Uncertainty Performance Domain Flashcards
Uncertainty Definition
A lack of understanding of issues, events, or paths to follow, or solutions to pursue.
Risk Definition
An uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project variables.
Complexity Definition
A characteristic of a program or project or its environment that is difficult to manage due to human behavior, system behavior, and ambiguity.
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Ambiguity Definition
A state of being unclear, having difficulty in identifying the cause of events, or having multiple options from which to choose.
Environmental Factors of Uncertainty
- Economics
- Technical considerations
- Legal Constraints
- Physical Environment
- Ambiguity of events
- Social influences on market or public opinion
- Political influences internal or external
General Uncertainty Approach
- Gather information.
- Prepare for multiple outcomes.
- Set based design.
- Build in resilience.
Gathering Information
- General uncertainty approach
- Conducting research
- Engaging experts
- Performing market analysis
- Identify when the cost of collecting more information exceeds benefit of having additional information
Prepare for Multiple Outcomes
- General uncertainty approach
- Primary solution + backup or contingency plans if primary solution is not viable
- Useful when there are a limited number of possible outcomes
What do you do when you are faced with the uncertainty and a large set or range of possible outcomes?
- Assess and categorize the causes of outcomes and assess their likelihood of occurrence
- Focus on the most likely to occur
Set-based Design
- Multiple designs or alternatives investigated early on the project to reduce uncertainty
- Compare trade offs: quality, cost, schedule, and time
- Intention is to explore options to so project team can learn from various alternatives
Build in Resilience
- General uncertainty approach
- The ability to learn, adapt and respond quickly to unexpected changes
- Example: ineffective product designs or prototypes
Conceptional Ambiguity Definition & Solutions
- The lack of effective understanding when people use similar terms or arguments in different ways.
- Establish common rules and definitions
Situational Ambiguity Definition
- When more than one outcome is possible.
Progressive Elaboration
- Response to situational ambiguity
- An iterative process of increasing level of detail on project management plans
- Occurs as greater amounts of information and more accurate estimates become available
Experiments
- Response to situational ambiguity
- Process of establishing cause and effect relationships
- Goal is to at least reduce ambiguity
Prototypes
- Creating a working model before actual production to reduce situational ambiguity
- Bonus: Can help distinguish the relationship between different variables
Two Approaches to Systems Based Approaches to Complexity
- Decoupling
- Simulation
Two Ways of Reframing Complexity
- Examining a diversity of perspectives
- Balancing data sources and types (focusing on more than forecasts or lagging indicators)
- This means using multiple data sources that counter the negative effects of each alone
Process Approach to Complexity
- Iterative Design
- Stakeholder Engagement
- Fail safes
Decoupling
- Systems-based approach for approaching complexity
- Disconnecting parts of a system to simplify and reduce the # of connected variables
- Reducing the overall size of a problem to explore how a larger system works
Simulation
- Systems-based approach for approaching complexity
- Seeking out analogous information from unrelated scenarios to learn about a system
Remember categories of approaching complexity….
Diversity
- Reframing method for approaching complexity of a system
- Viewing a system from a diversity of perspectives
- Examples include: Divergent ways of seeing a system (brainstorming) and Divergent-Convergent thinking (Delphi Method)
Iteration
- Process-Based method for approaching complexity
- Building iteratively or incrementally by adding features one at a time
- Identify what what worked, what did not work, and customer reactions
- Learn what the project team learned
Context of reducing complexity…hint: performance domain
Engage
- Process-Based method for approaching complexity
- Build opportunities to get stakeholder engagement
- Aims to reduce the number of assumptions and build learning into the development/delivery process
Volatility Definition
- Rapid, unpredictable change, and magnitudes of change
- Example: Fluctuations of available skillsets or required materials
Two Approaches to Manage Volatility
- Alternative Analysis
- Volatility Reserve
Volatility Reserves
- Cost reserve used to cover price over-runs due to price volatility
- Schedule reserves used to address delays due to resource availability
How would you describe ‘Overall Project Risk’?
- Function of complexity, ambiguity, and volatility
Other Risk Metrics
- Risk Threshold
- Risk Appetite
- Risk Impact, Probability, & Severity
Threat
- An event or condition that can have a negative impact on one or more objectives if it occurs
Threat Responses
- Avoid
- Escalate
- Transfer
- Mitigate
- Accept
Threat Avoidance
- Eliminating a threat or protecting a project team from its impact
Threat Escalation
- When the project team or sponsor agrees that a threat is outside of the scope of a project manager’s authority
Threat Transfer
- Shifting the ownership of a threat to a third party to manage the risk, and bear the impact if the threat occurs
Threat Mitigation
- Action taken to reduce the probability of occurrence and/or the impact of a threat
- Early mitigation is more effective than repair after threat occurence
Threat Acceptance
- No proactive action planned against threats
- Developing contingency plans in case threat events occur
Risk Appetite
- The degree of uncertainty an organization or individual is willing to accept in anticipation of a reward
- May correlate with Risk Threshold (smaller margins for risk thresholds ~ smaller appetite)
Risk Threshold
- The measure of acceptable variation around an objective that reflects the risk appetite of the organization
- May be defined through upper and lower limits
- The point at which risk becomes unacceptable.
Opportunity Responses
- Exploit
- Escalate
- Share
- Enhance
- Accept
Explain
- This plots the effect on Return of Investment (ROI) of a projects goal against the Expected Monetary Value (EMV) of a risk
- As the EMV of the risk increases, the ROI of the project diminishes
Test
Situational Ambiguity Responses
- Progressive Elaboration, Experiments, & Prototypes
What differentiates a risk and an issue?
- A risk can or may happen
- An issue HAS happened
