Ithuta JV

Source: Article by Bob Andrew

The continuous identification, assessment and management of risks and threats that could influence project deliverables is an important part of a project manager’s life. The main source of risks and threats is uncertainty.

The concept of uncertainty has been debated for many centuries by philosophers, religious people, physicists, economists, financiers, statisticians, astronomers, engineers and information scientists. Each sees uncertainty in subtly different ways, e.g. physicists view uncertainty as a fundamental property of quantum mechanics, portrayed mainly by the Heisenberg Uncertainty Principal, which states that precise simultaneous measurement of more than one physical property of an atomic particle is impossible. Unlike most of the other fields, e.g. statistics and engineering, uncertainty is not brought about by errors in measurements, but is a rather a fundamental property of nature itself. Quantum Mechanics is the field of study that has scientifically developed this concept and has provided the basis for the invention of the Laser, TV and a large number of digital gadgets.

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In more simplistic and practical terms, uncertainty arises from a lack of understanding of how the multitude of complex and interrelated systems in the universe function and influence one another. Such systems include natural systems, like the weather; economic and financial systems, like economies of countries and stock markets; human systems, like how communities and networks work and how individuals respond to one another; and socio-political systems, like how political parties come into power and individuals are elected into positions of power or force themselves in. As with all complex systems, while we can view current patterns and trends in them, we will never be able to fully describe them and their behaviour, in general, will remain uncertain.

An important consequence of uncertainty is that people, organisations and governments see the need to predict a future outcome. Predictions are normally based on projections or extrapolations of previous measurements, historical information, knowledge, experience and often, on intuition or, in the view of psychics, on paranormal behaviour or extra sensory perception. Forecasts are generally the same as predictions, except that they predict a range of possible outcomes.

If, however, we look at the past, it is apparent that many events with dramatic and disastrous consequences were never predicted, or perhaps there were predictions but nobody took any notice of them, e.g. two airplanes crashing into the World Trade Centre on 11th September 2001 and the financial disasters of 1987 and 2008. How many of the innovative electronic devices we use today, like the IPod, Amazon Kindle, Blueberry, IPad, and similar, were predicted, say, one to three years ago? Similarly, think of some major predictions that have been made and which have never come true. According to the website ‘Bible.ca’, 220 dates, from 44 AD through our current year of 2010 and including many in future years, have predicted the dates on which the world will end. Most of these are based on interpretations of the Christian Bible, combined with unfathomable numerology. The most recent date on which all was supposed to have ended was the 17th April 2008. Currently, the most popular ‘end-it-all’ date is the 21st December 2012, based on a very convoluted interpretation of the Mayan calendar, where the world as we know it was stated to only last for 13 ‘Baktun’ cycles or 13 times 144,000 days, i.e. 5,128 years and 281 days[1] . This works out nicely to coincide with the Winter Solstice of 2012, where the Earth ‘stands still’.

Religious fundamentalists, New Age thinkers and Psychics are not the only people who make predictions. Think of the many ‘expert’ financial advisers, stock brokers, insurance salespeople who, in order to sell you some fancy-sounding financial product, predict high returns on your investments that you make with them. Many of these predictions, or so we would like to believe, are based on ‘key’ information and analysis of past financial performance, but others may be based on nothing else except the ability to sound like an expert and to give you a glib sales pitch. Every time we place a bet on a horse or on a spinning wheel, take out a bet on a sporting event or buy a lottery ticket, we are in fact predicting that we will win. Have you ever come across anyone who is predicting that they will lose money when they place a bet? How many people believe that they will be losing money, sometimes their entire life savings, when they buy shares or make other investments?

Because the world and our life therein are always uncertain, we of necessity have to predict outcomes and we plan our lives to achieve these outcomes. But, do we plan, or do we just rather hope and pray that the outcome will arise? There is a big difference between setting our goals in the form of predictions and hoping that they will arise and planning every step along the way. Living your life effectively is not like betting: you don’t just place your bet and wait to win, and if you lose, well, you just try again, or taking action aimed at achieving the desired outcome. In the former case, your life is not in your hands whereas in the latter you are in control.

The failure for predictions often not to come true and since so many events take place without them having been predicted shows us that many things are unpredictable. The classic metaphor for unpredictability has been given by the writer Nassim Taleb and described in his book ‘The Black Swan’[2] . In the 16th century in England, all swans were presumed to be white because information on swans indicated this: a black swan was considered impossible and could not exist. However, in 1697 in Australia black swans were discovered, so that the assumption that all swans were white was incorrect. Taleb used the Black Swan as the iconic symbol of an unexpected event, something that was not predicted and yet, at least in the context of swans, was a major event that had significant consequences.

Black Swans can also be viewed as ‘outliers’, which is a term derived from the field of statistics indicating a single measurement or observation, in a sample of measurements or observations, that significantly deviates from the other members of the sample. For example, say the Intelligence Quotients (IQ) of a class of 35 school children are measured at the same time. The average IQ of the class is calculated at 105, but there is one child with an IQ of 145 and two children with IQs of 85. The child with the IQ of 145 and the two children with IQs of 85 could be regarded as outliers with respect to the rest of the class. Obviously, in a class of very bright children whose average IQ is 140, the child with an IQ of 145 would not be regarded as an outlier, and similarly, the children with IQs of 85 would not be regarded as outliers in a class where the average IQ is 90. Thus, outliers, and Black Swans for that matter, refer to a particular group (sample) of people or other things.

[1] Link
[2] Taleb, Nassim Nicholas (2007), The Black Swan: The Impact of the Highly Improbable, Random House