Uncertainty Management

Essay # 59766

This paper emphasizes that effective and efficient management of uncertainty is essential for good project risk management results.

1,212 words () | 7 sources | MLA | 2004 India

Paper Summary:

Uncertainty is inherent in all projects and is also a greatest source of project associated risks. The paper explains that uncertainty management is essential for project risk management to be effective. It discusses how most of the time uncertainty is viewed as a 'threat' because of the adverse effects it produces as increasing the cost, duration of the project or falling short of meeting the user's requirements etc. Sometimes uncertainty also creates 'opportunity' which is beneficial to the project. It concludes that both as a threat and an opportunity, uncertainty definitely requires effective and efficient management.

From the Paper:

"Every project is associated with a novel set of risks and uncertainties. Frank H. Knight (1921) has differentiated between risk and uncertainty. He says that, risk refers to situations where the decision-maker can assign mathematical probabilities to the randomness, which he encounters, while, uncertainty refers to situations when this randomness "cannot" be expressed in terms of specific mathematical probabilities. James Robertson (2004) states, "The greatest source of project risk is uncertainty", and from the American Risk and Insurance Association, Professor James Garven, University of Texas at Austin, has extracted the definition of project risk management as a systematic process of managing an organization's risk exposures to achieve its objectives in a manner consistent with public interest, human safety, environmental factors, and the law. It consists of the planning, organizing, leading, coordinating, and controlling activities undertaken with the intent of providing an efficient pre-loss plan that minimizes the adverse impact of risk on the organization's resources, earnings, and cash flows (Robert Tusler, 1996)."