Business Case Challenge and Planning Fallacy - Report Example

BUSINESS CASE CHALLENGE AND PLANNING FALLACY and Submitted Business Case Challenge and Planning Fallacy 1. Abstract The paper focuses on the business case challenge and planning fallacy in the empirical situation. The paper seeks to propose the features of more successful project future. The research stemmed for the prediction phenomenon wherein persons are faced with a challenge of not estimating correctly the time required to finish a project irrespective of having the knowledge from previous experience that projects usually take longer than expected to be completed. Firstly, the definition of a planning fallacy and business case challenge is outlined including complexities and controversies associated with the above issues. Besides, this paper comprises of a summary of empirically researched generality and scope of these contemporary issues in the real world. 2. Introduction The business case challenge and planning fallacy act as major hindrances to the future success of project management. 3. Literature review and discussion The trend of miscalculating time a project takes to be completed is a robust phenomenon, constantly supported by empirical studies under different types of conditions. The main reason for this literature review is to summarize the most appropriate applications of the outside and inside perspectives when making predictions. This information will provide a guide to selection methodologies and research approach in the case study. Literature Review will provide an outline of the classical view of the planning fallacy and business case challenge. This will be followed by a brief description of the practical implications for the project planning in the practical world. Besides, there will be a summary of prevalent concepts of planning fallacy followed by illustrations of conceptual model. Subsequently, the role of temporal planning accuracy in relation to project management environment will be discussed. Finally, various empirical attempts of coming up with most suitable ways of approaching the alleviation of positive forecast bias in practice. This part provides an overview of the fundamental cognitive biases that perpetuate business case challenge and planning fallacy. It starts with original explanation followed by recent explanation. This is followed by scenario thinking which suggests that evidence presentation that breaks up a task using inside view is beneficial to planning accuracy (Brown 1977, 32). The final part explains various alternatives to planning fallacy and its importance to this paper. The classical explanation The existence of the planning fallacy and business case challenge was first put forward by Kahneman and Tversky. They proposed that individuals place excessive emphasis on a specific task and forget to properly incorporate historical and external information when making prediction. The outside and inside perspectives can be conceptualized here as the major ways through which various planning fallacy variables can affect positive prediction bias. The above finding indicate that in order to improve planning accuracy there should be an improved planning accuracy by encouraging consideration and incorporation of information outside focal goal as well as laying emphasis on prediction of individual at lower levels (Dettmer 1998, 85). 3.1 A business case can be highly-structure or comprehensive. Logically, a business case serves the purpose of the link between financial resources and the support of a well defined business need. Business case covers information such as expected cost of the project, expected risk, options considered, expected benefits and gap analysis (Dror 1971, 93). A good business case brings accountability and confidence in investment decision making as all information is compiled during the analysis process (Baker 2001, 32). Business case challenge can be solved by ensuring that the business case prepare can serve its purpose. The business case should ensure that the performance indicators are sufficiently identified and used for proactive realization of character change and business realization (Fredrickson 1990, 28). The business case prepared should make sure that the proposed initiative has importance and comparable priority compared to substitute initiatives based on expected benefits and objectives laid out in the business case. A business case should be designed in way that makes it accountable and committed to delivery of benefits and clarity of management costs. Moreover, the business case should ensure that all basic aspects are quantifiable in order to measure and track the achievements. The business case should be business oriented whereby it should concentrate on the impact and business capability. It should also be transparent and directly justify all key elements. A business case should be easily understandable. The content should be logical, simple to complete, evaluate, and make sense to the users. It should also be adaptable in a way that fits best to the risk size of the proposal. A business case should be consistent by addressing the same business issues in every project (Fren 1990, 32). Finally, a business case should consist of all necessary factors relevant to complete project evaluation. 3.2 Eliminating the fallacy of planning and business case challenge requires the capacity to identify its origin and effects and a commitment. To do away with it, there is need for education and awareness. Minimization of the effects of the planning fallacy is the most effective way of solving this a challenge in situations where it cannot be fully eliminated (Gould 1996, 28).This involves the act of safe environment creation with an aim of creating trust for making planning decisions. This is made successful by discouraging ego-driven plans and building of a culture of responsiveness where practicality is acknowledged for its benefits. It includes enhancing a culture where pulling the plug on a bad decision does not come at the expense of anyone’s career. The planning fallacy and the business case challenge can be tackled by conducting relevant refresher training on calculating probabilities and statistics, ways of estimating various types of risk and project estimation. Besides, the above challenge can be tackled by use of quality control planning to facilitate the whole process of risk management and review of all portfolio management practices. There should be uniformity between competing projects in the same field. Financial models of IRR,ROI, TCO should be formalized to enhance ease calculations (Grandstaff 2009, 95). The people involved in project management can measure and manage projects, improve project estimation accuracy and resource performance by implementing portfolio management model (PPM). To guard against various forms of cognitive bias, there should be training of not IT and IT managers in the most effective and preferred project management practices in addition to implementation of Agile project management, which offers many advantages from incremental and iterative development. A successful project management process requires more accuracy on how to forecast the length time and cost an activity takes hence a better estimation and planning (Grans 2009, 95). To avoid the planning fallacy all project assumptions should be questioned with a lot of discipline and the team has to be cognizant of the dangers of the project. A study has to be conducted bearing in mind the need to find information on similar projects in order to articulate worst, likely and best case scenarios. The people involved in project management acquire statistics of the preferred class. For instance, the team should find the proportion by which expenditures exceed budget, cost per square foot and project delays .This objective research can help in generating a baseline prediction (Great Britain 2009, 32). The prediction baseline can be adjusted in event of optimism bias. An appropriate reference class should be identified including IT project, family room addition and building project. 3.3 Factors that lead to successful Project Apart from having a talented project manager, there are other factors which make a project succeed as follows: 1. Strong Project Closure In order to prevent continuation in consumption of resources in a project, then a project should have a strong closure. This enhances an agreement between the customer and the project team where all critical success factors are met (Green 1977, 19). There should be confirmation of the project delivery, testing, release and signing off. The necessary and satisfactory forms of documentation should be maintained at any point in time .This ensures that valuable information is retrieved for future reference and when need arises. Strong project closure leads to an increase in quality, organized project plans and proactive future plans (Higgins 2007, 28). 2. Careful risk management Careful Risk management is achieved through vital production of risk log with an action plan for the risks faced by the project. This is due to the fact that things go once in a blue moon off as planned (North American Tunneling Conference 2008, 99). The project manager should make sure that all the concerned people are aware of the risk log and know where they can access it. If an emergency arises, then the team can quickly resolve the issue at hand with the management plan that has already been set in time. This yield confidence when project risk is being faced thereby making the customer feel comfortable with the project progression (Ries 2011, 74). In order to ensure maintenance of crucial project momentum during the project, then a central online database of project information should be put in place. This makes it easy to acquire fresh team members up to a speed in the event of losing key project participants. 3. Open communication Open communication is an essential factor to the success of a project where people involved in project management look closely at details and listen to outside sources of information. The team remain well-informed .The team should work under well defined timetable. Communication should be internally within the organization .Open communication prevents a problem that impact negatively on the project from spreading to other parts as well. Moreover, it ensures that all stakeholders are listened to thereby avoiding mistakes that have already occurred. Open communication have to a positive in the organizational history of major projects including giving convenience and accessibility to business process and policies. Open communication includes having the knowledge of when to say no .Saying no can save the surplus of unnecessary problem in the future (Schlesinger 1988, 74). Where open communication is upheld, the team never promises anything they know they cannot fulfill to the satisfaction of the customer, remain honest about what the team can do and when it can be done. The team makes sure that there is the use timelines that have the capacity of being dragged along and allows use of previous projects as templates for coming up with latest timelines (Smith 2007, 75). This leads to an improvement in the project management process where more accuracy with estimates and setting client expectations accordingly is fulfilled over time and a progress in communication between all project participants. 4. Smart planning Smart planning allows creation of a reliable and realistic time-scale. This has positive impact on the cost and time estimates. It also ensures clarity in documentation of milestone and deliveries thereby making things easier as the project progresses (Sorenson 2009, 43). A smart planning sets up a project for success from the beginning. All stakeholders should be involved during the planning process and often have clear knowledge of where the project is headed. Smart planning helps in meeting deadlines and upholding of organization despite keeping the project team on track and determined. Stakeholders get to know how the project progresses. A proficient plan is prepared which gives details all resource requirements and also acts as a warning. A warning system provides a clear visibility of what to expect in the event of a risk. Open communication in a way can ensure avoidance of redundancies associated coming up with a fresh project from scratch each time. The more frequently one uses a template project, the closer the accuracy of timelines and budget estimates. Previously completed projects should be used as templates for future projects. 5. Smart people Smart people in project management imply having the right team in place .Core project staff, suppliers, all stakeholders and expert resources should form part of team dynamics. This ensures that there is no inadequacy within the team. The team should comprise of individuals who are dedicated to the group, strive to general success and share comparable visions. Communication has to be at par. The entire team should be fully informed involved in the decision making process in order to have the most successful outcome. It is of great importance to assign the right people to every part of the project and make sure that they work well together to the success of the project (Thaler 2008, 21). Copper project should be used as it allows management of the To-Do and project plans apart from allowing setting of resources available and then book the time on specific tasks. Time-sheets or invoicing are automated and project processes are stopped from falling apart when the staff moves on. Everyone gets online using the central repository system of information. 4. Conclusion From the above discussion, it is clear that business case management and planning fallacy are amongst the many challenges facing project management process which need to be addressed. The following are common characteristics of a successful project future. Well-planned: A successful business project has its basic rights and means well planned. The eye is kept on the project plan as the work progresses .This makes it easier to further down the line. Strong team: Everyone in the team understands the project well and has the necessary resources and skills. Each of the members of the team feels happy and motivated. For instance,the rest project team the stakeholders contributed to the success of the project ,then this is pointed out to the boss and other stakeholders. Clear communication One of the essential features of a successful business project is that it involves clear communicational the way through it. The project manager sees the complete project from everyone’s point of view by keeping them up to date at all times. Communication strategy is put in place at the start and stick to it (Thomassen 2008, 74). The project manager does not miss meetings and sends out updates. The manager prepares back up plans when need arises. Good change Control To ensure success in project management, robust change control process is an essential requirement. The process is set down at the start and then stick to it from then on. Good change control ensures that the project management process is not faced with scope creep and sudden realization that of not having the knowledge of which version of documents have been agreed with the stakeholders. A clear vision: A successful business project future keeps a clear vision of what they want to achieve. The decision makers should be clear in the initial project documentation about the goals thereby ensures that there are no distractions along the way hence no losing of track of what they are trying to do in the first place. Risk control: A success project management requires effective ways of managing risk. Risks are identified at the start and signed off by stakeholders. Afterwards, risks are tracked (Sunstein 2008, 183). All emerging risks and those that change status are added. Risks are kept an eye on all the time hence do not get out of hand. List of References Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form Bottom of Form Top of Form BAKER, D. (2001). 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