Sunday, March 20, 2011

John Nash's theory applied to Project Management

There is an unexplored area related with Project Management that could be seen from the perspective of John Nash's theory. Any Project Manager with any experience knows how difficult it is to deal with the stakeholders of a project. This knowledge area is commonly named "Stakeholders Management". I don't have statistics about it but I'm pretty sure that the behavior of stakeholders explains the failure of a big number of projects. John Nash has told us why this happens and how we can develop a model to predict it.

First of all, we need to understand that a project is a conflict. Period. More than defining a project as something that can have a conflict, we can see a project as a conflict by itself. Let's remember that a conflict could be defined as a situation where two or more persons, or groups of persons, have interests perceived like opposites. The majority of projects are just like this. It starts at the moment when somebody pays and somebody receives payment. Who doesn't want a bigger payment?. Who doesn't want a bigger scope?. That's all, a project is a conflict.

A conflict is named "a game" for mathematicians. Nash's Equilibrium of a game is an agreement that nobody can break discretionally without losing. That means, if somebody wants to break the deal and breaks it unilaterally, he/she will risk earning less than he/she would earn without breaking the deal (See the Prisoner's Dilemma http://en.wikipedia.org/wiki/Prisoner's_dilemma). Nash said that every finite game has at least one Nash's Equilibrium.

Well, I have the intuition to say, and I often do, that the triple restriction (scope, cost, time) is a Nash's Equilibrium of a game formed by the relationship of the stakeholders of a project. Many times the failure of a project starts with the unilateral decision of a stakeholder trying to take more than he can without breaking the "deal". As a result, it is common that the group or society obtain less than they could obtain in Nash's Equilibrium. If a mathematician reads this, please help me develop the model to prove this and increase the probability of success in many future projects.  

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