Understanding Tolerance and Threshold in Project Management: Key Concepts Explained (Full Transcript)

Speaker 1: Who would tell? Anybody has an understanding? What's tolerance and threshold? Not like not really with respect to schedule. In general, what is tolerance and threshold? Threshold

Speaker 2: is like a benchmark, like this is the limit, we should not cross it, something like this.

Speaker 3: Yeah, kind of, kind of. Anyone else? Tolerance is the maximum limit, which is allowable and threshold is the maximum limit, which is you can say the allowable limit. Yes, yes. So

Speaker 1: see, let's talk about it with respect to schedule. But by the way, this concept of tolerance and threshold applies in all major planning areas. Schedule, resource, yes or no? Yes, in resources, cost for sure, quality for sure. So I am discussing it over here and wherever the concept of threshold comes in later on, we are just going to skip it because it's the same everything. So in a very layman terminology, threshold and tolerance is the acceptable deviation from your agreed upon plan, which is acceptable, which is acceptable for everyone. So for instance, if you say that a project is planned, is baselined for say 30 days, 30 working days. And on top of that, you say that the acceptable deviation is plus 10% and minus 10, minus 10 to plus 10% it's okay. What does that mean? It means that after 30 days, if you are extending it to that 10% of 30 days, which is I think three days, right, three more days, then which means 33 days. And lower than that it is 27 days. So if the project is ending any time between 27 to 33 days, this is the acceptable, this is the tolerance level. Within this range, it is tolerance. If you are anywhere, if the team is standing anywhere from the minus 10% to the plus 10%, it's okay for the management, for the customers, for the senior management, and so forth. Because this is agreed upon deviation. In the practical world, nothing is ideal. Although you baseline plans, you plan out everything, but things may change for a variety of reasons. For some reasons are in your control, and because of poor management, it didn't work out. And some reasons are just beyond your control. And those were not known as well at the time of planning. So in alignment with your customers, your other stakeholders, you should be agreeing on an acceptable level, which is exactly the tolerance. Tolerance is usually in percentage. So it can be plus, it can be minus usually in the plus or in the overrun part is there. Not always negative is there because maybe someone would think that how come early delivery is going to be the practical case. It happens. It's not always overrun, which is a question. Underrun is also a question at times. For instance, if a project was planned for 30 days, and you were able to complete it in, for instance, 15 days time, half of the time than planned can be a question. It can lift many pros as well that how come you were able to finish in half of that time? Did you miss any important milestone? Did you miss anything major? Did you or why did you overestimate it? Why did you place a stretch timeline? I mean, there can be many questions in case of under delivery as well. So not really under delivery, but ahead of time delivery. So for the same reason, the threshold or the tolerance on the lower side is also there in some of the projects wherever it applies. This, this edge of your tolerance level, the, the bare minimum, lowest side and the bare minimum upper side is actually threshold. This is such. So in our case, reaching 33 days or delivering earlier than 27 days, both of that is a problem. So both of that would place you in danger. So if you are here, it is a danger zone. If you are here, it is a danger. Right. Breaching is a problem. And this is going to put you in red zone or dangers. If you are over here, or maybe below than that, which is agreed upon, this is the green zone. Yeah. Like I would say this way, anything which is below this is green. Like over here, any day with any delivery, which is, which is within this range is safe. Right. It's, it's safe or it's acceptable. So this is how we see it. The range that we are defining for positive, negative or both of whatever applies is a tolerance. The maximum point of the positive and negative range is your threshold. Breaching of which is going to be a trouble for the project. Or going to put you in the red zone or going to put your project in the red zone.