Value of Uncertainty: The Lost Opportunities in Large Projects

Abstract

Abstract:The uncertainty management theory has become well established over the last 20-30 years. However, the authors suggest that it does not fully address why opportunities often remain unexploited. Empirical studies show a stronger focus on mitigating risks than exploiting opportunities. This paper therefore addresses why so few opportunities are explored in large projects. The theory claims that risks and opportunities should be equally managed in the same process. In two surveys, conducted in six (private and public) companies over a four-year period, project managers stated that uncertainty management is about managing risk and opportunities. However, two case studies from 12 projects from the same companies revealed that all of them had their main focus on risks, and most of the opportunities were left unexploited. We have developed a theoretical explanation model to shed light on this phenomena. The concept is a reflection based on findings from our empirical data up against current project management, uncertainty, risk and stakeholder literature. Our model shows that the threshold for pursuing a potential opportunity is high. If a potential opportunity should be considered, it must be extremely interesting, since it may require contract changes, and the project must abandon an earlier-accepted best solution.

Uncertainty in information system development: Causes, effects, and coping mechanisms

“…As discussed by a number of scholars (e.g., Dönmez and Grote, 2018;Johansen et al, 2016), in addition to negative effects, uncertainty may also have positive outcomes. Based on the interviews, we identified six distinct effects of uncertainty, three negative and three positive.…”

Controlling superprojects – information management requirements

“…The project business case and how far it depends on needs and costs, which are changing. Information’s role in managing the project and the information flow between different players, allowing them to perform their roles and allowing risk and uncertainty to be managed. Project flexibility e.g. interdependence between tasks or activities, availability and flexibility of resources – the so-called “critical chain” of Leach (2014) – and flexibility of different activities’ start and end times. Reasons for problems and delays at each stage and the fact that during a project, new opportunities or risks may appear, suggesting the need to replan to capture or avoid/mitigate them (Hillson, 2019; Johansen et al , 2016; Krane et al , 2014), but redesigning/respecifying projects during implementation creates more problems, as does non-conformance of progress or final outcomes, leading to rectification and further cost/delay problems. Human resource aspects of project management, especially capacity (determined not only by resources but also by the quality of project managers and how they work (Dalcher, 2019) and the systems and processes that support them), the maturity of the organisation in relation to project management (e.g. does it have a long history of executing successful projects), whether the organisation is ambidextrous (Turner et al , 2016a, 2016b; Turner et al , 2013; Khanagha et al , 2014) (able to continue with operations while managing change on some definitions, on others using, refining, and building on existing expertise) while exploring exploration (innovation and problem solving) and mindful (again this has different definitions, conscious of what it is, what it can do, what it is planning to do, what the associated risks are and how they might be handled, and so on).…”

“…Reasons for problems and delays at each stage and the fact that during a project, new opportunities or risks may appear, suggesting the need to replan to capture or avoid/mitigate them (Hillson, 2019; Johansen et al , 2016; Krane et al , 2014), but redesigning/respecifying projects during implementation creates more problems, as does non-conformance of progress or final outcomes, leading to rectification and further cost/delay problems.…”

Dealing with uncertainties in the design phase of road projects

“…Johansen (2015) developed a framework for managing project uncertainties with reliance on the three components Human and organisation , Process and Tools and techniques . This framework supported practical UM, which was applied in different industries and projects (Hald et al.…”

“…There exist other tools such as Monte-Carlo simulation-based approach by Han et al (2017) or the systematic approach to managing uncertainties using the multiple-case approach by Augusto et al, (2019). Johansen (2015) developed a framework for managing project uncertainties with reliance on the three components Human and organisation, Process and Tools and techniques. This framework supported practical UM, which was applied in different industries and projects (Hald et al, 2008;Johansen et al, 2014;Johansen, 2015).…”