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How to Manage Project Opportunity and Risk: Why uncertainty management can be a much better approach than risk management by Stephen Ward, Chris Chapman

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Chapter 10

Quantify some uncertainty

But to us, probability is the very guide of life.

— Bishop Joseph Butler, 1756.

This chapter, and the next, may seem too technical to be of interest to senior managers. In our view this is not the case – no senior manager should be unaware of the key points made in this chapter and the next, and those responsible for opportunity/uncertainty/risk management have a responsibility to ensure that there is a corporate understanding of all the key issues at a suitable level of clarity by all relevant players. Probability as it is addressed here is not high science – it is practical common sense captured in a manner which provides structure to guide decision making. The ‘how to do it’ details are not relevant to senior managers, but the ‘what needs to be done’ principles discussed in this chapter and the next need to be understood by everyone involved in uncertainty management, along with their rationale and implications.

The key deliverable provided by the quantify phase of the PUMP is probability estimates of some uncertainty associated with sources of uncertainty and response options identified earlier in the PUMP. These numeric estimates of uncertainty associated with cost, duration, or other measurable project performance criteria provide a basis for making choices which shape the project to achieve opportunity efficiency. They also provide a basis for understanding which sources of uncertainty and associated responses are important, perhaps ...

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