This video discusses the advantages and disadvantages of bottom up vs. top down planning and which one to choose for your particular programme needs.
- A small but important question when you're planning projects and programs is whether to plan from the top down or from the bottom up. A top down plan would be, for example, where you as the program manager would think right, I reckon the stadium will take nine months to build and will cost 15 million, and the marketing will take four months to prepare and cost two million, et cetera, and then you go to the various project managers and you say okay, Mr. Marketing, or Mrs. Stadium Project Manager, I need you to do this job in nine months and you can have 15 million.
Can you do it? The worst case would be that they would say oh no, I need 12 months and 20 million. So you go back to your high level plan and modify it. The bottom up approach would be when you say okay, Mr. Marketing or Mrs. Stadium Project Manager, how long will the job take and how much will it cost? And by the way, they might be doing the same. They might have to go to their detail people and get all the estimates from them before they can come back to you. And then you take their estimate and you use it as the basis for making your high level program plan.
The advantages of the first method, doing it top down, are number one, it's quicker. You don't have to wait for everyone in the chain below you before you can get even a rough idea of what's possible. Number two is that you can find out early on what's critical and what isn't so that you can then focus on the critical tasks and the critical projects. The estimates for those have to be spot on, whereas for non critical or floating tasks and projects, you don't mind if the estimates turn out to be a bit off or if they run a bit late.
They don't effect anything else. You can also tell the people who are doing the work that they have options about when they do it as long as they plan to do it and then actually do deliver it at some point within their window. But remember that this applies only to time. Any over spends of money are real costs, real money lost, regardless of whether the tasks are critical or not. It's only time where you can have some leeway and a bit of lateness doesn't matter.
But there's a risk that if you ask them for a very demanding time scale, then they may spend too much money doing it, and if you ask for a very demanding budget, then they may reduce the quality too much in order to do it, not realizing that the demanding time scale or budget isn't actually that crucial to you. They're just estimates that you came up with. Now good communication should avoid this, but there's still a significant risk that some of your estimates will put pressure on them that might be good, but might also be a bad thing.
The advantages of the second method, bottom up, are number one, you get them to open first. So you avoid the risk of saying I want it in nine months and for 15 million, and they're thinking ha, I could have done it in six months for only 10 million, but hey, I'll take the nine and 15 if you're offering it. The second advantage is the estimates that you're using are going to be more accurate. They've come from the actual people who are doing the job rather than just being made up by you.
And the third advantage is that the people doing the job have more buy in because they came up with the estimates in the first place. They can't claim it wasn't their fault if the estimates turn out to be inaccurate. But there is a risk that the estimates that you get will all have contingency already included, a bit of padding added in by the people doing them so that they aren't at risk of delivering late or losing money on the job. So when you add your contingency, or even if you don't add any yourself, there's a risk that your overall estimates for time and money will turn out to be larger than they needed to be.
Of course you can counter this tendency by asking them about contingency, asking for details of how they came up with their estimates, but you do need to look out for the padding effect. So which one would I choose? Well I personally would combine both top down and bottom up so I can kind of get the best of both methods. So I'd start by doing a top down plan just for me, but not show it to the people below, and then I'd ask them for estimates now that I know what kind of thing I'm looking for, then if it's good news, cheaper or quicker than I expected, I'll happily take that, but I'll bear in mind that I might be right, they might be over optimistic, so I need to monitor their progress quite carefully.
And if it's bad news and they're slower or more expensive than I expected, then I know I need to drill down into their estimates a bit and get a really good story about why, and if it really is true, then okay, I need to amend my master plan, which isn't too hard to do. What do you normally do for this? Top down or bottom up? And what do you think of my idea of combining the two?
- What is program management?
- Planning from the bottom up vs. top down
- Resource planning
- Managing projects, resources, and time
- Getting the staff you need
- Self-organizing teams