The price of uncertainty

The further you get into a project, the more expensive it is to change your mind…

Uncertainty

As we stated in the earlier topic on the differences between projects and operations, projects inherently have a much higher degree of uncertainty than the business-as-usual activities of an organization.

The red shading here illustrates that uncertainty is greatest at the start of the project and reduces the further we get into project delivery.

Assumptions & estimates

This is because the assumptions and estimates that go into our business case (at the project initiation stage) are far more prone to error than those we make in project planning and delivery, where we benefit from more accurate and detailed information.

So why do we bother with a project plan at all?  Why not just go straight to delivery?

The cost of change

Unfortunately, the cost to change things exponentially increases the further we get into a project.

For example, it is much easier to change the design of a house when it is just a series of drawings on paper than it is to change the design once construction has started.

And the further you get into construction, the more expensive it is to change your mind!

The benefits of planning

Therefore, good planning (shown here in green) reduces the uncertainty that inevitably attaches to a project and can save significant money downstream by reducing the need for change.