What is Operational Planning: Definitions and Best Practices

A company’s strategic goals are big-picture ideas. Those ideas need to be pursued through specific measurable actions to be realized. This is what operational planning does: finds a way to achieve one or more strategic goals through concrete actions and structures those actions across multiple areas.

In this article, we’ll explore what operational planning is in more detail, the benefits of implementing it, what an operational plan is, and how you can create one for your organization.

Key takeaways:

• Operational planning is the process of transforming strategic company goals into practical specific actions that help achieve them in a short timeframe.
• The benefits of operational planning include strategic alignment, informed decision making, and improvements in company efficiency.
• The result of OP is an operational plan that contains all the relevant information about goals being pursued, processes used to pursue them, ownership structure, timelines, and KPIs.
• As operational planning involves turning strategic goals into tangible projects and initiatives, multi-project management software plays a key role in aligning resource use with company goals and effective execution.

What Is Operational Planning?

Operational planning is the process of analyzing and planning business operations — tasks, projects, and activities that the company undertakes to keep running and generate profits.

Effective operational planning bridges the gap between company strategy and its daily activities. An operational plan is typically created for mid to short term, around a year, and describes what activities have to be undertaken to achieve strategic goals for that period of time.

To achieve that, operational planners need to investigate the company’s strategic goals and create a plan that contains concrete steps the company needs to undertake to achieve them.

Operational planning can touch upon multiple areas of business, including customer support and sales processes. In this article, we’ll mainly focus on operational planning in project-based organizations. 

Strategic vs Operational vs Tactical Planning

There are several levels to business planning. Typically, they’re categorized into strategic, tactical, and operational. Here is a brief comparison between the three of them.

	Strategic	Tactical	Operational
Timeframe	3-5 years	1-3 years	Under one year
Ownership	C-level executives	Department heads	Team leaders
Scope	Strategic company objectives	Mid-term targets	Specific actions
Example	Double annual revenue in three years	Win 10 large contracts in a year	Reorganize and optimize the sales funnel

What Are the Benefits of Operational Planning?

A well-thought-out operational plan aligns company efforts with the larger business objectives and streamlines operations required to achieve them. Here are a few advantages of operational planning explained in more detail.

Alignment of company efforts

An operational plan brings together the larger long-term strategy of a company with its day-to-day efforts and actions. This ensures that all activities the company invests in are pointed towards achieving the long-standing goals instead of being misdirected and wasting effort and funds.

A good plan also aligns team efforts by putting every member on the same page as to what the company priorities are, how company activities are interrelated, and what the ownership structure of tasks and projects is. This ensures all team members understand how their actions fit into the larger company plan.

Improved decision making

Planning and forecasting company actions and activities involves weighing priorities and assessing risks, both of which affect decision making greatly.

Proper prioritization allows operations planners to make decisions on what projects or initiatives should be selected and pursued to maximize business value generation. Proactive risk detection and risk management allow companies to make better decisions in terms of arranging work in a way that minimizes operational risks and prevents bottlenecks in work execution.

Efficiency improvement

One of the main goals of operations management is improving efficiency across the company. Operational planning achieves that goal by streamlining work and standardizing processes that contribute to both decision making and execution.

This improvement in efficiency means the company can achieve the same goals or more without wasting finances on extra resources, resulting in significant cost reduction.

Resource capacity balancing

A major aspect of operational planning is resource management — planning resource capacity and allocating resources in a way that:

• Focuses them on high-priority projects.
• Ensures that tasks that move work further are executed first.
• Improves utilization of available resources and prevents execution bottlenecks.

This facilitates both cost reduction through improved efficiency and productivity improvements through focusing on the most impactful work and lack of overload.

Fostering accountability

Finally, operational planning fosters a culture of accountability in the company it’s used in. When every team member knows who is responsible for what, personal ownership of tasks thrives, improving productivity.

As a result, execution becomes more consistent and less reliant on informal coordination mechanisms.

Who Owns Operational Planning?

Operational planning is owned by multiple roles throughout the organization, and many of them contribute to creating an effective operational plan.

The framework in which operational planning is conducted is created and owned by the operations managers and the portfolio managers. They translate the strategy defined by the higher management into actionable plans.

C-level executives and project sponsors are responsible for the signoff of the plan. They take the decisions on approving and financing company activities and dictate the strategy that the operational plan intends to execute.

The actual work of business operations planning lies on the shoulders of department heads, team leaders, and PMOs unless there’s a specific role of an operations planner in the company. People who occupy these roles are responsible for analyzing company goals and capabilities and creating a realistic plan that leads to achieving the former with the latter.

What an Operational Plan Should Contain

The result of and the guiding document of the operational planning process is an operation plan. This document outlines planned activities and strategies and consists of:

• Executive summary. A brief summary of the operational plan intended to inform C-level managers who don’t have the time to read the whole document.
• Strategic vision statement. A brief summary of the goals and timelines of their achievement.
• Strategic objectives. A list of objectives and explanation of how they help achieve strategic goals.
• Milestones and timelines. A list of milestones on the way towards achieving company goals and the planned timeline of said milestones.
• KPIs. A list of metrics and success criteria that will be used to monitor progress and assess quality of work. 
• Financial strategy. An explanation of how much funding will be needed to achieve the goals and what is the expected ROI.
• Staffing strategy. An assessment of current resource capacity, hiring plan, and resource allocation strategy.

How to Create an Operational Plan

Creating an operational plan is a long process of analysis and bringing together company goals and capabilities to achieve long-term goals. It can take several forms, but here we’ll take a look at project-based organizations specifically, and how operational plans organize projects Here are the most important steps in operational planning.

Study the strategic plan

Operational plan is the expression of practical realization of goals and objectives contained in the strategic and tactical plan. That’s why the process of its creation always starts with studying the long and mid-term objectives the company wants to achieve.

Choose goals to pursue

Study the existing documentation and choose which parts of the strategic plan can be realized in the next planning period. That decision is often based on:

• Urgency.
• Strategic priorities.
• Feasibility.

Choose one or several goals that your operational plan can realistically focus on.

Set measurable objectives

With those goals in mind, set measurable and realistic objectives. For instance, if the goals you’ve chosen to pursue are increasing revenue by 15% and developing a new product, the objectives can include:

• Cutting costs of production by 5%.
• Increasing the number of returning customers by 15%.
• Finishing 10 R&D projects.

No matter what objectives you decide on setting, make sure they’re realistic in the given timeframe under your company’s resource constraints, and have clear success criteria.

Identify key stakeholders

The next step is to identify the key stakeholders in processes that can lead to achievement of these goals. These include project sponsors, project managers, team leaders, and team members.

Study the structure of your organization to understand what roles and people are responsible for making decisions in those processes and executing them. This delineates the ownership structure and helps plan further steps and foster accountability within the organization.

Prioritize actions

After this step, set priorities of projects and tasks based on how they contribute to achieving high-priority objectives and on critical chain analysis. This process will determine the order in which projects will need to be executed.

Analyze resource capacity and needs

The step that determines the realistic timelines of execution is analyzing resource capacity. Resource capacity is the amount of work hours available to the company. It limits how much work can be realistically done at the same time.

Based on the analysis of resource needs of the projects you need to deliver and resource capacity your company handles, you can plan how many projects can be done at the same time in the most efficient way.

In multi-resource environments this process might be complicated as the sheer number of projects, tasks, and resources may contribute to errors in planning.  For instance, resource capacity analysis can highlight that demand for a critical engineering role exceeds available capacity, signaling a need to adjust priorities, timelines, or resource allocation choices.

Decisions like these might not be easy to see when analyzing resource needs and capacity manually. Resource management software brings these options to the attention of operational planners and facilitates efficiency improvements.

Allocate resources and schedule projects

Once all of the analysis is done, schedule the projects and allocate resources to each task. Do that based on project priority, dependencies between projects, resource capacity, and resource skillsets.

Improve processes design

A large part of effective operational planning is process design, which helps structure and standardize approaches to performing work. In most cases, processes are already in place, and instead of designing them from scratch, operational planners need to analyze them and restructure them to remove inefficiencies and blockages.

Do that by conducting interviews with people involved in each process to map it out and find common issues in the process. The plan for improving the processes can also benefit from options of the team members on why blockages happen.

Share and update your operational plan

Once all of the elements of the operational plan are in place, create a document that explains the plan and share it with people responsible for approving it. After getting their approval and starting the process of execution, monitor the process closely and correct the plan if you see that performance varies from what was expected.

Challenges and Best Practices of Operational Planning

Operational planning has a range of challenges both specific to the process itself and to the nature of the environment in which it operates. Here is a list of the most common ones followed by best practices for facing each challenge.

Complexity of a multi-project environment

The first challenge that all strategic and planning processes in larger organizations face is the inherent complexity of a multi-project multi-resource environment. In an organization that has dozens if not hundreds of projects running in parallel and multiple, often distributed resources, bringing those two together is never easy.

This limits visibility into projects, processes, and resources as well as increases the complexity of decision making , which leads to suboptimal decisions and higher risk of human error.

Best practices for addressing this challenge

Using enterprise-grade project portfolio management tools is one of the most straightforward ways to overcome this challenge. Tools like these allow the user to analyze multiple trade-offs through predictive analytics and scenario analysis, utilize available resources most efficiently, reduce bottlenecks, and make more informed decisions that can maximize business value delivery.

More advanced tools of this sort like Epicflow can automate this process with AI-driven algorithms and find the most efficient portfolio scenario based on current resource constraints and projected business value without human intervention.

Another good practice is to focus on one team or department at a time when creating a plan. This ensures that operational planning efforts are streamlined and can result in a more realistic plan.

Vague goals

Larger company goals are often phrased as general goals, not as something specific and measurable. For instance, achieving leadership on the market or increasing revenue. The job of an operational planner is to transform those statements into a goal that can be pursued in a short timeframe, achieved, and measured.

If they fail to do so and produce a set of objectives that lack clarity, they can be misunderstood and result in chaotic priorities that lead to waste of company efforts.

Best practices for addressing this challenge

The answer to this challenge lies in a better planning process. Hold brainstorming sessions to understand what steps can actually be taken to achieve strategic goals, what would be the realistic timeline, and what success criteria and KPIs can be applied to confirm they were achieved.

The more people take part in this process, the better.

Lack of data

As analytics is an important part of planning, and if not all data is available for analysis, the planning will be incomplete and incorrect.

In organizations where work relies on people, not roles and processes, it’s a common occurrence that data is stored siloed between teams and departments. That prevents all the necessary data from being integrated into the analytical systems and results in arriving at misguided insights.

Best practices for addressing this challenge

Do an audit of data sources and data storage practices. Find all places where data is stored and work on solutions for centralizing that data and integrating it with the analytical systems the organization uses.

Poor cross-deparment communication

Even the best operational plan can be disrupted if it’s not properly communicated to the teams that are assigned with its execution. When team members are not on the same page, efficiency and productivity suffer.

Best practices for addressing this challenge

Communication is never easy in large companies, but it can be amended greatly by establishing formal cross-department meetings with the aim of discussing all details of an operational plan, from processes to the strategic goals this plan tries to achieve.

Organizational resistance to change

Finally, some large organizations will have internal resistance to new processes and changes in the way a company operates. This can happen due to decision makers insisting on the importance of projects they sponsor that got postponed, team members not realizing the benefits of a new process, or any other reason. The end result is the same, the operational plan is undermined.

Best practices for addressing this challenge

The answer to this challenge is in a mix of data analytics and interpersonal skills. On one hand, the operational planners need to find a way to communicate with people who are resisting change that suits their character. On the other, using data instead of personal opinions to explain the benefits of a new approach often works much better.

Limited resource capacity

No matter how large a company is, its resources are always limited. With a set number of employees and a set number of hours per employee, the operational plan is constrained by the overall resource capacity.

Best practices for addressing this challenge

Instead of investing in increasing headcount, organizations should strive for resource optimization and work prioritization across the portfolio. When resources are used more efficiently for a lower number of high-value projects, more business value can be delivered  with the same headcount.

Conflicting priorities

In large organizations with multiple projects running concurrently, priorities often become conflicted. Different goals require contradictory actions, departments and project sponsors insist on continuing investment in projects that are not connected to any long-term goals, the same resources are required by multiple projects.

This leads to a planning chaos and inability to deliver projects on time.

Best practices for addressing this challenge

Focusing the operational plan on pursuing a limited number of business objectives per planning period helps focus on the high-priority goals and eliminate priorities that conflict.

How Project Portfolio Management Software Helps Operational Planning

You cannot produce a feasible operational plan on assumptions and manual analysis alone. It requires software that can analyze the projects and resources a company operates with, assist in strategic alignment, predict future capacity, and allocate resources in an optimal way.

Epicflow is a resource-oriented portfolio management tool that can help your organization create an effective operational plan. Implementing this software can lead to 30% decrease in lead times, as the case of the Dutch MoD shows.

Below, we’ll look at how Epicflow features can help your company create better operational plans.

Prioritize work based on resource constraints

Epicflow helps operational planners analyze projects and resources and set priorities based on not only urgency or budget availability but also on:

• Resource availability.
• Resource skillsets.
• Task dependencies.
• Business value creation potential.

This ensures that all company resources are focused on the most impactful work at the moment.

Improve portfolio-level operational coordination

Epicflow serves as a centralized data storage for both raw performance data and analytics data. This allows operational planners not only to analyze data, but also to find problem spots in company operations and communicate them to the stakeholders.

Detect bottlenecks and resource overload early

Capacity planning software allows users to detect bottlenecks, resource groups that are overloaded with work, and interfere with execution of the plan as a whole early. Based on the planned activities and resource allocation decisions, this software highlights overload and gives multiple ways to narrow it down to the problem spot and manage it.

This allows for more precise planning and prevents wasted effort. 

Test the impact of decisions

What-if analysis allows operational planners to experiment with different ways of scheduling projects and resources without interfering with the original environment. AI-based predictive modelling shows how different decisions impact resource load and feasibility of project due dates, leading to improved planning clarity.

Support operational decision-making with AI predictive capabilities

Epicflow’s AI Portfolio Optimizer is an advanced analytical tool that can process data on project business value potential and company-wide resource constraints to create the most efficient way of sequencing projects and distributing resources. It aims for a portfolio scenario with the highest business value per constrained hour. This practically means maximization of resource ROI with no wasted effort.

Book a call with Epicflow team representatives to learn more about how it can help your organization in operational planning.

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