PAPERS

Challenging Classic Project Management: Turning Project Uncertainties Into Business Opportunities
Thomas G. Lechler, Wesley J. Howe School of Technology Management, Stevens Institute of Technology, Hoboken, NJ, USA Barbara H. Edington, Management and Information Technology, St. Francis College, Brooklyn Heights, NY, USA Ting Gao, Wesley J. Howe School of Technology Management, Stevens Institute of Technology, Hoboken, NJ, USA

ABSTRACT I
The management of uncertainty during a projects implementation is not well understood. In general, uncertainties are treated similar to project risks by practitioners and by scholars as negative events threatening a projects implementation. Following the arguments of economists, uncertainties are a necessary condition for the existence of opportunities. This research aims to identify specific classes of opportunities and specific contextual situations under which they occur during the implementation of projects. An exploratory case study of 20 projects was conducted. Different categories of opportunities and uncertainties were identified. All identified opportunities were connected with at least one situation of uncertainty but not every situation of uncertainty relates to opportunities. The cases unveiled that risks are misperceived as uncertainties and some situations of project improvements were misperceived as opportunities. Our study sheds light on the limitations of classic project management and suggests that future project management education needs to include a deeper exposure to business context to better equip project managers for the challenge and opportunity posed by uncertainty during project implementation. KEYWORDS: project opportunity; project value maximization; project uncertainty; project risk
Project Management Journal, Vol. 43, No. 6, 5969 2012 by the Project Management Institute Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/pmj.21304

INTRODUCTION I
he management of projects is faced with challenges from both risks and uncertainties. The project management literature has a long tradition in analyzing and discussing project risks, also called the known-unknowns. It could be asserted that risk management is a mature component of project management practice and theory. However, classic project management does not clearly differentiate between risks and uncertainty, also called the unknown unknowns. Its main focus lies in identifying and quantifying sources of variation and the analysis of trade-offs. Uncertainties that occur during the implementation of projects are basically treated in the same way. By virtue of their unique nature, projects are mired in uncertainty. Economists associate uncertainty with entrepreneurial behaviors in an economy (Kirzner, 1973; Schumpeter, 1934). Without uncertainties, entrepreneurial profits would be impossible (Knight, 1948). If projects are unique, as the general body of literature suggests, then uncertainties (unknown unknowns) are inevitable, no matter how much information is gathered before a project is initiated (Hubbard, 2007; Sydow & Staber, 2002). Consequently, following the arguments of the economists, uncertainties are the precondition for the existence of opportunities. Therefore, and in contrast to risks, uncertainties are not necessarily limited to negative consequences; there are positive implications as well, as some authors suggest in hindsight (Jaafari, 2001; Loch, DeMeyer, & Pitch, 2006). Classic project management offers many concepts and tools to identify project risks; however, it does not offer a conceptual basis for understanding the relationship between uncertainty and opportunity (Siebert, 2005; Thiry, 2004) nor does it offer specific practices to manage uncertainties. Risks are potential threats leading to a variation from predefined objectives and therefore could impact the baseline. Depending on the severity of these potential events, specific measures are taken, such as the use of a buffer to mitigate these risks. This risk management process assumes that events are known and can be quantified with some probability before the implementation of a project. Given these conditions, it is conceptually not possible to identify and treat uncertainties since they are just not known at the beginning of the project.

December 2012 I Project Management Journal I DOI: 10.1002/pmj

59

PAPERS

Challenging Classic Project Management: Turning Project Uncertainities

More important, it is not clear how to manage these unknown-unknowns. Following the classic project management logic, variation from the baseline should be avoided because it is a negative impact to the project. Applying this logic to manage uncertainty, the baseline cannot be questioned and there is no opportunity to redefine the value proposition of a project. Following the economists arguments, we assume that situations of uncertainty are connected with opportunities that could improve the value proposition of a project or at least significantly change it. Based on 20 indepth cases, this study explores the relationship between the perception of risks, uncertainties, opportunities, and their relation to project outcomes. It is an exploratory study to characterize opportunities and uncertainties that occur during a projects implementation. It sheds light on the causes of uncertainties and their relationships with project-related opportunities. The study also analyzes the impact of opportunities on creating project value. as . . . situations in which new goods, services, raw materials, markets, and organizing methods can be introduced through the formation of new means, ends, or means-ends relationships. For purposes of this study, we view opportunities with a focus on the concept of project value and define project opportunities as: Project value opportunities represent a potential to alter the quality and/or exceed the predefined stakeholder value of a project (Lechler & Byrne, 2010). Several authors (Kahkonen, 2001; Kapsali, 2011; Ward & Chapman, 2003) have criticized the conceptual limitations of project management practice, in particular, the basic premises of the widely accepted and established classic project management paradigm. In more abstract terms, these critiques raise issues related to two limiting premises. First, the notion of opportunity is not directly addressed by classic project management, because uncertainty and risk are conceptually not differentiated. Second, classic project management does not include the notion of maximization; it is based on optimization within the given constraints. Under these conditions, uncertainty on the project level is a threat since opportunities are conceptually not an alternative and variation should be avoided. The interviews were conducted between July 2010 and August 2011, resulting in 20 cases as described by 19 project managers. All interviewees were project managers of the projects under investigation. The interviews usually lasted about 90 minutes and were conducted by at least two researchers. Recordings were not allowed by our interviewees, and, as a method to increase accuracy, notes taken during the interview were immediately reviewed and case write-ups were created and confirmed by the interviewees before we started our data analysis (Eisenhardt, 1989). The case study protocol and database were created according to recommendations for establishing construct reliability and validity (Yin, 2003). The case study protocol specified the procedures and the questionnaires to collect data. The interviews were structured in four segments. In the first segment, general information was gathered about the industry, size, and general products of the organization. In this segment interviewees described one of the projects they managed in which they perceived unexpected events. Information about stakeholder structure, planned and actual budget, schedule, and scope information were collected in this segment. The interviewees were also asked about the degrees of innovativeness and complexity of the project. The second segment was an open discussion with the interviewees to identify up to three major situations of project uncertainty. In the third segment, the interviewees were asked to name two situations of uncertainty in which opportunities to improve the projects value were discovered. The sources of uncertainties and the means in which opportunities were discovered and exploited were discussed in detail. In the fourth segment, the interviewees discussed opportunities that were discovered but not exploited. The specific questions were modified slightly as the interviews progressed. For example,

Conceptual Foundation for the Case-Study Approach

Uncertainty is related to unforeseeable project situations (unknown-unknowns) but it does not necessarily lead to a negative consequence. The nature and significance of value-related opportunities stemming from uncertainty on the project level is not well understood. However, it is known that specific project situations lead to unconventional solutions creating value for a projects stakeholders. In general, opportunities represent the potential for extraordinary value, or as Schumpeter (1934) called it, entrepreneurial profit. Thus, when applied at the project level, the concept of opportunity represents a potential to create value for a projects stakeholders beyond the initial requirements or the predefined baseline. Eckhardt and Shane (2003, p. 336), defined entrepreneurial opportunities

Methodology
This research employs a hybrid approach reflecting both positivist and interpretive perspectives (Kirsch, 2004) to describe the basic characteristics of opportunities and risks in project implementation. This exploratory case study was designed and conducted following guidelines of Eisenhardt (1989), Yin (2003), and Corbin and Strauss (2008). Data Collection and Sample Description The primary means of data collection were semistructured interviews augmented with project documentation.

60

December 2012 I Project Management Journal I DOI: 10.1002/pmj

initially project managers were confused by the concept of uncertainty and we added explanations to clarify the question. Data Analysis The study followed the suggested protocols for improving analysis speed and identifying needed adjustments to the data collection procedures by overlapping data collection and analysis (Corbin & Strauss, 2008; Eisenhardt, 1989). Debriefing meetings were arranged as soon as possible after the case write-up, and accuracy was confirmed by the interviewee. All relevant researchers participated in the debriefing where the essential constructs of this study, uncertainty and opportunity, were interpreted and in some cases required clarification from the interviewee. The report included the sources of uncertainty, discovered opportunities, their impact on project results, and any malpractice or mismanagement in the project. The case write-ups and interpretation reports were coded following a multistep coding process by Corbin and Strauss (2008): open coding, axial coding, and selective coding. Upon completion of an interview, open coding was conducted for each opportunity and uncertainty situation and was iteratively conducted for each case. Axial coding was taken to classify previously identified concepts into categories at the completion of 10 cases. The findings in the first round of interviews then guided but did not limit the analysis for the next round in order to confirm and complement existing findings. A selective coding process was used to integrate and refine those findings to create the theoretical contribution of this study. A cross-case analysis was conducted and included in the following result section.

Project Category
Product development project IT/IS project Construction project R&D project Business realignment project Clinical trial project Market prediction model Feasibility study Total

Numbers
6 6 3 1 1 1 1 1 20

Table 1: Project categories of cases.

months (Case 1), with a range of budget objectives between $500,000 (Case 7) to $69 million (Case 5). Twelve projects were claimed to be highly complex, five had a medium complexity, and three were low complexity, with a percentage of 60%, 25%, and 15%, respectively. Project Opportunities From the 20 cases, several opportunities were identified and classified (see Table 2). The results show that opportunities were identified and exploited in only 12 projects. Opportunities have many different characteristics, but all represent a potential for significant increase in value to a project under the condition of significant change. Basically, when exploited, they led to a redefinition of a projects initial baseline. They represent various means for adding value to a project such as implementing new technologies or new processes or identifying new projects for the future. The first category of opportunities identified in our cases is technical innovation. Case 5 illustrates an opportunity to meet a new regulatory requirement through the development of an inexpensive testing solution during project implementation. The second category is related to opportunities in implementation process.

For example, in Case 13, constrained resources led to the development of a common build process that will save time, money, and decrease postdeployment issues. These opportunities often lead to new procedures that can be put to use even when the project is completed. The third category is the business opportunity. The project described in Case 1 faced uncertainty when the original business sponsor was no longer involved in the project. The new business owner created additional business opportunities by broadening the audience for the project output. The fourth category is future project business opportunity. In several cases, opportunities were identified that could generate value beyond the project. For example, in Case 7, the project manager recognized the business value of the knowledge that was being gathered from the project and that, if properly managed, could be applied to future projects. In another case (Case 16), the solution to a software problem that occurred during implementation in one department was applied to a different area of the company to improve efficiency, thereby gaining additional advantage from the solution originally intended only for that specific project. Sources of Project Uncertainties Thirty-three situations of project uncertainty (unknown-unknowns) were perceived by our interviewees, but 12 of them were actually risks rather than uncertainties. We will discuss the issue of misperceptions in the section below. The identified uncertainties were classified into six categories (Table 3). 1. Contextual turbulences include changes that impact the project, such as external legal issues, dynamic markets, and regulatory uncertainty. For example, Case 3 encountered the uncertainties associated with a dynamic business market in a software application project. The changes in the market made some applications obsolete and
61

Case Data
The investigated projects were categorized as described in Table 1. The schedule objectives of the projects ranged from 8 months (Case 2) to 36

December 2012 I Project Management Journal I DOI: 10.1002/pmj

PAPERS

Challenging Classic Project Management: Turning Project Uncertainities

Categories
Technology opportunity Implementation process opportunity

Opportunities
Technical innovation Process improvement among different management levels Outsourcing

Cases
Case 5 Case 9

Interview Quotations
The curve negotiation testing solution was able to save at least $2 million in revenues. Another opportunity was process improvement among the region, HQ, and area planning for the future switch build project. The idea was to add low-cost outsourcing to do the simpler jobs, while in-house designers watch over the tasks and provide direction. Outsourcing some of the engineering work from the organization to vendors/consultants. The common build saved deployment time and money. Postdeployment issues dropped from three or four action items to approximately one action item. This also ensured that the results of the project were put to use for a wider group (not just the one port). The initial spec was to go with the BankCo software application. The project team found something better. The delay opened opportunity, which made the project team realize additional demands, which cannot be predicted at the start. Since early market penetration gained market share and provided a competitive advantage, the opportunity was exploited. The (new) spare parts contract complemented the 2-year warranty period and was essentially the cherry on top. They will have the opportunity to use such knowledge in future projects. This is definitely the tool to utilize in future projects. The project team turned this negative into a positive and the organizations help desk function now uses the software coach model in handling user issues.

Case 8

Case 12 Common build process Case 13

Project business opportunity

Create multiplier

Case 1

Identified new opportunities of original solution Extend fiber capacity due to its delays Early market penetration

Case 11 Case 9

Case 19

Future project business opportunity

Project life cycle opportunity

Case 5

Beyond the project

Case 7 Case 2 Case 16

Table 2: Identified opportunities.

required the addition of new applications. In Case 5, the original requirement needed adjustment due to changes in the regulations that required a different method of providing evidence of compliance. 2. Stakeholders are also main sources of uncertainties. For instance, customer-induced changes in Case 5 were required when the customer did not comply with the procedures

previously agreed upon. Vendors could also create uncertainty, as in Case 9, where the vendor failed to deliver product on a timely basis. The ownership of the project in Case 1 was uncertain after the project sponsor retired. 3. Technological uncertainties are the third category. Even well-developed technical specifications can fall victim to unknown-unknowns. In Case

19, during the preliminary test phase, a particular technical functionality issue could not be solved by the specification as stated. A unique component was needed to meet the end-users requirements. 4. Organizational uncertainties are represented by the fourth category. Organizational changes could lead to project uncertainties. A corporate merger in Case 10 created a level of

62

December 2012 I Project Management Journal I DOI: 10.1002/pmj

Uncertainty Categories
Contextual turbulences

Uncertainty Sources
External legal context External market context (dynamic) Regulatory uncertainty

Cases
Case 3, 13 Case 3, 15 Case 5 Case 5

Stakeholder uncertainty

Customer-induced changes/contracts/diverse needs New/inexperienced constituencies (project manager, customer, project team, contractor, external consultants): Inability of the vendor Inability of contractor Inexperienced project manager Inexperienced subcontractor Inexperienced outside designers Unknown project ownership Contractor-customer relations False assumptions about capabilities of contractor

Case 9 Case 6 Case 17 Case 18 Case 15 Case 1 Case 15 Case 18 Case 16, 19 Case 12, 13, 18 Case 9, 10 Case 18 Case 11, Case 18 Case 7

Technological uncertainty

Technical issues Tight technical specifications

Organizational uncertainty

Organizational changes Incompatibility of management system

Project uncertainty Malpractice

Table 3: Identified sources of uncertainities.

Unknown complexity Self-induced uncertainty

redundancy in the project, which made the roles and responsibilities of the groups involved in the project unclear. It was impossible to plan for this redundancy, because the project team had no knowledge of the pending merger and was unaware that the company was involved in a similar project. 5. Project uncertainty is also a category that creates an ambiguous environment for project teams. The projects under investigation provided examples of unrecognized complexity (Case 11 and Case 18). 6. Malpractice is the category where instances of the absence or lack of adherence to project management standards created an environment of uncertainty. For example, in Case 7,

the lack of root cause data surrounding the companys instrument problems was the result of the absence of a tracking mechanism, therefore creating a lengthy and more costly root cause analysis process when a problem occurred. Identified Misperceptions Misperceived Opportunities Several opportunities and situations of uncertainties reported by the interviewees were determined, in the data analysis phase, to be misperceptions (Table 4). We have identified three categories of misperceived opportunities: 1. The first is project as an opportunity, which means the project itself was claimed to be the opportunity. In

Case 18, the project was driven by the CEO and represented a strategic business opportunity. The project itself created value for the company but no opportunity was identified during the project implementation. 2. Another misperceived opportunity was what we call a self-evident opportunity, which is represented in Case 2 and Case 10. In both cases, the opportunity was offered by the externalities and was obviously better than the alternatives; there was no need for the project team to search for opportunities, and there was no choice or alternative. 3. The third category describes opportunities that were not opportunities at all. For example, in Case 6 the management team did not connect

December 2012 I Project Management Journal I DOI: 10.1002/pmj

63

PAPERS

Challenging Classic Project Management: Turning Project Uncertainities

Misperceived Uncertainty
Case 2 Installation of rock sockets Removal of stubs and debris Shutdown due to environmental issues No misperception Outcome Inability of contractor No misperception Insufficient resources from the vendor Inability of external consultants Market volatility Data migration Inexperienced project manager Inexperienced subcontractor Economic crisis

Misperceived Opportunity
Self-evident opportunity: a new type of drill offered by a subcontractor, which reduced the duration Updated their existing old and outdated applications to newer technology Routine opportunities Playground Self-evident opportunity: external consultants No misperception No misperception No opportunity No misperception No opportunity Project as a strategic opportunity Project as a feasibility study

Case 3 Case 4 Case 6 Case 10 Case 11 Case 12 Case 14 Case 15 Case 17 Case 18 Case 20

Table 4: Misperceived uncertainities and/or opportunities.

opportunity with value. They considered the addition of a playground area to a park an opportunity because it was offered by a not-forprofit organization. However, the target customers of the project were fishermen, and the value of the playground to them was questionable. Misperceived Uncertainties Using our definitions, unknownunknowns are uncertainties but knownunknowns are risks. However, as Table 4 shows, project managers in 10 out of 20 cases confused these two different concepts and typically mistook risks as uncertainties. For example, in Case 2, the interviewee described three situations of uncertainty, all of which we reclassified as perceived risks. The need for certain processes to accommodate depth-related construction, debris removal, and potential shutdown due to environmental issues are typical construction situations that should be considered as known-unknowns. The project manager in Case 11 perceived insufficient
64

resources from the vendor as a source of uncertainty. However, in this large-scale information technology (IT) project, resources committed to the project were always limited, making the situation a risk, not an uncertainty.

Discussion
The primary focus of this exploratory study was to provide first insights and to establish a basis for further studies on the relationship between uncertainty and opportunity during a project implementation. But our case analyses also documented confusion surrounding the meaning of uncertainty. The following discussion addresses both issues. First, we analyze the relationship between uncertainties and opportunities occurring during the implementation of projects. Second, we analyze the relationship between exploited opportunities and achieved project value. Relationships Between Uncertainties and Opportunities As Table 5 shows, most real opportunities are related to real uncertainties. In

seven cases (Cases 1, 7, 9, 11, 12, 15, and 16), the project managers identified project uncertainties and opportunities. For example, the unknown ownership of the project in Case 1 motivated the project team to proactively seek a new project owner. Their networking efforts with contacts in different government agencies resulted in the identification of a new owner that would bring the project to the attention of a larger audience. In Case 12, it was the tight technical specifications that led the project team to the decision to outsource a portion of the engineering work from the organization to a third party. This outsourcing decision also created an opportunity to lower overhead expenses, resulting in a 50% reduction in labor charges. In three cases (Cases 5, 8, and 13), it was senior management, not the project manager, who identified opportunities. For instance, in Case 5, a new regulatory requirement would have increased the project cost by $2 million for the needed compliance testing. The regulatory environment represents considerable

December 2012 I Project Management Journal I DOI: 10.1002/pmj

Case
Case 1 Case 2 Case 3

Perceived Uncertainty
Unknown project ownership No uncertainty External legal context External market context

Perceived Opportunity
Create multiplier Internal innovation No real opportunity

Stakeholders Who Identified Opportunities

Project manager Project manager Project manager

Case 5

Regulatory uncertainty Customer-induced changes

Technical innovation Project life cycle opportunity (new spare parts contract) Increased knowledge for future Outsourcing labor Extend fiber capacity due to its delays Process improvement among different management level No real opportunity

Executive team

Case 7 Case 8 Case 9

Root cause of the problem caused by mismanagement Change of ownership of parts Inability of the vendor Organizational change

Project manager Upper management Project manager

Case 10

Organizational changes

Upper management Project team

Case 11 Case 12 Case 13

Unknown complexity Tight technical specifications Tight technical specifications External legal context

Identified new opportunities of original solution Outsourcing

Project manager Project manager

Common build process

Senior management

Case 15

External market context Inexperienced outside designers Accepted change request Help desk function No real opportunity No real opportunity Project manager Project manager Project manager Senior management

Case 16 Case 17 Case 18

Technological failure caused by mismanagement Server performance False assumptions about capabilities of contractor Incompatibilities of management system

Case 19

Technical issue

Early market penetration

Project steering committee

Table 5: The perceived uncertainities and/or opportunities. uncertainty in many projects, and in this case, the executive team discovered the opportunity to develop a testing solution that could provide the framework for effective yet inexpensive testing on current and future projects. In Case 13, the standardized process was an opportunity to increase efficiency. It was driven by value maximization pursued by senior management as a means of standardizing testing rather than continuing to conduct expensive customized tests. In addition, the project steering committee rather than the project manager identified opportunities in Case 19. One exceptional case is Case 2, which demonstrates that an uncertainty was not perceived. However, the project managers identified and exploited an opportunity, which was the redesign of the concrete access platform to reduce the duration of the project. The driver for the opportunity was customer complaints, but this situation was not perceived as uncertainty. However, not all identified uncertainties led to opportunities, as some cases have shown in Table 5 (Cases 3, 10, 17, and 18). For example, in Case 10, the unexpected merger between two companies was a real uncertainty, but self-evident opportunity was pursued
65

December 2012 I Project Management Journal I DOI: 10.1002/pmj

PAPERS

Challenging Classic Project Management: Turning Project Uncertainities

by upper management and the project team. An unrecognized opportunity may be choosing the best location for their server from alternatives of those two similar projects taking advantage of the merger. The review of all the cases indicates that opportunities are always related to uncertainties; therefore, if a project manager correctly perceives uncertainties, there is a good possibility that an opportunity can be identified. Based on this discussion, we could draw two propositions for future investigations:
Proposition 1: Opportunity could be discovered or created from uncertainties in project settings.

Number of Cases
Schedule Stakeholder satisfaction Shareholder satisfaction Quality (performance) Financial returns Budget Outcome (specifications) Quality (grade) Nonfinancial benefits Other
Table 6: The value effects of identified opportunities.

Percentage
75% 75% 67% 67% 58% 42% 42% 33% 33% 33%

9 9 8 8 7 5 5 4 4 4

Proposition 2: Project managers who can perceive uncertainties have a higher likelihood to discover and explore opportunities.

The exploited opportunities cover a wide range of solutions, indicating that critical project decisions are not solely driven by technical considerations. The review shows that many opportunities are based on business-related considerations. This seems to be another challenge for project managers who are responsible for the technical execution and now face the challenge of identifying and solving issues that are related to the business side of projects. These decisions require a businessoriented mindset. This leads to a third proposition to be investigated in the future:
Proposition 3: Project managers with a business-oriented mindset are more likely to identify opportunities.

Relationships Between Opportunities and Project Value The remaining question is whether the identification and exploitation of projectrelated opportunities do indeed lead to an improved project value proposition. The decisions to exploit opportunities are not always obvious and often require
66

significant project changes. These changes require approval of key stakeholders, and this can be challenging because the outcomes of the changes are unknown. In reviewing the value effects of identified opportunities in Table 6, it is clear that the influence of opportunities is wide and deep. Significant performance aspects of the project such as schedule, budget, quality, financial returns, nonfinancial returns, stakeholder satisfaction, and shareholder satisfaction are all potential benefactors of the opportunity realized from uncertainty. In many cases, exploited opportunities had an impact on several performance criteria, and it was difficult for the interviewees to differentiate specific effects. For each of 12 projects where real opportunities were identified, at least two value criteria were simultaneously affected. More specifically, nearly 75% (see Table 6) of all exploited opportunities led to an increase of stakeholder satisfaction, often accompanied by schedule improvements. The affected stakeholders were mainly internal or external clients of the project. Shareholder (project owner) satisfaction and quality were also frequently improved. In addition, 58% of the identified opportunities experienced increased financial returns.

Overall, the cases demonstrate that the search and discovery of opportunities and their exploitation are very beneficial for the implementation of projects. The fourth hypothesis addresses this relationship:
Proposition 4: The exploitation of opportunities in project settings is beneficial for project value.

The value embedded in opportunities is particularly critical for the businessrelated criteria of the projects. The practical aspect of this research provides a means of identifying and exploiting lost value as a means of maximizing rather than merely optimizing the business value of a project.

Implications for Project Management Practice and Research

The results of the case analyses provide several implications for project practice and research. The lack of a clear distinction between risk and uncertainty in classic project management allows for misperceptions and consequently leads to forgone value opportunity at the project and enterprise levels. Project managers are familiar with risk management, which aims at minimizing variation from baseline. This is achieved

December 2012 I Project Management Journal I DOI: 10.1002/pmj

by analyzing sources of risks and mitigating for the identified risks. Project standards offer a large repertoire of tools supporting these important analytical activities. However, project management standards do not explicitly address the identification of uncertainties that define the vantage point for opportunities. Our case studies demonstrate that exploited opportunities can significantly improve the value proposition of a project. In contrast to risks, uncertainties cannot be avoided and need to be managed differently. The first step to recognize opportunities is the identification of potential sources of uncertainty. Our study identified six categories of uncertainty sources: (1) contextual turbulences, which include external legal issues, market dynamics, and regulatory change; (2) stakeholder uncertainty, such as customer or vendor inability to complete deliverables; (3) technological uncertainty; (4) organizational uncertainty, such as organizational changes or incompatibility of the management system; (5) project uncertainty, such as unknown project complexity; and (6) malpractice, defined as those situations with the absence or lack of adherence to good project management practices. Once a situation of uncertainty is identified, opportunities should be created or discovered leading to an increased value proposition for the project and the enterprise. The discovery and development of opportunities is not an obvious process. It requires creativity and the analysis of potential solutions beyond a projects constraints. This cannot be achieved by following the classic risk management technique of simply minimizing variation from the baseline. It is crucial to refocus the management perspective from goal adherence to value creation. In situations of uncertainty, the adherence to a baseline that was defined without the knowledge of uncertainty could lead to neglected opportunities, forsaken value opportunities, and consequently the potential for project failure. Our

study identified four classes of opportunities: (1) technology opportunity, such as technical innovation or alternative technologies; (2) implementation process opportunity, such as standard processes to be used across projects to improve efficiency; (3) project business opportunity, such as early market penetration or new market solution; and (4) future project business opportunity, which could create values beyond the current project, such as new contracts. These categories guide project managers to review a broader range of potential opportunities. After potential opportunities are identified, all possible means of exploitation are to be considered. The exploitation of project-related opportunities is not a straightforward process. It is related to exceptional and innovative decisions, because these often require significant changes of the value proposition of a project and are often possible only by involving the key stakeholders of a project. In these situations, project managers should take the role of champions and use their communication skills to bring these opportunities to the decision-making level. Our cases demonstrate that there can be several mechanisms of reward embedded in exploited project opportunities. All exploited opportunities had an impact on several project performance criteria, and the benefit for the stakeholders exceeded the initial value proposition. The results indicate a need for an alternative project management paradigm and demonstrate that value creation correlates with the recognition and exploitation of opportunities that occur during implementation. Subsequent to identifying opportunities, project managers need to communicate with key stakeholders to facilitate the discussion concerning alternatives and agree to a decision as to how to exploit the existing opportunities. Therefore, we suggest that it is mainly the project managers responsibility to identify opportunities, while it is also necessary for senior managers to

encourage and support the project managers authority to engage in value-enhancing opportunity identification and exploitation. The situations we identified as related to uncertainty and opportunities have one commonality: they can only be evaluated within a business context. When uncertainty is discovered at the project level, a project manager needs to be able to consider the potential opportunities and evaluate the alternatives that would create the business value from the uncertain environment. Interestingly, this study led to an unexpected insight about the perception of uncertainty and opportunity from the perspective of the project manager. Many interviewees had problems identifying uncertainties and they often confused the concept of risk with uncertainty. One conclusion is that selecting or hiring project managers with a business perspective may be an important factor not only for project success, but for maximizing a projects potential value to the enterprise. The education and training models for project managers may need to increase the business context in which these theories are taught. Teaching methodologies that rely solely on the tools and techniques of classic project management are not sufficient to enable project managers to identify situations of uncertainty, assess opportunity alternatives, and make consistent decisions that increase project and enterprise value. Education needs to broaden the technical and systems-related aspects of managing projects by constraint methods to encourage a business mindset enabling project managers to think beyond constraints and to create value beyond initial expectations. This study has several theoretical consequences for the existing classic project management paradigm, which overlooks the concept of opportunities while supporting the management of risk by requiring a stable baseline. It is therefore conceptually difficult to differentiate between risk and uncertainty.
67

December 2012 I Project Management Journal I DOI: 10.1002/pmj

PAPERS

Challenging Classic Project Management: Turning Project Uncertainities

Opportunity does not explicitly exist, since it is directly related to uncertainties in project settings (Propositions 1, 2). Opportunity is a dependent variable and is only as valuable as the ability of the project manager and the team to unleash the opportunity from the uncertainty. Our study contributes to the development of an alternative project management paradigm where project managers should be equipped with a business perspective. Our cases suggest that these project managers are more likely to identify opportunities than project managers who rely on the classical project management paradigm (Proposition 3). The connection between uncertainty and opportunity supports our efforts to integrate the fundamental theoretical arguments of entrepreneurship research into the discourse of project management research. This integration permits a better explanation of specific phenomena in project management. The importance of the right fit between the project manager and the type of project is underlined in our findings. Projects with higher levels of uncertainty should be managed by businessoriented project managers, who seem to be more apt to perceive real opportunities. The cases also demonstrate that the identification and the exploitation of opportunities really pay off (Proposition 4). Exploited opportunities have comparative effects and have positive influences on several value criteria. This does not mean that every opportunity will have positive effects. Finally, our study suggests that malpractice interferes with the concepts of risk and uncertainty management and have to be considered as a source for variation in data samples. In summary, this research offers some important insights for practitioners about how to manage project uncertainty during a projects implementation and contributes to the development of an alternative project management paradigm in the discourse of project management research.

Limitations and Outlook

This study makes several significant contributions to uncertainty management in project settings, but it also comes with limitations that should be addressed by future research. Case study research, in general, is not designed as a tool to test hypotheses. In this instance, an exploratory study was required to examine an underresearched but increasingly important phenomenon in project management practice and to raise more granular questions for future investigation, but our results should be addressed with larger data samples. Industry and project type are not highly diversified, with 60% of our cases representing new product development projects and IT projects, thereby limiting generalizability of our study. Project documents were not available to augment our data due to their sensitive and confidential nature. Furthermore, the data represent the single perspective of the project manager, which can be biased by oversight but also by specific perception predispositions. While we attempted to overcome this weakness by having the interviewees review the reports of their interviews it does not resolve the single-perspective issue. All of these methods have been recommended by others to ensure rigor in case study research (e.g., Dube & Par, 2003). Other stakeholders, like senior managers and clients, should be included in further analyses. Our findings provided some suggestions for further research. We have proposed four hypotheses related to the management of uncertainty. These hypotheses need to be empirically tested and investigated in different contexts. For the empirical purpose, a valid and reliable measurement model is needed for determining the business orientation of project managers mindsets. Moreover, additional research is called for to differentiate risk and uncertainty and integrate concepts of

opportunities and explicit management of change. The results of these case studies are encouraging and demonstrate that uncertainties bear the potential for opportunities that could significantly improve project value.

Acknowledgments
This research is sponsored by the Project Management Institute. The authors are grateful for the support of Dr. Carla Messikomer and the staff of PMI. Also we would like to thank David L. Keeney for his relentless efforts to conduct the interviews and all the interviewees who voluntarily participated in our study. I

References
Corbin, J., & Strauss, A. (2008). Basics of qualitative research: Techniques and procedures for developing grounded theory (3rd ed.). Thousand Oaks, CA: Sage. Dube, L., & Par, G. (2003). Rigor in information systems positivist case research: Current practices, trends, and recommendations. MIS Quarterly, 27(4), 597635. Eckhardt, J. T., & Shane, S. A. (2003). Opportunities and entrepreneurship. Journal of Management, 29, 339349. Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(4), 532550. Hubbard, D. (2007). How to measure anything: Finding the value of intangibles in business. Hoboken, NJ: Wiley. Jaafari, A. (2001). Management of risks, uncertainties and opportunities on projects: Time for a fundamental shift. International Journal of Project Management, 19, 89101. Kahkonen, K. (2001). Integration of risk and opportunity thinking in projects. Proceeding of the Fourth European Project Management Conference, PMI Europe 2001, London, England.

68

December 2012 I Project Management Journal I DOI: 10.1002/pmj

Kapsali, M. (2011). Systems thinking in innovation project management: A match that works. International Journal of Project Management, 29, 396407. Kirsch, L. J. (2004). Deploying common systems globally: The dynamics of control. Information Systems Research, 15(4), 374395. Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago, IL: University of Chicago Press. Knight, F. H. (1948). Risk, uncertainty and profit (7th ed.). London, England: London School of Economics and Political Science. Lechler, T. G., & Byrne, J. C. (2010). The mindset for creative project value. Newtown Square, PA: Project Management Institute. Loch, C. H., DeMeyer, A., & Pitch, M. T. (2006). Managing the unknown: A new approach to managing high uncertainty and risk in projects. Hoboken, NJ: Wiley. Schumpeter, J. A. (1934). The theory of economic development. Cambridge, MA: Harvard University Press. Siebert, A. (2005). The resiliency advantage. San Francisco, CA: BerrettKoelher.

Sydow, J., & Staber, U. (2002). The institutional embeddedness of project networks: The case of content production in German television. Regional Studies, 36, 215227. Thiry, M. (2004). How can the benefits of PM training programs be improved? International Journal of Project Management, 22(1), 1318. Ward, S., & Chapman, C. (2003). Transforming project risk management into project uncertainty management. International Journal of Project Management, 21, 97105. Yin, R. K. (2003). Case study research: Design and methods (3rd ed.). Thousand Oaks, CA: Sage.

He earned both his masters in industrial engineering and his PhD at Karlsruhe University.

Barbara H. Edington, MBA, PMP, DPS, is the director of the Center of Excellence in Project Management at St. Francis College and is an associate professor in the management and information technology department. Prior to her academic career, she spent over 20 years in the financial industry as a new product development manager working with firms including SEI and Goldman Sachs in both their New York and London offices. She holds a doctorate in professional studies in computing from Pace University, a master of business administration in finance from Temple University, and a bachelor of science in psychobiology from Albright College. Her area of research is contextual factors of project management.

Thomas G. Lechler, PhD, is associate professor at the Howe School of Technology Management, Stevens Institute of Technology, specializing in project management and entrepreneurship. Prior to coming to Stevens, he taught at Berlin University of Technology and at Karlsruhe and Dresden Universities. He has published three books and numerous articles and has won several awards for his research. His paper, Project Management Systems: Moving Project Management from an Operational to a Strategic Discipline, was honored with PMIs Project Management Journal Paper of the Year Award.

Ting Gao is a PhD candidate at the Howe School of Technology Management, Stevens Institute of Technology, and holds a bachelors degree in engineering management and a masters degree in technology management from Central University of Finance and Economics in China. She has coauthored several papers and one book in the field of project management. Her research area is focused on stakeholder management, entrepreneurship, risk, and uncertainty management in project settings. She is a member of the Project Management Institute.

December 2012 I Project Management Journal I DOI: 10.1002/pmj

69

Copyright of Project Management Journal is the property of John Wiley & Sons, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.