Preparing for the Inconceivable Risk—Are You Ready for Black Swans?
When rare and extreme events never observed before occur, they have major consequences and sometimes even global impact. World War I, AIDS, 9/11, but also the advent of Internet are all black swans, or extremely rare, unprecedented events with inconceivable consequences. The term black swan was coined by the philosophical essayist Nassim Nicholas Taleb in the book The Black Swan: The Impact of the Highly Improbable. Taleb uses the term black swan to refer to extremely rare, very difficult to predict, and massive-impact events. Zooming into the realm of project management, when negative black swans (unconceivable risks, extremely unpredictable, and improbable) occur, they lead projects to failure.
How can Managers Plan for Black Swans?
Inherently, black swans cannot be forecast—they are unique events that are not in statistics and their total impact on a project is impossible to predict, which makes them most dangerous to any project. While managers cannot plan for such risk, simply taking no action and hoping a black swan doesn’t strike their project is not the wisest thing to do. But if they cannot plan for the unplanned, what can they do?
Grey Swans vs. Black Swans
First, managers can learn to distinguish black swans from grey swans and prepare for these. Not all project failures are due to black swan events, but to grey swans, which are rare but predictable risks. Professor Elisabeth Paté-Cornell from Stanford argues in an article in Risk Analysis that black swans are extremely rare, but people in industry and finance often use black swans in the aftermath of a disaster as an excuse for poor planning. In my opinion, this may also happen in many major IT projects that fail, for example those going over budget by 200 percent and over schedule by 70 percent—surprisingly, a situation that strikes one in six projects according to the authors of a Harvard Business Review article. Although managers blame black swans for such project failures, often their risk analysts have failed to factor in grey swans. Identifying and mitigating grey risks should be part of effective risk management. (more…)
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When a member leaves the project or is added mid-project to the team, that team’s composition changes. Consequently, the team performance increases or decreases. If the team performs worse after the change, the project manager 
Earned value management (EVM) is an efficient methodology for monitoring and predicting project performance only if it is correctly and timely applied. Otherwise, it can become a negative risk for the project, as it ends up consuming managers’ and project teams’ time without producing accurate estimates.
One of the first things project management students learn is that a project’s cost, time, and scope are interdependent. These three project constraints form the iron triangle. If one constraint changes, the other two change as well. For example, adding extra features to a product costs more and takes more time. Although the iron triangle was a measure of project success for decades, it is no longer so. Yet the iron triangle is not obsolete.
“Death march projects are the norm, not the exception,” says Edward Yourdon, the author of the Death March, a book about surviving highly stressful, irrational projects in the software industry. Many organizations promote “death march” projects – those with unrealistic goals and schedules – to keep up with the competition in their respective industries. As a result, project teams work overtime to meet unrealistic goals and schedules, sometimes with insufficient resources, only to reach the burnout phase. The productivity declines, the absenteeism rate increases, and the team is unable to meet requirements. A burnout team means that the employees’ job satisfaction diminishes and that they cannot perform their tasks and meet deadlines. The consequence is a failed current project and a high probability of failure of the next project.