FEATURED PAPER
By Bob Prieto
Chairman & CEO
Strategic Program Management LLC
Jupiter, Florida
Introduction
This paper looks at the special case of decision making under uncertainty. The relationship between uncertainty and complexity is explored as is their joint relationship with large complex projects. The importance of getting these projects well founded from an ability to manage uncertainty is discussed and the aspects of these strong foundations is described.
Effective decision making under uncertainty is outlined and high reliability practices for decision making under uncertainty are tabulated. Additionally, it is suggested that we may have learned the wrong lessons from some of our most complex and most important projects delivered under high uncertainty and in the process hard coded a project management dogma that does not serve us under complexity or uncertainty well.
What is uncertainty?
Uncertainty consists of ambiguity, volatility and variability.
Ambiguity, an unquantifiable measure of uncertainty, may result from several sources
- Inadequate view of external factors
- Uncertainty of cause and effect relationships
- Uncertainty inherent in means, methods and their effectiveness
The importance of stakeholder engagement and an increased focus on monitoring, measuring, tracking and understanding external project impacting factors cannot be overstated. Our project control resources are inward looking while uncertainty arises external to the project.
Tight coupling of tasks without effective buffers or adequate preparation for contingent execution ignores the uncertainties and variability inherent in all activities.
Volatility is a constant source of uncertainty and is associated with unpredictable impacts or rates of change. It arises from unknown and often unknowable future events (Black Swans[1]) but often is perceived to arise from knowable but undealt with factors (Black Elephants[2])
Variability is associated with a known range of potential outcomes but with the result itself being uncertain.[3] This is aleatoric uncertainty as contrasted with the epistemic uncertainty of ambiguity.
Relationship of uncertainty to complexity
Large, complex projects face high degrees of uncertainty.
Stage-gate mentalities make it difficult for managers to take on risk, the very attribute which is often necessary when dealing with both complexity and uncertainty. The flexibility of response that uncertainty demands is constrained by traditional project inflexibility. Flexibility is about taking action while continuing to think. Adjusting as necessary.
More…
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How to cite this paper: Prieto, R. (2020). Decision Making Under Uncertainty; PM World Journal, Vol. IX, Issue XI, November. Available online at https://pmworldlibrary.net/wp-content/uploads/2020/11/pmwj99-Nov2020-Prieto-Decision-Making-Under-Uncertainty.pdf
About the Author
Bob Prieto
Chairman & CEO
Strategic Program Management LLC
Jupiter, Florida, USA
Bob Prieto is a senior executive effective in shaping and executing business strategy and a recognized leader within the infrastructure, engineering and construction industries. Currently Bob heads his own management consulting practice, Strategic Program Management LLC. He previously served as a senior vice president of Fluor, one of the largest engineering and construction companies in the world. He focuses on the development and delivery of large, complex projects worldwide and consults with owners across all market sectors in the development of programmatic delivery strategies. He is author of nine books including “Strategic Program Management”, “The Giga Factor: Program Management in the Engineering and Construction Industry”, “Application of Life Cycle Analysis in the Capital Assets Industry”, “Capital Efficiency: Pull All the Levers” and, most recently, “Theory of Management of Large Complex Projects” published by the Construction Management Association of America (CMAA) as well as over 700 other papers and presentations.
Bob is an Independent Member of the Shareholder Committee of Mott MacDonald. He is a member of the ASCE Industry Leaders Council, National Academy of Construction, a Fellow of the Construction Management Association of America and member of several university departmental and campus advisory boards. Bob served until 2006 as a U.S. presidential appointee to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), working with U.S. and Asia-Pacific business leaders to shape the framework for trade and economic growth. He had previously served as both as Chairman of the Engineering and Construction Governors of the World Economic Forum and co-chair of the infrastructure task force formed after September 11th by the New York City Chamber of Commerce. Previously, he served as Chairman at Parsons Brinckerhoff (PB) and a non-executive director of Cardno (ASX)
Bob can be contacted at rpstrategic@comcast.net.
To view other works by Bob Prieto, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/bob-prieto/
[1] Black Swans Risks https://www.researchgate.net/publication/272507451_Black_Swan_Risks
[2] Black Elephants https://www.researchgate.net/publication/343425486_Black_Elephants#fullTextFileContent
[3] Rolling a dice. Result will be between 1 and 6 but we don’t know which face will be on top.
