The Planning ‘Fallacy’

Plans are always wrong – everything takes twice as long and costs twice as much. Why is that the case?

  • There is not enough slack built into the plan (slack is not acceptable to the management)
  • People wanted to win the project in the first place so made unrealistic assumptions (“Are these projects presented to me because they have a positive NPV, or do these projects have a positive NPV because they are presented to me”)?
  • Unexpected things happen, incl. stuff that were fully unpredictable (e.g. a Tsunami in Japan)

Plans are inaccurate, but they are not worthless. The value of planning is not so much in the plan itself, but:

  • In the communication value: aligning everyone to pull in the same direction
  • They help you better understand the opportunities, requirements, dependencies, and risks – plans are a “mental simulation” before the project get started. This helps make the project more successful (or less of a disaster if you did not have a plan).

If you want to improve your plans in a very uncertain environment, the Scenario Planning technique can help.

Welcome to The Art of Business Planning

Pierre Lurin, author of 'Business Planning for Managers'Investaura Management Consultants welcomes you to The Art of Business Planning, a web site fully dedicated to the topic of business planning. Our objective is to help entrepreneurs, start-ups as well as managers working with mature companies write better business plans and launch more successful and lasting businesses.

The web site will be updated on a regular basis as our consultants gain additional insight and come across new materials that we want to share with you, in particular videos.

Thank you for your patience!

Enjoy your meal and contact us if you have any comment or question.

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