How top down planning boosts operational profits
The completion of a project should be a cause for celebration, but too often the outcome disappoints. Recent history is littered with projects that have overrun in cost and time and failed to meet expectations. The root cause is often that the project was not properly scoped, and this is where top down planning steps in.
Before a new project can be planned and its estimate prepared, the scope of what’s required must be clearly understood and agreed in detail with the client. The greater the level of detail specified the lower is the risk of disappointment, so a diligent and comprehensive definition of the project deliverables should be the starting point.
In defining the scope of the project, the required phases will materialise. For most projects the work content of each phase will need to be broken down through a number of levels into manageable work packages. This process creates a work breakdown structure (WBS) for the project, and should end up by defining individual work packages that are relatively simple to plan and estimate. It is good practice to restrict the duration of each work package to a small number of weeks, where possible. Provided that this approach is sufficiently rigorous, the individual work packages should collectively meet the project’s expectations.
This process of developing a WBS to create manageable work packages is often called top down planning; the larger or more complex the project, the greater is its importance.
For very simple projects or those that require a more agile approach, top down planning is less applicable. For example, where the objectives of phase 2 cannot be defined until phase 1 is completed, such as for a feasibility study, the project scope can only really be defined for the current phase. Nevertheless, the principle of breaking a new project into manageable work packages is a sound one and should be consistently applied wherever possible.
Top down planning should significantly reduce the need to re-estimate projects as they progress. When applied to a portfolio of projects, this means that project demand management and resource allocation become significantly less volatile and utilisation levels will increase.
Maintaining high levels of resource utilisation is a strategic objective for project based organisations as it will significantly increase their operational profits. So there is a direct link between rigorous top down planning on individual projects and improving operational profits.