Useful Professional Techniques

The basic patterns above underlie all planning, but three specific professional techniques -- network analysis of projects, the systems development life cycle recommended by the Data Processing Management Association, and simple breakeven analysis -- will be helpful in specific situations.

3.1 Network Analysis

Most of the planning we do is for projects, which have a definite beginning and a definite end, and a process of implementation which breaks down into specific activities which must be performed in clear logical sequences. Thus, activity network planning techniques, such as PERT, are useful to us.

The key to these techniques is the activity network diagram, which shows the activities and their logical order in an easily understood form. (Professionals go on to use the diagram to guide the allocation of people, skills, time, scarce resources and money, but for our purposes the diagram alone is usually all we need. If formal planning of resource allocation is needed in a specific case, I suggest that a good textbook be consulted and that one of the commercial PERT software packages be used.)

ANALYSE: — CONTEXT? — SWOT?

PLAN: OSL IMPLEMENT RESULTS

MONITOR, EVALUATE & CONTROL

EXAMPLE PROJECT: To make a cup of tea.

We start at the end, "cup of tea made," and work back to the beginning by asking "What must be done before this stage (technically, 'event') is reached"? This specifies the activities, events, and their logical order, which we represent in a network diagram:

END: Cup of tea made

1. Fetch cup, saucer, tea, colander 2. Boil water

3. Fetch milk, spoon, sugar 4. Put tea in colander

5. Pour boiling water through tea into colander 6. Remove colander and spent tea

7. Add sugar and milk to taste and stir

8. Clean up

In the network diagram, Activities are represented by numbered arrows and the resulting Events by circles. The key rule is that an Event cannot occur until all activities which flow out of it can start, that is, all Activities pointing into it have been completed. For instance, we cannot add sugar and milk to our cup of tea until the colander is out of the way, but we can fetch the milk and sugar at any time before we stir them into the tea.

4 5

1 2 6

3 7 8

3.2 The Systems Development Life Cycle

"Systems" is a rather cold and mechanical word, but in reality once we organise people, procedures, activities, machines and such like to achieve a purpose, we have set up a system. From time to time, such systems tend to become outdated and need to be renewed or replaced. Thus, the need for the systems development process.

The key indicator that it is time to check whether a system needs to be upgraded or replaced is a mounting dissatisfaction with its performance among those who have to live or work with it on the ground. If it is easy to express such unease, it may be vocalised. More often, however, it is

The first step in the development process is to ventilate frustrations and to investigate their roots. It is wise to set up a team to do this, one which draws its membership from those who work with the system, those who manage it, and those who consume or benefit from its products or

services. It may also be wise to include specialists and systems experts, who can serve as resource persons.

Such a team conducts a Preliminary Investigation and produces a feasibility report with one of three recommendations:

(1) Take no action -- no alternative offers better performance; (2) Maintain the system -- relatively small changes will suffice;

(3) Develop a new system, in accordance with the attached analysis and recommendations.

The results of this investigation are evaluated, and appropriate action is taken. If a new system is to be developed, a development team is set up and goes to work:

1. General Analysis and Design: The report from the Preliminary Investigation and further technical investigations are used to generate an overall design for the new system. This design sets the framework for the detailed work to follow, and should ensure that the elements of the new system as it is developed in detail will work together satisfactorily. (Too often, individual components of a system work separately, but cannot work

together.) The resulting specifications should be evaluated before moving on to the next phase.

2. Detailed Design and Implementation: In this phase, the detailed design, testing and development and/or procuring of components is carried through, and the system, at least as a pilot test, is put together "on the ground" and tested as thoroughly as possible. Bugs are ironed out, and the new system is evaluated by its prospective users and brought to an acceptable condition.

3. Installation and Commissioning: The new system is installed, workers are trained, managers are briefed, last minute bugs are ironed out, and the system is commissioned -- formally put into service. (At this point, the design team hands over responsibility for the system to management.)

Finally, the whole process is subjected to a formal Review, and lessons for the future are drawn and documented, so that the organisation can benefit from the system development experience. It is wise to update this final review on a regular basis, to see if the system lives up to its claims, and to detect when it, in turn, begins to become outdated or in need of maintenance.

3.3 Breakeven Analysis

Quite often, we have to charge for materials, price tickets for a concert, or set the fee for a

retreat, camp or conference. Breakeven analysis provides a relatively simple but effective way to do this.

The key point of breakeven analysis is the observation that some costs vary more or less directly with the number of units sold, but others are relatively fixed:

TOTAL COSTS = FIXED COSTS + VARIABLE COSTS

VARIABLE COSTS = COST PER UNIT x VOLUME OF SALE

TOTAL SALES = SELLING PRICE x VOLUME OF SALE

Thus, if we plot costs and sales versus volume of sales, as in the diagram, as long as the selling price per unit exceeds the cost per unit, at some volume of sale (the breakeven point) the income from sales will just equal the total costs, and if sales exceed this, there will be a profit. We can therefore estimate what volume of sale will break even at a given price, or what price will break even at a given volume, or what the profit or loss will be at given selling prices and volumes. (Often, however, the costs will not fall along a single straight line for all volumes, or may be curved, so costing must be very carefully done.)

A simple example will clarify the case. Suppose we rented a hall which seats 1,000 for $ 500, and that the additional cost per customer is $1.00. If we pay $100 to print tickets, and charge $ 5.00 per ticket, the breakeven point will be:

at breakeven, Total Costs (TC) = Total Sales (TS)

Sell Price (SP) x Vol of Sale (V) = Fixed Costs (FC) + Var Costs (VC) = FC + V x Cost per Unit (UC)

COSTS/SALES SALES

TOTAL COSTS

FIXED COSTS

or, breakeven volume, V = $ 600 / $ 4 = 150 customers

(Of course, it would be even easier to simply plot and read off the results from a graph.)