29 January, 2024

Capabilities-Based Planning: A Full Primer for Better Project Definition

By Glen B. Alleman

Capabilities Based Planning, Capabilities-Based Planning

The familiar way to start defining your project is with a set of functional requirements – a functional specification. But increasingly, this approach is not meeting the needs of businesses or organizations; especially with IT projects. A  new approach has emerged that is far more rooted in the strategic context. It’s called Capabilities-Based Planning (CBP). And one of the leading practitioners is Glen Alleman.

Glen is a heavyweight project manager. He served on some of the largest, most complex projects in the US. He is also a serious thinker about how we can practice our profession rigorously. It is a privilege to have Glen contribute this introductory article to the community.

Glenn will look at:

  1. What is Capabilities-Based Planning?
  2. The Case for Capabilities-Based Planning
  3. Connecting the Value Chain from Business Operations to Strategy
  4. Scenario Analysis
  5. Summing-up Capabilities-Based Planning

Before we go on, and I hand you over to Glen, I made a short video (3 min), based on what I have learned from Glen…

What is Capabilities-Based Planning?

Capabilities-Based Planning: A Full Primer for Better Project Definition

Capabilities Based Planning fits naturally with essential business priorities like:

  • Strategy Creation and Implementation
  • Business Development
  • Business Process Improvement
  • Integrated Program Management.

Capabilities-Based Planning (CBP) differs from the more common approach to planning. The standard approach is to base your planning on a shopping list of features and functions. However, CBP focuses more on providing the capabilities that the organization will need, to fulfill its strategy.

This approach is more flexible and adaptive.

It is therefore more robust to the changing needs of the business. And, it implies a modular, building–block approach to delivering enterprise applications. This is valuable: it reduces risk and increases the probability of project success.

So, instead of starting from a formal set of requirements, start with your need to build a set of capabilities.

  • First ask, what do we need to be able to do?
  • This drives a planning response to figure out how to build those capabilities.

This way, you can expose any gaps in architecture, planning, or business understanding. These gaps are often hidden behind formal specifications.

Capabilities Based Planning - Capabilities replace features and functions

So let’s look at what we mean by ‘Capabilities’.

What are Capabilities?

‘Capabilities provide your customer with the means to generate business or mission value.’

Performance-Based Project Management, Glen B Alleman

This definition shows us that capabilities provide a defined outcome for your project. But it is rarely a final end-point. Instead, it lays the groundwork for the continuous delivery of value to the business. A Capabilities-Based Planning approach allows subsequent projects to enhance those capabilities.

Capabilities-Based Planning is Particularly Valuable in IT Projects.

We are all familiar with out-of-control IT projects that produce bloated software products. These build features that were appealing to stakeholders at the outset, but which users do not need. So the features don’t get used, and the time, cost, and risk the project has incurred were a waste.

Capabilities are not the same as Features and Functions.

Capabilities allow stakeholders to state business demands without explicitly specifying a solution. When your project creates a capability, it enables the organization to:

  • Affect an outcome
  • React to an input or change
  • Change an effect

Let’s Compare the Two Approaches

To do this, let’s take an example of how a capabilities-based approach differs from the more familiar functional approach. Here are two statements of a need:

Former Approach: Using Features and Functions in your requirements document

‘We will install a General Ledger and operate it in all financial centers by fall of 2006.’

With these features and functions comes a set of abilities, but they are not made explicit.

New Approach: Using a Capability Statement Framework

‘We will be capable of acquiring a $100M business in less than 90 days.’

With the capabilities explicitly stated, you can directly connect your investment to the strategic objectives.

Capabilities Based Planning - Schematic
Capabilities-Based Planning – Schematic

The Case for Capabilities-Based Planning

Under Capabilities-Based Planning, things are different. Organizations can deliver operational value when a specific capability is available for use. As a result, this lets them meet their business objectives.

On the other hand, features and functions describe the static and dynamic behaviors of a system. As a result, they are not directly connected to business strategy.

So, capabilities provide the answer to the question:

‘To achieve our strategic objectives what must we be able to do, and when?’

You can then use Milestones to mark key points in your timeline. Your big milestones are the delivery points of each of your capabilities. Other milestones mark key points along the way.

So, to sum up…

Capabilities-Based Planning transforms:

  • the delivery of features and functions.

into…

  • a process that delivers a capability in support of a strategy.

Capabilities-Based Planning is planning, under the conditions of uncertainty, to provide capabilities suitable for a wide range of business challenges and circumstances, while working within an economic framework.

Connecting the Value Chain from Business Operations to Strategy

Defining your project in terms of features and functions requires you to start with a functional specification. This will allow you to test that the features work, and that they conform to the specification. We often use a Requirements Traceability Matrix to help with this.

If you start from capabilities, then you have your outcome or effect to test against, from the start. Easy!

Capabilities-Based Planning is part of your Project Management Toolkit.

However, it is better to understand CBP as a part of enterprise process analysis. The essential steps are, in summary:

  1. Identify capabilities the business needs, to support its operational requirements
  2. Use the set of capability options to test how different operations scenarios perform
  3. Make choices about requirements and how to achieve the capability
    You are likely to have a complex set of capability requirements. Therefore, you will probably want to take a portfolio approach, using an integrated portfolio framework
  4. Produce a set of project options, based on the operational models to have assessed.

For more on the software testing process, take a look at our video, The Software Testing Process: What is User Acceptance Testing – UAT?

Putting Capabilities-Based Planning to Work

Using Capabilities-Based Planning means you must change your approach to planning. Now, you need to think of the planning process as a set of business process improvement activities. These focus on increasing the maturity of the capabilities the business needs, to fulfill its strategic objectives.

So, Capabilities-Based Planning is a Business Mindset

Now, your emphasis is on operational capabilities, rather than features and functions. So these operational capabilities become building blocks for change.

However, in a changing environment, you also need to maintain strategic flexibility. So you must assess the capabilities under conditions of uncertainty. This suggests a ‘building blocks’ approach, that can adapt to these changes.

And, as soon as we think about changing business or social conditions, we must also think about…

Scenario Analysis

Scenario-based planning is one approach to setting the objectives of a business strategy. It is widely used in both strategic and more operational, IT-based, projects. There, technologies and needs can change rapidly. Scenario Analysis is popular in decision-making processes, where it is used in two ways:

  1. Finding alternatives to the model you are assuming
  2. Evaluating existing alternative approaches

1. Finding Alternatives

The first use (finding alternatives) is popular but it has problems. For example, we assume we can discover a sound business strategy by studying individual scenarios. This ‘what if’ approach to decision-making is flawed when some of the parameters are unknown. And this is the case in most IT projects.

2. Evaluating Existing Alternatives

The second use of scenario analysis is based on simulation. You can test how different strategies perform, based on competing assumptions about the future. Even if you can create reasonable assumptions, this will soon become complex.

The scenarios trigger sequences of cause and effect. And, the scenarios are related to each other too. So changes made to one operational scenario may impact another. Therefore, you must base your selection of scenarios on a solid understanding of how they affect one another.

Introducing a Capabilities Mindset to Scenario Analysis

A capabilities view of the world can address some of the issues found in scenario-based planning. Capabilities provide a collection point to consolidate scenarios. They systematically define operational concepts and their relationships. So each capability establishes a compelling case for one or more decisions.

So, the approach is to look for capabilities you will need under a wide range of strategic scenarios, or under the scenarios you consider most likely. Together, the need for each of these capabilities will drive your portfolio of projects.

Summing-Up Capabilities-Based Planning

Capabilities create value.

Defining businesses needs through IT–enabled capabilities connects:

  1. the measure of IT’s value
    to
  2. the business’s measure of success

So you should use capabilities to drive your project requirements.

This leads to one of the ‘5 Immutable Practices of Project Success’:

Identify the capabilities needed to achieve:

  • Either, your project objectives
  • Or, the desired end-state for a specific scenario

As a result…

Capabilities allow you to answer the first of the 5 questions that underpin Project Success:

‘What does done look like?’

Performance-Based Project Management

Editor’s Note: Glen Alleman describes his 5 Immutable Principles of Project Success and much more in his excellent book, Performance-Based Project Management: Increasing the Probability of Project Success. I cannot recommend this book enough.

  • It can work as a primer for new PMs (although, it may be a bit too advanced – I’d recommend my How to Manage a Great Project for real beginners)
  • It is perfect for PMs with some experience, who want to go more deeply into the way experienced PMs think and work
  • And, an experienced PM can learn a lot from this book, because it is crammed with Glen’s advanced insights

Learn More about Defining Your Project

You may be interested in our Project Manager’s Project Definition Kit – an innovative course and resource kit, so you can take a jumble of ideas, needs, and requests and turn it into a well-defined project.

Any Questions? Or Observations?

I look forward to reading your comments and questions below. As always, I’ll respond to all of them.

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Glen B. Alleman

About the Author...

Glen is a deep Project Management generalist with 30 years' experience on Software Intensive System of Systems programs in Aerospace, Defense, Federal, and Enterprise programs. He specialises in Evidence Based Project Performance Management for software intensive programs and in using Agile at scale. His blog, Herding Cats is one of the most widely respected in the profession, and his book, Performance-Based Project Management, shows how basic principles can be applied at scale, to the most complex projects.
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