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Assumption Based Planning (ABP) is a planning and decision-making tool developed by James A Dewar of the Rand Corporation. ABP seeks to identify and bring to attention all possible assumptions inherent in the plans of an organization in order to prepare for any unwelcome surprises that may be lingering on the horizon.
Assumption Based Planning was first developed to help the United States Army with mid to long range planning and has been found to be effective in environments where significant uncertainties exist. ABP is now also highly regarded as an effective strategic planning tool for business as it helps planners identify assumptions within their plans and prepare for changes in the environment. ‘The primary aim of ABP,’ as Dewar explains in his book, ‘is to ensure a plan is cognizant of and responsive to major uncertainties inherent in assumptions that underlie it.’
Dewar asserts that it is necessary to accept that all plans make assumptions about the future. Even a simple plan for a birthday party can contain many assumptions. The following example will use the birthday party scenario to illustrate the process of ABP.
Step 1 – Examine the Plan for Assumptions
The plan is to throw a birthday party two weeks on Saturday on the patio of a newly opened tapas restaurant in town, with 10 good friends in attendance.An assumption is an assertion about some characteristics of the future that underlies current plans.
An assumption is important if its negation would lead to significant changes in the plan. Although this is a straightforward plan, it does contain several assumptions:
- availability of the 10 good friends two weeks on Saturday
- availability of a table for 11 people at the restaurant
- availability of a table for 11 people on the patio
- the weather
- the financial situation of all those invited
Step 2 – Identify the Load-Bearing Assumptions
After having examined the plan and identified the assumptions inherent within it, the next step is to identify those assumptions upon which the success of the plan most heavily rests. These assumptions are called ‘load-bearing assumptions’. Assumptions that are load-bearing and vulnerable are most likely to produce nasty surprises, thus:
- If the plan contains certain people, the availability of those people is a load-bearing assumption.
- If the plan is for a specific date, that could be a very vulnerable assumption.
What makes an assumption vulnerable are those elements of change that would violate the assumption or cause it to be wrong. To help contend with such events, ABP highlights three steps:
Step 3 – Signposts
A signpost is a warning sign that can be used to monitor those assumptions that are most likely to produce surprises. It is based on the premise that the best approach in an uncertain environment is to do what needs doing now and watch carefully for changes that will resolve the uncertainties in the future.
Step 4 – Shaping Actions
A shaping action helps shore up uncertain assumptions in order to avert the failure of a vulnerable assumption. Planners generally know how they would like a plan to play out and may have some control over the assumption. For example, while nothing can be done about the weather, an assumption about the availability of a table can be dealt with by phoning quite far in advance.
Step 5 – Hedging Actions
A hedging action helps prepare planners for the possibility that an assumption will fail despite efforts to deal with it. A hedging action involves replanning and typically comes from thinking through a plausible scenario in which an assumption collapses and then asking what might be done now to prepare for that scenario.The model below illustrates the basic steps and flow of ABP.
Further Reading
Assumption based planning at Rand Corporation
