Uncertainty and Project Management: Beyond the Critical Path Mentality

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UNCERTAINTY AND PROJECT MANAGEMENT: BEYOND THE CRITICAL PATH MENTALITY

Arnoud De Meyer1), Christoph H. Loch2), Michael T. Pich3)

1) Professor of Technology Management, INSEAD (arnoud.de.meyer@insead.edu.sg) 2) Associate Professor of Technology Management, INSEAD (christoph.loch@insead.fr) 3) Assistant Professor of Technology Management, INSEAD (michael.pich@insead.edu.sg)

Keywords: project management, uncertainty, project profiles

Abstract

Project management is often identified with network planning techniques such as PERT, Critical Path Methods, Gantt Charts, etc. These techniques help us to cope with the management of complexity in a project. But projects are often confronted with a high level of uncertainty. Coping with this uncertainty requires another management approach. In this paper we categorize the different types of uncertainty with which a project manager can be confronted and we develop a list of tools and managerial approaches that can help the project manager to respond to the different types of uncertainty.

1. INTRODUCTION

In executing operational activities, organizations often find it useful to make a distinction between processes, the systematic execution of repetitive activities, and projects, the one-time execution of more or less unique activities. In today’s new ‘new’ economy, the second form of operations is gaining in importance as more and more activities are carried out as projects. One can find many reasons for this shift of emphasis. The fast pace of competition requires constant innovation. Better-informed customers require customization. Internationalization and constant mergers and acquisition require more agility. In short, the current business environment requires constant change, and implementing change entails the need to master projects.

A project can be defined as a unique set of activities with more or less clearly defined objectives, carried out within a limited budget and limited time span. Typically, project management requires paying attention to two major areas of responsibility: (i) managing tasks; and (ii) managing relationships. Successful project managers understand that both are important. However, the available formal management tools address only planning and task management. Consider the following real story:

It is 9:30AM on a Wednesday morning in southern California and thirteen men sit around a rectangular table in an office trailer parked at the edge of a multi-million dollar land development site. It is the weekly grading-logistics meeting at Ladera Ranch, where the project management team, representing the landowners and money partners, sits down with its various engineering and earth-moving subcontractors to discuss the progress of the project and any outstanding issues that need attention. Most of the men huddle over a topographical map that lies at the center of the table, discussing the most recent changes made to the “final grade” of building lots, streets and community buildings they are supposed to deliver in phases over the next three years.

Behind them, taped to one of the dusty walls of the trailer, hangs a six-foot long Gantt chart, dutifully updated using the latest version of Microsoft Project(. At no time during the two-hour meeting do the men refer or turn to the Gantt chart. The term “critical path” is mentioned only twice during the meeting, and is used on both occasions more as a metaphor for urgency than as an explicit reference to any activities highlighted as critical on the forgotten Gantt chart behind them. After the meeting, one of the authors asked a member of the project management team whether they ever referred to the Gantt chart during one of these meetings. The reply was

“If I need a Gantt Chart to tell me what’s going on, I should be fired. Fifty percent of my job is managing relationships with our subcontractors, regulatory agencies and the landowners....
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