You've gone through the work of collecting credible estimates, building and finally running your simulation. You've got a range of possible outcomes, now what?

The Goal: Acceptance

At this point, you want to make sure that stakeholders accept the project or budget as simulated and everyone is aligned to the possible outcomes. It may mean setting a target, either a dollar figure for a budget or a date for a project, but that isn't necessary.

This means having some important conversations about Risk and Assumptions.

Talking About Risk

Generally, it is impossible or impractical to aim for 100% chance of success - the levels for the worst case in all but the simplest of simulations far exceeds what most organizations would accept. Not planning for the worst case means tolerating some amount of risk.

Generally there are a variety of approaches to dealing with risk - transferring (or insuring), mitigating (reducing or eliminating the effect), avoiding (reducing the likelihood) or accepting (hoping it doesn't happen). With simulations, there is often another tool - additional research.

We've written before about the difference types of risk - knowable (epistemic) and unknowable (aleatoric). If some of the uncertainty comes from a lack of knowledge, you could decide to take the time or spend the money to reduce uncertainty, reducing the 'knowable' risk.

Even once all levers have been pulled, you're sure to end up accepting a certain amount of risk - whether that is 5% or 50% is up to your organization's risk tolerance. It is important that, as a manager, you don't unilaterally take on that risk.

Conversations About Assumptions

A nice simulation gives the impression that everything is known, but of course there are always assumptions that should be evaluated:

• Good Estimates - If the individual item estimates are bad, the end result, no matter how pretty, won't be accurate.
• Independence - An underlying assumption of DartCannon is that all items are independent, while in many situations all items will trend high or low.
• Completeness - Are any tasks or line items missing? Are there unknowns that could turn bad?

Avoiding Traps

While the goal is to get alignment around risk tolerance, there are a number of directions that the conversation can go off the rails.

• Focus on extremes - The extremes are typically so infinitesimally likely, that spending time on the worst and best cases is unhelpful.
• Discuss individual estimates - Trying to tweak parameters to get a desirable outcome is unlikely to change the overall picture and is second-guessing the work done creating the simulation.
• Placing burden of risk on the manager - There is a lot to unpack here and we're going to write more on this in the future, but DartCannon simulations are about uncertainty which, without resources, cannot be influenced.

Takeaway

Having productive conversations about risk tolerance is largely why DartCannon exists - don't let your work end when your simulation is complete.

Photo by Jakob Owens on Unsplash