Managing Project Uncertainty: The Delphi Method

Abstract

Management Decision making in uncertain environments is key to the successful delivery of oil and gas projects. By definition, however, uncertainty is ambiguous and unpredictable. Uncertainty does not necessarily imply risk; the two are separate concepts. Economist Frank Knight made a clear distinction between the two as far back as 1921. Risk can be measured and quantified and is well suited to the analytical techniques used in project risk management; uncertainty defies quantitative expression. Items with the quality of uncertainty often surface during risk-assessment exercises but tend to be categorized as “issues” and are neither captured nor addressed by traditional risk-management processes. Donald Rumsfeld’s infamous quote highlights the difficulty of articulating uncertainty. However, the statement is rooted in sound cognitive and sociological theory and makes an important point about the perils of taking our individual and shared perceptions for reality. The philosopher Slavoj Žižek (2006) suggests that there may also be a fourth category of “unknown knowns”—those things that we intentionally refuse to acknowledge due to, for example, the social stigma around dissent. While we may feel confident dealing with “known knowns” and “known unknowns,” how can we hope to discover the “unknown unknowns” and uncover the “unknown knowns”? These problems can be effectively addressed using a Delphi-based workshop methodology. The process presented in this article discusses how to work collaboratively to develop a common understanding of a project and achieve alignment on issues and uncertainties. This allows managers to gain a better understanding of the critical uncertainties running through the project and implement appropriate strategies. Delphi Methods Delphi is a structured communication technique that was developed as part of the United States’ response to global uncertainty during the Cold War. Since then, the process has been used across many different industries worldwide (Linstone and Turoff 2002). Delphi-based methods are able to draw out the tacit knowledge held by project members and assess it in a structured manner.