MGT 645 Module 5 Planning Example

Fourteen Months and $6.2 Million, Checked Against History: Planning a Gluten-Free Line Without Bold Forecasts

Student Name

Master of Business Administration, Aspen University

MGT 645: Project Management Essentials

Instructor Name

Month Day, Year

Fourteen Months and $6.2 Million, Checked Against History: Planning a Gluten-Free Line Without Bold Forecasts

Four modules in, the Chippewa Valley gluten-free project has a charter, a stakeholder plan, a team and a hybrid life cycle. The board approved $6.2 million and fourteen months. Before contracts are signed, the project manager must produce an integrated plan and test whether those figures are realistic. This paper presents the plan.

Does Planning Matter?

Dvir et al. (2003) studied more than a hundred defense development projects and examined which kinds of planning related to success. Planning the functional requirements and technical specifications, defining clearly what the project must deliver, was positively related to success. Planning procedures and using planning tools, on their own, had little relationship to success. The finding suggests putting planning effort where it most shapes the result: in requirements.

Which Processes Matter Most

Zwikael (2009) examined the planning processes in the PMBOK Guide's knowledge areas and ranked them by their effect on project success across many projects and industries. Some planning processes, particularly those related to time and risk, had larger effects than others, and the most important processes differed somewhat by industry. The ranking helps a project manager decide where planning effort pays most when time is short.

The Inside View

Kahneman and Lovallo (1993) argued that managers are prone to bold forecasts because they take an inside view: they consider their project's specific plans and obstacles and build a scenario of how it will unfold, ignoring the outside view of how similar projects actually turned out. Combined with timid choices about risk, this produces plans that are consistently optimistic. Their remedy is to anchor forecasts on what actually happened on a set of comparable past projects.

Flyvbjerg (2006) turned that remedy into a method he called reference class forecasting. The planner identifies a group of past projects similar to the new one, establishes the spread of their actual cost and schedule outcomes, and positions the new project within that spread instead of trusting a bottom-up estimate alone. He presented the approach as a practical answer to the optimism and strategic misrepresentation that recur in large infrastructure projects, and it has since been adopted by some public agencies. A pizza plant has a small reference class, but it is not empty.

Requirements Before Procedures

Applying the finding of Dvir et al. (2003), the team spent its first planning month on requirements rather than on the schedule format. The quality manager, the certification body's checklist and two retail buyers together defined what the line must do: hold positive air pressure in the room, keep gluten below the certification threshold in every swab round, produce three crust sizes at rated speed and ship in packaging the retailers have approved. Each requirement has a test attached. Only once those were signed did the project manager build the work breakdown, because a schedule built on loose requirements tends to be replanned later at greater cost.

Where the Planning Hours Went

Zwikael (2009) gives a useful guide to where scarce planning time should go. The team gave the most attention to the schedule network, especially the links between the construction stream and the equipment delivery date, and to the risk register, where cross-contact during start-up and a slow certification audit sat at the top. Communication and procurement planning received lighter treatment, since the plant has long relationships with its contractor and vendors.

The Basis of Each Estimate

Every estimate in the plan names its source. Construction costs come from the contractor's priced design, equipment from two firm vendor quotes, labor from the time agreements made in Module 3 and product development from the bakery's last two new product launches. Listing the basis lets the sponsor see which numbers are firm and which are judgments, and it shows the board where the contingency is most likely to be spent.

The Integrated Plan

Checking Against History

Following Kahneman and Lovallo, the team compared its estimates with the plant's last two line installations. The first ran 22% over schedule and the second 35%, in both cases mainly during start-up, when products failed early trials and equipment needed adjustment. The first draft plan allowed three weeks for start-up. The outside view suggests eight to ten. The team added six weeks of buffer between planned start-up and the ship date promised to customers and increased the start-up trial budget by $280,000, funded by reducing contingency elsewhere after firm equipment quotes.

Planning the Adaptive Streams

Recipe and packaging work is planned at the level of cycles and target dates rather than detailed tasks, consistent with the hybrid life cycle. The plan fixes the date by which final recipes must be locked, month eleven, so equipment settings can be finalized.

Updating the Plan

The plan will be updated at each phase gate and monthly for the product streams. Changes over $50,000 or two weeks go to the sponsor. Each update records the variance against the baseline and its cause, which means the next plant project begins with a better reference class than this one did. Product cycle reviews feed the update with recipe test results, and any slip in the recipe lock date is treated as a schedule risk to equipment settings rather than a product matter alone.

Conclusion

Dvir, Raz and Shenhar's evidence directs planning effort toward requirements, Zwikael's ranking toward time and risk, and Kahneman and Lovallo's warning toward checking estimates against history. The resulting plan is less comfortable than the first draft and more likely to be met.

References

Dvir, D., Raz, T., & Shenhar, A. J. (2003). An empirical analysis of the relationship between project planning and project success. International Journal of Project Management, 21(2), 89-95. https://doi.org/10.1016/S0263-7863(02)00012-1

Flyvbjerg, B. (2006). From Nobel Prize to project management: Getting risks right. Project Management Journal, 37(3), 5-15. https://doi.org/10.1177/875697280603700302

Kahneman, D., & Lovallo, D. (1993). Timid choices and bold forecasts: A cognitive perspective on risk taking. Management Science, 39(1), 17-31. https://doi.org/10.1287/mnsc.39.1.17

Zwikael, O. (2009). The relative importance of the PMBOK guide's nine knowledge areas during project planning. Project Management Journal, 40(4), 94-103. https://doi.org/10.1002/pmj.20116