Product based planning is a fundamental part of the PRINCE2

PRINCE2

PRojects IN Controlled Environments 2 is a structured project management method endorsed by the UK government as the project management standard for public projects. The methodology encompasses the management, control and organisation of a project...

 approach to project management

Project management

Project management is the discipline of planning, organizing, securing, and managing resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end , undertaken to meet unique goals and objectives, typically to bring about beneficial change or added value...

, and is a method of identifying all of the products (project deliverables) that make up or contribute to delivering the objectives of the project, and the associated work required to deliver them.

Overview

Product breakdown structure

Product based planning is intended to ensure that all of the necessary products are identified and captured, and begins by identifying a product breakdown structure

Product breakdown structure

In project management, a product breakdown structure is a tool for analysing, documenting and communicating the outcomes of a project, and forms part of the product based planning technique....

 which is then repeatedly refined until all of the requisite products are identified. The PBS is thus a hierarchical family tree of all the products and sub-products that comprise the final end-product.

It is important to understand that in this context the term 'product' includes intermediate documentary products that are essential to the work of delivering the project. In this sense the product breakdown structure is a great deal more than simply an exploded view

Exploded view

An exploded view drawing is a diagram, picture or technical drawing of an object, that shows the relationship or order of assembly of various parts....

 of the final end-product. Products included might also be products required to manage the project such as paper based products and quality products such as approvals or quality checks on earlier made products. Examples include such things as requirement specifications, design approvals, test documentation, safety certifications, and so on.

Product flow diagram

Once a product breakdown structure has been created, work can then begin on creating a product flow diagram

Product flow diagram

The Product flow diagram is a graphical representation of the order by which a sequence of products is created according to Product based planning principles...

 (PFD) (or product flowchart) which identifies the order of precedence of products and will typically include multiple and complex parallel paths. For practical purposes this flowchart is essentially the same as the PERT chart used for critical path scheduling

Critical path method

The critical path method is an algorithm for scheduling a set of project activities. It is an important tool for effective project management.-History:...

 and leads naturally to the development of a project schedule.

Work breakdown structure

With an understanding of the deliverables required, and the sequence in which they should be produced, work can then begin on defining the tasks required to produce them.

A significant advantage of product based planning is the ability to surface critical assumptions and constraints. For example, if your project is to build another floor on top of a house a required product will be the floor underneath on which to build the one you are commissioned to deliver. As a product you hope that it is there and will be fit for purpose but as you are not commissioned to deliver it, it falls outside your scope - and into your assumptions. In this way, by defining the whole product set necessary for the project, and not just those that are in your scope, you can surface and document the critical assumptions. Another advantage compared to activity-based planning has to do with reporting. Products are either finished or not, activities can be 90% finished for a long time even though work is taking place. One tends to forget things that have to be done to complete a project. This method captures them all, reducing the chance that any will be overlooked.

This method is used in PRINCE2, the UK's government mandated method for the management of major projects

Example

A refrigerator

Refrigerator

A refrigerator is a common household appliance that consists of a thermally insulated compartment and a heat pump that transfers heat from the inside of the fridge to its external environment so that the inside of the fridge is cooled to a temperature below the ambient temperature of the room...

is a final product with sub-products being door, shelves, heat exchange unit, fans, ice cube dispensers, lights, etc.

Each of the sub-products are made up of smaller products such as door handle, insulation, magnetic closure strip and internal covering.