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Project Manager : Project Manager June July 2012
O NE OF THE MOST elegant expressions used in business today is a ‘black swan event’. Coined by US scholar Nassim Nicholas Taleb in his 2007 book The Black Swan, the term means an event that is totally unexpected and out of the blue. The black swan is a reference to the fact that until white settlers landed in Western Australia and discovered black swans, it was assumed all swans were white. Therefore, it is a metaphor that reminds managers to expect the unexpected and that there are always unknowns in a project. Black swan events are a project manager ’s worst nightmare – an event that rears up and slaps the project in the face, rendering obsolete the careful planning and preparation that has gone into the project and often derailing the initiative altogether. Are they becoming more common? There has certainly been a spate of natural disasters that could be considered black swan events, including the destructive Hurricane Katrina, which devastated New Orleans and surrounding areas in the US in 2005, the 2010 Haiti earthquake, the 2011 Japanese earthquake and tsunami, as well as manmade events such as the terrorist attacks of 11 September, 2001 and the recent global financial crisis. But despite all these disasters, are black swan events really becoming more prevalent? The United Nations 2011 Global Assessment Report on Disaster Risk Reduction suggests that at least when it comes to cyclones and floods, the risk of being killed by one is lower today than it was 20 years ago “except for those who live in a country with low GDP and weak governance”. The report does suggest, however, that new risks are emerging through “the complexity and interdependency of the technological systems on which modern societies depend.” It cites the communication breakdown that happened following the Japanese earthquake and tsunami as an example. What this means is that should similar tragedies occur in the future, they could have commensurate effects on the people and areas they touch. what’s the impact? Deloitte Consulting director Colin Earp says the impact of black swan events has become more significant given the huge number of major projects currently in train in Australia – according to Deloitte’s figures, there are more than 158 infrastructure projects underway in Australia, each costing $1 billion or more, with a total value of $768 billion. “Individual projects, and the national portfolio, have become bigger and more complex , so the impact of any given event is greater,” he argues. Earp also says the huge number of projects being built has led to a scarcity of resources available to predict and manage r isk in projects, which is also increasing the likelihood of black swan events impacting and even derailing these initiatives. Can you prepare for a black swan? Can project managers plan for black swan events – and what is the correct response when a black swan event occurs? Ernst & Young’s head of advisory Neil Plumridge says that there is often confusion about what a black swan event actually is. ( COvER STORy • By AlexAndrA CAin BLACK swAN EVENTs CAN DERAIL pROJECTs, YET ThEY ARE ALmOsT ImpOssIBLE TO pREDICT. sO whAT CAN pROJECT mANAgERs DO TO REDUCE ThE ImpACT OF BLACK swAN EVENTs ON ThEIR pROJECT? www.aipm.com.au Project Manager 19
Project Manager April May 2012
Project Manager Aug Sept 2012