Cone of Uncertainty

Its a concept on how uncertainty varies through time. The evolution of a product's knowledge over time.

The earlier you are in the projects cycle, the less you know about it, thus the higher the variability.

$E = Estimate\ in\ days$

$V = Variablity\ in\ Estimates\ or\ Degree\ of\ Error\ (0.5x, 1.5x, 2x, 4x...)$

The more uncertainty involved in the estimate the higher the variability, and it can be used for adjusting our expectations regarding an $Estimate$.

You work with two scenarios:

• Worst-case: $E \times V$

• Best-case: $E\ /\ V$

Usually variability on software projects are off by a factor of 4, because of VUCA. The higher the variability, the higher the need to be agile.

The more uncertain, complex, ambiguous is the business and technological environment the higher the variability factor will be.

VUCA

Sets of problems that projects have, and that needs to be dealt with.

• V (Volatility)

  • The level of changes in the environment. The more changes the higher the volatility.

• U (Uncertainty)

  • Is about how much we know about the situation. The more volatile the environment, ambiguous and complex the problem or solution, the higher the uncertainty. If you are not 100% certain, you are dealing with uncertainty.

• C (Complexity)

  • The level of inter connectivity and interdependence of multiple components in the system. The more business rules and technological dependencies the more complex.

• A (Ambiguity)

  • Is about the level at which we understand the meaning of something. Like understand what the user wants given what he described. Environments with high ambiguity, we need to assume an answer so that we can move forward despite not being sure about it.

Agility is a way of dealing with VUCA.

• It has been shown that adopting short delivery cycles can reduce the variability estimates from 300% to 60%.