Uncertainty in Project Plans

Projects involve uncertainty. At the beginning of a project, the exact amount of

time that will be needed is not known, nor is the precise amount that the project

will eventually cost. For some projects, it is even uncertain whether the intended

goal will be reached at all. In a world of fast-paced change, the foundations of a

project have sometimes already changed before the project is completed. This

sometimes occurs because of technological developments or developments in the

market or political arena.

When preparing project plans, project leaders can only estimate the control

factors (i.e. time, money, team, quality goals and necessary information) of the

project. As the project proceeds, more knowledge emerges about the project itself.

In the initiation phase, only an idea exists. In the definition phase, the idea is

refined according to requirements. In the design phase, possible designs are

examined and developed, providing even more clarity. In the development phase,

it becomes clear how the design should be realised. In the implementation phase,

the actual project result is built, and in the follow-up phase, all of the loose ends

are tied together.

(image taken from AIMS project management academy course)

Clarity increases as a project progresses. It is therefore pointless to make a

detailed budget for the follow-up phase (which will take place later) during the

initiation phase. At this stage, it is still possible for the project to proceed in any of

a number of possible directions. The idea has yet to be elaborated. The exact form

of the follow-up phase is probably also known only in the broadest terms. This is

too little information upon which to base a realistic, detailed estimate for the

follow-up phase. A broad outline of a budget is the most that can be expected at

this stage.

Project plans therefore work as follows: a global budget is made for the entire

project, along with a concrete budget for the next subsequent phase. For example,

if a project team is preparing to enter the implementation phase (after the

development phase), they are well aware of what must happen. At that point, it is

possible to make a detailed budget for the implementation phase.

(this article which originally written by me when I was giving lectures in my institute for the students of project management certification will continue in parts on my blog).