Project Assumptions: Useful and Those Not So Much

At a project start, there are things you won’t know, so you have to make assumptions. While management considers whether the project business case is worthwhile, practical and reasonable assumptions can make the difference between a project launch and “a good idea, but.” Here are some ways to differentiate useful assumptions from the ones to avoid.

Useful

• A high probability of being valid. Accurate and easily verified project assumptions are very useful. Example: You assume that a specific contracted skill is available. A call to a trusted vendor can provide informal verification to confirm the accuracy of the assumption. That’s followed up with a formal request. The contract with the vendor later commits to the skill availability. 
• Enable initial costs to be estimated. Estimates are part of every initial go/no-go decision. Carefully craft assumptions that can support informed financial decisions.  Example: The assumption about a contracted skill should define the role so a vendor query would provide an approximate hourly or daily rate. This approximation would validate the assumption and support estimated costs.
• Limited in scope. Useful assumptions address a narrow aspect of a project, rather than a broad prediction of project outcome. Example: An assumption about cost for tooling to maintain a new manufacturing line is appropriate. An assumption of the entire cost of a project to build a new manufacturing line isn’t helpful. There are too many elements contributing to the total project cost, making it impossible to predict anything with confidence. 
• Supported by project histories. Useful assumptions are based on facts. If the time to produce a project deliverable has been consistent in the past, it is low risk to assume that timeframe for a new project. Example: Even when building an entirely new manufacturing line, preparing the floor and power drops for that line might be like past buildouts. So, you can assume the buildout timeframe in the preliminary plans for a new line. If an assumption isn’t supported by history, it’s time to document the risk and use wider ranges for estimates.
• Stakeholders understand and support the assumption. Stakeholders have to understand and support assumptions when participating in project go/no-go decisions. Additionally, with assumptions related to stakeholder performance, it enables them to help make the assumption a reality. Example: You might assume a key stakeholder’s availability to support project completion within a constrained timeframe. If stakeholders are aware and understand that assumption, they can strive to ensure that the skilled resource is available

Not useful

• Speculation that can’t be proven without completing the project. Assumptions regarding items such as customer acceptance of a new product, made without surveys or other market research, are pure speculation and carry high risk. You can determine market acceptance only by completing the project and releasing its product. Example: You assume that new electric toenail clippers will be in high-demand without any customer outreach, and launch the project anyway. Note: Innovative product development often proceeds without surveys, because sharing a novel idea with the marketplace early would hurt competitive advantage. These projects are always high-risk, but when the project’s product is broadly accepted (like the iPhone), the rewards can be significant.
• Opinions are the basis of an assumption. Opinions are often based on gut feelings, not on fact, but they can be expressed with passion. Question proposed assumptions and evaluate whether the accompanying passion hides a lack of factual basis.
• Based on old or incorrect data. Assumptions based on incomplete or outdated facts aren’t useful. Confirm the facts behind a proposed project assumption! Example: Stakeholders propose that new robotics will increase manufacturing line output by 300%, based on their experience, and want that applied to a new project they proposed. However, that productivity increase is achieved only when one raw material is used, and the new manufacturing line in the current project will require three raw materials. 
• Require “ideal conditions” to be accurate. Overly optimistic assumptions can mislead stakeholders. Example: There’s an assumption that construction completion can be achieved within 4 months. However, this can be valid only if there are no weather delays, all materials are delivered on time without defects, and none of the construction crew members fall ill.

Review some assumptions from a current or recent project. Find any that meet the not useful criteria. Think about how you might turn them into useful ones.

 

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