There is a posted question at an agile conference. Can you make a decision without an estimate? Like many discussions in the domain of agile, the statement is made without any evidence that it is true, nor can even be true in principle. This type of fallacy is common.
First a principle ...
There is NO means of making credible decisions in the presence of uncertainty without first estimating the outcome of that decision. This is the foundational principle of microeconomics of probabilistic decision making. To suggest you can make such a decision without estimates requires ignoring that principle.
Let's look at each of these from the point of view of Managerial Finance and Economics of Decision Making in the presence of Uncertainty. These two points of view are the basis of any credible business management process.
It's not your money, spend it wisely
First, let's establish a singular framing assumption
- All project work is uncertain - this uncertainty comes in two types. Reducible (Epistemic) and Irreducible (Aleatory).
- These uncertainties are probabilistic and statistical respectively.
- Knowing the behaviors of these uncertainties - the probabilistic and statistical models - is part of deciding what to do.
- The impact on the project from these probabilities is also probabilistic. Knowing this impact requires assessing the probabilities.
If you want to decide what's the probability of occurrence of some Epistemic uncertainty or the statistical processes for some aleatory activity, you need to estimate. Don't guess. Don't assume, Estimate. This process is the basis of all risk management. And Risk Management is How Adults Manage Projects - Tim Lister.
So with this in mind let's look at the conjectured process that can be performed on projects without estimating in the presence of uncertainty.
- Longest entry Barrier First - so how would you know what the longest is without making an estimate since that longest is likely a probabilistic number in the future? If you the longest upfront, it's already happened.
- Prototyping First - OK, which feature do we prototype? How much effort is the prototype? What are we expecting to learn from the prototype before we start spending the customer's money?
- Strategic Items First - strategies are hypotheses. Hypotheses have uncertainties. Those uncertainties impact the validation of the Strategy. How can you assess the strategy without making estimates of the impact of the outcome of the hypothesis?
- Customer Oriented First - does the customer have absolute confidence of what comes first? Does the customer operate in the presence of uncertainty?
- High Risk First - all risk comes from uncertainty. Epistemic uncertainty. Aleatory uncertainty. No decision can be made in the presence of risk - derived from its uncertainties - without estimating the impact of that risk, the cost to mitigate that risk, the residual risk after mitigation. Risk Management is How Adults Manage Projects - Tim Lister. Be an adult, manage the project as a Risk Manager. Be an Adult, estimate the impact of the risk on the probability of success.
- Management Decision - OK, management decides. Any uncertainties resulting from that decision? No, proceed. Yes? Any estimate on the impact of that decision on the probability of success? Just because management decided does not remove tuncertaintynty, unless that uncertainty has been analyzed.
- Reducing Cost First - how much cost, what sources of cost, what's the probability that the cost reduction will be effective?
- Minimal Scope - how do you know what minimal is in the presence of uncertainty without estimating?
- POC to Decide - same as Management Decision
The is NO principle by which you can make a credible decision in the presence of uncertainty (reducible and irreducible) without estimating the impact of that decision on the probability of success of your project.
