Projects as Systems

This chapter paves way for a nonlinear Monte Carlo methodology. The primary goal is to come up with qualitative assessments of risk interactions pertaining to complex projects. Four project complexity types are introduced—simple, complicated, complex and chaotic. Three primary interacting project subsystems are distinguished—external environment subsystem (EES) where a project should be delivered, project structure subsystem (PSS) defining what should be delivered and project delivery subsystem (PDS) determining how it should be delivered. Mismatches among these subsystems are treated as uncertainties. A primary attention is paid to the PSS–PDS mismatches recognized as project risks that could interact. Three types of risk interactions are distinguished—internal risk amplifications, knock-on interactions and compounding. Causal loop and bowtie diagrams are built for these types of risk interactions allowing to discover that various system issues stand behind them. Hence, overall maturity of a project system depends on the presence of the system issues. The higher the number of system issues, the higher the mismatches, the higher the uncertainties in the project system, the lower its maturity. This allows to assess risk interactions qualitatively first and quantitatively second (in the next chapter) giving rise to nonlinear Monte Carlo methodology.