Monitoring assumptions - Strategic Management

An assumption is a statement of fact, important to the project, which can not be verified during the planning phase of the project. Assumption that turn out to be wrong are well recognized as a source of disaster in project management. It has to be accepted that uncertainty can not be eliminated from a project; if we waited for certainty we would wait for ever. Uncertainty, therefore, is business as usual for projects so the requirement is not that we eradicate uncertainty totally but merely that we mange it as efficiently as possible.

The process of managing assumptions can be broken into three phases. Finding assumptions, Changing as many assumptions as possible into something else. Monitoring assumptions.

Finding Assumptions
Assumptions are such a ubiquitous presence in project management that you can't just rely on an 'assumptions' meeting although you probably should hold one. In addition you have to set up a mechanism where assumptions can be easily logged by anyone on the team then educate the team to add assumptions to the log as they are discovered during other activities. At the 'Assumptions' meeting you can publicize your assumptions capture mechanism and discuss all the kinds of assumption there are and why they must all be captured. The assumption log has to be reviewed at regular intervals to see what new assumptions need dealing with.

Changing as many Assumptions as Possible into Something Else
When we think about assumptions we tend to focus on uncertainty but this is a mistake; what really matters is the weighted impact of an assumption being wrong. If we focus solely on uncertainty then every statement is an assumption because every statement has a degree of uncertainty. Weighted impact takes into account the consequence of the assumption being wrong and is simply equal to... the probability that the assumption is WRONG times the cost of dealing with that error. Both of these things can be reduced in the planning stage in the hope that the total can be reduced to the point where it is no longer significant and can be left to normal planning methods.

The probability that an assumption is wrong can be reduced by investigation. For instance you might identify an assumption that the room can hold 500 people. Some very simple research can reduce the probability that this assumption is wrong to zero and thus dispose of the assumption altogether. In many cases research is not so conclusive but often it can greatly reduce the uncertainty surrounding an assumption.

The cost of dealing with an invalid assumption can be reduced by altering the plan so that the uncertainty is resolved as early as possible and delaying expenditure relying on that assumption until after the assumption has been verified one way or the other. Even after research and planning however some significant assumptions will remain in the plan.

A proportion of these can be identified as risks and dealt with as such. A risk involves an event which may happen during the life of the project having a negative impact on it. Risks are dealt with using mitigation which a subject for another article.

The remaining assumptions should be things which you hope are true but for which the weighted impact - if they are not true - is too high to ignore. These are the residual assumptions and must be entered in the project's assumptions log.

Monitoring Assumptions

For all the residual risks you should record. The statement which you hope is true. The estimated probability that it is NOT true. The cost to the project of the statement not being true. The date when you will find out if it is true or not.

The assumptions log can then be reviewed in the regular project meetings to see if anything has happened to change any of these values and take action if they have.

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