‘There are also unknown unknowns’: a resilience-informed approach for forecasting and monitoring management reserve in projects

Abstract

Available studies on project contingency planning predominantly focus on contingency reserves that account for known unknowns, neglecting considerable uncertainty associated with unknown unknowns. This study aimed to develop a decision-making model for forecasting and monitoring management reserve to mitigate the negative impact of unknown unknowns. To achieve this, it drew on observations from the resilience curves of a reference class of similar projects, which had already experienced disruptions, to uncover the likely disruption and recovery behaviour of the project. As part of the validation analysis, the results obtained from the proposed model were compared with the results yielded by a conventional method of estimating management reserve. The validation results revealed that the proposed model offers a better understanding of unknown unknowns by modelling the nonlinear performance of the project in the face of such events. This study is the first to develop an empirically based analytical model, enhancing the reliability of forecasting and monitoring management reserve in projects. Decision-makers and managers can use the proposed model as a unifying basis for decision-making in the context of unknown unknowns across project phases. Show more