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First of all thank you that you are here! ☀️ My name is Peter Elek - certified project manager with banking expertise. My main goal with this blog to practice what I have learned and share important aspects project, program or portfolio management.
I hope that you have already consumed your ☕️ today, and we can easily digest this topic. Today I would like to share some insights about uncertainty in project and program management. I believe in some situation is pretty normal that you are facing uncertainty - for example agile and adaptive environment - , but it could be challenging and irritating in waterfall - plan based or in strategic decisions.
But if we would like to defend ourselfs just we need to trust our gut feeling and strategic thinking. Recognizing, evaluating, and responding to system interactions can lead to the most positive outcomes. Early consideration of uncertainty and risk within the project, exploration of alternatives and consideration of unintended consequences can help to mitigate the situation.
To understand the situation more in details it worth to define uncertainty. Uncertainty is a lack of understanding and awarenesss of issues, events, paths to follow, or solutions to pursue. Uncertainty deals with the probabilities of alternative actions, reactions and outcomes. Uncertainty includes unknown unknowns and black swans, which are emerging factors that are completely outside of existing knowledge or experience.
Uncertainty causes project risk as a whole, arising from all sources of uncertainty. These risks could be negative but positive too. The negative risk we called it threats is an event or cindition that if it occurs, has a negative impact on our objectives. How to handle?
Avoid - threat avoidance is when the project team acts to eliminate the threat or protect the project from its impact.
Escalate - escalation is appropriate when the project team or the project sponsor agrees that a threat is outside the scope of the project or that the proposed response would exceed the PMs authority.
Transfer - transfer involves shifting ownership of a threat to a third party to manage the risk and to bear the impact if the threat occurs.
Mitigate - action is taken to reduce the probability of occurance and/or impact of a threat. Early mitigation action is often more effective than trying to repair the damage after the threat has occurred.
Accept - acknowledges the existence of a threat, but no proactive action is planned. Actively accepting a risk can include developing a contingency plan that would be triggered if the event occurred, or it can include passive acceptance, which means doing nothing.
The positive risk called opportunity, is an event or condition that, if it occurs, has a positive impact on our objectives. An example of an opportunity could be a time and materials-based subcontractor who finished work earlier, resulting in lower costs and/or schedule savings.
Exploit - a response strategy whereby the project team acts to ensure that an opportunity occurs.
Escalate - used when a project team or the project sponsor agrees that an opportunity is outside the scope of the project or that the proposed response would exceed the project manager's authority.
Share - opportunity sharing involves allocating ownership of an opportunity to a third party who is best able to capture the benefit of that opportunity.
Enhance - the project team acts to increase the probability of occirrence or impact of an opportunity. Early enhancement action is often more effective than trying to improve the opportunity after it has occurred.
Accept - accepting an opportunity acknowledges its existence but no proactive action is planned.
Once a set of risk responses has been developed, it should be reviewed to see whether the planned responses have added any secondary risks. The review also assess the residual risk that will remain once the response actions have been carried out. Response planning should be repeated until residual risk is compatible with the organizations's risk appetite. Luckily the general uncertainty during the project or program is inversely proportional with the passage of time. As the project progresses, we know more and more about every aspects.
In strategy creation a great solution when uncertainty is normal, is the rolling wave planning. This is an iterative planning method in which the work to be accomplished in the near term is planned in detail, while the work in the future is planned at a higher level. We can do it quarterly with pre-defined iterations and reports.
To be honest with you, it's not easy to handle uncertainty in the beginning, but I would encourage you to be relaxed and trust your knowledge. To manage a program or a project, you need to be prepared - like in life - to have Plan B or Plan C. Having these alternatives in mind gives you the confidence to handle situations earlier.
I would encourage you to hire certified project managers or upskill them with the latest guidelines/standards to minimize the risk around your projects and around the overall portfolio. Contact here
Source: PMBOK 7th edition
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