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BSBMGT517
Manage
Operational Plan
Document Name: BSBMGT515A Manage operational
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May-12

© John Bailey 2010 Page Sequence: Page 2 of 75
BSBMGT517 - Manage operational plan
Author: John Bailey
Copyright
Text copyright © 2009, 2010 by John N Bailey.
Illustration, layout and design copyright © 2009, 2010 by John
N Bailey.
Under Australia’s Copyright Act 1968 (the Act), except for any
fair dealing for
the purposes of study, research, criticism or review, no part of
this book may
be reproduced, stored in a retrieval system, or transmitted in
any form or by
any means without prior written permission from John N Bailey.
All inquiries
should be directed in the first instance to the publisher at the
address below.
Copying for Education Purposes
The Act allows a maximum of one chapter or 10% of this book,
whichever is
the greater, to be copied by an education institution for its
educational
purposes provided that that educational institution (or the body
that administers
it) has given a remuneration notice to JNB Publications.

Disclaimer
All reasonable efforts have been made to ensure the quality and
accuracy of this
publication. JNB Publications assumes no responsibility for
any errors or
omissions and no warranties are made with regard to this
publication. Neither
JNB Publications nor any authorized distributors shall be held
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the use of this
publication.
Published in Australia by:
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PO Box, 268,
Macarthur Square NSW 2560 Australia.

May-12
Contents
Contents
1.1 Research, analyse and document resource requirements and
develop an operational plan
in consultation with relevant personnel, colleagues and
specialist resource managers. .................. 15
1.2 Develop and/or implement consultation processes as an
integral part of the operational
planning
process....................................................................................
........................................... 32
1.3 Ensure details of the operational plan include the
development of key performance indicators
to measure organisational performance.
.......................................................................................... 37
1.4 Develop and implement contingency plans at appropriate
stages of operational planning. 40
1.5 Ensure the development and presentation of proposals for
resource requirements is supported
by a variety of information sources and seek specialist advice as
required. .................................... 43

1.6 Obtain approval for plan from relevant parties and ensure
understanding among work team
involved
...............................................................................................
............................................ 44
2.1 Develop and implement strategies to ensure that employees
are recruited and/or inducted
within the organisation’s human resources management policies
and practices. ............................ 49
2.2 Develop and implement strategies to ensure that physical
resources and services are acquired
in accordance with the organisation’s policies, practices and
procedures. ...................................... 53
3.1 Develop, monitor and review performance systems and
processes to assess progress in
achieving profit and productivity plans and targets.
........................................................................ 56
3.2 Analyse and interpret budget and actual financial
information to monitor and review profit
and productivity performance.
...............................................................................................
.......... 59
3.3 Identify areas of under-performance, recommend solutions,
and take prompt action to rectify
the situation.
...............................................................................................
...................................... 61
3.4 Plan and implement systems to ensure that mentoring and
coaching are provided to support
individuals and teams to effectively, economically and safely

use resources. ................................ 65
3.5 Negotiate recommendations for variations to operational
plans and gain approval from
designated persons/ groups.
................................................................................ ...............
.............. 68
3.6 Develop and implement systems to ensure that procedures
and records associated with
documenting performance are managed in accordance with
organisational requirements. ............. 70
May-12
Description:

This unit describes the performance outcomes, skills and
knowledge required
to develop and monitor implementation of the operational plan
to provide
efficient and effective workplace practices within the
organisation's productivity
and profitability plans. Management at a strategic level requires
systems and
procedures to be developed and implemented to facilitate the
organisation's
operational plan. No licensing, legislative, regulatory or
certification
requirements apply to this unit at the time of endorsement.
Employability Skills:
This unit contains employability skills.
Application of Unit:
This unit applies to people who manage the work of others and
operate
within the parameters of a broader strategic and/or business
plan. The task
of the manager at this level is to develop and implement an
operational plan
to ensure that the objectives and strategies outlined in the
strategic and/or
business plan are met by work teams. However in some larger
organisations
operational plans may be developed by a strategic planning unit.
At this level work will normally be carried out within complex
and diverse
methods and procedures, which require the exercise of
considerable

discretion and judgement, using a range of problem solving and
decision
making strategies.
Introduction
As a worker, a trainee or a future worker you want to enjoy
your work and
become known as a valuable team member. This unit of
competency will
help you acquire the knowledge and skills to work effectively as
an individual
and in groups. It will give you the basis to contribute to the
goals of the
organisation which employs you.
It is essential that you begin your training by becoming familiar
with the industry
standards to which organisations must conform.
This unit of competency introduces you to some of the key
issues and
responsibilities of workers and organisations in this area. The
unit also
provides you with opportunities to develop the competencies
necessary for
employees to operate as team members.
This Learning Guide covers:
• Develop operational plan.
• Plan and manage resource acquisition.
• Monitor and review operational performance.

Learning Program
May-12
As you progress through this unit you will develop skills in
locating and
understanding an organisations policies and procedures. You
will build up
a sound knowledge of the industry standards within which
organisations
must operate. You should also become more aware of the effect
that your
own skills in dealing with people has on your success, or
otherwise, in the
workplace.
Knowledge of your skills and capabilities will help you make
informed choices about
your further study and career options.
Additional Learning Support
To obtain additional support you may:

• Search for other resources in the Learning Resource Centres of
your learning
institution. You may find books, journals, videos and other
materials which provide
extra information for topics in this unit.
• Search in your local library. Most libraries keep information
about government
departments and other organisations, services and programs.
• Contact information services such as Infolink, Equal
Opportunity Commission, and
Commissioner of Workplace Agreements. Union organisations,
and public
relations and information services provided by various
government departments.
Many of these services are listed in the telephone directory.
• Contact your local shire or council office. Many councils have
a community
development or welfare officer as well as an information and
referral service.
• Contact the relevant facilitator by telephone, mail or
facsimile.
Facilitation
Your training organisation will provide you with a flexible
learning facilitator.
Your facilitator will play an active role in supporting your
learning, will make
regular contact with you and if you have face to face access,
should arrange
to see you at least once. After you have enrolled your
facilitator will contact

you by telephone or letter as soon as possible to let you know:
• How and when to make contact
• What you need to do to complete this unit of study
• What support will be provided.
Here are some of the things your facilitator can do to make your
study easier.
• Give you a clear visual timetable of events for the semester or
term in which you
are enrolled, including any deadlines for assessments.
• Check that you know how to access library facilities and
services.
• Conduct small ‘interest groups’ for some of the topics.
• Use ‘action sheets’ and website updates to remind you about
tasks you need to
complete.
• Set up a ‘chat line”. If you have access to telephone
conferencing or video
conferencing, your facilitator can use these for specific topics
or discussion
sessions.
• Circulate a newsletter to keep you informed of events, topics
and resources of
interest to you.
• Keep in touch with you by telephone or email during your
studies.

May-12
Flexible Learning
Studying to become a competent worker and learning about
current issues
in this area, is an interesting and exciting thing to do. You will
establish
relationships with other candidates, fellow workers and clients.
You will also
learn about your own ideas, attitudes and values. You will also
have fun –
most of the time.
At other times, study can seem overwhelming and impossibly
demanding,
particularly when you have an assignment to do and you aren’t
sure how to
tackle it…..and your family and friends want you to spend time
with
them……and a movie you want to watch is on
television….and….
Sometimes being a candidate can be hard.

Here are some ideas to help you through the hard times. To
study effectively, you
need space, resources and time.
Space
Try to set up a place at home or at work where:
• You can keep your study materials
• You can be reasonably quiet and free from interruptions, and
• You can be reasonably comfortable, with good lighting,
seating and a flat surface
for writing.
If it is impossible for you to set up a study space, perhaps you
could use
your local library. You will not be able to store your study
materials there,
but you will have quiet, a desk and chair, and easy access to the
other
facilities.
Study Resources
The most basic resources you will need are:
• a chair
• a desk or table
• a reading lamp or good light
• a folder or file to keep your notes and study materials together

• materials to record information (pen and paper or notebooks,
or a computer and
printer)
• reference materials, including a dictionary
Do not forget that other people can be valuable study resources.
Your fellow
workers, work supervisor, other candidates, your flexible
learning facilitator,
your local librarian, and workers in this area can also help you.
Time
It is important to plan your study time. Work out a time that
suits you and
plan around it. Most people find that studying in short,
concentrated blocks
of time (an hour or two) at regular intervals (daily, every
second day, once
a week) is more effective than trying to cram a lot of learning
into a whole
day. You need time to “digest” the information in one section
before you
move on to the next, and everyone needs regular breaks from
study to avoid
overload. Be realistic in allocating time for study. Look at
what is required
for the unit and look at your other commitments.

May-12
Make up a study timetable and stick to it. Build in “deadlines”
and set
yourself goals for completing study tasks. Allow time for
reading and
completing activities. Remember that it is the quality of the
time you spend
studying rather than the quantity that is important.
Study Strategies
Different people have different learning ‘styles’. Some people
learn best by
listening or repeating things out loud. Some learn best by
doing, some by
reading and making notes. Assess your own learning style, and
try to
identify any barriers to learning which might affect you. Are
you easily
distracted? Are you afraid you will fail? Are you taking study
too seriously?
Not seriously enough? Do you have supportive friends and
family? Here
are some ideas for effective study strategies.
Make notes. This often helps you to remember new or
unfamiliar
information. Do not worry about spelling or neatness, as long
as you can

read your own notes. Keep your notes with the rest of your
study materials
and add to them as you go. Use pictures and diagrams if this
helps.
Underline key words when you are reading the materials in this
learning
guide. (Do not underline things in other people’s books). This
also helps
you to remember important points.
Talk to other people (fellow workers, fellow candidates, friends,
family, your
facilitator) about what you are learning. As well as helping you
to clarify and
understand new ideas, talking also gives you a chance to find
out extra
information and to get fresh ideas and different points of view.
Using this learning guide:
A learning guide is just that, a guide to help you learn. A
learning guide is not
a text book. Your learning guide will
• describe the skills you need to demonstrate to achieve
competency for this
unit
• provide information and knowledge to help you develop your
skills
• provide you with structured learning activities to help you
absorb the
knowledge and information and practice your skills

• direct you to other sources of additional knowledge and
information about
topics for this unit.
The Icon Key
Key Points
Explains the actions taken by a competent person.
Example
Illustrates the concept or competency by providing examples.
May-12
Chart
Provides images that represent data symbolically. They are
used

to present complex information and numerical data in a simple,
compact format.
Intended Outcomes or Objectives
Statements of intended outcomes or objectives are descriptions
of the
work that will be done.
Assessment
Strategies with which information will be collected in order to
validate each
intended outcome or objective.
How to get the most out of your learning guide
1. Read through the information in the learning guide carefully.
Make
sure you understand the material.
Some sections are quite long and cover complex ideas and
information. If you come across anything you do not
understand:
• talk to your facilitator
• research the area using the books and materials listed under
Resources
• discuss the issue with other people (your workplace
supervisor, fellow workers,
fellow candidates)

• try to relate the information presented in this learning guide to
your own experience
and to what you already know.
Ask yourself questions as you go: For example “Have I seen
this happening
anywhere?” “Could this apply to me?” “What if….?” This will
help you to
make sense of new material and to build on your existing
knowledge.
2. Talk to people about your study.
Talking is a great way to reinforce what you are learning.
3. Make notes.
Additional research, reading and note taking.
If you are using the additional references and resources
suggested in the
learning guide to take your knowledge a step further, there are a
few simple
things to keep in mind to make this kind of research easier.
Always make a note of the author’s name, the title of the book
or article, the
edition, when it was published, where it was published, and the
name of the
publisher. If you are taking notes about specific ideas or
information, you

May-12
will need to put the page number as well. This is called the
reference
information. You will need this for some assessment tasks and
it will help
you to find the book again if needed.
Keep your notes short and to the point. Relate your notes to the
material in
your learning guide. Put things into your own words. This will
give you a
better understanding of the material.
Start off with a question you want answered when you are
exploring
additional resource materials. This will structure your reading
and save you
time.
BSBMGT515A - Manage operational plan
Element Performance Criteria
1. Develop operational plan.

1.1
Research, analyse and document resource requirements and
develop an operational plan in consultation with relevant
personnel, colleagues and specialist resource managers.
1.2
Develop and/or implement consultation processes as an integral
part of the operational planning process.
1.3
Ensure details of the operational plan include the development
of
key performance indicators to measure organisational
performance.
1.4
Develop and implement contingency plans at appropriate stages
of operational planning.
1.5
Ensure the development and presentation of proposals for
resource requirements is supported by a variety of information
sources and seek specialist advice as required.
1.6
Obtain approval for plan from relevant parties and ensure

understanding among work teams involved.
2. Plan and manage resource acquisition.
2.1
Develop and implement strategies to ensure that employees are
recruited and/or inducted within the organisation’s human
resources management policies and practices.
2.2
Develop and implement strategies to ensure that physical
resources and services are acquired in accordance with the
organisation’s policies, practices and procedures.
May-12
BSBMGT515A - Manage operational plan

Element Performance Criteria
3. Monitor and review operational performance.
3.1
Develop, monitor and review performance systems and
processes
to assess progress in achieving profit and productivity plans and
targets.
3.2
Analyse and interpret budget and actual financial information to
monitor and review profit and productivity performance.
3.3
Identify areas of underperformance, recommend solutions, and
take prompt action to rectify the situation.
3.4
Plan and implement systems to ensure that mentoring and
coaching are provided to support individuals and teams to
effectively, economically and safely use resources.
3.5
Negotiate recommendations for variations to operational plans
and
gain approval from designated persons/ groups.

3.6
Develop and implement systems to ensure that procedures and
records associated with documenting performance are managed
in
accordance with organisational requirements.
Skills and Knowledge
Required Skills
• literacy skills to access and use workplace information and to
write a succinct and
practical plan
• technology skills to use software to produce and monitor the
plan against
performance indicators
• planning and organisational skills
• coaching skills to work with people with poor performance
• numeracy skills to allocate and manage financial resources.
Required Knowledge
• models and methods for operational plans

• budgeting processes
May-12
• alternative approaches to improving resource usage and
eliminating resource
inefficiencies and waste.
May-12
Range Statement
The range statement relates to the unit of competency as a

whole. It allows for different
work environments and situations that may affect performance.
Bold italicised wording, if
used in the performance criteria, is detailed below. Essential
operating conditions that
may be present with training and assessment (depending on the
work situation, needs of
the candidate, accessibility of the item, and local industry and
regional contexts) may also
be included.
Resource requirements
may include:
• goods and services to be purchased and ordered
• human, physical and financial resources - both current
and projected
• stock requirements and requisitions
Relevant personnel,
colleagues and
specialist resource
managers may include:
• employees at the same level or more senior managers

• managers
• occupational health and safety committee/s and other
people with specialist responsibilities
• supervisors
• union or employee representatives
Consultation processes
may refer to:
• email/intranet communications, newsletters or other
processes and devices which ensure that all employees
have the opportunity to contribute to team and individual
operational plans
• mechanisms used to provide feedback to the work team
in relation to outcomes of consultation
• meetings, interviews, brainstorming sessions
Operational plans may
also be termed:
• action plans
• annual plans
• management plans
• tactical plans
Key performance

indicators may refer to:
• measures for monitoring or evaluating the efficiency or
effectiveness of a system which may be used to
demonstrate accountability and to identify areas for
improvements
Contingency plans may
include:
• contracting out or outsourcing human resources and
other functions or tasks
• diversification of outcomes
May-12
• finding cheaper or lower quality raw materials and
consumables

• increasing sales or production
• recycling and re-using
• rental, hire purchase or alternative means of
procurement of required materials, equipment and
stock
• restructuring of organisation to reduce labour costs
• risk identification, assessment and management
processes
• seeking further funding
• strategies for reducing costs, wastage, stock or
consumables
• succession planning
Organisation's
policies, practices and
procedures may
include:
•
•

organisational culture organisational guidelines
which govern and prescribe operational functions,
such as the acquisition and management of
human and physical resources
• Standard Operating Procedures
• undocumented practices in line with organisational
operations
Designated
persons/groups may
include:
•
•
groups designated in workplace policies and
procedures managers or supervisors whose roles
and
responsibilities include decision making on
operations
• other stakeholders such as Board members

• other work groups or teams whose work will be
affected by recommendations for variations
Evidence Guide
The evidence guide provides advice on assessment and must be
read in conjunction
with the performance criteria, required skills and knowledge,
range statement and the
Assessment Guidelines for the Training Package.
May-12
Critical aspects for
assessment and evidence
required to demonstrate
competency in this unit

Evidence of the following is essential:
• development of an operational plan with details of
how it will be implemented and monitored
• knowledge of models and methods for operational
plans.
Context of and specific
resources for assessment
Assessment must ensure:
• access to appropriate documentation and resources
normally used in the workplace.
Method of assessment A range of assessment methods should
be used to
assess practical skills and knowledge. The following
examples are appropriate for this unit:
• direct questioning combined with review of
portfolios of evidence and third party workplace
reports of onthe-job performance by the candidate
• oral or written questioning to assess knowledge of
budgeting processes
• review of operational plan, key performance
indicators and contingency plans
• evaluation of employee recruitment and induction
strategies

• evaluation of processes implemented to acquire
physical resources and services.
Guidance information for
assessment
Holistic assessment with other units relevant to the
industry sector, workplace and job role is
recommended, for example:
• other units from the Diploma of Management.
1. Develop operational plan.
develop an operational plan in consultation with relevant
personnel,
colleagues and specialist resource managers.
1.2 Develop and/or implement integral part of the operational
planning
process. consultation processes as an
Ensure details of the operational plan include the
1.3 development of key performance indicators to measure
organisational performance.

May-12
1.4 Develop and implement stages of operational planning.
contingency
plans at appropriate
Ensure the development and presentation of proposals for
1.5 resource requirements is supported by a variety of
information sources
and seek specialist advice as required.
1.6 Obtain approval for plan from relevant parties and ensure
understanding among work teams involved.
develop
an operational plan in consultation with relevant personnel,
colleagues and specialist resource managers.
What Is an Operational Plan?
Along with Action and Monitoring Plans the Operational Plan is
the third part
of a completed Strategic Plan. It defines how you will operate
in practice to
implement your action and monitoring plans – what your
capacity needs

are, how you will engage resources, how you will deal with
risks, and how
you will ensure sustainability of the project’s achievements.
An Operational Plan does not normally exist as one single
standalone plan;
rather the key components are integrated with the other parts of
an overall Strategic Plan.
Figure 1: Standards Process.
May-12
The key components of a complete Operational Plan include
analyses or discussions
of:
• Human and Other Capacity Requirements – The human
capacity and
skills required to implement your project, and your current and
potential
sources of these resources. Also, other capacity needs required

to
implement your project (such as internal systems, management
structures, engaged partners and specialist resource managers,
and a
supportive legal framework).
• Financial Requirements – The funding required to implement
your
project, your current and potential sources of these funds, and
your most
critical resource and funding gaps.
• Risk Assessment and Mitigation Strategy – What risks exist
and how
they can be addressed.
• Estimate of Project Lifespan, Sustainability, and Exit Strategy
– How
long your project will last, when and how you will exit your
project (if
feasible to do so), and how you will ensure sustainability of
your project’s
achievements.
Your Strategic Plan may only be considered complete when
these
components have been defined, at least in broad terms. As the
project
moves into Implementation, several of these components are
then defined
in more detail and tested in reality. Thus the Operational Plan
provides a
critical bridge between the Action and Monitoring Plans and
Implementation of those plans.

The level of detail and formality of your Operational Plan will
vary depending
on the size and complexity of your project or program. Small
projects may
only briefly touch on each of these topics before moving on to
implementation. Large, complex programs should be able to
provide
evidence that they have addressed each of the components of an
Operational Plan. The larger the program, the more extensive
and formal
the treatment of each component should be.
An operational business plan customarily has a number of major
elements
or sections. Each of these elements serves a particular purpose
in the
overall presentation of your plan. The following table identifies
and briefly
describes each of the documents or document categories that
would make
up your plan. They are presented in the order in which they
usually appear
in the plan. You must not feel constrained to follow this exact
format if
another way presents itself as being more amenable to the
essence of your
organisation.
Figure 2: The Components of a Written Operational P lan

May-12
The
relative
mix of
products and service to be offered can also affect the content of
a plan. Issues relating to
inventory, production, storage and the like become less
significant as the product/service mix
moves towards a purely service business. For example, a
business that relies on the services
of many professional employees would provide substantial
details about acquiring and
retaining these vital workers.
In any event, it pays to at least mention all the major issues,
even the ones that are relatively
less significant to your particular business. Someone who reads
your plan will be more
confident about your assessment of the situation if you identify
such issues and resolve them,
even if you just summarise these issues. For example, if you
plan to work alone and perform
all services personally, you might note that you anticipate no
need to hire employees or
engage independent contractors if the plan succeeds at the

levels projected in the plan. Any
questions that are raised should be addressed somewhere in your
document.
General format and presentation Remember that the operational
plan is a
clearly recognisable type of document,
and your audience will have some
expectations with respect to style and
contents. Just as your teachers in school
expected you to conform to certain
standards, the people who will look at
your operational plan will have certain
expectations
Cover page and table of contents They indentify your plan and
make it
easy for readers to find and examine
particular documents.
Business background This is the section that provides
company-specific information,
describing the business organisation,

history, and the product or service the
business will provide.
Action plans This is where you detail how operational
and management issues will be
resolved, including contingency
planning.
Financial projections This is another extremely important
section. Your projections (and historical
financial information, if you have it)
demonstrate how the business can be
expected to do financially if the
operational plan’s assumptions are
sound.
Appendix This is the place to present supporting
documents, statistical analysis, product
marketing materials, resumes of key
employees, etc.

May-12
Why Is an Operational Plan Important?
An Operational Plan ensures you can successfully implement
your
Action and Monitoring plans by getting your team to:
• Prepare your project to raise funds, being clear about how you
will get the resources and arming you with a convincing plan to
review
with existing and potential donors.
• Use resources efficiently, to help allocate scarce resources to
the most critical gaps and needs.
• Clearly define your capacity gaps and most critical resource
requirements.
• Reduce risks where possible, and prepare contingency plans
where necessary.
• Think about the long term future of the project, including how
you will ensure
sustainability of your project’s targets and impacts.
When to Design Your Operational Plan

In practice, it is important to consider implementation and
operational issues as you
go through all the earlier steps in the planning process.
Every project has a delicate balance between what is desired (in
your vision,
strategies and intended results) and what you can realistically
do with the
resources you have. It is important that you do not limit your
vision or planning
based on perceived limits to resources, but on the other hand it
is equally
important you do not plan for something that is completely
impossible to implement.
For example, as you define your project team in, you are
beginning to
consider your project’s capacity requirements, including human,
financial
and other resources. As you develop your strategies and
activities and
monitoring plans, your team should be actively considering
what technical
skills and other capacities you need to implement these
activities and tasks.
Here are two approaches that may help you get this balance
right:
• Develop a rough first version of your Strategic Plan early in
the project,
using the Concept Form (An example of this is in Figure 3
following).
Use this to gain feedback on whether your project appears to be

both
ambitious and achievable, and to get buy-in from senior
management
and other potential stakeholders.
• In Steps 1 and 2 of the Standards process (Define and Design)
(Figure
1), involve one or more staff or partners who are experienced in
operations and implementation. Ask them to help ensure the
project
maintains a sense of realism as the design develops.
Figure 3: WWF Network Initiative Concept Form
1
WWF Network Initiative Concept Form (A)
NETWORK INITIATIVE TITLE (Inspiring,
and correct in terms of what the initiative
is about, sensitive and meaningful to the
external context)

May-12
2. Compelling and Relevant Vision and Scope. What is this
program for? What do you plan to achieve, where, and by
when? How is this program relevant to external (and internal)
evolving agendas (e.g. Millennium Ecosystem Assessment,
CBD, MDG Goals, and 2degree Climate Change threshold and
IPCC Report as well as the Living Planet Index and
Consumption/Production Footprint trends)? Why is this a
compelling program to undertake?
3. Transformational Strategy and Sustained Result(s). What
action will be taken under this program to work towards
the vision? Briefly describe this transformational strategy (and
any related strategic activities) and its estimated
transformational potential as well as how impact would be
sustained? Briefly describe the main results to be delivered and
show how they link to the vision (e.g. with a simple Results
Chain)
4. Network Concerted Action: Leadership, Program Team and
Accountability. What are the current leadership and

team and governance situation and who is currently
accountable? What changes would be required for successful
implementation of a Network Initiative? What parts of the
Network are likely to be necessary for optimal performance and
in
what capacity (e.g. global implementers, local implementers,
technical expertise, provision of fund, host of the program)?
Who should be the key people accountable in WWF? Is there a
business champion to support the program?2
1 This concept form should be a maximum of 5 pages.
2 “Business Champion”. It is helpful to identify an individual,
or sometimes a small steering group, to whom the program
leader
will turn for advice and support. This person may in fact have
initiated or commissioned the program. He/ she will often be
the program leader’s line manager.
5. Human resource capacity. Are there major implications for
human resource capacity in WWF? What additional
human resources might be needed internally? What type of
capacity building and or training programs might be necessary
for implementation? What type of support would be needed and
for how long? Who might be involved that have not

traditionally been engaged in programs?
NAME OF Network Initiative CONCEPT
FACILITATOR AND CONTRIBUTOR(s)
DATE
SUMMARY – What does this Network Initiative definition
recommend?
a. New Program or major
up scaling of a current
program
b. Continuation of
program – little change to
strategy, but major
change to operation
c. Continuation of
program – major change
in strategy; little change in
operation
d. Continuation of

program- major change to
strategy and operation
1. Brief Background. Set the context. What problems and/ or
opportunities are creating the need for this program
concept? (Where applicable, include results of previous
evaluations or learning from other projects/programs).
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6. Stakeholders and Partners. List key stakeholders who have an
interest in the success or failure of the program
(mostly external- though internal if over and above those listed
in No.4). Where applicable, state the implementing
partner(s) and describe WWF’s prior experience of them.
7. Next Steps. State the next steps for this program (assuming
the concept is approved) e.g. a formal program

development phase- who would need to be involved; gathering
of specific key information; learning from other
projects/programs; or detailed planning and implementation.
ADDITIONAL OPTIONAL INFORMATION:
8. Goals, Objectives and Monitoring. Propose goals (impact-
oriented) and objectives (outcome-oriented) in line with the
vision (these may be draft only and subject to change). How
will progress towards the goals and objectives be measured
(propose 1-3 key indicators)?
9. Risks and Assumptions. What are the (internal and external)
risks associated with the program and the chosen
transformational strategy? What steps would you suggest to
minimise risk? What key assumptions must hold true for this
strategy to work?
10. Alternative Strategy Choices. What alternative strategies
have you considered? Why do you think the chosen
transformational strategy is the most appropriate (you may
choose to describe the chosen strategy in more detail)?
11. RESOURCES REQUIRED
Financial Resources (estimate how much

CHF would this require)
FY08
Budget
FY09 FY10 FY11 FY12 TOTAL
Current Financial Commitment (if
applicable and from whom)- add row(s) if
necessary
CHF
Additional Financial Commitment required
Total Finance required
How to Design Your Operational Plan
The following sections describe how to develop the different
components of
a complete Operational Plan. It is worth noting that there are
strong links
between the four components described here, and even some
overlaps. You
may find it easier to address them in a different order than is
presented here.
You may also wish to address multiple steps at the same time,
or at the time
you are working on other steps.
The four components of an operational plan involve:

1. Human and Other Capacity Requirements
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2. Financial Requirements
3. Risk Assessment and Mitigation Strategy
4. Estimate of Project Lifespan, Sustainability, and Exit
Strategy
An Operational Plan should be developed with the involvement
of
appropriate staff and partners. Although your core project team
members
will take the lead in many areas, they will require strong
support, often
involving staff from different parts of the organisation. For
example:
• A Project Administrator or Finance (F&A) Officer should be
involved in
defining financial requirements

• Human Resource and/or F&A staff should be involved in
assessing HR and
capacity needs
• HR, IT or Operations staff should be engaged in discussions of
processes,
procedures and systems (e.g. accounting software, technology
infrastructure) capacity needs
Efficient operational planning and implementation requires
continuous and open
collaboration between the core project team and these other
staff.
Human and Other Capacity Requirements
The first step of an Operational Plan is to conduct a broad
analysis of the
human and other capacities required to implement your project
– and current
and potential sources of resources and partners to help fill
capacity needs.
This analysis should build on earlier work that would be done in
setting up a
project team.
We need to define the initial team composition and operations
What
Are Team Composition and Operations?
A project or program is ultimately designed and implemented by
a specific
group of individuals who comprise your project/program team.1
Over the life
of your project, there are many different potential roles that you

will need to
fill on your team:
• Initial Project Team – The specific people who initially
conceive of and
initiate the project. They may or may not go on to form the core
project
team.
• Designated Project Leader/Manager – Although leadership
responsibilities are often shared between team members,
normally one
individual is appointed as the overall project leader. Specific
roles that
the leader often plays include managing the performance of
other team
members, relations with key stakeholders, and the process of
going
through the project cycle.
• Core Project Team – A small group of people (typically 3-8
people) who
are ultimately responsible for designing and managing a project.
• Full Project Team – The complete group of people involved in
designing, implementing, monitoring, and learning from a
project. This
group can include managers, stakeholders, researchers, and
other key
1 The term Project is used throughout this document as
shorthand for Project/ Program. The guidance applies equally to
projects and
programs.

May-12
implementers. You need to have a wide range of skills on your
project
team.
• Project Advisors – People who are not on the project team, but
to
whom the team members can turn for honest feedback and
counsel and
who can champion your cause.
• Project Stakeholders – Individuals, groups, or institutions who
have a
vested interest in the natural resources of the project area and/or
who
potentially will be affected by project activities and have
something to
gain or lose if conditions change or stay the same. Just because
someone is a stakeholder does not mean that you will want them
on your
project team. But if they are a key stakeholder, you also cannot
ignore
them in your analyses of the situation. Cultivation of key
stakeholders

can be a long process itself that may have to begin well before
your
process gets underway.
• Process Facilitator – A process facilitator is a person who can
help the
project team through the planning process. A process facilitator
is
typically part of the initial and/or the core team. A good
facilitator
understands the key elements of the process, has good
facilitation skills,
and can keep your team from getting too bogged down in any
one part
of the process. This person does not need to be a “professional”
facilitator, but should be someone who is intimately familiar
with applying
the planning process to “real-world” conservation problems.
Some of these roles such as the need to appoint a leader and
have core
project team members, are important for all projects. However,
projects and
programs vary enormously in scale and complexity. Clearly you
need to take
this into account in deciding who to involve in the team. Staff
will possess
some but possibly not all of the required knowledge, skills and
experience.
You may need to involve “outside” expertise such as
consultants or
academic institutions. In addition it may be important to involve
key partners
with whom you may expect to collaborate in future. This can
help you to
build ownership or buy-in for the project. It is worth bearing in

mind that such
partners (especially external partners) may have different
priority issues in
mind, and you may need to take extra time to define and design
the project.
In addition to determining who is on your project team, it is
also important to
determine how the members of the team will work together.
Specific team
operations that need to be agreed on include what the team is
setting out to
do, what team members will do, how team members will work
together and
make decisions, a rough timeline for project activities, who else
needs to be
informed or involved, and what resources are required to move
through the
project cycle. It is important to write this down in the form of a
project charter
or concept form. At this early stage you can only provide a
“rough sketch”
of the design; you will not have all the information required to
fully define the
project, but you can at least clarify what you do and don’t
know.
Why Is Defining Team Composition and Operations Important?
Although conservation focuses on biodiversity, it is
fundamentally a human
endeavour. To this end, the most important resources for any
conservation project are the
people who will be involved in designing and implementing it.
It is the commitment and skills
that these people bring that will ultimately determine if your

conservation planning process
will result in the development of effective strategies that will
truly be implemented and
evaluated over time. If you set off with the right people,
structures and processes involved
in the project, you should be able to move the project forward
quickly and efficiently, and
May-12
you have a good chance of being ultimately successful.
Conversely if any of
these aspects is lacking, your project is likely to be ineffective
and/ or
inefficient.
One of the key principles of adaptive management is that the
people who
will ultimately be responsible for implementing a project must
also be
involved in designing and monitoring it. If project managers
don’t intimately
understand the assumptions that have gone into a project plan,
chances are
they will not be able to effectively implement the plan – or to

successfully
adapt it and change it over time. Another key principle is that
having project
team members with different skills, knowledge, and experience
will
generally lead to a more creative and resilient project. Project
team
members collectively need to have knowledge of the area (both
its ecology
and human context), ample conservation experience, and an
ability to think
strategically. A final principle is that although it is important to
have
continuity, project teams also need to grow and change over
time as
conditions change, the project matures, and as people’s careers
evolve.
When to Define Team Composition and Operations
You need to define your initial project team right at the start of
the project.
This team should then relatively quickly identify the core and/or
full project
teams. Of course the composition of the project team may
change as you
move through the management cycle. It is often very helpful to
maintain
continuity in terms of the project leader and some key team
members, but
this is not always appropriate. The key is to recognize and make
use of
existing skills and experience to ensure that the project moves
forward with
the best available knowledge. Below some symptoms of
effective and

ineffective teamwork which may help a project team consider
how it is doing
and whether any changes are needed are shown. Remember that
it can
take some time for an effective team to develop, so you may
need to be a
little patient!
Figure 4: Effective and Ineffective teams
You also need to make sure you account for any other resources
and
enabling conditions required to implement your project (such as
community
support, leadership, and a supportive legal framework). Some of
these needs
will probably be raised in your analyses of Risk and
Sustainability (see
below).
For smaller projects, you can use the following list of questions
to evaluate capacity
needs, although this is not intended as an exhaustive list:
Project Team Skills
• Do you have enough people with the science, policy,
technical, process,
fund raising or communications skills required to implement the
activities
in your strategic plan? If not, how will you get them?
• To recruit any new staff or consultants required, how long will

it take,
how much will it cost and who needs to be involved?
• Will the implementing staff require enhanced or new skills?
How will
these skills be built, over what time frame and at what cost?
May-12
Partners and Wider Institutions
• How much extra work will be required of partner
organisations? Do they
have enough people with the required skills, knowledge and
time? Do
they have adequate resources to engage on this project, and
have they
planned and budgeted accordingly?
• Do you have the necessary wider institutional engagement and
infrastructure for longer-term sustainability, or can this be
built?
• Does your core team have the ability to monitor partners’

activities and
impacts?
Project/Program Team Management and Governance
• Do you need to make any adjustments to the procedures that
you
worked out? In particular, have you worked out reporting lines,
how and
when you meet/communicate, how you share information, how
you
make decisions, and levels of authority for spending money?
Office Systems and Support Functions
• How much extra work will be required of the following areas
of operation,
or will there be needs for recruitment, training or additional
funding for
any of these? - Finance and Administration, and Operations -
Fundraising and Communications - IT - Human Resources -
Science,
Policy and Technical Support - Project or Program Management
Support
Financial Requirements
At this stage of your project or program, your team should carry
out a general
assessment of the financial requirements of implementing your
plan over the
expected lifetime of the project. This can be a fairly simple

estimate for
smaller, shorter term projects. For longer term, complex
programs, a more
comprehensive financial estimate is recommended. Both are
described in
this section.
In general, this estimate should be a high level (not too
detailed) evaluation
of your current and potential sources of income, the estimated
costs of your action and
monitoring activities, and any projected financial resource gaps.
You should also consider
Effective Teams Ineffective teams
• Clear objectives • Falling performance levels
• Good decision
making processes
• Low levels of motivation
• Clear roles, responsibilities and
leadership
• Poor communication
• Leadership roles are shared
• Poor or slow decision-
making
• Trust, cooperation, support and
constructive conflict

• Confusion about
responsibilities
• Individual and
mutual
accountability for performance
results
• Role and territory conflicts
May-12
long term expenditure and funding needs, particularly for larger
projects and programs
where the scope of your strategies may be far beyond your
current capacity, and you
envision the need to scale up, raise more funds, and engage
more partners in order to carry
out the work.

When estimating expenditure, you should include both direct
project
expenditures such as staff, research, monitoring and other
resources
required, and indirect project expenditures such as office
management and
administration.
A. Simplified project financial needs estimate or model:
For most projects, you may develop a simple table or “model”
in Excel that
shows estimated project income, project expenditures, and your
project’s
balance and funding gaps (if any). The following is a very
simplified example
of a five-year financial estimate.
The level of detail in this estimate will depend on the size and
complexity of
your project as well as where you are in the project cycle. For
example, early
on in your project design you may wish to have high-level
estimates of the
costs of major activities. Once you are in the implementation
mode you will
have to develop more precise budgets.
In addition, your team may wish to estimate two or three
scenarios in relation
to your projected income and expenditures (e.g. – expected,
bestcase and
worst-case). You should consider how you will respond to these
scenarios,
especially the worst-case scenario. For example, which
activities will you

prioritise as the most important to implement and which will
you delay?
Figure 5: Simplified Project Financial Needs Estimate or Model
Summary
Budget
(All Values
in xxxx
Currency)
Budget FY
2006
Budget FY
2007
Budget FY
2008
Budget FY
2009
Budget FY
2010
TOTAL
A - Secured Income (Grants, Donations, User Fees, Other):

Donor W
Donor X
Source Y
Total Income:
B - Budgeted Expenditures:
Action Plan
Strategy/Activity 1
Strategy/Activity 2
Strategy/Activity 3 etc.
May-12
Monitoring Plan

Activity 1
Activity 2 etc.
Management Expenditures
Other Indirect Expenditures (if any)
Total Expenditures:
C - Balance (A - B):
Balance of funds to raise to cover budgeted expenditures
B. Large program financial needs estimate or model:
For financial estimates of larger and more complex (multi-
partner,
multidonor, and/or multi-country) programs, your financial
needs estimate or
model will by nature become more complex. As you prepare to
implement
larger programs, it is useful to develop “higher-level”
extrapolated income
and expenditure projections to forecast future financial
conditions and needs.
These models are used to estimate the full expenditures of your
action plan,
monitoring plan, other program-wide expenditures such as
management, and any

expenditure associated with building capacity, mitigating risks,
and monitoring performance
and results.
This comprehensive financial model is used to estimate funding
needs and
gaps over the full time frame of a large program (5-10 years or
longer) and
can be structured according to any important dimension of the
program such
as strategies, partners, or key geographic areas. The model
allows you to
establish coherent income targets for the entire program, and
provides your
team with the full context and clear, supportable goals for
securing funding
and engaging additional partners in your program.
As you move to later steps in the project cycle financial models
can also
serve as program management tools. By evaluating expenditure
and
income information and by changing key assumptions, the
model can
demonstrate how financial and operational changes affect long
term funding
and partner needs. Aggregate expenditure, income and priorities
in the
model can guide high-level program budgeting and resource
allocation
decisions.
A financial model provides activity and financial data that can
serve as key
performance indicators (KPIs) for tracking your program’s
progress over

time. For example, you can compare estimated expenditures for
activities
within the model to actual implementation expenditures.
Another potential
use is to track activity progress by comparing planned versus
completed
units of activity over time.
Most financial models are built by estimating expenditures for
all activities,
working from the lists of activities derived from your Action
Plan. After
developing your work plan, you could make your model more
accurate by
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using your lists of tasks to help you estimate expenditures.
Doing so,
however, would take more time so you should consider what
level of
precision is useful for your project.
A financial model for a larger scale project should also reflect
expenditures

for ongoing operations, one-time capital or start-up
expenditures,
monitoring, research, and management. The financial model
may also
include estimates of all current or expected income. Finally, a
financial
model for a large program should be able to provide a gap
analysis of
income over expenditures, and possibly even the ability to carry
out
sensitivity analysis or scenario analysis for key financial
conditions.
Figure 6: Steps and considerations in building a financial model
1) Preconditions
• Determine your conservation strategies and activities and
make sure the
financial model will reflect them;
• Identify who will build and who will maintain (“own”) the
financial model;
• Clarify the roles of any partners in the model (e.g., building
the model,
contributing resources that should be reflected in the model,
which partner
activities will be included in the model)
2) General Considerations
• Identify key parameters (dimensions) of the model such as
geographic regions,

strategies, partners or timing;
• Identify assumptions and variables such as expenditure
drivers, rate of spending,
inflation, or foreign exchange;
• Determine priorities for strategies, activities, geographic
areas, or other
parameters;
• Determine the time horizon for model (5-year, 10-year or
longer).
3) Specific Considerations and Model Details
• Address how expenditure data will be projected (phased)
across the time
horizon of the model;
• Identify which expenditures are one-time (and/or capital
expenditures) and
which are recurring;
• Incorporate program-wide expenditures such as management,
monitoring,
and communications;
• Determine one-time or recurring income sources and
categories the model will
use;
• Develop a gap analysis or scenario projection tool within the
model to evaluate
gaps.

May-12
Risk Assessment and Mitigation Strategy
As you develop your Operational Plan you should assess the
risks to your project and what you can do to mitigate them.
Risks are conditions under which the project/program is
expected to function, but which can cause problems. Projects
often have no direct control over these conditions. High risks
are those that, when not overcome, are likely to stop the project
from
achieving its goals and objectives.
A comprehensive risk assessment identifies and ranks project
risks. A risk assessment
process takes about 2-3 hours to carry out, and will help your
team identify and understand
risks, agree on the seriousness of those risks, rank them, and
decide what (if anything) to
do to address them.
A risk mitigation strategy is a plan to address risks that your
team has identified. Your team

should develop mitigation strategies for any high risk. Timely
risk mitigation allows your team
to anticipate risks in advance and hence avoid a major impact
on your project.
The steps in the risk assessment and mitigation process include:
A. Identify Risks – Your project team should go through a
formal exercise
to identify specific risks related to your project. It is important
to define each
risk using concise and unambiguous language.
The number and relative severity of certain risks may increase
with the size
of your program. Some risks are essentially internal to the
project (within
your team’s control, at least to some extent) and others are
external (outside
your team’s control). A large, multi-country program for
example, may have
greater external political risks due to government instability or
disruptive
cross border relations, and greater internal risks due to network
and
management issues.
B. Rank Risks – The next step is to individually rank each risk
according
to its likelihood, and the severity of its potential effect on the
project. The
risk assessment template should help your team to rank each
risk on a 1-4
scale across at least two criteria:

Likelihood of Risk Occurring
4 = Very Likely – Almost certain to occur over the life of the
project (or a 10 year
period, whichever is shorter)
3 = Likely – Probably will occur during a 10-year period
2 = Unlikely – Probably will NOT occur during a 10-year period
1 = Very Unlikely – Almost certain NOT to occur during a 10-
year period
Severity of Risk
4 = Very High – Would prevent goals and objectives from being
achieved
3 = High – Would cause significant problems or delays in
objectives being achieved
2 = Medium – Would cause relatively minor problems or delays
in objectives being
achieved
1 = Low – Would probably not affect project implementation
C. Determine Final Raking of Risks, and Develop Risk
Mitigation
Strategies – Add the ratings for steps 1 and 2 for each
individual risk and

May-12
then determine whether each individual risk is high, medium, or
low using
these thresholds, and then respond as follows:
6-8 = High Risk – You should have a detailed mitigation
strategy, and perhaps
consider modifying your goals and objectives
4-5 = Medium Risk – You should have a clearly defined
mitigation strategy
2-3 = Low Risk – No mitigation strategy required (or a very
basic strategy at
most)
For risks that are essentially internal (e.g. capacity, leadership,
partners)
you should focus on taking action to reduce the risk. For risks
that are
external to the project (e.g. political, economic) your response
will more
likely be to develop contingency plans and monitor the risks.
You should
then assign responsibilities among your staff and/or partners for
carrying out
each mitigation strategy and for monitoring each risk as
necessary.

Mitigation actions for high risks may be large enough to be
included in the
budget.
You can use the Risk Assessment and Mitigation Template to
document and
track each risk, ranking and mitigation strategy. It is important
that your team ensures that
your risk mitigation strategies are clear and manageable with
the resources available to your
project.
Estimate of Project Lifespan, Sustainability, and Exit Strategy
Finally, one of the most important (yet sometimes most
forgotten) tasks of
the design step is to think about the long term future of the
project in terms
of:
• Sustainability of the project – A project can be said to be
sustainable
when it continues to deliver conservation results indefinitely
after most or all
external support has been removed.
• Estimated Project Lifespan – The period of time over which
your team
expects to carry out all activities under the Action Plan and
achieve the project’s intended
results. Your initial action plan may represent a first phase of
your project. You should
be clear about whether you expect further phases and what the
timing of those phases
will be.

• Exit Strategy – The process by which an organisation can
systematically and
responsibly pull out of supporting and/or managing a project,
either concluding the work
successfully or handing management or funding over to another
organisation.
In looking at the long-term plans for your project, it is
particularly important
to clarify expectations with partners, stakeholders, and your
own staff.
Getting projects up and running successfully is quite a
challenge, but exiting
from a project or parts of it can be even harder. Few projects
seem to have
implemented exit strategies and reliable experience is scarce.
The basic
steps required to develop an exit strategy are described here.
A. Examine Factors Ensuring Sustainability – The following
table lists
some of the most important factors that help ensure
sustainability (note
some of these may not be relevant to your particular project).
You need to
consider to what extent you Action Plan, Capacity Assessment
and
Financial Plan already address these factors and identify what
needs more
attention, either now or in the design stage or later on as the
project

May-12
develops. By systematically following steps it will be found that
many of the
factors would be addressed. (Figure )
Figure 7: Sustainability Factor
Sustainability Factor Questions for Consideration
Local Situation /
Grounding in Reality
Has a thorough Situation Analysis been
carried out?
Biodiversity and
Ecological Processes
Will you be able to measure the condition of
the biodiversity that you plan to affect?

Policy and Legislative
Environment
Is there sufficient policy and legislative
support by the partners/institutions/ other
authorities involved?
Economic Forces
Do you understand the impact of trade and
market forces on the project (local, national,
international, global)?
Is the project economically viable?
Financial Resources
Will the financial resources needed to
maintain operations after the project be
available (infrastructure, equipment,
staffing, etc.)?
Institutional,
Community and
Individual Capacity
Will the government, communities or other

partners involved in project implementation
have the necessary capacity to manage
ongoing activities and monitoring?
Appropriate
Technology and
Methodologies
Will local staff and communities be able to
use the methods, equipment and
infrastructure and maintain them after the
end of the project?
Stakeholders’ Priorities
Do you know the priorities of stakeholders?
Are you addressing them or acknowledging
them in some way?
Participation and Partners
What is the project’s strategy for
encouraging involvement and ownership of
different stakeholders?

Socio-cultural Issues and
Gender
Do the project strategies, including any
proposed changes to people’s behaviour,
take into account cultural traditions,
religious beliefs and social practices? Will
sufficient ownership of project strategies by
local communities be assured?
May-12
B. Define Who Will Continue the Activities –To exit
successfully, key
stakeholders with influence over the factors that affect the
program need to
take ownership. The development of effective partnerships with

such
influential groups or institutions is therefore critical; within this
partnership,
common goals and objectives need to be agreed. The project
team may
during the lifetime of the project deliberately limit itself to
playing the role of
a facilitator, encouraging the major stakeholders to play the
principal
implementation roles.
C. Estimate Lifespan and Define Exit Strategy – It is important
to set
expectations with all partners regarding how long you anticipate
the project
will last and what will happen when it ends. An estimate of the
lifespan is
important, but at the same time it is important to base any
actual decision
about exit on clear criteria rather than rigidly fixing the time for
an exit.
Based on your analysis of factors for sustainability, your project
team and
key partners should define the end state that you would want to
see in order
to be able to exit. This may mean more than the achievement of
your goals
and objectives as such; it may also mean that certain supporting
conditions
have to be in place for those achievements to last, based on the
most
important sustainability factors.
For example, a fully functional watershed committee may
require full levels

of participation and clear decision-making structures in order to
be
sustainable. It is then useful to map out how this end state will
be achieved.
Often it can be useful to define the long-term future of a project
in phases.
For example the project team may continue to play a role after
the first phase
ends, but its role may change (e.g., it may focus on different
activities or
transition from an. implementer to a facilitator).
Furthermore, projects usually need to differentiate their exit
strategies by
each major activity or group of activities. Some activities may
be effectively
completed within a short time while others may be long-term.
As the project
develops, the team should define:
• Which activities can/ should stop completely? Exits will
typically be
appropriate for activities that completely achieve their
objectives and
need no further attention from project team or partners OR
activities that
are unlikely to ever achieve their objectives.
• Which activities will be continued by a partner? The project
team should
consider how the effectiveness of such work is monitored.
• Which activities will be continued by the project team?
Reasons may
include a requirement for particular expertise or that the criteria
for exit

have still not been met and the team’s involvement is seen as
critical.
D. Making An Exit – As an exit scenario develops, it is
important to
maintain positive relationships with partners and key
stakeholders. In
particular, it is important to:
• Signal intentions in advance
• Formally communicate decisions when they are known
• Discuss implications of an exit, including expectations for
each main
Equity
Will organisations and individuals involved
in the project (or living in the project area)
benefit fairly?
May-12

Activity
• Allow time for scale down of activities, as appropriate
1.2 Develop and/or implement consultation processes as an
integral part
of the operational planning process.
The operational plan is an essential component to a business
plan and it tells
how you going to get your product/service out to market. That
is, how you are
going to get your product out of the production stage to the
doorstep of you
target customer.
An operational plan may seem mundane but it will outline some
very important answers
to such fundamental questions such as:
• Who is doing what?
• What are the day to day activities?
• How will the suppliers and vendors be used?
• Who are the suppliers?
• What are the labour requirements?
• What are the sources of raw materials?
Why is this section so important? First off, it will outline to the

stakeholder
how you are going to carry out the delivery of your product or
service. What's
the use of having a product or service if you don't have a way to
get it from
the development stage to the consumer’s home?
A business plan reviewer gives this section a lot of weight
because they
want know what you and your employees are doing to get your
product/
service out to market.
These activities may seem like the kind of details that take care
of
themselves but these are fundamental and critical for your
business
success. Why? This is where you translate theory into the...
Real World
It is important that you understand why this section is
important. It's because you are
now dealing with practice and not theory.
You see, there's a far greater chance that a business will fail
because
fundamentals aren't handled properly than because the basic
business
concept is faulty.
The fundamentals being the core of your business such as the
operations.
You must not assume that the operations are going to take care
of

themselves.
You need to know the importance of a well thought out
operational plan and
place considerable weight on this section since it can mean the
success or
failure of a business.
As an internal planning document, the plan should be a detailed,
in-depth
operational plan. This will give the entrepreneur an opportunity
to work out
many potential problems on paper prior to commencing
operations.
May-12
However, if you are using your plan to potentially leverage
additional funds,
remember not to get too complicated. Understand that the reader
wants to know
that you have worked out your operations and how your product
or service fits into
the “big picture”.

Don't leave your reader sitting there scratching their heads
trying to figure
out every detail. Keep it simple and remember, you want to
convey to your
reviewer that you have everything under control.
If you are planning to present your plan to a third party
reviewer, ask yourself these
two questions:
1. Will the reviewer understand the content?
2. How important is the content to the overall understanding and
appreciation of
the business plan?
The relative importance of an operational plan will depend on
the nature of
the business. A production facility will probably require
significant attention
to operational issues.
On the other hand, most retail businesses and some service
businesses will
probably have less operational complexity. However, don't get
the
impression that an operational plan is not needed because it is.
What Should An Operations Plan Cover?
I'd like to point out that an operational plan should be specific
to your
business. Not all businesses require the same level of
complexity when it
comes to the operational plan. The topics that I cover here will
not all apply

to your particular business.
In your own plan, you do not necessarily need to address each
topic. Rather,
limit your operations section to those issues that are needed and
considered
essential to the nature and success of your business.
If your business is a manufacturing business in which product
distribution is
often a major difficulty, you may want to include a couple of
paragraphs
clarifying your company's approach to improve this difficulty.
However, if your
business is a retail operation, distribution may not be a problem
and you might
not have to discuss it.
On the other hand, if you business is an operation that develops
or relies on
a lot of new technology, you need to explain those aspects
thoroughly. You need to explain
who will be using that technology and what the implications
are.
Basically, you want to explain to your reader how you are going
to deliver
your product. What are you and/or your employees going to be
doing on a
daily basis from the time you open up to time you close. This is
what your
reader wants to know.
Some issues often addressed in an operational plan include:
• Production or manufacturing

• Facilities
• Inventory
• Distribution
• Maintenance and service - Order fulfillment and customer
service
Production or Manufacturing
May-12
Every manufacturing business has a production process - the
way it goes
about fabricating a raw or component material and creating an
item with
greater usefulness or desirability. However, even if your
business is a
service or retail operation, you have to use a method of
“producing”
something of value for your customers.
Integral to the overall understanding of a production oriented
business is an

appreciation of how the company will manufacture its products.
One straight
forward way of conveying such information is to examine this
activity in
terms of resources, processes, and output.
Resources may be characterized as those elements the firm must
utilize in
an effort to manufacture a desired product. Typically, these
include
manufacturing facilities, machinery, equipment, materials and
related
assets, and labour. Depending on their relative importance,
attention might
be focused on each of these elements.
In the case of a production facility, it is important to discuss the
process by
which a company will manufacture its products. This usually
involves some
description of the plant, equipment, material, and labour
requirements.
What techniques and processes are going to be used in
combining these
resources, such as assembly lines and robotics; and the
capability of the
business in terms of production rates, critical constraints such
as productive
capacity, or quality assurance programs.
The operational plan might include a profile of the facility, that
will be used,
including comments regarding size, location, and related
specifications -
clearance, loading docks, and proximity to other outlets such as

railways
and airports.
There should be some comment as to the nature of the
machinery and
equipment being used or acquired. Also, sources of raw
materials or
components availability, price volatility, and key supplier
relationships are
often worth mentioning.
The number one question being asked here is how you are going
to implement
the techniques and processes to get your product out the door.
What sort of
machinery are you going to be using and who's going to be
using it?
Take the time to evaluate your production process and assess
the plan to see if
you can enhance efficiencies and improve the quality of the
finished product.
In doing so, you may find little gaps here and there that may
serve impede
the bottom line - profit. Look at the various stages involved in
creating your
product or service, can these stages be shortened?
Remember, you must use your judgement in deciding how much
detail
should be offered in the operational plan. Just remember that
you want to
convey to your reader that you have covered all of your bases
when it comes
to production.

Here are some points you may want to consider when putting
your operational plan
together:
Capacity
Capacity is the measure of how much work your facilities,
labour force, and
equipment can handle. Does your production process have the
capacity to
keep orders up? Do you have too much capacity? Not enough
capacity?
Productivity
May-12
Productivity measures how long and how many people it
requires to produce
your product or service. If you can produce more goods in less
time, you
can improve the bottom line from every dollar spent on
equipment and
operating costs such as salaries and rent.

Labour
What kinds of and how many employees do you require to
produce your
product or service? How are you going to use them? Are you
going to be
using seasonal workers? Full time? Casual?
Quality Assurance
How are you going to keep consistent and maintain the same
standards with
each product or service? Such activities include regular
inspections
throughout the production process, occasional testing or
sampling of goods.
Facilities
In business, the location of your facilities can prove a critical
factor for your
success. If your business is going require a large outlay of
capital assets at
the onset, you will need to make sure the facilities are adequate
and are
positioned properly.
What's the use of setting up a manufacturing facility in a rural
setting with no
transportation mechanisms? You will need to decide how you
are going to
get your product to your consumer and position your facility
that will be both
cost effective and efficient.
When evaluating your facilities, examine those aspects most

important for
your particular business. Do you need to be close to certain
transportation
facilities? Do you need to be close to key suppliers? Do you
need to be
downtown?
Keep these points in mind when you are completing your
operational plan for
facilities:
Location
Include the location of company headquarters, retail store (s),
branch offices,
additional plants, and others. Describe the size and how each
will be
allocated. Mention why you are located at your particular
location and the
benefits associated with it.
Describe access to parking and transportation; air, rail, and
surface shipping access,
and loading docks, warehouse, and other facilities.
Improvements
What improvements are needed to get the building in working
condition and
how much will it cost to fix it up.
Lease/Rent
Are you leasing? This is very important and make sure you
understand all aspects

of the lease. You don't want to be stuck in a 5 year lease if your
business fails after
the first year (I've seen this happen - a few times). Can you
sublet? What restrictions
are in the lease? Can you get out early if things go sour?
Maintenance
May-12
What are the operational costs associated with the building?
Include the cost
of gas, water and electricity. What are the costs for janitorial,
trash removal
and other operational costs?
Inventory
Different businesses will have different inventory requirements.
Of course,
a large retail operation will have much more inventory than an
engineering
consultant so remember to use those points that apply to your
business.

Most of the retail operations I deal with overlook the
importance of inventory
management. An effective inventory management process can
make all the
difference in the world when it comes to making a huge profit.
On the other hand, a poor inventory management plan can take
you right
out of business - I've seen it happen. What happens if you sink a
large
portion of your operations budget to your inventory and have no
way of
monitoring the process? Disaster.
How much money you have tied up in supplies or finished
product sitting in
your warehouse makes a direct impact on your bottom line.
Every box of
raw material is not just taking up space, it's costing your hard
cash and it's
money sitting around - losing value. What about too little
inventory?
If you don't have sufficient inventory, you occasionally can't
make the sale.
Every business dreads the possibility of receiving large orders
but can't
seem to fill them because of the lack of inventory.
How do you keep inventory on a level and consistent basis?
Develop
systems that increases the flow of information from the sales
point to the
production and purchasing units. The most important thing to
remember is
to know how your sales are going - At all times.

Distribution
Here's some advice if you rely on goods or materials for your
business; Keep
up a good relationship with your suppliers. You see, most
businesses will
experience different levels of difficulties at different parts of
the year.
So it's important to work at developing excellent relationships
with your
suppliers and distributors; You want them to feel that you are in
a partnership
together so that they will try to do everything possible to meet
your needs.
Believe me, there will be a time when this relationship will be
invaluable to your business.
It's also important that you try not to be too dependent on just
one supplier
or distributor. The reason? Your business' financial future will
be too
vulnerable if they fail you. Imagine a supplier going under who
is your only
supplier during your peak season. Always have backups.
Use suppliers that understand the needs of your business. Look
for
companies that can deliver on time, and have excellent customer
service.
Don't make the mistake of using a supplier based on price alone.
Select suppliers with whom you can communicate well; make
certain they understand

your specifications and can consistently meet your standards.
Maintenance and Service - Order Fulfillment And Customer
Service
In some instances, it is important for a company to define the
services and
support it will provide. Specifically, the plan should address the
level of
support a company will provide after a customer has purchased
a product
or service. This is particularly important in the case of new or
technical
product.
May-12
The service and support of a company's goods are often critical
to the
business's success. As a consequence, they often merit attention
in the
business plan. The need to include such a description is
dependent on the
nature of the company's products. Some goods are sufficiently
simple or
inexpensive not to need service and support.

In other cases, such as technical or new products, support may
be
necessary if a customer is to use and maintain properly the
company's
products. A company can benefit in two ways from providing
quality
customer service.
First, a company can preserve and enhance its reputation and its
relationship with customers by providing guidance and support
after a sale.
This support may range from simply providing an operating
manual to
having a staff of service people on call, ready to address
customer
problems.
Second, this activity may prove to be an additional source of
revenue. This
is the value of a lifetime customer. By keeping in touch with
your customer
on a regular basis and providing them with quality information
and special
deals, you give them a reason to trust you. People only buy
from people
they trust.
Customers are constantly demanding better and better service.
The expect
to get what they want, when they want it, and to be treated
graciously and
fairly in the process.
So, it's your job to make certain customers have little reason for
complaints.

Build sufficient flexibility into your policies so that you can
easily handle
unusual or difficult requests.
Also look at your order fulfillment process. Often, orders are
not
communicated clearly or quickly to the processing department,
and valuable
time is lost due to inadequate internal communication. Assess
the methods by
which you prepare goods for shipping and deliver good to
customers.
Careful planning in the operational area can bring you
meaningful rewards.
Analysing the day to day operations of your business will pay
off in the form
of increased profits as you find ways to reduce costs and
improve
productivity.
1.3 Ensure details of the operational plan include the
development of key
performance indicators to measure organisational performance.
Key Performance Indicators, also known as KPI or Key Success
Indicators
(KSI), help an Organisation define and measure progress toward
Organisational goals.
Once an Organisation has analyzed its mission, identified all its
stakeholders, and defined its goals, it needs a way to measure

progress toward
those goals. Key Performance Indicators are those
measurements. What Are
Key Performance Indicators (KPI)
Key Performance Indicators are quantifiable measurements,
agreed to beforehand, that
reflect the critical success factors of an Organisation. They will
differ depending on the
May-12
Organisation. A business may have as one of its Key
Performance Indicators
the percentage of its income that comes from return customers.
A school may
focus its Key Performance Indicators on graduation rates of its
students. A
Customer Service Department may have as one of its Key
Performance
Indicators, in line with overall company KPIs, percentage of
customer calls
answered in the first minute. A Key Performance Indicator for a
social service

Organisation might be number of clients assisted during the
year.
Whatever Key Performance Indicators are selected, they must
reflect the Organisation's
goals, they must be key to its success, and they must be
quantifiable (measurable). Key
Performance Indicators usually are longterm considerations.
The definition of what they are
and how they are measured do not change often. The goals for a
particular Key Performance
Indicator may change as the Organisation's goals change, or as
it gets closer to achieving a
goal.
Key Performance Indicators Reflect the Organisational Goals
An Organisation that has as one of its goals "to be the most
profitable
company in our industry" will have Key Performance Indicators
that measure
profit and related fiscal measures. "Pre-tax Profit" and
"Shareholder Equity"
will be among them. However, "Percent of Profit
Contributed to Community Causes" probably will not be one of
its Key
Performance Indicators. On the other hand, a school is not
concerned with
making a profit, so its Key Performance Indicators will be
different. KPIs like "Graduation Rate"
and "Success In Finding Employment After Graduation", though
different, accurately reflect
the schools mission and goals.

Key Performance Indicators Must Be Quantifiable
If a Key Performance Indicator is going to be of any value,
there must be a way to accurately
define and measure it. "Generate More Repeat Customers" is
useless as a
KPI without some way to distinguish between new and repeat
customers. "Be
The Most Popular Company" won't work as a KPI because there
is no way to
measure the company's popularity or compare it to others.
It is also important to define the Key Performance Indicators
and stay with the
same definition from year to year. For a KPI of "Increase
Sales", you need to
address considerations like whether to measure by units sold or
by dollar
value of sales. Will returns be deducted from sales in the month
of the sale or
the month of the return? Will sales be recorded for the KPI at
list price or at the actual sales
price?
You also need to set targets for each Key Performance
Indicator. A
company goal to be the employer of choice might include a KPI
of "Turnover
Rate". After the Key Performance Indicator has been defined as
"the
number of voluntary resignations and terminations for
performance, divided
by the total number of employees at the beginning of the
period" and a way
to measure it has been set up by collecting the information in an

HRIS
(Human Resources Information System), the target has to be
established.
"Reduce turnover by five percent per year" is a clear target that
everyone
will understand and be able to take specific action to
accomplish.
May-12
Key Performance Indicators Must be Key to Organisational
Success
Many things are measurable. That does not make them key to
the
organisation's success. In selecting Key Performance Indicators,
it is critical
to limit them to those factors that are essential to the
organisation reaching
its goals. It is also important to keep the number of Key
Performance
Indicators small just to keep everyone's attention focused on
achieving the
same KPIs.

That is not to say, for instance, that a company will have only
three or four
total KPIs in total. Rather there will be three or four Key
Performance Indicators for the
company and all the units within it will have three, four, or five
KPIs that support the overall
company goals and can be "rolled up" into them.
If a company Key Performance Indicator is "Increased Customer
Satisfaction", that KPI will be focused differently in different
departments.
The Manufacturing Department may have a KPI of "Number of
Units
Rejected by Quality Inspection", while the Sales Department
has a KPI of
"Minutes a Customer Is on Hold before a Sales Rep Answers".
Success by
the Sales and Manufacturing Departments in meeting their
respective
departmental Key Performance Indicators will help the company
meet its
overall KPI.
Good Key Performance Indicators vs. Bad
Bad:
Title of KPI: Increase Sales
Defined: Change in Sales volume from month to month
Measured: Total of Sales by Region for all region
Target: Increase each month

What's missing? Does this measure increases in sales volume by
dollars or
units? If by dollars, does it measure list price or sales price?
Are returns considered and if so
do they appear as an adjustment to the KPI for the month of the
sale or are they counted in
the month the return happens? How do we make sure each sales
office's volume numbers
are counted in one region, i.e. that none are skipped or double
counted? How much, by
percentage or dollars or units, do we want to increase sales
volumes each month? (Note:
Some of these questions may be answered by standard company
procedures.)
Good:
Title of KPI: Employee Turnover
Defined: The total of the number of employees who resign for
whatever
reason, plus the number of employees terminated for
performance reasons,
and that total divided by the number of employees at the
beginning of the
year.
What Do I Do
With Key
Performance Indicators?
Employees lost due to Reductions in Force (RIF) will not be

included in this calculation.
Measured: The HRIS contains records of each employee. The
separation section lists reason and date of separation for
each employee. Monthly or when requested by the Vice
President, the HRIS group will query the database and
provide Department Heads with Turnover Reports. HRIS will
post graphs of each report on the Intranet.
May-12
Once you have
good Key
Performance Indicators defined, ones that reflect your
organisation's goals, one that you can
measure, what do you do with them? You use Key Performance
Indicators as a performance
management tool, but also as a carrot. KPIs give everyone in the
organisation a clear picture
of what is important, of what they need to make happen. You

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