Scenario:
Definition | Examples | Synonyms
Scenarios in project portfolio management (PPM) work like simulations to test your biggest what-ifs. They help you understand the impact of different decisions or factors before implementation. These scenarios are not forecasts but rather possible future portfolio states.
In scenario modeling, PPM software is typically used, which contains data on all your projects and resources. You create a copy of your current plan and tweak some portfolio variables such as scheduling and resource allocation to get an idea of their impact.
Scenario modeling helps you ask yourself, “how would my planning change if X Y or Z?” It allows you to explore different assumptions based on your own data and current trends.
A Practical Example
Imagine you work at a mechanical engineering company that manufactures robots for industrial production. You are facing important strategic management decisions on how to optimize and future-proof your product portfolio.
This is where scenario planning comes into play:
Point of Departure: Plan of Record
First, you create a plan of record based on your ongoing planning. You use the standard assumptions you employ every day on factors like production capacity, resource availability and market demand. In our example, let’s say you have a certain number of robot types in your portfolio and plan to produce them over the next five years.
Scenario 1: Technological Innovation
Let’s say you recently read about a new breakthrough affecting your mobile manipulator (MoMa) platform and would like to examine the impact such an innovation could have on your production. What happens if you develop a new, advanced robot with enhanced features? Thus, you can create a scenario in which this new robot successfully enters the market. What increases in revenue and profit could you expect?
Scenario 2: Demand Shifts
The demand for robots can change. So, what happens if automation trends shift from cobots to MoMas, or new industries increase the use of robots? You can model a scenario where the demand for your robots significantly increases. How would this affect your profitability? And what changes could be made quickly to boost your production capacity?
Scenario 3: Supply Chain Risks
Last but not least, supply chain disruptions can impact your business. What happens if a key supplier fails? You might simulate a scenario in which a critical component supplier encounters issues. How does that affect your production and delivery capabilities?
By modeling each scenario, you use clear assumptions about the future to inform your decisions. You can get a feel for the ways your portfolio can pivot and adapt in the face of change, helping you keep your strategy flexible and adjust your planning too.
Synonyms and Abbreviations
There are no real synonyms or abbreviations for scenarios. However, there are pairs of terms that are often used interchangeably, such as What-If Simulation, Scenario Simulation, Scenario Modeling or Scenario Analysis.