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Uncertainty Management – Myths And Realities

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Uncertainty Management – Myths And Realities

Authors: Agnar Johansen, Siva Ekambaram, Hans Petter Krane, Trygve Steiro,

Presented at the 12th EURAM conference, 2012, Rotterdam, The Netherlands.

Abstract:

This paper addresses the need for using a project owner perspective in projects in order to handle uncertainty management processes more thoroughly. Traditionally, literature and actual practice have focused on risk mitigation. Recent published knowledge reflects a change in attitude, as it acknowledges that uncertainty has both an upside and a downside. Most literature, however, is still using a too narrow project perspective when analyzing and describing uncertainty management processes. But more alarming was the lack of focus on opportunities that we saw when we followed project in six difference companies over a four year period.  This is also evident when it comes to thinking in terms of lifecycle.

The aim of this paper is to discuss a set of often-claimed viewpoints on project uncertainty. We have organized the ideas into what we denote “three myths about project uncertainty”. In this paper, we will first present the research methods that were applied in the work on which this paper is based. We then describe relevant theories as a background and a framework for describing the three myths. Finally, an overall discussion and concluding remarks will wind up the paper.

In this paper the following myths are presented and examined 1) Uncertainty is reduced to zero towards the end of the execution phase, 2) There are substantial amounts of both opportunities and threats at the start of a project, 3) Uncertainty is understood in the same manner by all the main actors within and outside the project (everyone has same understanding of the uncertainty that is associated with the project).

A traditional way of dealing with uncertainty has been to mitigate the risk. Project owners should demand results and negotiate cost and time buffers. In our opinion, front-end loading is necessary, but not sufficient for managing projects. We argue that project managers still need traditional skills in managing uncertainty. However, we see that project managers face more demands, many of which are of non-traditional nature. Project managers will hence need more training in managing uncertainty. Equally important is to raise the consciousness of uncertainty not only as a limiting factor, but also an enabling factor both for project managers and project owners.