It is not rare that we misinterpret terms which definitions are similar or applied differently in different context or areas of work. One example in the project management area is the common confusion between risk, issue and assumption.
The PMDPro Guide defines risk as the potential effect of uncertainty on project objectives. There are two key aspects of risks: probability (what is the odds of the event to occur?) and impact (how “large” is the change in the project?).
Assumptions are hypotheses about necessary conditions, both internal and external, identified in a design to ensure that the presumed cause-effect relationships function as expected and that planned activities will produce expected results. In other words, assumption is an event, condition or fact that we need to happen or maintain in order to assure the project success.
Finally, issue is a problem – something that is happening now. Issues can be either something that was no predicted or a risk that has now occurred. It can take the form of an unresolved decision, situation or problem that will significantly impact the project.
We could relate these terms with the following simple expression, that would help their comprehension:
- Risk: ‘what if?‘
- Assumption: ‘We need that it happens/maintain‘.
- Issue: ‘Oh, damn!‘.
Okay. If you have predicted the issue and treated it as a risk, you would have a response plan, and the expression would be: ‘I told you! Let´s treat it‘.
Let´s use a simple task to exemplify the difference between these terms. The task is “going to work”, which most people do every day.
- Activity: Go to work by bus
- Indicator: To reach my work station by 8 a.m. every day
- Means of verification: Log (punch card)
An example of assumption would be that public transportation is running regularly, with no delays in my bus line. There is nothing I can do to assure that buses are on time.
Wondering about risks, it possible to identify several situations that can happen:
- Roads might be under maintenance or blocked and the bus takes a longer way
- Traffic jams may occur delaying the bus time
- An accident might happen in the road and block it or creates a traffic jam
The response for these risks would be taken an earlier bus. That would be treating the risk before it even happens. However, I might arrive at my work too early… so, there is another risk as result of that strategy: to arrive too early. In that case, I will always carry a book with me, so I can use the free time before clocking in to read a few pages.
Let´s suppose that a problem happens. Bus drivers start a strike for better work conditions. Unfortunately, I have not predicted this issue and, therefore, no response plan is in place. In order to solve the problem, I call my boss and ask him/her to take a taxi, which cost my company will reimburse (I hope so… because I don´t have enough money in my wallet).
Now that I learned that strikes might happen, I can treat it as a risk and put a response plan in place. I will bring enough money with me for taxi in case of another strike, and I will have an authorization from my boss in advance to take a taxi and receive the proper reimbursement.
Even though risk, assumption and issue have different definitions, they are deeply connected. An assumption might have a response plan if it doesn´t happen or change, a risk will become an issue at the moment it happens, and an (unpredicted) issue must be included in the risk response plan once we identify it (and there is a chance that it will happen again).
Just excellent article! Very helpful! Explicitly clear!