Over the years the success rate of traditional project management methods applied to software development projects has been underwhelming. Traditional project management methods are based on a retrospective approach, which measures variance against plan rather than providing a performance–forecast that can be used to guide projects in a chaotic environment.  There are a number of programmatic control issues associated with IT projects that suggest a better approach is needed. 
Using this linear project planning paradigm – sometimes referred to as waterfall – but often derived from PMBOK linear style planning processes – there is little attention given to the forces that negatively impact the project. These project risks have no means of evaluation other than to acknowledge their presence, define mitigations and track the results. The impact on the business value of the capabilities of the system is not part of the project management process.
Capabilities Based Planning is anchored on producing Enterprise and Software Intensive Systems focused on strategic outcomes. Progress is measured through assessment of the effectiveness and performance of the deliverables in meeting those strategic objectives. This approach assures business value is connected with the strategy not just measures of the passage or time and consumption of money and the production of technical features.
In this approach avoiding or controlling change becomes the primary activity of project management. In this traditional model change is undesirable. In reality of business systems development, change is not only natural it is desirable. It is through change that the system can adapt to the needs of the business, which are themselves driven by external forces. These forces are rarely under the control of the project manager let alone the senior management of the business.
One project failure mode is when the participants and leaders of the project fail to recognize the difference between managing in the presence of change and managing change. It is managing in the presence of change that is a critical success factor of any modern business systems development.
Definition of Capability-Based Planning
“… involves a functional analysis of operational requirements. Capabilities are identified based on the tasks required… Once the required capability inventory is defined, the most cost effective and efficient options to satisfy the requirements are sought.”
What Are Capabilities and Why Are They Better at Describing Maturity?
Measuring project and product maturity as a function of effort and time assures that project management adds value to the business. Simply controlling and measuring the expenditure of resources – score keeping – provides little value in the presence of change. We need measures in units meaningful to the decision makers. Physical Percent complete needs to be measured as increasing Effectiveness and Performance, with decreasing Risk to increase the Probability of Project Success.
Capabilities–based planning provides a defined outcome that is not a final conclusion but lays the groundwork for the continued delivery of value. Objectives are reached and the operational value delivered when a defined capability is available for use. Features and functions describe the static and dynamic behaviors of a system, but they are not directly connected to the business strategy. Milestones indicate that a position in a timeline has been reached, but do not forecast what value will be delivered to the business or how this value is traceable to the needs of the user community. Capabilities provide the answer to the following question: in order to achieve our objectives, what capabilities must we possess? 
Capabilities–based planning transforms the delivery of features and functions into the delivery of processes that support a business strategy. Capabilities–based planning is planning, under the conditions of uncertainty, to provide capabilities suitable for a wide range of business challenges and circumstances, while working within an economic framework. This approach emphasizes flexibility, adaptiveness, and robust capabilities, implying a modular building–block approach to the delivery of enterprise applications.
Capabilities are not the same as features and functions; they enable demands to be met without explicit specification of the solution. A capability is the ability to affect an outcome, react to an input, or change an effect.
A capability provides an outcome or an effect without an a priori specification. Features and functions require an a priori specification in order to test for their existence or conformance to the specification. Capabilities–based planning can be understood at the execution level, but it needs to be raised to the level of enterprise process analysis:
Identify a needed capability in operational terms, using the set of capability options to assess the effectiveness in an operations paradigm, and make choices about requirements and the ways to achieve the capability using an integrated portfolio framework to produce an output set of options based on these operational paradigms.
Putting capabilities–based planning to work requires a change in our approach to planning — a set of business process improvement activities focused on assessing increasing maturity of the capabilities needed to fulfill the strategic objectives. Emphasis is placed on operational capabilities rather than features and functions. These operational capabilities become the building blocks of change. The emphasis is also placed on evaluating capabilities under conditions of uncertainty, which requires the deployment of robust building blocks capable of adapting to these changes. In both cases, analysis illuminates the feasibility of alternatives.
Augmenting Our Strategy–Making with Capabilities
Strategy–making is the starting point for project management. It asks and answers the question why are we doing this? Strategy making activities can be augmented through a capabilities–based planning process by mapping strategies to the assessment of maturity evaluation points for each of the emerging capabilities. This approach connects the why of a project with the how. The result is the replacement of the measurement of progress as the passage of time with the measurement of progress as the delivery of capabilities.Capabilities–based planning focuses on assessing the increasing maturity of functionality defined by the strategy. Planning under uncertainty provides capabilities suitable for a wide range of challenges and circumstances while working within an economic framework that necessitates choice, where the focus is on “possible uses” rather than specified features and functions.
With a set of capabilities in mind, a plan for delivering the capabilities is needed. One approach to building this plan is an Event–Based integrated master schedule. This has been discussed in the past, but the next article will describe the details on how to build such a schedule; derived from the capabilities.
 “Uncertainty and Project Management: Beyond the Critical Path Mentality,” Arnoud de Meyer, INSEAD Working Paper, 2001.
 “Analytical Architecture for Capabilities–Based Planning, Mission–System Analysis, and Transformation,” Paul K. Davis, RAND National Defense Research Institute, MR–1513–OSD, 2002.