managing projects under uncertainty

8/14/2019 Managing Projects Under Uncertainty

1/14

INSEAD

Presented at 2000 IEEE International Conference onManagement of Innovation and Technology, ICMIT 2000 Singapore

Posted by Author Permission on ProjectConnections.com

Managing Projects underUncertainty -I m p l i c a t i o n s f o r

P r o j e c t M a n a g em e n t S t y l e s

Arnoud De Meyer

Christoph Loch

Michael Pich

INSEAD (Singapore)


2/14

INSEAD



Where do we come from?

Project Management is traditionally

about: Managing tasks :planning, identifying risks and

contingencies, monitoring and control

Managing relationships: defining the stakeholdersand formaliszing the contract

Project Management is often associated withm a n ag em e n t o f co m p l e x i t y

Classical project management tools addressthis complexity


3/14

INSEAD



But

Many project managers pay only lip

service to the Gantt Chart from projectmanagement tools

We asked: Why ?

More than twenty detailed case studies

Own experience with projects

Observation : complexity management is

heavily influenced by the type of uncertaintythe project manager is confronted with


4/14

INSEAD



Lets define the types ofuncertainty

V a r i a t i o n in activity durations, costs andexact performance level of the resources

Ex. variation during a construction project in deliverydates

Fo r e se e n r i s k s refers to a distinct andidentifiable project influence which may ormay not have an impact on the project

Ex. results of field test in drug development


5/14

INSEAD



Types of Uncertainty (II)

U n f o r e se e n r i s k s are similar to foreseen

risks, but differ in that the influences cannotnot be identified upfront

Ex. influence of Challenger disaster on Aerostar van

Ch a o s refers to a fundamental uncertaintyabout the basic structure of a project

Ex. Sun s development of Java, or many of the

internet business projects


6/14

INSEAD



Core argument of thepresentation

The way you manage the projectis contingent on the dominant type of

uncertainty you are confronted with

The most effective style of Project Management,the approach to managing tasks & relationships

is determined by the dominant type ofuncertainty on the project


7/14

INSEAD



Type of uncertainty PM Style Managing Tasks Managing Relationships

Planning Execution Planning Execution

No uncertainty(only task and

relational complexity)

Coordinator

and master

scheduler

Plan thenature andsequenceof tasksbased onexperience.

Activitynetworkanalysis

(CPM,PERT, etc.)

Monitoringof projectprogressagainstprojectplan.

Gantt Chart

Identifyinterestconflicts, andcodifyresponsibili-ties anddeliverables.

Contractdesign andenforcement

Coordinationofstakeholdersand suppliers

Enforcementof deliveriesby parties with

conflictinginterests

Type of Uncertainty: None

(Only Complexity)

critical path

Critical

Path Method

critical pathcritical path

Critical

Path Method


8/14

INSEAD





Variation Troubleshooter and

expeditor

Build inslack/bufferat strategiclocations incritical pathanddeterminecontrollimits forcorrectiveaction.

Simulation

of differentscenarios.

Monitordeviationfrom inter-mediatetargets

Use of

controlcharts

Clearlyidentify andcommuni-cateexpectedperformancecriteria.

Monitorperformanceagainstperformancecriteria.

Maintainsomeflexibility withkeystakeholders.

Type of Uncertainty: Variation

Critical Chain: buffer management


9/14

INSEAD





Foreseen risk Consolidatorof project

achieve-

ments

Anticipateand triggeralternativepaths toproject goal

throughdecisiontreetechniques

Contin-gencyplanning,decisionanalysis.

Identifyoccurrencesof foreseenrisks andimplement

contingencies

Increaseawarenessfor changesinenvironment

along knowncriteria ordimensions

Occupy thewhite spacesin thecontract.

Continuouslyinform andmotivateinternal andexternal

partners inorder to copewith majorswitches inprojectexecution

Type of Uncertainty: Foreseen Risk

X

1

X2

X3

X4

go

stop

1-

Chance node

Decision tree decision nodeoutcome

X1

X2

X3

X4

go

stop

1-

Chance node

Decision tree decision nodeoutcome


10/14

INSEAD





Unforeseen r isk Flexibleorchestrator

and

networker

Build in theability toadd a set ofnew tasks

to thedecisiontree

Continuous-ly questionthe existingproject

modelandscan thehorizon forearly signsof non-anticipatedinfluences.

Build inability tomobilise newpartners in

the networkwho can helpsolve newchallenges

Maintainflexiblerelationshipsand strong

communica-tion channels.

Type of Uncertainty: Unforeseen Risk

X1

X2

X3

X4

0

go

stop

1-

X5

Parameter (chance node) recognized at this point

Evolving

decision tree X1

X2

X3

X4

0

go

stop

1-

X5

Parameter (chance node) recognized at this point

Evolving

decision tree


11/14

INSEAD





Chaos Entrepre-neur and

Knowledge

manager

Considerparallelsolutionswith

iterationand gradualselection offinalapproach.

Repeatedverificationofhypotheses

on whichproject isbuilt; detailplan only tonextverification

Build long-termrelationshipsin order to

createinterestalignment

Close linkingwith usersand leadersin the field.

Direct andconstantfeedbackfrom marketsandtechnologyproviders.

Type of Uncertainty: Chaos

Further

decisions

(notplannable )

?

?

Iteration (new

projects)Further

decisions

(notplannable )

?

?

Iteration (new

projects)


12/14

INSEAD



Practically Speaking

Up front, determine the

p r o j e c t u n ce r t a i n t y p r o f i l e

(For the type of project you re undertaking,understand the mix of uncertainty typesinvolved.)

See typical profiles on next slide.


13/14

INSEAD



Uncertainty profiles

Earth-moving,

Infra-structure development with

unknown ground conditions

Complexity

Variation

Risk

Ambiguity

Chaos

Cruise ship with

known components

Importance for

project management

Hi-Tech startup with

unknown market

Importance for

project management

Importance for

project management


14/14

INSEAD



Practically speaking

Determine the project uncertainty profile

Develop the project infrastructure to allow appropriate planning and management of

tasks and relationships, according to the types ofactions called for on previous uncertainty profile slides

Assign Accountabilities to ensure project managers and others are set to use

the right styles of task and relationship planning andmanagement for this kind of project

managing projects under uncertainty

Documents