At my 2016 PMI Global Congress presentation next week, I’ll be hinting at the differences between project predicting and project forecasting.
What is a prediction? And what is a forecast?
A prediction is a projection about the future (that’s true of a forecast, too). A prediction offers a single outcome for the future, which is unlike a forecast. I can predict that the Miami Dolphins, the South Florida hometown favorite football team, will fail to secure a playoff spot by the end of the NFL season. Again. That is a single outcome (of course, there are only two outcomes possible — either they will, or they won’t).
When the Miami Dolphins play their next game on Sunday, at home, against the Cleveland Browns. Both teams are 0-2. One website predicts that the Dolphins will win, 12.6 to 28. I don’t bet, but predicting any team to score a fractional point just sounds wrong to me.
But in this case, is it possible that both teams will score something other than their predicted point total? Of course. There are many other, possible outcomes, some of which are plausible and probable (like, the Dolphins scoring only 21 points, or maybe 31 points), and some are plausible but improbable (like scoring 0 points, or 60 points).
We estimate our projects like we’re predicting football scores for the upcoming weekend game. We create single-value estimates of the future. We offer a single, predicted outcome even though there are many other, possible outcomes.
Worse, no one really knows, exactly, what the predicted outcome represents. If I say the project will finish in 30 weeks, is that a most likely outcome? An optimistic outcome? A pessimistic outcome? An average outcome? What does 30 weeks represent?
And whatever it represents, do all the stakeholders (my project sponsor in particular) know what 30 weeks represents?
If I estimate a most likely outcome of 30 weeks, what’s the likelihood that it will be 31 weeks? Or 35 weeks? Or 40 weeks?
And what happens if I know that the 30 weeks estimate represents a most likely outcome (which has about a 50% likelihood of success), but my project sponsor thinks that it’s a highly confident estimate representing 95% confidence? The answer is, I’m misaligned with my sponsor and the project is at-risk of not delivering on-time.
Project predictions, without included reliability, are dangerous. And yet, virtually every project schedule is created with predicted work efforts or activity duration. And virtually every project is budgeted with a single-value, projected cost for the entire project, even though the actual project cost may have many possible outcomes.
As PMs, we have to know how to effectively create project predictions when we have to do that, but we can also offer a better way of projecting future project outcomes: we can forecast them.