Management and Assumptions

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Assumption based planning in project management is a post-planning method, that helps companies to deal with uncertainty. It is used to identify the most important assumptions in a company’s business plans, test these assumptions and think of hedging actions and what-if scenarios. Conventional business planning methods operate on the premise that managers can extrapolate future results from a well-understood base of information from the past. However, for new businesses and projects this way of planning often does not comply. Most of the time there is no past-knowledge and if there’s any past knowledge available, predicting the future out of it is nearly impossible. The dilemma is that corporate planning techniques often presume more…show more content…
What are we going to do if we’re not certain about the size of the market by the end of September next year? We assume that there the product is not very sensitive to the consumer price, how can we show that we’re right? Sometimes the mere identification of assumptions immediately leads to a change in the business plan. It is for that reason that ABP should be strongly interwoven into the whole business planning process. Implicit and explicit assumptions Assumptions according to Wikipedia are “propositions that are assumed, i.e., treated within the context of a discussion as if it were known to be true or false”. But although the Wikipedia definition of an assumption is correct, a better definition of assumptions in the context of business planning and ABP is given by RAND. “An assumption is an assertion about some characteristic of the future that underlies the current operations or plans of an organization” There are multiple types of assumptions. The most known derivation is between implicit and explicit assumptions. Another classification used in ABP is the derivation between primary and secondary assumptions. This latter categorization is discussed in the Critical assumption planning Wiki. The two classifications are not mutually exclusive; this means that an assumption can be both an explicit and a primary assumption, while another assumption can be implicitly derived. Explicit assumptions are assumptions of which the
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