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Planning Horizon
Sometimes referred to as the study period or "planning window".

A  "window" into the future, in which consultants
make forecasts (which should be realistic and defensible) and owners and managers make plans and decisions (which should be prudent).

The consultant's forecasts are of 
keep-up costs and the owners decisions and preparations are associated with capital projects, such as roof replacement or boiler retrofit.

This planning cycle usually covers many calendar years and/or fiscal years, and is intended to ensure sufficient lead time to raise funds and develop logistics for responsible stewardship of the assets.

The planning horizon culminates in an expenditure plan, which forms the first part of the financial analysis and answers the question: "How much money will we need?". The expenditure plan helps to generate the funding models to answer the question; "How much money will we have?"



A.  Content of a Planning Horizon
Depending on the length of the planning horizon, it contemplates costs associated with:
The planning horizon captures the projects associated with a single building or a portfolio of buildings,  which are usually represented as bars on a bar graph. [see figures at the right].



B.  Elements of a Planning Horizon
The planning horizon has two key dimensions: time and cost. The former is represented by the horizontal (x-axis) and the latter by the vertical (y-axis).

The horizontal (x-axis) governs the forecasts of the future events ("realistic") and is derived from the physical analysis.

The first year of the horizon is called the initial year, the final year of the horizon is the terminus year. The length of the planing horizon is the number of years from the base year to the terminus year contemplated in a report.

The vertical (y-axis) governs the estimated costs of the future events ("defensible") and is derived from the financial analysis.


C.  Interfaces of a Planning Horizon
The planning horizon does not operate in isolation. It intersects with other time periods that both precede and follow the subject horizon. Where the subject horizon can be considered the present window into the future, is adjoined by a past-window and a future-window.

Listed below are some concepts to illustrate these interfaces:



D.  Stages of a Planning Horizon
For management purposes, the planning horizon can be divided into three stages that adjoin (sit beside) one another. The stages are relative to one another and not relative to the base year.
The combination of the projects in all three stages (short, mid and long) provides the total capital load. Projects in the long-range phase have greater cost associated with the time value of money (inflation).



E.  Nested Views of Planning Horizons:
There are three types of planning horizons depending on the length of the window/outlook into the future,
each of which is relative to the base year and they each provide different levels of detail and have different probability distributions.
The further an event is in the future to the lower the confidence interval associated with that event.

The tactical horizon is nested within the strategic horizon and the operational horizon is nested within the tactical horizon.

The length of the strategic horizon varies by jurisdiction. For example: in British Columbia, the strategic horizon is 30-years. In Alberta it is 25 years and Hawaii it is 20 years.




F.  Populating the Planning Horizon:
Generating a realistic and defensible planning horizon is a challenge that is generally left to consultants. The process of populating the horizon contains two key parts;
The means and methods of populating the data into the planning horizon are listed below.
Consultants use spreadsheets or more sophisticated software tools to generate the planning horizon via a series of algorithms derived from the physical analysis on each asset (ie., chronological age, effective age, remaining useful life).

The quality of the data in the planning horizon will depend on the quality of the physical analysis.


G.  Objective Analysis of the Planning Horizon Patterns
Once the planning horizon has been populated with events, usually as a result of a consulting report, the experts are able to analyze the patterns and trends in the horizontal distribution of the events.

Listed below are objective and impartial tools for analyzing the patterns of the events in the planning horizon:
Simple-View (roll-up) and Detailed-View (drill-down) (such as a stacked bar chart).

Planning horizons at different life stages.
A strategic plan with most of the projects occurring within the second half of the planning window. This is characteristic of buildings in the childhood life stage and adolescent life stages.



H.  Subjective Interpretation of the Planning Horizon
Listed below are some of the interpretations of the future events and future states reflected in the planning horizon.
An outlook or scenario.


I.  The Time Dimension (Shifting Horizon)
The following concepts provide insight into the fluid nature of the planning horizon
:


J. Management of the planning Horizon
Listed below are some the key asset management concepts to assist with the administration of the planning horizon.
Mapping the planning horizon against the facility life cycle model for buildings of the similar class. For example, what is the funding trajectory for low-rise buildings that are 30 years old.
 
An Asset Management Plan (AMP) will optimize value by making appropriate trade-offs between risk, cost and performance
Fig. An Asset Management Plan (AMP) will optimize value by making appropriate trade-offs between risk, cost and performance.


The whole life of assets can be divided into life stages
Fig. The whole life of assets can be divided into life stages.



The relationship between the long-range strategic plan and the shorter range tactical plan.
Fig. The relationship between the long-range strategic plan and the shorter range tactical plan.



The expenditure model is one the first steps in the financial analysis.
Fig. The expenditure model is one the first steps in the financial analysis. It asks the question: "How much  money will we need?"


The three facets of the planning horizon: a) behind-the horizon, b) the horizon ("red zone") and beyond-the-horizon.
Fig. The three facets of the planning horizon: a) behind-the horizon, b) in-the-horizon ("red zone") and c) beyond-the-horizon.


The three stage elements of a planning horizon: a) short-term needs; b) mid-range needs and c) long-range needs.
Fig. The three adjoining stages of a planning horizon: a) short-term needs; b) mid-range needs and c) long-range needs.


Three planning horizons with future events displayed as purple and green bars on the chart.
Fig. Three planning horizons relative to the base  year. Future events are displayed as purple and green bars on the chart
.


I. Care is trying to use a crystal ball to make forecasts about his assets
Fig. I. Care is trying to use a crystal ball to see the planning horizon and make forecasts about his assets.


The physical analysis must be realistic in its forecasts of future events.
Fig. The physical analysis must be realistic in its forecasts of future events and the financial analysis must be defensible..


Using a road as an analogy to illustrate the concept of a view down planning horizon.
Fig. Using a road as an analogy to illustrate the concept of a view down the planning horizon.


A strategic plan with most of the projects occurring within the second half of the planning window. This is characteristic of buildings in the childhood life stage and adolescent life stages. A tactical plan with most of the projects occurring within the second half of the planning window.
Fig. Planning horizons with back-end loading, which are negatively skewed. This is characteristic of young buildings in the "childhood and "adolescent" life stages.



Example of the tactical plan represented in detailed-view (drill-down) with stacked bar chart to provide further insight into the distribution of the future events.
Fig. Example of the tactical plan represented in detailed-view (drill-down) with stacked bar chart to provide further insight into the distribution of the future events.


The shifting horizon moves events that were once in-the- horizon into the period called "behind-the-horizon"
Fig. The shifting horizon moves events that were once in-the- horizon into the period called "behind-the-horizon".



An incomplete event being carried forward from "behind-the-horizon" to "in-the-horizon".
Fig. An incomplete event being carried forward from "behind-the-horizon" to "in-the-horizon".


3D representation of the planning horizon with recent past included for contextual reference
Fig. 3D representation of the planning horizon with recent past included for contextual reference.





See also:
Read a short article on the planning horizon.

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