How What-if Scenario Analysis Can Advance Project Management

Use what-if scenario analysis to evaluate and compare multiple paths forward in an unbiased way to make better decisions.
Shannon Toe

Things don't always go to plan in project management. You can spend as long as you like coming up with a fantastic, achievable and realistic plan, but variables will just about always require you to do things slightly differently than you intended.

When you're not prepared, these scenarios can have a big impact on your project, both in terms of cost and time. However, by identifying likely variables in advance, you can make informed decisions about how to minimize the chance of them happening and mitigate their impact.

Defining what-if scenario analysis

What if scenario analysis allows project managers to consider variables in their project portfolio, and examine how new projects or different scenarios of project plans might impact the big picture: capacity, workloads, and utilization of project teams. Rather than banking on everything running as it should, the goal of what if analysis is to help business decision makers understand the implications of change rather than operate in the dark.

By getting an understanding of these alternate possibilities, it means you can come up with contingencies and plans to reduce the impact they have on the overall outcome.

What if analyses can be performed at multiple times throughout a single project or a project portfolio as a whole. It's a core part of initial planning before work is underway, and it can also take place at key milestones. This allows project managers to reconsider earlier estimates and update their analysis if anything has deviated from the original plan.

What are what-if scenarios?

What if analysis can range from evaluating what may happen if a task takes longer than expected, through to complex scenarios involving a range of factors.

Common what if scenarios include:

  • What if important resources are unavailable when we need them, or when we've planned on having them?
  • What if a new project comes in?
  • What if we hire new people?
  • What if we sub-contract out certain project tasks?
  • What if certain phases or tasks take longer than we've allowed for in our timeline?
  • If the current rate of progress continues, what is the effect on the completion date?
  • What if we accelerate the work, or work longer hours?
  • What if the cost of a task ends up being higher than we've budgeted for?

In answering these types of questions, project managers may adjust timelines or budgets, or come up with contingency plans to eliminate or minimize the impact of such variables.

Features of a good scenario analysis

It takes a degree of creativity and imagination to explore what if scenarios. Aspects of a good scenario analysis include:

  • Best and worst case scenarios. Consider a range of potential outcomes that may stem from a particular scenario, not just the one that seems most likely.
  • Stakeholder engagement. Project managers should involve team members and experts to get an informed understanding of the likelihood of scenarios occurring and the impact they may have. There may be previous examples of a what if scenario having played out in the past, which can be extremely useful to reference in a scenario summary report.
  • Objectivity. It's important to remove any bias or preference when examining what if scenarios. Rather than hoping a scenario doesn't eventuate or downplaying the impact it may have, it pays to follow an evidence-based approach and be realistic in your evaluation.

Key benefits of what-if scenario analysis

1. Recognizing likely variables

By considering what if scenarios, a project manager gets a better idea of ways in which a project may not go to plan. It's highly unlikely that a project will roll out exactly as intended, and it helps to understand the most likely ways things may go wrong.

2. Making better informed decisions

Without prior planning, if a what if scenario does end up eventuating then it can result in costly delays to progress while project management considers how to deal with it. This causes stress and may lead to poor decision making.

However, with careful analysis that isn't in the heat of the moment, project managers can outline well informed courses of action that best deliver on project objectives.

3. Mitigating variables

By planning for a what if scenario in advance, a project manager can take steps to either reduce or eliminate the likelihood of it happening, or minimize its impact on the project outcome.

Ironically, scenario planning can reduce the likelihood of such situations playing out, and improve the chances of a project going to plan.

4. Better project predictability

By their nature, project variables create uncertainty and unpredictability. However, by speculating and identifying possible deviations from the project plan in advance, things become more predictable. Variables can be considered in project planning to make outcomes more predictable also.

For example, you may be able to communicate the likely impact of a certain scenario in advance. If that scenario ends up eventuating, stakeholders already understand the impact it will have, and can predict the outcome.

5. Advanced analysis of simple and complex factors

Because it deals with hypothetical scenarios, what if analysis has infinite scope. A scenario manager can consider variations to primary elements of a project, or much wider, more complex scenarios.

The depth of what if analysis you go into can be adjusted based on the complexity or significance of the project.

6. Improved budgeting

Scenario analysis allows project managers to determine the impact of particular variables and understand how they may impact the budget. With this knowledge in mind, they can make better budgeting decisions in other areas if necessary.

For example, if a project manager considers there's a fair chance of a variable occurring that would cost a large amount to rectify, they may opt to reduce unnecessary spending elsewhere in order to be more able to meet this cost if it's needed.

Ultimately, what if scenario analysis is an extremely beneficial process in project management because it leads to more effective strategic planning. By understanding variables and their impacts, project managers can deliver on project objectives, even when things don't run exactly to plan.

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