Guiding Quote

“Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.” Einstein

Saturday, November 17, 2012

Project Managers and Risks: Assumptions

The recent problems associated with my daughter's wedding (see post on October 8th) in part revolved around various assumptions made by different people: Daughter number 2 always flies on Southwest Airlines, GPS always gets you there, and people from the UK will have mobile phones that work in the US. All wrong!

The derogatory definition of ASSUME is that it makes and ASS out of U and ME. It definitely does have that consequence if what we assume is either based on false premises or is not accepted by other parties. When the assumption is based on these poor foundations then it very quickly turns into a risk, in fact a very dangerous type of risk, because we tend not to reconsider our assumptions. We deem them to be a given.

History is full of assumptions that were not only wrong, but disastrously so.

In WWII the French assumed in June of 1940 that the Ardennes region of the Franco- German border was impassable to tanks. Well the Germans didn't and France was defeated in six weeks.

Wall Street financiers and economists, at least in public, used the assumption that the financial markets were self-correcting and the "invisible hand" would prevent a financial meltdown. Well the hand was "invisible" as in not there! Just has it had been missing in action in 1837, 1907, 1929, and of course 2008. Unfortunately they are still preaching the same assumption.

In 2008 Lehman Brothers assumed that they would be bailed when their speculations turned sour, and the US authorities assumed that they could let them go bust with no affect upon the global economy. Wrong and wrong, the bank went bust and the global economy sized up in a massive credit crunch. One wrong assumption can get you in trouble, for havoc you need at least two.

Projects get in trouble as in when people in the developed world assume that everyone had broadband Internet access, or ready access to international telephone lines. Rarely the case in BRIC countries.

As these examples illustrate assumptions are dangerous because they condition behavior and plans. They become the ground upon which great endeavors are built and so errors undermine those foundations and destroy the grandiose structures built upon them. 

We project managers have enough problems to handle without being ambushed by false premises. A good rule of thumb would be to enter every, and I do mean every, assumption into your risk analysis and keep it there. You must review them all the time. Things do change and you need either to change with them or at least adapt to them. As the great economist John Maynard Keynes said, "When the facts change, I change my opinion".

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