Yesterday, Hurricane Matthew swept passed my home in Boca Raton, Florida. For the U.S., it’s caused some property damage and a few people died because 911 personnel couldn’t get to those few that had life-endangering emergencies. In Haiti, the storm wreaked havoc on that poor nation, and hundreds have died. ;'(
Weather forecasters make forecasts. They make predictions, too, but we don’t call it weather predicting, we call it weather forecasting. What’s the difference?
A prediction is a single outcome of what a future uncertainty looks like. It ignores the possible many other outcomes, some of which are probable, some of which are improbable.
Forecasting, however, recognizes that there are many possible, future outcomes for a given uncertainty. Some of those outcomes are improbable, some are more probable.
For hurricanes, weather forecasters use the familiar “cone of uncertainty” which looks like a funnel. The narrow part of the funnel is the expected path of the eye of the hurricane that’s nearest to where the eye of the hurricane currently is. The wide part of the cone or funnel is three of five days away. Anyone who is familiar with agile estimation is likely familiar with the cone of uncertainty because it works the same way. Agile teams can pretty accurately predict what their velocity will be in the next sprint, but it’s hard to estimate what they’ll get done three months from now.
Project managers ought to become skilled at creating project forecasts instead of project predictions. We may still need to create predictions for schedule and budget for our project sponsors who authorize and fund projects, but the better way to align expectations among all key stakeholders and improve executive decision-making is to make forecasts — not predictions.
If we have to offer predictions — a single budget number for a project, or a single date on which a project will be complete — we ought to at least offer that budget number or calendar date with a confidence level: “With 90% certainty, the project will cost $800,000 or less, and, with 90% confidence, we will finish the project by March 31.”
When we share predictions with calculated confidence levels, we implicitly allow that the prediction may not come to pass (and how likely is that risk). If a project sponsor demands greater assurance that the project will be done, we can offer other, more confident predictions (which naturally cost more money and take more time). If a project sponsor wants to shrink the budget and/or schedule, we can do that too — and then share the risk that the budget and schedule will fail using easily understood probabilities.