To enable contextual understanding, project managers should consider the following caveats.
A truly objective contextual understanding does not and cannot exist. Project managers are as much captured by their circumstances as everyone else. Being the project manager places you (theoretically) at a "higher" position than many team members , but that does not guarantee objectivity. To deal with this challenge, project managers must consciously understand how they frame their contextual understanding and how others do the same. In addition, they need to involve people with frames or viewpoints that support and deviate from their own. This will counter the tendency of project managers to fall into what I refer to as the "hammer effect," whereby they are like a child with a hammer and everything looks like a nail.
This effect largely reflects the need to be in control, however illusionary, and can result in great costs. In The Logic of Failure , Dietrich Dorner agrees and observes that the reason is to augment one's sense of competence and avoid an admission of failure. Besides, such an admission may be perceived as an inadequacy on one's part. So, according to Dorner, conspiracy theories are developed to cover up such inadequacies.  These theories limit the view of the world and lead to seeing only what is wanted to be seen.
According to Edward De Bono, one way to obtain a clearer picture of understanding is through a shared explanation. Through a shared explanation, the visibility for understanding becomes clearer.  Then, it becomes easier to understand how different perceptions influence progression.
Constantly remind themselves that a strong tendency exists to see "individual trees before the forest." A major reason for this tendency is that people often subscribe to what they feel comfortable with, gained either through knowledge or experience. Once project managers lose sight of the big picture, they will find it very difficult to rise to a higher plane. Objectivity becomes even more difficult despite being impossible to attain in the pure sense of the word.
Project managers often become trapped in a perceived way of "how things work" and pursue unrealistic courses of action. According to Dorner, that is because the rules on how things work can constrain the ability to adapt to a changing context, leading to a disastrous result. It is important, therefore, to recognize that everything is in flux and that the ability to adapt is absolutely essential. However, such adaptation is opposite to our desire to develop general, abstract plans.  This tendency can lead to an inflexibility that can prove disastrous, at least systemically. Everything in a system is interlinked; inflexibility in one aspect or relationship will permeate a system. 
Recognize the need to distinguish between the tangibles and intangibles by identifying what lies above and below the waterline. A strong case can be made that an inability to understand the intangible aspects can "sink" a project quicker than the Titanic. Some intangible elements include the informal networks, politics, values, and the overall "atmosphere" enveloping an organization. Frequently overlooked, this inability can result in flawed decisions and actions. The situation does not seem to be improving.
Recognize the importance of data and information as well as the fragility of both. Data are, of course, unprocessed facts. Information is processed data that are meaningful to the recipient. Data and information are important because they are instrumental in decision making and for feedback on results. However, data and information are subject to many influences, from handling by developers and providers to the ravages of time. In other words, both data and information are perishable items. Understanding becomes very important concerning these conditions, especially if a desire exists to avoid adhering to and applying irrelevant data and knowledge.
Not everything has equal value when understanding the context of a project. Some data and information are critical for better understanding, while others are of minor importance. Unfortunately, this dichotomy poses a very significant problem. What is considered important to one person may not be so to another if operating under a different mental model or paradigm. It is imperative, therefore, that project managers surround themselves with a diversity of thought to avoid falling into a narrow, incorrect understanding of the context. Through understanding the context, it is easier to identify priorities because one can see the bigger picture.
Encourage open communication right from the start to obtain a contextual understanding. By encouraging open communication to capitalize on the benefit of different perspectives, they can cross-check the reliability of data and information. They also encourage the early communication of issues and concerns, positive and negative. Such open communication will enable addressing issues early to avoid their downstream impact when they will be more difficult and costly to handle.
However, that is often not easily achieved because of the failure by many project managers to listen. Too often, they arrogantly think they know the answer or solution and then proceed accordingly only to find that the long- term results were not as expected. They would have done well to heed the sage advice of Stephen Covey on two levels: "seek first to understand, then be understood "  and "diagnose before you prescribe." 
Contextual understanding involves the assimilation of substantial variable information. Such information can reflect the internal and external pressures placed on projects, their types, and their risks. Project managers must organize this information to obtain a contextual understanding and successfully shape their projects. Project shaping means to recognize the different scenarios facing a project and then manage and lead the project accordingly. Of course, this effort is not easy to accomplish since such information is often not readily available.
Diana Lilla, of Diana Lilla Consulting, gave a presentation before the Puget Sound PMI Chapter to discuss the project waterline model.  She notes that information is readily observable above the waterline. This information includes stated goals and deliverables. However, some items are below the waterline and, consequently, are not readily available or observable. These items pertain to the people aspects, e.g., informal networks, personal aspirations, and norms, and frequently have a major impact on a project and, therefore, should be acknowledged as best as possible.
What are some considerations that go into acquiring a contextual understanding? The list, of course, can be endless. I think, however, they can be grouped into four categories: people, process, performance, and profit. Each one, in turn , has an external and internal slant.
For people, the internal slant involves skills, knowledge, and abilities ; formal and informal networks; politics; motivations; values; beliefs; ethics; esprit de corps; and diversity. The external slant relates to similar issues only on a larger scale and from the perspective of influencing performance. They include communication with senior management, management styles, general history and culture of the organization, and relationships with suppliers, vendors , and consultants . What is challenging about determining internal and external slants about people are their subtleties, making it difficult to ascertain their presence and impact.
The internal slant of process involves implementing the major disciplines of project management, e.g., defining, planning, organizing, controlling, and closing; administrative or supporting processes, e.g., quality assurance, configuration management, and change management; and additional ones, e.g., portfolio project management. From an external slant, the same processes are involved but on a larger scale. Often, what complicates understanding is their linkage with so many elements within and outside the boundaries of a project.
The internal slant of performance centers on measurement, e.g., feedback during all phases of a project. Many tools are available to measure performance. Project management software is the principal tool for comparing expected and actual performance. Earned value management provides a true gauge on schedule and budgetary performance. The external slant again is on a higher level, with the output often feeding data and information to management. The challenges here are providing metrics on what satisfies internal needs while simultaneously satisfying external requirements.
The internal slant of profit relates to results achieved and is clearly associated with performance. Its emphasis is, however, more about results that have been achieved rather than the execution of a project. Profit usually relates to internal standards for quality, schedule, and budget. Quality deals with satisfying internal requirements and expectations; schedule, with meeting milestones and finishing on time; and costs, with finishing within budget. The external slant involves the same but with a twist. For quality, it deals with meeting the requirements and expectations of the customer as well as complying with any other externally mandated standards and requirements; schedules, delivering on time to provide a deliverable to another project; cost, satisfying overall budgetary requirements on a program and much larger organizational levels.
 Dietrich Dorner, The Logic of Failure , Perseus Books, Cambridge, MA, 1996, pp. 69 “70.
 Edward De Bono, Practical Thinking , Penguin Books, London, 1971, p. 34.
 Dietrich Dorner, The Logic of Failure , Perseus Books, Cambridge, MA, 1996, p. 98.
 Fritjof Capra, The Turning Point , Bantam Books, Toronto, 1998, p. 273.
 Stephen R. Covey, The Seven Habits of Highly Effective People , Simon & Schuster, New York, 1990, p. 237.
 Stephen R. Covey, The Seven Habits of Highly Effective People , Simon & Schuster, New York, 1990, p. 243.
 Diana Lilla, Navigating the waterline, Presentation at Puget Sound PMI Chapter, March 11, 2002, pp. 1 “17.