Adjusting Project Management Techniques to Uncertainty: Why Critical Path Thinking Needs to Be Replaced on Occasions by Contingency Thinking

By Loch, Christoph; Pich, Michael et al. | European Business Forum, Autumn 2000 | Go to article overview

Adjusting Project Management Techniques to Uncertainty: Why Critical Path Thinking Needs to Be Replaced on Occasions by Contingency Thinking


Loch, Christoph, Pich, Michael, De Meyer, Arnoud, European Business Forum


For virtually every engineer and project manager, a discussion of project management triggers two related concepts: the Critical Path Method (CPM) and the PERT or Gantt chart. These techniques (developed in the 1950s) enable project managers to identify the 'critical path'--the particular sequence of activities that dictate the minimum time required to achieve the specified project objective for any project, no matter how complex.

This synonymy of project management and CPM has created what we call critical path thinking': the idealisation of a project as consisting of (i) a fixed project objective, and (ii) a fixed set of interrelated activities needed to reach this objective. Using critical path thinking, project managers spend all their time 'fire fighting'--that is, reacting to unforeseen events by doing whatever is necessary to get critical activities back on target so that the fixed project objective can be reached in the allotted time.

Critical path thinking is perfectly appropriate for projects with little uncertainty in objectives and approach. It enforces a much-needed discipline to 'stay the course' regardless of any unforeseen storms. For many projects where goals may not be fully defined, however, the constraints it imposes create real costs and opportunity costs.

This has led many project managers to adopt a schizophrenic management style: on one hand, they use critical path techniques to generate a fixed schedule of activities; on the other they use so-called 'risk management methods' to identify, assess and manage project risk. There exist many approaches to the latter, each with its own acronym. They all have at least two components in common: risk analysis--identifying risks to the successful execution of the fixed project path--and risk management--preventative and contingent measures to get back to the fixed project path, or to reduce the negative impacts of risk on the fixed project objective.

Such risk management techniques amount to no more than fire fighting with better tools and equipment. They do not change the management style inherent in critical path thinking: seeing the project as one path to one goal, and any unexpected event as a negative risk that must be overcome or corrected. Emphasis is placed on planning for the complex interactions among the activities in an attempt to minimise the cost and time needed to complete the fixed set of activities deemed necessary to reach the fixed project objective.

Critical path thinking can lead to failures in projects with high levels of uncertainty--large budget and schedule overruns, compromised performance, and missed opportunities as recent examples such as the Eurotunnel, or the Denver and Hong Kong airports illustrate (see also an overview by Morris and Hugh 1987).

Where major uncertainties exist, it may be better to allow for alternative paths or goals, and if and when uncertainties arise, to react by changing the project path or goal. Emphasis here is not so much on planning for project complexity as on planning for project uncertainty. Objectives are fixed only to the degree necessary to co-ordinate interdependent activities. This requires a very different management style: one committed to resolving major points of uncertainty and identifying the best course of action in response to new information. The organisation must be committed to a project process rather than a particular path and objective.

Contingency thinking: Combining management styles

In our research, we have found it useful to classify projects based on five types of uncertainty that can be present in a project: complexity, variation, risk, ambiguity and chaos.

We have developed a system of project management styles that can be combined to deal with the different types of project uncertainty present.

Complexity

Complex projects are characterised by a large number of interacting activities and are the canonical examples for which critical path techniques were developed. …

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