Uncertainty in the broadest sense is a state of not knowing or unpredictability (unpredictability = when things cannot be guessed or expected). There are many nuances (nuances = small differences or types) to uncertainty, such as:

• Risk associated with not knowing future events
• Ambiguity (ambiguity = not clear or having more than one meaning) associated with not being aware of current or future conditions
• Complexity associated with dynamic systems having unpredictable outcome

General Uncertainty

Uncertainty is inherent in all projects. For this reason, the effects of any activity cannot be predicted precisely, and a range of outcomes can occur Potential outcomes that benefit the project objectives are known as opportunities; potential outcomes that have a negative effect on objectives are called threats. There are several options for responding to uncertainty:

• Gather information – Sometimes uncertainty can be reduced by finding out more information, such as conducting research engaging experts or performing a market analysis
• Prepare for multiple outcomes – In situations where there are only a few possible outcomes from an area of uncertainty, the project team can prepare for each of those outcomes.
• Set-based design – Multiple designs or alternatives can be investigated early in the project to reduce uncertainty.
• Build in resilience – Resilience is the ability to adapt and respond quickly to unexpected changes. Resilience applies to both project team members and organizational processes.

Ambiguity

There are two categories of ambiguity: conceptual ambiguity and situational ambiguity.

Conceptual ambiguity the lack of effective understanding occurs when people use similar terms or arguments in different ways. For example, the statement, “The schedule was reported on track last week,” is not clear. It isn’t clear whether the schedule was on track last week or whether it was reported on last week.

Situational ambiguity surfaces when more than one outcome is possible. Having multiple options to solve a problem is a form of situational ambiguity.

Complexity

it is a characteristic of a program, project, or its environment, which is difficult to manage due to human behavior, system behavior, or ambiguity

Complexity exists when there are many interconnected influences (things that affect each other and are linked) that behave and interact in diverse ways, In complex environments, it is not uncommon to see an aggregation of individual elements leading to unforeseen or unintended outcomes

The effect of complexity is that there is no way of making accurate predictions about the likelihood of any potential outcome or even of knowing what outcomes might emerge

There are numerous ways to work with complexity; some of them are systems-based (focused on the whole system), some entail reframing (involve changing the way we see a problem), and others are based on process (step-by-step methods).

Volatility

Volatility exists in an environment that is subject to rapid and unpredictable change (things change quickly and cannot be predicted). Volatility can occur when there are ongoing fluctuations in available skill sets or materials.

Volatility usually impacts cost and schedule.

Alternatives analysis and use of cost or schedule reserve (extra buffer) address volatility.

Alternatives analysis – Finding and evaluating alternatives, such as looking at different ways to meet an objective, such as using a different mix of skills, resequencing (changing the order of) work, or outsourcing (giving work to an external party) work.

Reserve – Cost reserve can be used to cover budget overruns due to price volatility. In some circumstances, schedule reserve can be used to address delays due to volatility associated with resource availability (whether workers or materials are available when needed).