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Assumptions: The Elegant Risk

March 7, 2010 | Author: PM Hut | Filed under: Risk Management

Assumptions: The Elegant Risk
By Abdulla Alkuwaiti

Introduction

If there was an elegant risk in projects, then it will be assumptions. Its elegance comes from the way how people often justify wrong assumptions that leads to risks. They often use phrases like “what can I do”, “I thought it will never happen” and “it’s impossible”. It is as if these risks are so obscure that they can never be identified in the first place. However, assumptions are similar to any other risk and can be identified and analyzed.

If you think about it, planning for a project depends on assumptions and estimations, which can be right or wrong. We plan in a linear and logical way, but our world seldom goes in the same way

Assumptions

When we assume, we are basically confident that something will happen without having prior evidence. Our life will be difficult without assumptions, as if we stop to assume, then we need to investigate and give a reason for everything. However, our assumptions should be reasonable and derived from our experience and knowledge. Examples of assumptions in a project are:

  • There will be no thunderstorms during the project.
  • The project manager will not get seriously injured in a car accident.
  • Oil prices will not increase by more than $3 per barrel during the project.
  • There will be no strikes in the airport to affect a major meeting.

For your project, it is a good idea to log your assumptions in a document so you will be able to think about them (or maybe ask other people to comment on them). In addition, if you log your assumptions, you can update them during the different stages in your project. When you make assumptions, you have to be reasonable and avoid going to extremes. For example, it is perfectly fine to assume that it will not snow in the middle of your construction project in the desert. However, it is unreasonable to assume that a shipment delivery will not be delayed.

From my experience, the single most dangerous assumption in projects deals with information transfer, where you assume that your message is received and understood correctly as intended.

Assumption Analysis

Wrong assumptions are big sources of risks. In assumption analysis, you need to verify the rationality of the assumptions made. To analyze assumptions, you need them to be written out first. Analysis should be done by a team rather than having the project manager analyze the assumptions he/she has made. You can conduct assumption analysis by going through each assumption and question its logic and if it is still valid.

Abdulla J. Alkuwaiti is a graduate of systems engineering from the University of Arizona in 2000. He started his life as an HSE engineer in an industrial island and now works as a program manager in a governmental municipality. He completed his Masters in Project management in 2007 and is PMP and RMP certified. He recently published a book titled “Study Guide for the PMI Risk Management Professional ® Exam”. Abdulla can be contacted at alk.books@gmail.com.

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This entry was posted on Sunday, March 7th, 2010 and is filed under Risk Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

5 people have left comments

I like it you call assumptions elegant risks. the difficulty with assumptions is we take them as facts and very very difficult to even be aware that we are assuming.

Jo Ann wrote on March 7, 2010 - 10:27 pm | Visit Link

Hi

It is really nice one and it is tauching the pain of our projects and which need to be considered during project life cycle. I like the last comment which clarifying most pitfalls that can effect the communication between stakeholders.

Tareq wrote on March 7, 2010 - 11:25 pm | Visit Link

Abdulla,

Nice Post. I think that all too often sponsors want to have a detrministic schedule whereby you know everyting. Assumptions are that gray area that people fee ucomfrtable with. If you add too much contingency, then sponsors may think you don’ know enough. If you add too little, you end up being in trouble. The best thing todo is document and communicate. I also agree with your comment about the most dangerous assumption being around sending and receiving of messages.

Regards,
Jason Edleman

Jason Edleman wrote on March 8, 2010 - 9:57 am | Visit Link

Having thunderstorms in the middle of the desert somewhere in the midst of the summer should not be considered an assumption, it’s a “given”. Assumptions are events that are highly likely to occur (with a small chance of not occuring), givens, on the other hand, are events that are always bound to occur (unless, of course, something extraordinary happens).

Pat Walters wrote on March 8, 2010 - 10:11 am | Visit Link

Timely reminder about the perils associated with silly assumptions. Many assumptions’ authors tend to use the opportunity given to them to detail manute irrelevant details tht must exist in order for their project to succeed. As mentioned by Pat Walters, assumptions should not include obvious and trivial things, nor should they be used to make ‘motherhood’ statements (like for instance the assumption that project resources will be available to carry out their tasks - Duhhhh). Assumptions should be taken seriously but not abused, should relate to things which are not clearly obvious and be relevant to the project with which they are associated.

Shim Marom wrote on March 9, 2010 - 3:02 am | Visit Link

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