The VUCAlity of Projects: A New Approach to Assess a Project Risk in a Complex World
Abstract
:1. Introduction
2. Project Risks, Complexity, and VUCAlity
3. Method
- Volatility: Unstable and unpredictable resource cost and/or availability at unpredictable times and durations, expected fluctuations on resources with unknown timing and magnitude. Questions aim to capture key reasons why resources might be suddenly unavailable or expensive, and the challenges in resolving resourcing for unforeseen new needs.
- Uncertainty: Lack of knowledge and unclear impact of change, but cause and effect are known. Questions aim to capture key risks for lack of comprehensive and reliable knowledge in projects, or difficulty in communicating or accessing relevant information, or effectively resolving questions on unforeseen new issues.
- Complexity: Many interconnected parts, complex regulatory/political environments, multiple components, and parts.
- Questions aim to capture key risks for the structural or systems-related complexity in the environment, internal and external, of a project, as well as whether an appropriate governance to effectively deal with these complexities is in place.
- Ambiguity: Doubt about the nature of cause and effect, little to no historical information available as to predict outcome, hence difficult to forecast or plan for.
- Questions aim to capture whether there are risks due to lack of experience and predictability that might affect the project, and whether the project delivers unpredictable new changes, either internal or external, to the project and/or the organization.
4. Results
- Project 1: A complex high-tech engineering project—technically advanced high-capacity production line—conducted in collaboration with multiple other organizations.
- Project 2: A new enterprise resource planning (ERP) implementation project.
- Project 3: A complex high-tech engineering project—technically advanced high-capacity production line.
- Project 4: A complex high-tech engineering project—technically advanced high-capacity production line.
- Project 5: A complex high-tech engineering project—technically advanced high-capacity production line.
5. Discussion and Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Categories | What It Is | An Example | Recommended Response |
---|---|---|---|
Volatility | Relatively unstable changes, information is available, and the situation is understandable, but change is frequent and sometimes unpredictable. | Commodity pricing is often quite volatile; jet fuel costs, for instance, have been quite volatile in the 21st century. | Agility is key to coping with volatility. Resources should be aggressively directed toward building slack and creating the potential for future flexibility. |
Uncertainty | A lack of knowledge as to whether an event will have meaningful ramifications; cause and effect are understood, but it is unknown if an event will create significant change. | Anti-terrorism initiatives are generally plagued with uncertainty; we understand many causes of terrorism but not exactly when and how they could spur attacks. | Information is critical to reducing uncertainty. Firms should move beyond existing information sources to both gather new data and consider them from new perspectives. |
Complexity | Many interconnected parts, forming elaborate networks of information and procedures; often multiform and convoluted but not necessarily involving change. | Moving into foreign markets is frequently complex; doing business in new countries often involves navigating a complex web of tariffs, laws, regulations, and logistics issues. | Restructuring internal company operations to match external complexity is an effective and efficient way to address. Firms should attempt to “match” their own operations and processes to mirror environmental complexities. |
Ambiguity | Lack of knowledge as to the “basic rules of the game”; cause and effect are not understood and there is no precedent for making predictions as to what to expect. | Transition from print to digital media has been very ambiguous; companies are still learning how customers will access and experience data and entertainment given new technologies. | Experimentation is necessary for reducing ambiguity. Only through intelligent experimentation can firm leaders determine what strategies are and are not beneficial in situations where former rules of business no longer apply. |
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What Is It? | Example | How to Address It? | |
---|---|---|---|
Volatility | Changes are frequent and unpredictable | Prices, stocks, politics, economy | Adopt change management and agile methods |
Uncertainty | The impact of future events not known | Climate changes impact on infrastructure | Information analysis bypassing cognitive biases |
Complexity | Many inter-connections and levels | Many sub-contractors, connected tasks | Decomposing the project, rolling planning |
Ambiguity | Lack of knowledge, unclear what to expect | Fake news, social media | Integrity, communication, psychology |
Criteria | Compliance Weights | Average Score | Statement Score Range | ||||
---|---|---|---|---|---|---|---|
Volatility | 1 | 2 | 3 | 4 | 5 | ||
Simple in planning (straightforward/sequential execution) | 5 | 5 | 5 | 4 | 5 | 4.8 | 1 |
Resource needs are known and accessible | 2 | 4 | 4 | 4 | 2 | 3.2 | 2 |
Adequate timeframe with good slack in schedule | 3 | 4 | 4 | 2 | 4 | 3.4 | 2 |
Solid contracts throughout project duration | 2 | 2 | 5 | 2 | 5 | 3.2 | 3 |
Known, well defined objectives | 2 | 1 | 4 | 2 | 2 | 2.2 | 3 |
Average score: | 2.8 | 3.2 | 4.4 | 2.8 | 3.6 | ||
Project score range: | 3 | 4 | 1 | 2 | 3 | ||
Uncertainty | 1 | 2 | 3 | 4 | 5 | ||
Uses few and proven technology components | 5 | 4 | 5 | 4 | 2 | 4 | 3 |
Stakeholders are few, with few time zones/cultural differences | 5 | 5 | 5 | 4 | 5 | 4.8 | 1 |
Information is easy to obtain | 3 | 4 | 4 | 4 | 5 | 4 | 2 |
Scope is well defined and approved | 2 | 1 | 2 | 2 | 4 | 2.2 | 3 |
Risk management is well defined | 4 | 2 | 4 | 3 | 4 | 3.4 | 2 |
Average score: | 3.8 | 3.2 | 4 | 3.4 | 4 | ||
Project score range: | 3 | 4 | 3 | 2 | 3 | ||
Complexity | 1 | 2 | 3 | 4 | 5 | ||
Few and simple regulatory or political environments | 5 | 5 | 2 | 2 | 4 | 3.6 | 3 |
Few subcontractors, organizational departments, and cultural differences | 5 | 5 | 2 | 2 | 5 | 3.8 | 3 |
Few interfaces with other technologies, projects or operations | 5 | 5 | 5 | 2 | 4 | 4.2 | 3 |
Has been done many times before | 4 | 3 | 2 | 4 | 4 | 3.4 | 2 |
Clear governance, straightforward decision-making | 3 | 1 | 4 | 2 | 4 | 2.8 | 3 |
Average score: | 4.4 | 3.8 | 3 | 2.4 | 4.2 | ||
Project score range: | 2 | 4 | 3 | 2 | 1 | ||
Ambiguity | 1 | 2 | 3 | 4 | 5 | ||
Deliverables are well defined, no “unkowns unkowns” | 5 | 2 | 4 | 3 | 5 | 3.8 | 3 |
Connections between tasks are clear | 2 | 4 | 3 | 2 | 2 | 2.6 | 2 |
Risk factors are well known and documented | 4 | 2 | 4 | 4 | 5 | 3.8 | 3 |
No “hidden agenda” | 2 | 3 | 4 | 2 | 5 | 3.2 | 3 |
All stakeholders and their relationships are recognized | 2 | 2 | 3 | 2 | 3 | 2.4 | 1 |
Average score: | 3 | 2.6 | 3.6 | 2.6 | 4 | ||
Project score range: | 3 | 2 | 1 | 2 | 3 |
Projects | Volatility | Uncertainty | Complexity | Ambiguity | ||||
---|---|---|---|---|---|---|---|---|
Project # | Score | Accuracy | Score | Accuracy | Score | Accuracy | Score | Accuracy |
1 | 2.8 | High | 3.8 | High | 4.4 | High | 3.0 | High |
2 | 3.2 | High | 3.2 | High | 3.8 | High | 2.6 | High |
3 | 4.4 | High | 4.0 | High | 4.0 | High | 3.6 | High |
4 | 2.8 | High | 3.4 | High | 2.4 | High | 2.6 | High |
5 | 3.6 | High | 4.0 | High | 4.2 | High | 4.0 | High |
Project # | VUCA Score |
---|---|
1 | 3.50 |
2 | 3.20 |
3 | 3.75 |
4 | 2.80 |
5 | 3.95 |
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Fridgeirsson, T.V.; Ingason, H.T.; Jonasson, H.I.; Kristjansdottir, B.H. The VUCAlity of Projects: A New Approach to Assess a Project Risk in a Complex World. Sustainability 2021, 13, 3808. https://doi.org/10.3390/su13073808
Fridgeirsson TV, Ingason HT, Jonasson HI, Kristjansdottir BH. The VUCAlity of Projects: A New Approach to Assess a Project Risk in a Complex World. Sustainability. 2021; 13(7):3808. https://doi.org/10.3390/su13073808
Chicago/Turabian StyleFridgeirsson, Thordur Vikingur, Helgi Thor Ingason, Haukur Ingi Jonasson, and Bara Hlin Kristjansdottir. 2021. "The VUCAlity of Projects: A New Approach to Assess a Project Risk in a Complex World" Sustainability 13, no. 7: 3808. https://doi.org/10.3390/su13073808
APA StyleFridgeirsson, T. V., Ingason, H. T., Jonasson, H. I., & Kristjansdottir, B. H. (2021). The VUCAlity of Projects: A New Approach to Assess a Project Risk in a Complex World. Sustainability, 13(7), 3808. https://doi.org/10.3390/su13073808