The Flaw of Averages in Project Management

New technologies and management practices offer a better approach to understanding and controlling project risk. Interactive simulation provides intuitive risk dashboards that can be used to detect and manage hidden risks, even for those with no statistical training. The distribution string (DIST) provides the needed standard for communicating project input and output uncertainties, so that experts in the organization can unambiguously share their knowledge of uncertainty in durations, costs, and other factors with managers at all levels.

The Flaw of Averages

How long will it take and how much will it cost?

There isn’t just one answer to each of these questions. Each question has several possible answers, each with its own probability of being correct. The answer is not one number—it’s a probability distribution. “I remember studying probability distributions in my statistics class,” you say, “and, as I recall, I preferred going to the dentist.” Don’t worry— revolutionary new technologies and business practices make working with distributions easy, intuitive, and compelling.

The common practice of reducing an uncertainty to a single best guess eliminates a lot of information, which leads to the flaw of averages, a set of systematic errors that occur when a single number, usually an average (…