Let's start with a fundamental principle of all project management...
Risk Management is How Adults Manage Projects - Tim Lister
All risk comes from Uncertainty - reducible uncertainty and irreducible uncertainty. [1] No uncertainty No Risk.
If you're not managing risks You're not managing the project. In order to manage risk - and act as an adult when spending other people's money - you must estimate many aspects of the project. The Five Immutable Principles of Project Success layout the aspects of project success that must be managed using estimates.
These Five Immutable Principles are found on all successful projects.
There was a question asked on Twitter -what do estimates have to do with these Principles?
Here are some answers. These answers are found in our Processes and Practices guide that accompany the Principles of project success. They are just the bullet points of good project management no matter the development method - traditional or agile.
- What does Done look like?
- Done must be described in units of measure meaningful to the decision makers. These units start with Measures of Effectiveness and Measures of Performance.
- These measures are rarely fixed or deterministic. They have upper and lower control limits for their evolving stochastic behavior.
- The planned and certainly desired behaviors of the project should operate inside these limits. The role of management is the plan and control the behaviors of the cost, schedule, and technical aspects of the project.
- As well these behaviors evolve over time, increasing in their compliance with the upper and lower control limits, which are reducing toward the desired values as the project progresses. This is the Cone of Uncertainty paradigm.
- Estimating the behavior of these parameters is needed to forecast what might be the expected behaviors to assess what responses will be needed if they were to occur.
- Estimating the impacts of any decisions made when taking corrective actions to keep the program GREEN (inside the upper and lower control limits)
- In the domain I work - our department is called Program Planning and Controls. Control in the presence of uncertainty is Closed Loop. It doesn't always turn out well, but the principles, processes, and practices of Closed Loop Program Planning and Control are well established.
- When it goes bad, corrective actions are needed after the Root Cause of the unfavorable variance is determined.
- Program Planning and Controls is a Close Loop Control process. Estimating is needed for Close Loop Control.
- How do we get to Done?
- The path to Done is described in Plans and Schedules of the work that implement those Plans.
- Each step along the way follows a path that is probabilistic since all project attributes are themselves random values.
- Controlling that path - in the presence of uncertainty - means making estimates of the possible outcomes of any decision.
- Is there enough time, money, and resources to get to Done?
- Each of these variables is a random variable with a probability distribution. These distributions have a Mode (Most Likely) and there upper and lower limits and the shape of the curve.
- What impediments will be encountered along the way to Done?
- Risk Management is How Adults Manage Projects - Tim Lister
- All project risks come from uncertainty. These uncertainties come in two form - Reducible and Irreducible.
- Reducible uncertainty requires specific reduction activities. This work operates in the presence of uncertainty itself. Estimates are needed to assess the probability processes of these uncertainties.
- Irreducibility uncertainty requires margin. This margin is developed with a probability model
- What are the units of measure for progress to plan for each deliverable?
- Measures of effectiveness and performance have uncertainties in both the measurement - an epistemic uncertainty. And an uncertainty in the actual performance - an aleatory uncertainty.
- The accuracy and precision of the measures also impact the confidence of the measurement.
- Estimating both is these is needed to assure proper performance measures are provided to the decision makers.
[1] "Distinguishing Two Dimensions of Uncertainty," Craig Fox and Gulden Ulkumen, in Perspectives of Thinking and Decision Making
