2.4.2.2P Assumptions and Risks

(2.4.2.2P.P1)

The quick definition for an assumption is that it is a “statement believed to be true”. In other words, you are not 100% sure if it is a fact, but you believe it to be true for the purposes of planning your project.

Projects need assumptions. You cannot delay a project while you try to be 100% certain of all aspects. In fact, it is not possible to be 100% sure of every aspect of a project. In some cases you need to “assume” that things will turn out as you expect, and continue planning based on those assumptions. 

Another way to look at assumptions is their relationship with risks. Assumptions are very much related to risk, and in fact are simply low-level risks. They both start with the same premise. They are both future events or conditions that will impact your project. In both cases, there is a probability of occurrence and an impact to your project. The difference between an assumption and risk has to do with whether the combination of probability and impact is acceptable to you or not.

Let's take an example of a common statement that is included in many Project Charters – that “the resources needed for this project will be available when needed.” What kind of a statement is this? Most people would say it is an assumption. After all, when a project starts, you always assume you will get the resources you need.

However, is it really an assumption? Can you imagine starting a project where the people and equipment were not available and there was a realistic possibility that they would not be ready when you need them - perhaps because another project needed to finish first? It is not too difficult to imagine that scenario. In that case, the same statement would definitely be a risk - not an assumption.

The key point is that the same statement might be an assumption or a risk depending on the circumstances of your particular project. The difference between an assumption and risk is whether the combination of probability and impact are acceptable to you or not. If the event is negative and the combination of probability and impact are not acceptable to you (that is, the combination is too high), it can be stated as a risk. If the event is negative and the combination of probability and risk are acceptable, it can be an assumption.

One way to identify important assumptions is to perform a risk assessment (2.4.2T Inherent Risk Factors) and look at all the low-risk items. Most of these low risks are not worth mentioning, but some will have significant implications if events do not turn out as you think. These are the ones that you can document as assumptions.

There are two key characteristics of risks and assumptions. First, there must be some uncertainty to the event. If there is 100% chance of an event occurring, it is simply a fact. If there is a 0% chance of the event occurring, it is fiction. Neither are risks or assumptions.

Second, assumptions and risks are both outside the total control of the project team. If the event is within the control of the project team it is neither an assumption nor a risk. It should simply be managed as a part of your schedule.

Review the following examples for more clarity on assumptions and risks.

Statement

Assumption, Risk or Other?

We will have strong support for this initiative from our executive sponsor.

Can't tell if it a risk or an assumption. Depending on the project, there could be a high degree of risk in this statement (risk) or very little (assumption).

The production servers will be installed by the vendor before we are ready for integration testing.

Can't tell if it a risk or an assumption. Depending on the project, there could be a high degree of risk in this statement (risk) or very little (assumption).

The concrete floor is 12 inches deep.

This statement is a fact or a requirement, and not a risk or assumption. It describes a deliverable.

We will complete requirements before we begin design work.

This is part of the project approach or schedule. It is not a risk or assumption because it is within the control of the project team.

Our vendors will be ready to interface with our application by October 1

Can't tell if it a risk or an assumption. Depending on the project, there could be a high degree of risk in this statement (risk) or very little (assumption).

We must go to Pluto to get the supply of meteor fragments that this project requires.

This is not a risk or assumption because there is no probability involved. It is a fiction (0% true).

The car must be able to withstand the force of a collision at 40 miles per hour.

This statement is a requirement, and not a risk or assumption. It describes a deliverable.

It is 60 miles from one project team location to the other.

This is not a risk or assumption because there is no probability involved. It is a fact (100% true). (If it were not true it would be a fiction (0% true), but it would still not be an assumption or risk statement.)