MIT Course on Project Management III: Project Uncertainty ManagementProf. Fred Moavenzadeh follows his lecture on construction risk management (pdf see previous post) with the culminating lecture of his course on project management.
This lecture 24 (pdf) deals with what he calls project uncertainty management, giving credit for his presentation of the subject to Odmund Granli, a Norwegian expert in project management who got some of his training at MIT.
The basic point Prof. Moavenzadeh addresses is the way attention to managing uncertainty, as opposed to looking only at risks negative eventualities enables project managers to focus on value creation over the full life cycle of a project.
Uncertainty in this context is defined as the degree of a project manager's
ability to predict the outcome of parameters or foresee events that may impact the project. Uncertainties have a defined range of possible outcomes described by functions reflecting the probability for each outcome.Uncertainty exists concerning both risks (negative outcomes) and opportunities (positive outcomes), and arises from variability and ambiguity, the latter due, e.g., to values conflicts among project participants.
Prof. Moavenzadeh outlines four types of uncertainty management challenges, one of which, somewhat confusingly, is itself called uncertainty, for which precautionary strategies, such as limiting the range of effects, are appropriate. The other three challenges are complexity, addressed by strategies that reduce the damage potential and limit the overall risk level (e.g., through establishing appropriate standards and procedures); dynamic processes, addressed by strategies that, e.g., reverse adverse trends and break vicious cycles; and ambiguity, addressed through consensus-seeking dialogue of advisory committees, citizen panels, etc.
The bulk of Prof. Moavenzadeh's lecture discusses how project organization and contracts can be structured to optimally manage project uncertainties both risks and oppportunities. However, since the slides supporting this portion of the lecture are hard to absorb without the benefit of Prof. Moavenzadeh's in-class commentary, I would suggest that someone wishing to learn more read something like Uncertainty Management for Systems Planning and Design (pdf), a 2004 paper by Richard de Neufville of MIT's Engineering Systems Division.