VUCA

Revision as of 15:22, 14 February 2022

Abstract

VUCA stands for volatility, uncertainty, complexity and ambiguity. Each can be considered a characteristic which can be used to help describe and understand the environment in which projects take place. Understanding the context of project is crucial in an ever-changing world where it is impossible to separate a project from the social environment in which it takes place. These four parameters will be explained in depth along with how to manage the challenges, these different parameters pose in an environment in which they are present. This can help project managers understand the context of their project and the most appropriate approach to navigate in and manage the project risks, as an addition to the traditional way of assessing project risk by primarily using likelihood and impact. The VUCA questionnaire will be presented as a tool help identify how the different parameters score for a given project, which will help project managers understand the environment their project and its associated risks are taking place. Finally, VUCA as a concept and tool will be discussed critically with its limitations and opportunities summarized.

VUCA and the traditional risk assessment

How traditional risk assessment is conducted and how VUCA can be used in addition to this.

Volatility

An environment that is volatile is one that often experiences rapid change of circumstances, which be both be predictable and unpredictable circumstances. The given environment does not have to be particularity complex or lack critical information for the project, as volatility refers to environments that have clear information available and the context is clear, but the environment changes and the outcome might not always be predictable. (What difference a word makes)

Example

Conducting a project dependent on a specific resource with rapid changes in its supply/availability can create a volatile environment for a project dependent on a steady supply of that specific resource.

Dealing with volatility

To deal with an environment that is volatile requires to prepare for the potential changes. This can be through hedging the volatile risk to multiple sources or stockpiling on the resources that is could have volatile supply or price fluctuations.

Uncertainty

Uncertainty characterizes environments where the cause of an event is understood, but it is unknown when and which implications it will have for the project, if any at all. Parameters that can potentially increase the negative effects of volatility in project, according to XXX, is:

-Unprecise information on resource needs and their availability

X-Complex project plan

-Lack of time and resource buffers in the project plan

X-Uncertain partner collaboration and agreements

-Poorly defined milestones and deliverables

Example

Dealing with uncertainty

Gathering information is one of the core tasks in dealing with uncertainty.

Another response to situations with deep uncertainty is Robust Decision Making. If it is infeasible to collect sufficient data to predict the outcome accurately or the

Complexity

Ambiguity

Application - VUCA meter questionnaire

Presentation of the VUCA matrix and questionaire and how it can help to identify the nature of the environment of a given project.

Bibliography

Key references identified for this wiki article:

Szpitter, A., & Sadkowska, J. (2016). Using VUCA matrix for he assessment of project environment risk. Zarzadzanie i Finanse, 401-413.

Fridgeirsson, T. V., Ingason, H. T., Björnsdottir, S. H., & Gunnarsdottir, A. Y. (2021). Can the “VUCA Meter” Augment the Traditional Project Risk. . Sustainability 2, 1-13.

Çiçeklioğlu, H. (2020). VUCA Concept and leadership. I G. Mert, Management & Strategy (s. 229-244). Istanbul: Artikel Yayincilik.