2 The uncertainty methodologies

Overview

Extreme Project Management (XPM) and Event Chain Methodology (ECM) are both considered uncertainty methodologies. Both approaches are aligned to projects that are complex, defined by speed, ambiguity, and fast changing needs, and therefore also characterised by rapid change. This is where the term ‘uncertainty’ emerges, as these project management methodologies are about managing the unknown. Let’s review what types of projects are characterised under each of them and what comprises each methodology.

Extreme Project Management

Extreme refers to a result that must be accomplished in a very short time. XPM, also known as eXtreme, is a method for managing projects that are chaotic and done just-in-time in a responsive format. The nature of the project is messy and uncertain. Therefore, the need for speed, time management, and creativity in planning is paramount. The degree of predictability that surrounds an extreme project is far lower than that of a traditional project, which is one of the primary distinctions between the two types of projects. Extreme projects are carried out in tumultuous environments that feature a great deal of change and uncertainty, such as, for example the COVID-19 pandemic. The requirements of an extreme project are subject to constant change throughout the entire project life cycle, accommodating both internal and external factors. These factors change the objective(s) of the project and can include moves made by competitors, the introduction of new technology, shifts in customer needs, changes in regulatory requirements, response to environmental natural disasters, response to a pandemic, and general shifts in economic and political conditions (for example, the war between Russia and Ukraine).

Extreme projects evolve at a quick pace despite always having a task that needs revising, a technology that needs updating, or a competitive strategy needing to be redesigned in response to a new environmental demand. In most cases, these types of projects include deadlines and timetables that appear to be difficult to adhere to. Therefore, the most common response is to design a very detailed planning phase. Under this detailed planning phase, the tendency for most project managers is to give themselves enough time to methodically prepare each task of the process; however, by the time the task is completed, it is likely to be no longer relevant. The challenge or opportunity that it sought to solve will have taken a new shape –  one that may not be easily planned and could, therefore, potentially trigger project failure. This is one of the main reasons why XPM is an increasingly important concept in today’s society, which is characterised by globalisation, a rising digital economy, and Industry 4.0 – all of which are generating new environments in which businesses must learn to operate and readapt (Hoyer et al. 2020). In order to keep up with these new demands and apply XPM, project managers must focus their complete attention on developing new approaches that are responsive, flexible and adaptable to the ongoing changing conditions of today’s business environment.

As changes occur due to the dynamic nature of market conditions and customers’ ongoing evolving needs, the types of changes impacting the project’s management processes are marked by frequent shifts (for example, cyclical scope creep scenarios). This in turn generates a very unpredictable working environment. In such circumstances, it will be impossible to create a comprehensive project plan or project strategy in advance. Such scenarios call for an adaptable management approach. XPM is one such method of managing projects which are immense in uncertainties and ongoing changes. Hence why XPM is also known as ‘the flexible project model’.

Unlike traditional project management methods, XPM enables you and your stakeholders to maintain project control and produce asset management value in the face of uncertainty. According to DeCarlo (2004:34), ‘Extreme project management is the art and science of facilitating and managing the flow of thoughts, emotions, and interactions in a way that produces valued outcomes under turbulent and complex conditions: those that feature high speed, high change, high uncertainty, and high stress’. Figure 3 is graphical representation of the key difference between traditional and XPM.

_{Figure 3. Examples of XPM vs traditional project management methods, by Carmen Reaiche and Samantha Papavasiliou, licensed under CC BY (Attribution) 4.0}

Since we have established that XPM is not a plan-driven approach, but rather an adaptable and self-correcting project method, it is necessary for us to understand the differences between a traditional versus an extreme management approach as listed in Table 2.

_{Table 2. XPM vs traditional management, by Carmen Reaiche and Samantha Papavasiliou, licensed under CC BY (Attribution) 4.0}

From a project management methodology viewpoint, there are some other differences shown in Table 3 below.

_{Table 3. XPM vs traditional project management, by Carmen Reaiche and Samantha Papavasiliou, licensed under CC BY (Attribution) 4.0}

XPM offers benefits in 3 key areas:

1. It enables project managers to manage the unexpected during uncertain times.
2. It focuses on securing and sustaining stakeholders’ commitment to the project’s objectives and strengthens their trust in the project and the way in which project managers operate.
3. It is a complete, realistic plan based on a just-in-time schedule of events developed by project managers who are ongoing ambassadors of change management.

XPM process: a brief overview

As described above, XPM is an incremental and iterative approach to project management and development. This is the notion of gradual planning and scheduling recommended for project management. In XPM, the development of the schedule will occur in cycles of approximately 3 to 6 weeks. At each iteration, stakeholders will be presented with a fully functional report that includes roles and responsibilities, activities changed and the revised risk management plan for the reported iteration. Doug DeCarlo (2004), the founder of XPM, identified 4 phases: INitiate, SPeculate, Incubate, and REview (INSPIRE). Each iteration of development will increase the clarity of succeeding iterations.

XPM is initiated by gathering and integrating a willing and prepared team. Once formed, the team will follow these steps, which are closely aligned with the standard of the project life cycle, as a process guideline:

1. Project design: keep the concept of XPM in mind, for example, by anticipating change, recognising that the timeline may vary, and having a degree of allowance for errors.
2. Address key questions: What needs to be done? Who and why? How long will it take? Can we get the desired result? More importantly, is it worthwhile?
3. Timeframe management is critical: tasks must be arranged in cycles lasting no longer than a few weeks.
4. Responsibility matrix: establish a daily communications responsibility matrix.
5. Engagement: frequently engage with clients, gain clarification and consensus about their needs and communicate these to the project team.
6. Review sessions: when the project looks to be drifting, schedule review sessions and rearrange project tasks accordingly.
7. Project celebration upon conclusion: As per phase 4 of the project life cycle, close the project and celebrate.

Now remember, XPM can only be achieved with extreme self-management. Every team member must have a strong sense of responsibility and proactivity, and the team should foster an atmosphere of openness, encouragement, and trust: good project governance. In addition, we advise adopting XPM only when circumstances are highly unexpected, unknowable, and subject to constant change. Use this method only for specific projects for which it is impossible to develop a formal plan outlining the project’s scope, time, and cost limitations in phase 1 and 2 of the project life cycle. For XPM to be effective, the project manager, as well as each member of the project team, needs to have a radical mindset and working behaviour that allows them to embrace a high degree of uncertainty.

Event Chain Methodology 

ECM is a network analysis technique which addresses event variations and aims to control these variations by managing the relationships between events. ECM focuses on the relationships (event chains: predecessors and dependencies) that impact project timelines and highlight risks. Therefore, we can define ECM as a scheduling network analysis method that allows us to model and visualise risk events. Figure 4 provides an overview of the ECM process. The ECM is also defined as an extension of the classic Monte Carlo simulations and project risk assessment (Agarwal and Virine 2017). The ECM emerged as a recommendation from the Project Management Institute to use a variety of approaches for risk analysis, including estimated cost value, sensitivity analysis, and the Monte Carlo analysis. Hence, ECM is recognised as an extension of these approaches as they form the basis for the application of the ECM.

The ECM is based on 6 main principles:

1. Timing of risk and state of activity. As discussed earlier, most real-world project activities are not uniform or continuous, and they are influenced by events that alter their states and potentially impact the project activities while in progress, changing the finishing time or delaying it. These external events occur randomly and can be triggered by, for example, changes in supplies, materials, or labour, that can affect the length of one or more activities. Events can be categorised as positive or negative, and can completely transform an activity from the start to the end, as well as vice versa (referring to mitigation efforts, if facing risk).
2. Event chains. An external event might result in subsequent events, forming event chains. Event chains have a substantial effect on project progress. Event chains are developed when one risk event (a trigger) generates another risk event, which typically results in a cascade of effects and major repercussions across the project. A single event might have many effects on distinct project activities or resources, resulting in a ‘burst’ effect. An example of a trigger event could be a delay in the supply chain of materials, which will result in various activities being delayed.
3. The Monte Carlos simulation. This simulation is applied to quantify the accumulated effects of the events. It uses the probability that risks will eventuate and looks at their impacts as input data. This computerised, mathematical approach provides a probability curve for project planning.
4. Event chain diagrams. These diagrams highlight the link between external events and tasks, their effects, and how they mutually influence one another. Event chain diagrams are derived from Gantt charts with certain changes. An example is presented in Figure 4. On a Gantt chart, the chains are represented by arrows that correspond to a specific activity or time period.
5. Critical event chain. This enables visualisation of those events that are likely to impact the project the most. By anticipating their degree of impact, it is feasible to minimise or mitigate these. However, to be able to achieve this, the project manager must examine the connections between the primary project parameters, such as project time duration, cost and events.
6. Performance measurement with event chain. Using real performance data ensures the use of up-to-date information and the recalculation of event probabilities and moments of events. It is therefore essential for project managers to monitor live progress of an activity. This guarantees that the most recent data is used for the Monte Carlo analysis.

_{Figure 4.  Event chain diagram by Kenmckinley at English Wikipedia, via Wikimedia Commons is available under Public Domain}

An event chain approach facilitates the description and analysis of complicated scheduling problems, such as event correlations and resource levelling. According to Virine and Trumper (2019), the algorithms designed to address these issues are known as ECM phenomena. They are founded on fundamental event chain methodology ideas, and we will highlight a few of these next:

1. Repeated activity: certain external factors promote the recurrence of previously accomplished activities.
2. Event chains and risk mitigation: when an event happens over the course of a project, it may require a mitigation strategy, which is a detailed plan process that is only executed for certain risk events. Multiple events may use the same mitigating plans.
3. Resource allocation based on occurrences: the ECM also results in the reallocation of resources from one activity to another.

A brief guide to the key steps for project scheduling and analysis which have been discussed earlier in the integrated six principles of ECM are summarised in Figure 5.

_{Figure 5. Steps for project scheduling and analysis using ECM, by Carmen Reaiche and Samantha Papavasiliou, licensed under CC BY (Attribution) 4.0}

In sum, ECM is a strategy for uncertainty modelling and schedule network analysis that focuses on finding and controlling events and event chains that have an impact on project timelines. It is a great methodology if it is applied correctly and if the project manager has a good understanding of the quantitative skills underpinning this approach. From a pragmatic perspective, ECM generates quantifiable evidence that helps to minimise our cognitive biases. ECM also has other great advantages:

• It incorporates ongoing actual information about the project performance into the original project plan.
• It simplifies the process of determining risks and uncertainties in project schedules, focusing on enhancing the capacity to conduct reality checks and visualise various events.
• It performs a more precise quantitative analysis.

Using the original schedule baseline as a starting point, the ECM technique enhances the current methodologies with new information on risk occurrences and their repercussions and by incorporating useful historical data.

Both ECM and XPM are related to the Agile system, which we will review in later modules. Yet, both approaches target different needs. When deciding which is the right project management method for your project, there are many things to consider. However, to conclude this section, consider these final two guiding principles:

• Use ECM for projects that require a chain of events and risk analysis. ECM will be the best fit as it is used to simplify the process of defining risks and uncertainties in our project schedules.

• Use XPM for projects that require ongoing scope changes. XPM functions well in development contexts, where project needs are in continual flux. It is an incremental and iterative strategy of development and management. It is beneficial when the project’s scope, timeline, and budget cannot be determined in advance.