Assumption-based planning is project management is a post-planning method that helps companies to deal with uncertainty. It is used to identify the most important assumptions in a company’s business plans, to test these assumptions, and to accommodate unexpected outcomes. Conventional business planning works on the expectation that managers can extrapolate future results from past experience, but for new businesses and projects this way of planning is often not possible.
Experience may be lacking or extrapolating from past experience may be misleading. A solution to this problem is to make assumptions and attempt to predict future outcomes. Some of the assumptions made during the planning process are very likely to come true; the outcome of others is very much uncertain, though not unimportant. Assumption-based planning identifies and tests the assumptions made in a business plan, the formulation of “hedging actions” and the construction of “what-if” scenarios. Uncertainties are identified and plans can be prepared for what to do if original predictions prove to be false. Assumption-based planning does not demand accuracy for all assumptions made in a business plan, but builds a reasonable model to assess the assumptions involved. Assumption-based planning methods include:
Assumption-based planning methodologies provided the foundation for other planning frameworks and tools such as robust decision making. Position in business planning process Most business planning methods or books about “how to write a business plan” indicate that you should write down your financial assumptions at the end of your plan, but assumption-based planning encourages managers to actively plan and monitor the validation of these assumptions.
The identification of assumptions may lead to a change in the business plan, so advocates of assumption-based planning argue that it should be at the core of business planning. RAND defines an assumption as “an assertion about some characteristic of the future that underlies the current operations or plans of an organization.” There are several types of assumption. Include implicit and explicit assumptions, and primary and secondary assumptions, an important aspect of critical assumption planning. The two classifications are not mutually exclusive; an assumption can be both explicit and primary.
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Strategic Management Tutorial
From Planning To Strategic Management And Beyond
Strategic Management: Success Or Failure?
A Look At The Total Process
The Challenge Of The Future
The Environment: Assumptions In Planning
Techniques For Assessing The Environment
Business Philosophy (ethics And Morality) And Strategic Management
The Corporate Appraisal – Assessing Strengths And Weaknesses
Analysing The Industry And Competitors
Analysing The Uk Management Development And Training Industry: A Case History
The Search For Shareholder Value
Vision And Objectives
Strategic Portfolio Analysis
Portfolio Analysis In Practice
Strategic Planning – A Second Look At The Basic Options
Multinational And Global Strategy
Technology And Manufacturing
Strategic Planning For Human Resources
Relating To The External Environment
Evaluating A Business Plan
Project Planning And Appraisal
From Plans To Actions
Management Of Change
Introducing Strategic Management
Why Planning Sometimes Fails
Strategic Management To Strategic Change?
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