[Solution] Step 2: Plans
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Author: Sarah Bennett
To achieve goals, managers make plans. Just as with goals, there are different types of plans. It is important to plan for what is expected, and it is also important to plan as much as possible for the unexpected.
Contingency Planning
Contingency planning formulates a different course of action to be taken if the original plan is no longer feasible. The contingency plan may include crisis management, which is the set of procedures the organization uses to respond to a disaster. A disruption to existing plans may be due to circumstances as varied as a hurricane or earthquake, a terrorist attack, civil unrest, or a pandemic.
The contingency planning process is involved at four points in the organization's overall planning process:
- At action point 1, the organization is making its strategic, tactical, and operational plans, and managers consider possible contingencies.
- At action point 2, the organization puts its plans into place, and the highest-risk contingencies are defined.
- At action point 3, managers identify the signs that indicate a contingency event may be occurring, and they develop plans to reduce or avoid the risk. Then managers monitor the environment for these indicators.
- At action point 4, the organization has successfully carried out either its original plan or its contingency plan.
Contingency Planning Process
Select the correct response to the following question.
What is a contingency plan?
- A plan that is developed by a centralized planning staff for one department or team in the organization
- A short-range plan designed to make progress against another plan of wider scope
- A broad set of actions that supports the organization's mission
- An alternative course of action developed when changed circumstances render the original plan obsolete
View Explanation
A contingency plan is an alternate plan that is implemented if the original plan is no longer feasible. This occurs when the environment changes so that "business as usual" is no longer possible. Sometimes the environment changes very suddenly, in a disaster, so the contingency plan may include crisis management, which is a set of procedures used to respond to a disaster. Contingency plans may be developed at any level of the organization, depending on the scope of the potential disruption the plan is designed to address.
The table gives descriptions of various action points in the contingency-planning process. Indicate which action point is being described.
Identify a contingency event that would be highly disruptive
Consider whether a natural disaster could disrupt operations.
Develop contingency plans for possible events
View Explanation
Action point 2 of the contingency-planning process involves putting the main plan into place while identifying the kinds of disruptive events that are worth developing contingency plans for. An organization will not develop a plan for every contingency—there are too many things that might happen—so at action point 2, managers determine which events are both relatively likely and would put the project at greatest risk. Therefore, identifying a contingency event that would be highly disruptive is part of action point 2.
Action point 1 of the contingency-planning process involves developing the main plan but also considering events that could disrupt it—the contingency events. Therefore, considering whether a disruptive event such as a natural disaster could occur is part of action point 1.
Action point 3 of the contingency-planning process involves (1) describing how managers will know an event is occurring that requires activation of a contingency plan and (2) developing the needed alternate plans. Therefore, developing contingency plans is part of action point 3. After action point 3, managers begin to monitor the environment for contingency event indicators so they can activate the contingency plan in a timely manner.
