The Uncertainty Trap
On large complex projects, uncertainty is unavoidable. No crystal ball can foresee all the threats you’ll face or suggest opportunities to go after.
This is so obvious it feels trite to state, yet many organizations behave as if uncertainty can be managed. What are they really dealing with? And do you just have to wait for the future to unfold and hope for the best?
We’ve been asked to appraise or intervene in several hundred large, complex energy industry projects over the years. On the bulk of them, uncertainty was defined poorly, if at all, in the strategy. The project organization then took an ad hoc approach to dealing with it as the project ran its course.
After all, fessing up to not knowing doesn’t often grease the wheels of project approval. As a result, measures to tackle uncertainty’s effects, or to exploit its opportunities, rarely feature as line items in the project budget except as some arbitrary contingency padding.
The level of uncertainty risk you’re carrying depends on two variables: the inherent complexity of the undertaking, based on its unique context, and the organizational capability designed and structured into the project itself.
‘Frontend loading’ aims to find out and build in as much knowledge about the project as possible before the project is finally approved to begin. However, at the point of sanction, it’s still only a plan—just a better one.
“Large projects require an early warning system”
During execution, large projects require an early warning system. Not just for everything that was identified that could happen, as well as anything that was overlooked, but for what couldn’t be known during planning.
Early warning only works, though, if the system enables and promotes ways to sense, communicate, and act to resolve issues in time. This means establishing three key things.
→ First, project leaders (and project approvers) must recognize the need to spend on project activities that may not appear tangibly productive to achieving a project’s outcome.
→ Second, the project design needs to be lightly coupled enough to allow time to recover from setbacks. Proper safeguarding should ensure the system has enough slack. If that’s impossible, be prepared with your analyst warnings.
→ Above all, the project must encourage people to speak up, recognizing and rewarding them for flagging issues early enough. A culture of psychological safety is therefore key to enabling a mindful approach. ‘But we put together a risk register!’ is a familiar lament reflecting mindless adherence to corporate conventions.
Would you like to feel a little more certain of your ability to tackle uncertainty? We can advise you on all three elements. Get in touch today.