Manage All Assumptions as Risks

Assuming something means taking it for granted. In other words you’ve got a more or less conscious theory (or, less charitably, a guess) that something is going to happen. The trouble is that the assumption might not be true.

That screams risk. And as a programme manager or project manager you need to manage risk.

Assumption means Risk

Assumption means Risk

Example: Fixed Term Contract Assumption

Here is an assumption made at the beginning of one of my programmes:

We can replace the expensive highly skilled and in demand day rate contractors with cheap fixed term contract staff half way through the programme.

The skill in question was MS Sharepoint development. These guys were sought after, knew it, and could demand high fees as a consequence. The organisation hoped to avoid paying those fees for at least half the programme by hiring fixed term contract staff. Fixed term meaning on staff salary and benefits (i.e. cheap) but short term. Obviously this was to keep the costs of the programme down.

I picked this example because it was an impossible assumption. My contractors were the best. World class. The kind of people that Microsoft rang to deploy on their most challenging projects. There is no way I could get fixed term contract staff to replace them. Danger. Risk.

Managing the risk of an assumption

In this case the inherent risk was obvious and the risk management started early and in time to make a difference. That is the thing. You have to spot the assumptions early and start managing them like the risks they are.

Luckily I was not the only one to recognise the risk inherent with the assumption on staff. My budget included a explicit contingency pot to allow me to retain the day rate contractors until the end of the programme. The only disagreement was on the likelihood of the risk becoming an issue. I thought it was guaranteed (100%) but others thought there was a chance we could hire cheaper staff.

Testing Assumptions

To demonstrate the challenge posed by the staffing assumption I had to start the recruitment process. After two rounds of advertising we had not attracted any suitable candidates so I formally told my programme board the risk had become an issue and I was intending to spend the explicit contingency pot. Because I’d proved the assumption was unfounded nobody challenged the announcement. Where before it was opinion versus opinion, now there was data to inform the decision. It is hard to argue with data.

Testing assumptions is useful in a programme or project but Eric Ries (2011) also suggests testing assumptions within the context of a Lean Startup. Typically the founders of a startup assume success will derive from a certain approach. Eric says they should test those assumptions as soon as possible. This will either support the assumption or indicate that the startup needs to pivot.

Ignoring an assumption is going to cause you grief.

References

Ries, E. (2011). The Lean Startup: How Constant Innovation Creates Radically Successful Businesses. Portfolio Penguin.

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