Project Management

Donald Rumsfeld and Project Management

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Donald Rumsfeld and Project Management

By John Herman   PMP, CQE, MPM

Donald Rumsfeld graduated from Princeton University and was an active participant at high levels in both corporate and government organizations.   He was both the 13th (1975-77) and 21st (2001-06) Secretary of Defense of The United States.  Today’s focus is on a statement he made at a Department of Defense news briefing on February 12, 2002. 

There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.

This jumble of words actually has considerable worth during project planning.   The “known knowns” are our scope and constraints.  We plan for these aspects because they are known.   The “known unknowns” are assumptions and risks.  We know about these aspects, but we don’t know about their degree of truth (assumptions), or how likely they are to occur or their severity (risks).  The “known unknowns” ties well to a previous entry in this blog titled “Alexander’s Question”.

But what about the “unknown unknowns”?   Can we simply ignore what we don’t know?  The answer is, of course, no.  But how can we plan for what we don’t know?   These “unknown unknowns” factor into the contingency buffers for scope, budget, and schedule.  The experienced project manager incorporates budget and schedule contingency buffers (also known as management reserve) within the project to accommodate the unforeseen.

Rumsfeld’s quote, along with some other gems that he’s given us, show that planning and risk management have application even at the highest levels of corporations and governments.  In closing, here’s another Rumsfeld quote that correlates well to measuring success, but we’ll have to save the discussion of this quote for another day. 

“Congress, the press, and the bureaucracy too often focus on how much money or effort is spent, rather than whether the money or effort actually achieves the announced goal. “  - From "Rumsfeld's Rules", January 12, 1974

Posted on: January 07, 2016 11:53 AM | Permalink

Comments (7)

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Hi John,

You defined three categories: Known-Knowns, Known-Unknowns and Unknown-Unknowns.

From my experience:

- Known-Knows are tied with the Work Packages Cost Estimate
- Known-Unknowns are tied with the Contingency Reserve
- Unknown-Unknowns are tied with the Management Reserve

However, Management Reserve is not part of the Cost Baseline, yet it is part of the project budget and funding requirements while Contingency Reserve is.

Cost Baseline = Contingency Reserve + WP Cost Estimates
Project Budget = Cost Baseline + Management Reserve

Management Reserve will become part of the Cost Baseline only if used during the cycle of the project.

Are we on the same line ? The reason I am asking is because you mentioned the following:

"The experienced project manager incorporates budget and schedule contingency buffers (also known as management reserve)".

Appreciate your feedback.

Rami Kaibni

Thanks for Sharing. Worth reading.

Your contingency reserve is for your known unknowns. Your management reserve is for your unknown unknowns. The former is part of your project baselines; not the latter.

@Stephen: Yes exactly, this was my exact explanation above but I am not sure what John exactly meant by his sentence, he might have been referring to something else.

For both Rami and Stephane - the contingency buffer for known unknowns is more than money. It's built into the schedule as well. Thank you for providing the proper PMI terminology for the two sets of reserves. Which is, unfortunately, not the same as the company terminology.

Schedule buffers would definitely be part of my contingency reserve. If you assign a resource rate to your buffer, you can account for it as an amount of money.

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