Planning and Forecasting

This report will be exploring the importance and methods of planning and forecasting calling on expert opinions and theories along with personal ideas and thoughts. Planning has many levels of operation in a business environment, they can then be divided into two very clear levels. Strategic and operational, strategic planning is a long term planning process usually looking forward up to ten years. These strategic plans are broad and general in terms but with clear visions and ideas, this is often described as a ‘company mission’ and sets out where the company wants to be in terms of market share, company value, ND employee effectiveness.

This level of planning would be reserved for company boards and directors then relevant information filtered down to middle and low level management so that they may carry out their operational and day-to-day planning with the same clear visions and ideas in mind. As mentioned, the operational planning level is handled at middle management level. Operational planning normally has a 1 to 2 year span and concentrates primarily on the much more concentrated issues of achieving annual or monthly targets, optimizing workforce and goods while also handling employee efficiency.

However there are other issues needing the concern of operational planners. These consist of gaining access to latest relevant technology, optimizing human resource methods, maintaining records Of performance, keeping track Of quality Of work, and general performance of workforce. In short these two levels can be differentiated between, strategic effectiveness and operational efficiency. In the sixth edition of G. A. Coles Management Theory and Practice the WV terms are defined as, “Effectiveness is about doing the right thing; efficiency is about doing things right. All being aid there is another level that sits above the strategic planning, but this is reserved for very broad policies such as a company’s ethical ideals, internal relations, and social responsibility. These are decisions often made by a company’s owner or founder, however you would frequently find that those at very high levels within a company need input from lower level employees to help develop the strategies for internal relationships and how to best implement methods surrounding social responsibility. This level of planning is referred to as the corporate level, setting out as said clear but broad objectives for all levels.

However the execution of these definitions is decidedly more difficult, they are fluid and ongoing processes that require tuning and tightening up almost constantly. The process starts with forecasting, which we will explore later, where the long and short term forecasts are used to set the companies goals and ideas explained as the corporate level of planning. This then filters down through the strategic and operational levels while always referring back to the businesses policies on ethics and social responsibility, those plans are then laced into action and tasks are executed as instructed.

It is at this stage that the fluidity of the process begins to show, as the tasks must be assessed and measurements made with reference to the effectiveness and efficiency explored earlier. Then these discoveries should be fed back to the operational and strategic managers and corrections to their plans must be made, while still always referring back to the company’s wide net forecasts and policies. This process will happen weekly, monthly and annually all depending on what aspects of the plans you want to amend.

We will return to planning later in he report, looking into how to effectively implement the definitions and overcome obstacles that counter the harmony of the plans. First we must explore forecasting, the task which as said, sits behind planning and ultimately controls which plans can and cannot be taken forward. There are many methods of forecasting within a company, each having unique qualities which allow you to explore deferent aspects and predictions depending on what data you have available.

The late Peter Trucker, who was a recognized expert on the subject defined the following method in his book, ‘The Practice of Management’. Fluctuation assessment – economy and business goes in cycles. This method identifies extremes Of the cyclical risk involved in such an environment. Bedrock analysis – “what has happened and what impact will it have and when? ” And trend analysis – events follow trends, so how likely and how fast are these events expected to occur? None of these methods would be used on their own however, as said each one brings a different idea and a different perspective to the table.

These three methods can then be further defined into two distinct groups, quantitative and qualitative. Quantitative methods are based n historical, existing data with the dissection and analysis of this data providing guidance towards the ultimate forecast. Qualitative however is based upon experience, observation and expert judgment, this is perhaps the more interesting of the methods since it allows for a more subjective point of view towards a company’s future, and it’s past. But, as with all other scenarios, neither can be used alone.

They must be used in tandem to create a prediction of the future that is sound and reliable. A task which is more formidable than most realize, nevertheless it must be carried out, redactions heard and forecasts drawn all attempting to consequentialness’ at the future. Be that as it may this is not to say that this guess isn’t well founded, as Trucker says; “Still, there is a difference between and ‘educated guesses and a ‘hunch’, between a guess that is based upon a rational appraisal of the range of possibilities and a guess that is simply a gamble. And it is the former that forecasters are adept at gaining. Yet with all the skill in the world predicting the future one hundred percent accurately is impossible no matter how much data you have, even if an event s considered completely Inevitable can you truly say exactly when it will occur. The answer to that is No, you cannot. So as a result forecasting can only step so far into the future. The further you move away from your present time the less predictable the events become, this is referred to as the ‘time horizon,’ when you stray so far you can longer see what will happen.

It is the job a forecaster to determine when this horizon appears and so for how long a forecast can last, typically it is five to fifteen years but there are innumerable factors which would have their impact on this. Forecasting though is not a task that needs to be undertaken on a particularly regular basis, since the data and experience they are based on does not change with time as the ideas that determine planning do. This doesn’t mean that forecasting is an easy task though, as stated it is a task that should only be undertaken by those who can properly and effectively analyses the data while giving clear and direct opinions.

It is in exploring this that we discover to importance Of both forecasting and planning. Forecasting is exceptionally important within a business environment and the construction sector is no exception. As demand for work rises and falls over the summer and winter month’s companies must decide how much work they can afford to take on, where to source materials, whether to deal with all aspects of a build internally or outsource to separate firms. Each point having its own unique but profound impact on any particular job, and a forecasters predicted budget and trends will play a massive part in helping to make these decisions.

Planning is equally as important with plans needing to be able to adapt to changing circumstances but also stay clear to a true destination. There are unfortunately many obstacles which an contribute to the poor execution of a planning exercise. Perhaps the largest negative factor is time constraints, a lack of time can prevent a plan from being properly reviewed and tested which can result in massive problems further down the line, meaning more work to be done and more time wasted, time which was never available in the first instance.

In addition to the poor time availability, poor methods of planning and unsuitable planners, for example those without the intellectual power to carry out the task, will again seriously detriment the effectiveness of the plan. This is why it s not only the plan that is important, but who penned the plan. Others include, a lack of relevant and useful information, unpredicted events which require complete overhaul of the plans, any failure in communication between parties and finally the financial cost of a proposed plan.

There is one final point that could impact the effectiveness of even the best thought through and most thoroughly tested plans, people’s resistance to change. People being unwilling to waver in their thoughts and methods can seriously and irreparably damage a plans cohesion. So again getting the right people onto the right jobs and roles is paramount for a company’s success and all of this stems from good planning and forecasting. Once these interruptions have been overcome the full impact of a successful plan can be felt. A thriving plan will be able to motivate, guide and inspire confidence in people.

Being able to instill these sorts of values in people is key to the success of a business so that all the employees are working towards a common goal. Take for example the construction of a small house or extension to an existing structure. Before any work can be carried out a plan must Be formed and time scales drawn up. First designs must be drawn and approved then necessary transposable identified, even at this first level of business it can be seen how important planning is, say for example that the designs had not been approved by the client and work had started without consent.

This would halt all work and could potentially loose a business a contract. Once transposable have been identified it must be decided what aspects are and are not going to be outsourced, for this we may want to refer back to our forecasters as discussed earlier. Once all the trades have been gathered then the sequence of construction can begin. Again another point which requires meticulous planning if plasterers arrived before bricklayers have finished this would result in wasted time and wasted money, neither of which a business can afford. On especially tight projects this becomes even more important.

For example on the Bib’s program; DID SO: the big build, a large team of transposable, often up to fifty at a time have just nine days in which to completely remodel buildings interiors in addition to often adding extensions and conservatories. To carry out this level of work in such a short time obviously requires the highest level of planning efficiency. And on the rare occasion that these plans are not to the standard required it is shown quite obviously how quickly things can fall out of control. If not for the constant planning and re- planning that was spoken about earlier in the report, these endeavourers would surely fail.

TO further illustrate the point I will refer to a specific episode that was first broadcast on BBC One on 08/1 0/201 3, series 23 episode 9 – Farther. The episode required the remodeling of a home for a three year old wheelchair stricken boy, the house had a fantastically small footprint and so work was ere tight and the floor plans needed to make use of every available millimeter. However, the existing doorways were not wide enough for wheelchair access, something which wasn’t taken into account in the floor plans.

This meant that massive parts of the work were delayed while supporting walls had to be removed and the upper levels re-supported, had it not been for the availability of specialist tradesmen and the quick re-planning of the layout the whole project may have been delayed, something which in these circumstances where all the transposable are volunteering their time free of charge, cannot happen. And so once again it is about getting the right people in the right places, at the right time. This reliance on people is a key part of management.

Delegation and allowing employees lower down the hierarchical structure to formulate and assess their own plans means that the manager is free to attend meetings and the like. So as long as the people making the plans are made aware of and follow the company’s mission statement, then a business will thrive forward. In the context of construction this delegation could be for example, allowing different sub-contractors complete freedom over internal activities so long as he end result is what is desired and the tasks were carried out with the same ethics and policies of the project managers.

In this report we have been exploring the methods and importance of forecasting and planning. Both have multiple methods and we have touched on just a few of them, for forecasting you have examples such as fluctuation assessment, bedrock analysis and trend analysis all quantitative methods of forecasting, that being using raw facts and figures to make mathematical calculations. The second is qualitative which draws on the opinions and experience of field experts to make company forecasts. Once these forecasts have been made a company may begin filtering down through the many levels of planning.

First you have corporate level planning, where very broad ‘mission statements’ will be laid out along with the companies policies on ethical trading internal relations and social responsibility. Then continuing on to the strategic level where long term plans would be set out in accordance with the forecast figures and corporate mission. Finally the operational level, where in a construction context could be a project manager who was on site with clear direction from the building plans would instruct annotators towards their work and see toward maintaining a high standard of work at all times.

The importance of all these methods is clear as without them there would be no direction within a company and it would be extremely difficult for work to be carried out properly. So, providing you have all the right people in all the right places, all following the right plan, a business cannot cease to function at peak efficiency.