Planning

IMSE-3rd Year
2015
Dr. Abdulghani Al-Nakeeb
 Roadmap
• Purpose of planning
• The planning process
• Setting objectives
• Building planning premises
• Developing plans
• Types of plans
• Planning pitfalls
Purpose of Planning

Set the standards Provide

to facilitate control direction

Manager
s engage
in
planning
to:

Minimize waste and Reduce the

redundancy impact of change
 Elements Of Planning (cont’d)
• Planning
– The process of setting goals and courses of action,
developing rules and procedures, and forecasting future
outcomes.
• What Planning Entails
– Choosing goals and courses of action and deciding now
what to do in the future to achieve those goals.
– Assessing today the consequences of various future
courses of action.
“Planning is deciding in advance what to do, how to do it, when to do it
and who is to do it. It bridges the gap from where we are and to where
we want to go. It is in essence the exercise of foresight”.
 What Planning Accomplishes
• Allows decisions to be made ahead of time.
• Permits anticipation of consequences.
• Provides direction and a sense of purpose.
• Provides a unifying framework; avoiding piecemeal
decision making.
• Helps identify threats and opportunities and
reduces risks.
• Facilitates managerial control through the setting
of standards for monitoring and measuring
performance.
 The Management Planning Process
• Hierarchy of Plans
– A set of plans that includes the company-wide plan and
the derivative plans of subsidiary units required to help
achieve the enterprise-wide plan.
– Top management approves a long-term plan; and each
department creates its own budgets
• The Planning Hierarchy
– Top management formulates its plans based on upward
feedback from the departments, and the departments
in turn draft plans that make sense in terms of top
management’s plan.
Hierarchy of Goals
 Who Does the Planning?
• Small businesses:
– Entrepreneurs do most of the planning.
• Large firms:
– Traditional:
• A central corporate planning group works with top
management and each division to solicit, challenge,
and refine the company’s plan.
– Current:
• Planning is decentralized and includes the firms’
product and divisional managers, aided by small
headquarters advisory groups.
 How to Develop a Plan
 Set an objective.
 Develop forecasts and planning premises.
 Determine your options.


Evaluate alternatives. } The decision-
making process
Choose your plan, and start to implement
it.
 Go to Level 2.
Setting Objectives
 Principles of Goal-Setting
 Set SMART goals—make them specific,
measurable, attainable, relevant, and timely.
Choose areas (sales revenue, costs, and so
forth) that are relevant and complete.
 Assign specific goals.
 Assign measurable goals.
 Assign doable but challenging goals.
 Encourage participation.
 Use executive assignment action plans, or
management by objectives.
Decision Making Stages and
Formal Planning Steps
 Forecasts and Planning Premises
• Forecasting is used to predict future requirements and
opportunities
– Determines the premises on which planning is based
– Can be quantitative (e.g., a time series) or qualitative (e.g., jury of
executive opinion)
• Marketing research
• Competitive intelligence
– Helps build the picture of what others are doing to inform the
planning process
• Next step is the decision-making process we talked about
yesterday
• Finally, you begin to build your plans (usually more than
one to realize objectives)
The Business Plan And Its Components
• Description of the business (including
ownership and products or services)
• Marketing plan
• Financial plan
• Management
and/or personnel plan.
Outline of a Marketing Plan
Product, Pricing, and Sales Forecasts
Types of Plans
 Pitfalls of Planning
• Planning may create rigidity
• Plans cannot be developed for a dynamic
environment
• Formal plans cannot replace intuition and
creativity
• Planning focuses managers’ attention on today’s
competition, not tomorrow’s survival
• Formal planning reinforces success, which may
lead to failure
• What did the planners do right in this effort?
• Was the design a result of research or creativity?
• How was the planning process affected by
stakeholder needs?
• How much of the planning was related to political
activities and how much to actual construction
activity?
• How was success measured for the project?
• Better project success rates due to lower
costs and smaller projects
• Difficulty of estimating costs and schedules
accurately
– Often tripled up front to avoid failure
– Old metrics not appropriate to modern
methods
– Difficult to establish benchmarks
• Different skills for different roles
 Prepare the Plan

Major elements in a Communications

Medical
written action Plan: Traffic
Support
Plans Map, etc. ...
Assignments
204
Organization
203

Objectives
202

Incident
Action
Plan
 Next Time
• Strategic planning
– Read Chapter 5 and Cleveland Public Library Strategic
Plan
• Discussion questions:
– How has the Gold Coast City Council been able to use
evidence to aid in strategic planning?
– Do you think their choice of benchmarks will achieve
the overall objectives?
– Are there any risks in using these measures in deciding
on long-term changes in structure?
– Do you think the library staff is engaged in this process?
Should they be?
 Strategic Planning
Learning Objectives

– Identify the various steps in the strategic planning process

– Initiate and manage a strategic planning process
– Determine appropriate tools for strategic planning
– Understand strategies for evaluation
– Initiate community support and involvement in the
process
– Develop communication strategies to promote the
strategic planning process
– Identify partners to be involved in strategic planning
process
– Participate in the strategic planning process (if applicable)
 What is Strategic Planning

• Used by community groups, government

departments, organizations and businesses to
develop blueprint for action and change
• the process should be community based, inclusive
and participatory to allow for maximum stakeholder
involvement and input.
 Benefits of Strategic Planning

• Defines mission, vision & • Provides base to measure

values
• Establishes realistic goals,
objectives & strategies
• Ensures effective use of
resources
progress
• Develops consensus on
future direction
• Builds strong teams
• Solves major problems
 Types of Planning

• Types of planning
– Strategic planning
– Business planning
– Project planning
– Program planning
– Municipal planning
• Planning as a profession
– Professional “planners”
– Planning functions in other professions
 Types of Strategic Planning

• Basic Strategic Planning

• Issue-Based or Goals-Based Strategic Planning
• Alignment Model
• Scenario Planning
• Organic (or Self-Organizing) Planning
 Types of Plans

 Strategic plans
 Broad future of the organization
 External environmental demands
 Internal resources
 Tactical plans
 Translate strategic plans into specific goals
 Specific parts of the organization
Strategy
A pattern of actions and resource allocations
designed to achieve the organization’s goals
Where will we be active?
How will we get there?
How will we win in the marketplace?
How fast will we move and in what sequence will we
make changes?
How will we obtain financial returns
 Operational plans
 Translate tactical plans into
specific goals and actions
 Small units of the organization
 Near term
 Types of Plans

Strategic Plans Tactical Plans Operational Plans

Time horizon Typically 3-5 years Often focused on 1-2 Usually focused on the
years in the future next 12 months or less.
Scope Broadest,originating Rarely broader than a Narrower, usually cen-
with a focus on the strategic business unit tered on departments or
entire organization smaller units of the
organization
Complexity The most complex and Somewhat complex but The least complex,
general, because of the more specific, because because they usually
different industries and of the more limited focus on small
business potentially domain of application homogenous units
covered
 Strategic Plans Tactical Plans
Impact Have the potential to
dramatically impact,
both positively and
negatively, the fortunes
and survival of the
organization
Interdependence High interdependence,
must take into account
the resources and
capabilities of the entire
organization and its
external environments
Operational Plans
Can affect specific Impact is usually
businesses but restricted to specific
generally not the department or
fortunes or survivability organization unit
of the entire
organization
Moderate interdepen- Low interdependence,
dence, must take into the plan may be linked to
account the resources higher-level tactical and
and capabilities of strategic plans but is less
several units within a interdependent with them
business
 Organizational Levels
 Corporate level (Strategic)
 What industries should the firm be in?
 What markets should the firm be in?
 In which businesses should the firm invest money?
 Business level (Tactical0
 Who are our direct competitors?
 What are their strengths and weaknesses? What
advantages do we have over them?
 What are our own strengths and weaknesses?
 What do customers value in our products/services?
 Functional level (Operational)
 What activities must my unit perform well in order to
meet customer expectations?
 What information about competitors does my unit
need in order to help the firm compete effectively?
 What are our unit’s strengths and weaknesses?
 The Planning Process

 Analyzing the environment

 Forecasts: what does the future look like?
 Environmental uncertainty
 Contingency plans: identify key factors that could
affect the desired results and specify what actions
will be taken if key events change
 Benchmarking
 Investigation of the best results among competitors
and noncompetitors and the practices that lead to
those results
 Setting Objectives
The Planning Process
 Setting objectives
 Priorities and multiple objectives
 Establish which objectives are most important and
which have temporal priorities,
 Measuring objectives
 Financial performance
 Profits relative to sales
 Profits relative to assets
 Many others
 Non-financial performance
 Determining Requirements

The Planning Process

 Determining requirements
 Assess current performance
 What will it take in order to get from current levels of
performance to that level specified in the objectives?
 What drives market share?
 What capital will be required?
 Assessing Resources

The Planning Process

 Assessing resources
 Resources required
 What resources are needed to achieve the stated
objectives?
 Resources available
 Do we have the needed human talent to meet the
requirements?
 Do we have the financial resources available?
 Do we have the required technology?
 Developing Action Plans

The Planning Process

 Developing action plans
 Sequence and timing
 Raw materials, manpower and
components must be brought
together in the right amounts and
sequences
 Accountability
 Who is accountable for which actions?
 Implementing Plans

The Planning Process

 Implementing Plans
 Monitoring the implementation
 Monitor the progress of the plan and its
implementation
 Monitor the level of support that the plan receives
as it is being implemented
 Monitor the level of resistance
 Real-time adjustment
 Monitoring Outcomes

The Planning Process

 Monitoring outcomes
 Unanticipated consequences
 Negative unanticipated consequences
 Positive unanticipated consequences
 Feedback loop
 Apply what has been learned to modify and improve the
planning process
Planning Tools
 Budgets
 Capital expenditure budget
 Specifies the amount of money to be spent on
specific items that have long-term use and require
significant amounts
 Expense budget
 Includes all primary activities on which a unit or
organization plans to spend money and the amount
allocated for the upcoming year
 Planning Tools
Budgets
 Proposed budget
 Provides a plan for how much money is needed,
and is submitted to a superior or budget review
committee
 Approved budget
 Specifies what the manager is actually authorized to
spend money on and how much
 Planning Tools
 Two budgetary approaches
 Incremental budgeting approach
 From the approved budget of the previous year
present arguments for why the upcoming budget
should be more or less
 Zero-based budgeting approach
 Justify all allocations of funds from zero each year
Goal Setting
 Attributes of effective goals
 Specific
 Measured
 Agreed
 Realistic
 Time bound
Organizing
 Even very small companies need to organize.
 If you have a one-body construction company, you
should still have an organization chart showing all of
the different hats that you wear.
 For larger organizations, the organization chart
will show:
 Position titles: should be descriptive.
 The chain of command: authority for each area,
accountability for actions
 Who occupies each position
The Organization Chart
 First Step: decide on the type of organization, consider
span of control, tall vs. flat, functional vs. geographic
 Second Step: decide what positions you need, create
position titles
 Third Step: assign people to fill the positions.
 TIP 1: Try to avoid picking the people first and then
designing a position to fit the person.
 TIP 2: Careful about Span of Control
 Organizational Chart of a Manufacturing Firm
Board Board Board Board
member member member member

Chief
Executive Legal
Officer counsel

President

V.P Sales/ V.P Human V.P

Marketing Resources Production

Industrial Consumer Industrial

Products
Consumer Industrial Consumer Industrial
Products Consumer
Products Products Director- Director- Products Products Products Products
Director- Director- Human Human Director- Director- Director- Director-
Sales Sales Resources Resources Production Production R&D R&D

Western Eastern Western Eastern

Region Region Region Region
Industrial Industrial Consumer Consumer
Products Products Products Products etc. etc. etc. etc. etc. etc. etc. etc. etc. etc.
Sales Sales Sales Sales
Manager Manager Manager Manager
Directing
 Using authority to cause plans to be
implemented
 Delegating authority to increase efficiency
and effectiveness
 Coordinating a company’s activities
 Selecting and training employees
 Preparing organization charts
Authority
 Authority is a legal term: the right to take action,
make decisions, and direct the work of others
 How effective formal authority is depends on
many factors.
 How badly does the subordinate need the job?
 How badly does the authority need the subordinate?
 Does the subordinate agree with the bosses’
decisions?
Types of Authority
 Line Supervisors
 Line supervisors
 President, Director of Construction Activities,
Project Managers, Superintendents, Foremen.
 Staff supervisors
 Chief estimator
 Accountant
 Office manager
 Delegating
 You can delegate the authority.
 You cannot delegate the responsibility.
 Do not set up departments or divisions unless you are will
to delegate the day-to-day control of them to the
managers.
 Train people to do the jobs
 Assign the jobs to them and get out of the way
 Check to see if they are making acceptable progress.
 If not correct the situation

“You can sub-out everything except the blame.”

Coordination

 Making sure that all departments are

working together toward goals
 Coordination is a function of
communication
 Rules or Procedures
 Might work for routine activities
 Will still need meetings and conversations
Coordination – How?
 Meetings
 Internet
 Email
 Newsletters
 Staff Assistants
 Liaisons
 Teams & Committees
 Controlling
 Control is the task of ensuring activities have
the desired results
 Control requires targets and goals be set
 Controlling involves setting targets,
measuring performance, and taking
corrective action
 Enron and financial controls: Artur Andersen
Types of Control Systems
 Steering control (feedforward or precontrol
 Corrective action before problem occurs
 Preventive in nature
 Intermediate milestones
 Concurrent control (yes/no)
 Control as the activity takes place
 Rules and procedures
 Feedback control (post-action)
 Compare results to standard
 Profit at end of project
 Checklist for Effective Control System

1. Controls should reflect nature/needs of activity

2. Should report deviations promptly
3. Should be forward-looking
4. Should point out exceptions at strategic points
5. Should be objective
6. Should be flexible
7. Should reflect the organizational structure
8. Should be economical
9. Should be understandable
10. Should indicate corrective action
Two Basic Control Approaches

 The Traditional Approach:

1. Set a standards, target, or goal
2. Measure actual performance against standards
3. Take corrective action
 The Commitment-Based Approach:
1. Getting people to want to build in quality
2. Hire the right people and invest in them
3. Foster self-control
4. People centered, sense of community, shared fate
5. Guarantee organizational justice
6. Use financial rewards and profit-sharing
7. Encourage self-actualization