty of taxes is questioned by some.).

This is only a problem if you can't accept not getting what you want. As soon as you accept the inevitability of uncertainty you are in good shape. By remembering that your estimates are estimates, not actuals, and that they are based on assumptions enables effective estimating.

Assumptions! Yes, whoever it was that said that assumption making was something to avoid, was wrong. Assumptions are absolutely necessary when it comes to estimating or otherwise predicting the future. The problem is not acknowledging that assumptions are assumptions.

Using assumptions the estimator builds a scenario - so many people will do so much work in so much time under some set of conditions. The scenario is the base for the estimate.

The clever estimator makes risk management an integral part of estimating. He or she will vary the assumptions to create alternative scenarios. Alternative scenarios provide the opportunity to assess the practicality of the estimate. Each set of assumptions is evaluated to determine its probability and impact on the estimate.

Nothing mystical here, it is management 101. The challenge is to actually do it in the face the common obstacles. Fear of pushing back against demands for quick estimates that simply show that irrational deadlines will be met is an obstacle. Not doing the hard work of building the scenarios and assessing them to find the one that is most likely to achieve desired results and set rational expectations is an obstacle.

The factors that drive an estimate are

  • Objectives (what is to be delivered),
  • The resources (people, machines, money, supplies, etc.) that will do the work to achieve the objectives,
  • Environment (where the work is being performed; the infrastructure, culture, geography, etc.)
  • Constraints (rules, regulations, budgetary limits, etc. that influence the work and the outcome)
  • Process or approach (the way the work is done, including tools, procedures and methodologies).

Change in any one of these multifaceted factors will cause a change to the estimate. Consciously play what if games by varying the factors through a range of possibilities. Attempt to minimize uncertainty by estimating based on practical expectations and by actively managing change as it occurs during project performance.

Do not expect to eliminate uncertainty.

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