Assumption Based Planning
Assumptions based planning in project; it is a post planning methods that help companies to deal with uncertainness. It is used to identify the most important assumption in a company business planning, to testing of these assumptions, & to accommodate unexpected results. A solution of this problem is to create assumptions & attempt to predict future results. Some of assumptions made during the planning activity are likely to come true; the result of others is very much uncertain, by not un-important. Uncertainties are identified & plans can be prepared for what to do if original previsions prove to be mistaken. It is possible for a single assumption to cause major issues and rework late in a project cycle that’s why the ears of an experienced successful project manager will always come alive when they find out conversations amongst project team members that may be contain key assumptions.
Assumption based planning does not required accuracy for all assumptions create in a business plan, but develops a reasonable model to assess the assumptions included.
Assumption-based planning methods include:
- Critical assumption planning
- Discovery Driven Planning
- Assumption based planning
Types of assumption
- Implicit & explicit assumptions
Explicit assumptions are those assumptions, which the intention i.e. fully revealed and expressed without unclear, implication and ambiguity. However, explicit commands in a plan often have concealed implicit assumptions. Implicit assumptions are assumptions that are not expressed & may go undetected.
Process of Assumptions Based Planning
- Design tests: Design a test for all critical assumption. In the test design you express how to test the assumption & what proves the assumption wrong & right.
- Identify assumptions: Collect every assumption’s explicit, implicit, primary & derivative, out of the plan.
- Determine Criticality: Trying to quantify the assumptions as much as possible in order to ascertain which assumptions have the greatest impact.
- Test assumptions: When the assumption is tested this outcomes in a test result, which proves the assumption right & wrong.
- Plan retesting: The assumptions needs to be retested regularly if not invariably. There should be a re-test schedule of all critical assumptions.
- Create and update the assumption’s plan: The assumption’s plan holds each data gathered during the Assumptions based planning (ABP) activity.
- Critical assumption planning
It helps managers & entrepreneurs maximize business development learning at least price. Funds the Requests, Test Implementations or Venture Reassessments. The identification & assessment of assumptions solves this problem & forms the origination for managing new business speculations.
- Critical assumption and identification
During this point the assumptions are identified & there is a determination of criticality. In order to find out the criticality of the assumptions, they want to be quantified; it is then possible to set the financial outcome in a spreadsheet & link them together. These financial impacts will be change for the many of assumptions. NPV analysis proves the company with data about the criticality of assumptions. Two signals strongly point critical assumptions: a big difference in NPV between the best & worst-case scenarios, & a huge loss of NPV in the worst case scenarios.
- Test program and design
The assumptions required to be tested. Sometimes good market research is enough, other times a working prototype needs to be developed. The order in which the assumption is tested is critical in terms of the cost spent on testing.