INSEAD

Managing Projects under

Uncertainty -
Implications for
Project Management Styles
Arnoud De Meyer
Christoph Loch
Michael Pich

INSEAD (Singapore)

Presented at 2000 IEEE International Conference on Posted by Author Permission on ProjectConnections.com

Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Where do we come from?

‹ Project Management is traditionally
about:
– Managing tasks : planning, identifying risks and
contingencies, monitoring and control
– Managing relationships: defining the stakeholders
and formaliszing the contract

‹ Project Management is often associated with

management of complexity
‹ Classical project management tools address
this complexity

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

But…
‹ Many project managers pay only lip
service to the Gantt Chart from project
management tools
‹ We asked: ’Why ’?
– More than twenty detailed case studies
– Own experience with projects

Observation : complexity management is

heavily influenced by the type of uncertainty
the project manager is confronted with

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD
Let’s define the types of
uncertainty
‹ Variation in activity durations, costs and
exact performance level of the resources
– Ex. variation during a construction project in delivery
dates

‹ Foreseen risks refers to a distinct and

identifiable project influence which may or
may not have an impact on the project
– Ex. results of field test in drug development

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Types of Uncertainty (II)

‹ Unforeseen risks are similar to foreseen
risks, but differ in that the influences cannot
not be identified upfront
– Ex. influence of Challenger disaster on Aerostar van

‹ Chaos refers to a fundamental uncertainty

about the basic structure of a project
– Ex. Sun’ s development of Java, or many of the
internet business projects

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD
Core argument of the
presentation

The way you manage the project

is contingent on the dominant type of
uncertainty you are confronted with

The most effective style of Project Management,

the approach to managing tasks & relationships
is determined by the dominant type of
uncertainty on the project

Presented at 2000 IEEE International Conference on Posted by Author Permission on ProjectConnections.com

Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD
Type of Uncertainty: None
(Only Complexity)
Type of uncertainty PM Style Managing Tasks Managing Relationships

Planning Execution Planning Execution

No uncertainty Coordinator Plan the Monitoring Identify Coordination

and master nature and of project interest of
(only task and scheduler sequence progress conflicts, and stakeholders
relational complexity) of tasks against codify and suppliers
based on project responsibili-
experience. plan. ties and
deliverables.

critical path Activity Gantt Chart Contract Enforcement

network design and of deliveries
analysis enforcement by parties with
(CPM, conflicting
PERT, etc. interests
…)

Critical
Path Method

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Type of Uncertainty: Variation

Type of uncertainty PM Style Managing Tasks Managing Relationships

Planning Execution Planning Execution

Variation Trouble Build in Monitor Clearly Monitor

shooter and slack/buffer deviation identify and performance
expeditor at strategic from inter- communi- against
locations in mediate cate performance
critical path targets expected criteria.
and performance
determine criteria. Maintain
control some
limits for flexibility with
corrective key
action. stakeholders.

Simulation Use of
of different control
scenarios. charts

Critical Chain: buffer management

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Type of Uncertainty: Foreseen Risk

Type of uncertainty PM Style Managing Tasks Managing Relationships

Planning Execution Planning Execution

Foreseen risk Consolidator Anticipate Identify Increase Continuously

of project and trigger occurrences awareness inform and
achieve- alternative of foreseen for changes motivate
ments paths to risks and in internal and
project goal implement environment external
through contingenci along known partners in
decision es criteria or order to cope
outcome tree dimensions with major
Decision tree decision node X1 techniques switches in
project
p Contin- execution
Chance node X2
gency Occupy the
go planning, white spaces
X3 decision in the
1 -p
analysis. contract.
X4
stop

Presented at 2000 IEEE International Conference on Posted by Author Permission on ProjectConnections.com

Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Type of Uncertainty: Unforeseen Risk

Type of uncertainty PM Style Managing Tasks Managing Relationships

Planning Execution Planning Execution

Unforeseen risk Flexible Build in the Continuous- Build in Maintain

orchestrator ability to ly question ability to flexible
and add a set of the existing mobilise new relationships
networker new tasks project partners in and strong
to the ‘model’ and the network communica-
Evolving decision scan the who can help tion channels.
decision tree X1 tree horizon for solve new
p early signs challenges
X2 of non-
anticipated
go
X3 influences.
1-p
X4
stop
0
X5
Parameter (chance node) recognized at this point

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Type of Uncertainty: Chaos

Type of uncertainty PM Style Managing Tasks Managing Relationships

Planning Execution Planning Execution

Chaos Entrepre- Consider Repeated Build long- Close linking

neur and parallel verification term with users
Knowledge solutions of relationships and leaders
manager with hypotheses in order to in the field.
iteration on which create
and gradual project is interest Direct and
Iteration (new selection of built; detail alignment constant
projects) final plan only to feedback
? Further
approach. next
verification
from markets
and
decisions technology
providers.
(not
plannable )
?

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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Practically Speaking

Up front, determine the

project uncertainty profile

‹ (For the type of project you ’re undertaking,

understand the mix of uncertainty types
involved.)

‹ See typical profiles on next slide.

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Management of Innovation and Technology, ICMIT 2000 Singapore
 INSEAD

Uncertainty profiles

Chaos

Ambiguity

Risk

Variation

Complexity
Importance for Importance for Importance for
project management project management project management

Earth-moving,
Cruise ship with Hi-Tech startup with
Infra-structure development with
known components unknown market
unknown ground conditions
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Management of Innovation and Technology, ICMIT 2000 Singapore
INSEAD

Practically speaking
‹ Determine the project uncertainty profile
‹ Develop the project infrastructure
– to allow appropriate planning and management of
tasks and relationships, according to the types of
actions called for on previous uncertainty profile slides

‹ Assign Accountabilities
– to ensure project managers and others are set to use
the right styles of task and relationship planning and
management for this kind of project

Presented at 2000 IEEE International Conference on Posted by Author Permission on ProjectConnections.com

Management of Innovation and Technology, ICMIT 2000 Singapore