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Assumptions and Constraints
No-one knows the future with perfect certainty but Project Managers can make use of assumptions in risk management. Dr David Hillson examines assumption analysis...
No-one knows the future with perfect certainty, which of course
is why we need risk management. But sometimes we try to guess
what might happen, and use that information as a basis for
planning or decision-making. The proper name for such a guess is
an “assumption”, and these are an important source of risk, for
projects, businesses and life in general.
An assumption is a way of dealing with an uncertain future when
there are a number of possible options. In its simplest form an
assumption is a decision to proceed on the basis that one option
will turn out to be correct and the others will not happen. For
example, we might assume that our suppliers will deliver on
time, or that our client will sign-off all approvals within two
weeks, or that all key members of our project team will remain
for the duration of the project. But what happens if we assumed
the wrong thing? In most cases a false assumption would lead to
a problem for the project, since we usually tend to assume that
things will go the way we want.
Of course not all assumptions matter equally. There are some
assumptions which might prove false without having a significant
effect on the overall project, but there are others where a
different outcome could be serious. Fortunately there is a
simple process for testing how risky assumptions might be, and
for including them in the risk process if necessary. A simple
IF-THEN statement can be written for each assumption, in the
form :
“IF this assumption proved to be false, THEN the effect on
the project would be …”
The IF side tests how likely the assumption is to be unsafe, and
the THEN side tests whether it matters. Another way of
describing this is to see the IF statement as reflecting
probability, whereas the THEN phrase is about impact. And
probability and impact are the two dimensions of risk. This
simple approach can be used to turn project assumptions into
risks. Where an assumption is assessed as likely to be false
and/or it could have a significant effect on one or more project
objectives, that assumption should be considered as a candidate
risk.
This type of Assumptions Analysis is a powerful way of exposing
project-specific risks, since it addresses the particular
assumptions made about a given project. There are however two
dangers with this technique:
- 1. The first weakness is that this technique can only
consider explicit assumptions, which have been consciously
made and openly communicated. There are however many implicit
or hidden assumptions which we all make every day, some of
which are very risky.
- 2. Secondly this approach tends only to identify downside
risks, threats that a particular assumption may prove false
and result in a problem for the project. Assumptions Analysis
is not good at identifying opportunities because most of our
assumptions are optimistic.
The first shortcoming can be overcome by a facilitated approach
to identifying and recording assumptions, using someone
independent and external to the project to challenge established
thinking. To be fully effective, Assumptions Analysis needs full
disclosure.
For opportunity identification, the technique can be extended to
address and challenge constraints. These are restrictions on
what the project can or cannot do, how it must or must not
proceed. But some of these constraints may not be as fixed as
they first appear – indeed some of them might be assumed
constraints. In fact it might be possible for a constraint to be
relaxed or perhaps even removed completely. In the same way that
assumptions can be tested to expose threats, a similar IF-THEN
test can be applied to constraints to identify possible
opportunities:
“IF this constraint could be relaxed or removed, THEN the
effect on the project would be …”
Instead of making assumptions about the future, or accepting
that stated constraints are unchangeable, being prepared to
challenge assumptions and constraints can expose significant
threats and opportunities which can then be addressed through
the risk process.
About the author: Dr David Hillson PMP FAPM FIRM
MCMI is an international risk management consultant, and
Director of Risk Doctor & Partners (www.risk-doctor.com). He
is a popular conference speaker and award-winning author on
risk. He is recognised internationally as a leading thinker and
practitioner in the risk field, and has made several innovative
contributions to improving risk management. His recent emphasis
has been the inclusion of proactive opportunity management
within the risk process, which is the topic of his latest book.
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