Qualifying assumptions

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Whilst acknowledging that capturing ‘all’ information relevant to making a decision about implementing a business initiative is not possible there is a real issue that needs to be addressed with how assumptions are managed.

Often an assumption is accepted as being a fact. Its unqualified acceptance can result in significant and unmitigated risk to the initiative’s eventual success.

The scenario, for a hypothetical initiative, is that an assumption is made that, if executed, will result in a business increasing its customer base by 50%. In building a business case this increase is expected to translate, based on known customer behaviour, to an increased peak transaction load on whatever system is developed to host the initiative of say 10,000 transactions per hour.

With the assumption accepted, as is the transaction rate, with other perhaps known information and other assumptions some benefit of the initiative to the business could be established thus providing an indication of its feasibility.

To make a good decision however the assumption initially made should have been qualified.

By supporting the assumption with statements such as ‘based on market research it is expected that the customer base will increase by 30% plus or minus 20% with a confidence level of 30%’ can have a profound effect on decisions eventually made. The assumption, now qualified has a best case of achieving a 50% customer base increase but has a worst case of 10%.  The business case benefit, driving the decision, without having further quality information, must now be suspect.

The lesson here must be that before making a decision based on assumptions ensure that they are qualified.

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