The importance of the planning phase to project success

PhD Candidate, SKEMA Business School

Abstract

Project planning is widely thought to be an important contributor to project success. However, does the research affirm its importance and give guidance on how much effort should be spent planning? The literature is reviewed to find the reported link between planning and project success. We start by defining what is meant by the planning phase and project success. Next, we review literature that questions the value of planning and literature in the construction, software development, and general project management areas. Overall, the literature points to a strong link between planning and project success. A summary of the available studies shows unexpectedly consistent empirical results for the correlation of planning and success: an average value of an R2 = 0.33 correlation with efficiency, and an R2 = 0.34 for overall project success. This indicates a significant impact if compared with the reported 20% to 33% effort spent on planning. Opportunities exist for future research to quantify how much to plan.

Introduction

Background

Traditional wisdom is that planning and analysis are very important and the more there is in a project, the more successful the project will be (Wang & Gibson, 2008; Dvir, Raz, & Shenhar, 2003). Time spent on these activities will reduce risk and increase project success. On the other hand, inadequate analysis and planning will lead to a failed project, (Morris, 1998; Thomas, Jacques, Adams, & Kihneman-Woote, (2008).

If poor planning has led to failed projects, then perhaps billions of dollars have been lost (Sessions, 2009). But how much is too much? “Light weight” project management techniques such as agile are gaining popularity. Part of their ethos is that less initial planning is better and an evolutionary process is more efficient.

Research Questions

The following are the research questions we will examine within the literature.

  1. Is planning important for project success?
  2. What is the impact of the planning phase on project success?
  3. What level of effort expended on the planning phase is most correlated with project success?

Methods

An extensive review of the literature on project planning and its impact on success was undertaken. In total, more than 190 papers and books were reviewed with approximately 50 of those being cited in this paper.

Project Success

Before it is possible, discuss the impact of the project planning phase on success; it is useful to define what a successful project is. Shenhar, Dvir, Levy, and Maltz (2001) define four levels of project success:

1. Project efficiency

2. Impact on the customer

3. Business success

4. Preparing for the future

Thomas, Jacques, Adams, and Kihneman-Woote (2008) state “Examples abound where the original objectives of the project are not met, but the client was highly satisfied.” as well as the reverse (p. 106). While the measure of project success has focused on tangibles in the past, current thinking is that ultimately, project success can best be judged by the judgment of the primary sponsor. Cooke-Davies (2002) makes a similar point; therefore we will refer to:

Project efficiency — meeting cost, time and quality goals
Project success — meeting wider business and enterprise goals

Zwikael and Globerson (2006), however, state that efficiency and success are often correlated as do Dvir, Raz, and Shenhar (2003).

Project Planning

Mintzberg (1994) describes planning as the effort to formalizing decision-making activities through decomposition, articulation, and rationalization. In construction, pre-project planning is defined as the phase after business planning, where a deal is initiated and prior to project execution (Gibson & Gebken, 2003). Another definition of planning is “what comes before action” (Shenhar, personal communication, 2011).

For the purpose of this review, we will use these definitions:

Planning phase — The phases and associated effort that come before execution in a project

Planning effort — The amount of effort in money or work hours expended in planning

Reasons Not to Plan

Anderson (1996) questions the assumption that project planning is beneficial from a conceptual standpoint. He asks “How can it be that project planners are able to make a detailed project plan, when, either activities cannot be foreseen or they depend on the outcomes of earlier activities?” (p. 89). Bart (1993) makes the point that in research and development (R&D) projects, too much planning can limit creativity.

Collyer, Warren, Hemsley, and Stevens (2010) describe examples of failed projects such as the Australian submarine and the Iridium satellite projects, “While useful as a guide, excessive detail in the early stages of a project may be problematic and misleading in a dynamic environment.” (p. 109) Collyer and Warren (2009), state that in dynamic environments, creating detailed long-term plans can waste time and resources and lead to false expectations. Aubrey, Hobbs, and Thuillier (2008) note that for one project management office (PMO) studied, overly rigorous planning processes resulted in an impediment to rapidity. Flyvbjerg, Holm, and Buhl (2002) highlight that senior management can choose not to use the estimates from the planning phase.

Zwikael and Globerson (2006) note that even though there is a high quality of planning in software and communications organizations, these projects still have low ratings on success. Chatzoglou and Macaulay (1996) note any extra planning will result in a chain reaction delay in the next phases of the project. Thomas et al. (2008) write that for most projects there are pressures to reduce the time and effort spent on the planning phase. In addition, Chatzoglou and Macaulay (1996) touch on why planning is sometimes shortened or eliminated because managers think “it is better to skip the planning and to start developing the requested system. However, experience shows that none of the above arguments are valid” (p. 174).

The literature does not support the conclusion that planning should not be done in projects, though some caveats are highlighted. We therefore report the following:

Conclusion 1: Pressure exists in the project environment to reduce the time spent planning rather than increase it.

Planning in Construction

Project management has a long history in the construction industry and there have been a number of studies on the relationship between planning and project success.

Hamilton and Gibson (1996) found that the top one third of projects from a planning completeness perspective had an 82% chance of meeting those goals, whereas only 66% of projects in the lower third did (a difference of 16%). Similar results are seen for schedule and design goals. Shehu and Akintoye (2009) found in a study of construction programs that effective planning had the highest criticality index of 0.870 of all the critical success factors (CSFs) studied.

The PDRI is a widely adopted method in the building industry used to measure project scope definition for completeness (Gibson & Gebken, 2003). No planning correlates to a PDRI score of 1000, whereas a score of 200 or less is good planning (Wang & Gibson, 2008). Gibson, Wang, Cho, and Pappas (2006) show that effective preproject planning using PDRI leads to improved performance in terms of cost, schedule, and operational characteristics.

Success Index vs. Pre-project Planning Effort Index (after Gibson et al. 2006)

Exhibit 1 - Success Index vs. Pre-project Planning Effort Index (after Gibson et al. 2006)

In the construction industry, project success is closely linked to project efficiency so this can apply to efficiency and success (Collyer et al., 2010). The PDRI does not measure work effort, just completeness.

In addition, Gibson and Pappas (2003) noted a marked difference in empirical measurements of project success based on the project PDRI score.

Table 1 – Comparison of Projects with PDRI-Building Projects (after Gibson and Pappas, 2003)

PDRI score
Performance <200 >200
Cost 3% below budget 13% above budget
Schedule 3% ahead of schedule 21% behind schedule
Change orders 7% of budget
(N=17)
14% of budget
(N=61)

Further, they note “many owners face such uncertainty that they skip the entire planning process and move to project execution, or decide to delegate the pre-project planning process entirely to contractors, often with disastrous results.” (p. 41)

In reviewing these papers in the construction field, we can note:

Conclusion 2: The level of planning completeness is positively correlated with project success in the construction industry.

Planning in the Information Technology Industry

The reports of high failure rates for software projects are well known (Standish Group, 2011). Some studies in this area tried to quantify how much planning should be done for software projects. Poston (1985) states that in software development projects, testing costs 43% of overall project costs for the projects studied, whereas planning and requirements accounted for only 6% of effort.

Project Cost Breakdown (after Poston, 1985)

Exhibit 2 - Project Cost Breakdown (after Poston, 1985)

He also notes that the earlier defects are identified as such as in the planning/design phase, the less they cost to fix.

Müller and Turner (2001) reported a correlation between post-contract signing planning and project schedule variance. Also, Tausworthe (1980) notes the importance of the work breakdown structure (WBS – a planning artifact) on software project success. Deephouse, Mukhopadhyay, Goldenson, and Kellner (1996) showed that project planning, was consistently associated with success more than other practices. The dependency for successful planning was 0.791 for meeting targets and 0.228 for quality. Although they do note the following caveat about after-the fact judgments “They could have reasoned. ‘The project was late, so clearly the plan was not realistic.’” (p. 198).

Planning and Success in the General Project Management Literature

Thomas, et al. (2008) state “the most effective team cannot overcome a poor project plan” (p. 105) and projects started down the wrong path can lead to the most spectacular project failures. Morris (1998) similarly argued that “The decisions made at the early definition stages set the strategic framework…. get it wrong here and the project will be wrong for a long time” (p. 5). Munns and Bjeirmi (1996) state that for a project that is flawed from the start, successful execution may matter only to the project team, while the wider organization will see the project as a failure.

Blomquist, Hällgren, Nilsson, and Söderholm (2010) state “Plans are a cornerstone of any project; consequently, planning is a dominant activity within a project context.” (p.11) This is a recurring theme: planning is inherently important to project success or one could argue project management would not exist.

Pinto and Prescott (1988) found that a schedule or plan had a correlation of 0.47 with project success, while detailed technical tasks had a correlation of 0.57 and mission definition a correlation of 0.70. Pinto and Prescott (1990) again found that planning factors dominate throughout the project life cycle. Planning was found to have the greatest impact on the following success factors: “Perceived value of the project” (R2=0.35) and “Client satisfaction” (R2=0.39). The coefficient of determination R2 provides a measure of how well future outcomes are likely to be predicted by a model.

Shenhar (2001) notes better planning is the norm in high and super-high technology projects. This was found to apply consistently to the deliverables normally produced in the planning phase. Dvir and Lechler (2004) found quality of planning had a +0.35 impact on R2 for efficiency and a +0.39 impact on R2 for customer satisfaction.

Dvir, Raz, and Shenhar (2003), in a rigorous paper noted the correlation between aspects of the planning phase and project success. The planning procedures effort was found to be less important to project success than defining functional and technical requirements of the project. The correlation was 0.297 for functional requirements and 0.256 for technical requirements. Zwikael and Globerson (2006) noted the following “organizations, which scored the highest on project success, also obtained the highest score on quality of planning. “ (p. 694)

We can therefore generalize for all industries:

Conclusion 3: Planning is associated with project success; both project efficiency and overall project success

What appears to be clear is that activities which we define as part of the planning phase, such as requirements definition, scope definition, and technical analyses are important to project success (Shenhar et al., 2002) as Eisenhower is said to have stated: “In preparing for battle I have always found that plans are useless, but planning is indispensable.” (Blomquist et al., 2010).

However, it is clear that the activities that occur prior to execution and along with planning are important to project success (Dvir et al., 2003). Turner and Müller (2003) also note that “There is growing evidence that competence in the traditional areas of the project management body of knowledge are essential entry tickets to the game of project management, but they do not lead to superior performance. They are hygiene factors, necessary conditions for project management performance.” (p. 6)

How Much to Plan

Surprisingly little research has been done on how much planning should be done in projects. Daly (1977) states that schedule planning should be 2%, specifications 10%, and final design 40%, of the total cost; however, not much design is done during execution. Similarly, Poston (1985), states that plans and requirements should be 6% of project cost, product design should be 16%, and detailed design 25%. Empirical guidance on how much time to plan has become less common over time. Whether this is because this guidance was found not to be effective, the diversity of technology projects increased, or it simply fell out of favor is not clear

Chatzoglou and Macaulay (1996) outline a rule of thumb for planning effort: The three-times-programming rule and the life cycle stage model. “One estimates how long it would take to program the system and then multiply by three” (p. 183) to get the total. Software development testing is estimated to take roughly an equal amount of effort as development (Kaner, Falk, & Nguyen, 1999). This leaves one third of total effort for the planning phase and other miscellaneous tasks.

Nobelius and Trygg (2002) found front-end activities made up a least 20% of the project time. Similarly, Wideman (2000) states that the typical effort spent in the planning phase in construction projects is approximately 20% of the total work hours.

Choma and Bhat (2010) found “the projects with the worst results were those that were missing important planning components” (p.5). However, they also found “the projects in this sample that took longer in planning had the worst results” (p. 7). Their analysis points to either that too much planning can be negative to project success or that a planning phase that lasts too long can be an indicator of a problem project.

Conclusions

Dvir, et al. (2003), state “with the advancement in computerized planning tools and the blooming in project management training, a certain level of planning is done in all projects, even in those that eventually turn out to be unsuccessful projects. Hence, when a certain level of planning is done in all types of projects, a significant statistical correlation cannot be found in the data” (p. 94); this is a critical point. The question of whether planning is correlated with project success may be a moot point. The benefits of planning have been confirmed through the practice of project management. It has thus become an expected part of all projects. It has, as Turner and Müller (2003) state, become a hygiene factor for successful projects.

Table 2 – Summary of Reviewed Literature on Relationship between Planning and Success

Positive Empirical Conceptual Positive No relationship Conceptual Negative %Empirical negative
Pinto and Prescott (1988) Tausworthe (1980) Flyvbjerg, et al Bart (1993) %Choma and Bhat
Pinto and Prescott (1990) Chatzoglou and (2002) Anderson (1996) %(2010)
Hamilton and Gibson Macaulay (1996) Zwikael and
(1996) Munns and Bjeirmi Globerson (2006)
Deephouse, et al (1996) (1996) Collyer, et al.
Müller and Turner Morris (1998) (2010)
(2001) Johnson, et al.
Shenhar, et al. (2002) (2001)
Dvir, et al. (2003) Shenhar (2001)
Gibson and Pappas Thomas, et al (2008)
(2003) Zwikael (2009)
Dvir and Lechler (2004) Blomquist et al.
Gibson, et al. (2006) (2010)
Zwikael and Globerson Collyer, et al. (2010)
(2006)
Wang and Gibson (2008)
Zwikael (2009)
Choma and Bhat (2010)

From this table, we can see that the preponderance of the literature has found that planning is important for project success.

The next table summarizes the empirical results encountered in the literature review from a high level.

Table 3 – Meta-Analysis Summary of Empirical Results

Study Empirical Relationship Normalized to R2
Aggregate Efficiency %Overall Success
Pinto and Prescott (1990)

Planning found to have the greatest impact on success factors Perceived value of the project (R2=.35)

Client satisfaction (R2=.39)

R2=0.35
R2=0.39
Average
R2 =0.37
R2=0.37 R2=0.39
Hamilton and Gibson (1996) The top third best planned projects had an 82% chance of meeting financial goals, while only 66% of projects in the lower third did.
Similar results were seen in these projects' results relating to schedule performance and design goals met.
Deephouse et al. (1996) The dependency for successful planning was 0.791 for meeting targets and 0.228 for quality. R2=0.625
R2=0.052
Average
R2 =0.34
R2=0.34
Dvir, et al. (2003) Meeting the planning goals is correlated 0.570 to overall project success measures. R2=0.32 R2=0.32
Dvir and Lechler (2004) Quality of planning had a +0.35 impact on R2 for efficiency and a +0.39 impact on R2 for customer satisfaction. R2=0.35
R2=0.39
Average
R2 = 0.37
R2=0.35 R2=0.39
Zwikael and Globerson (2006) Planning quality correlates as follows:
R = 0.52 for cost
R =0.53 schedule
R= 0.57 technical performance
R= 0.51 customer satisfaction
R2 = 0.27
R2= 0.28
R2= 0.32
R2= 0.26
Average
R2 = 0.28
R2=0.28 R2=0.29
Gibson et al. (2006) R2 = 0.42 Correlation between planning completeness and project success R2 = 0.42 R2 = 0.42
Salomo et al. (2007) R2 = 0.27 between project planning/risk planning and innovation success
R2 = 0.33 between goal clarity/process formality and innovation success
R2= 0.27
R2= 0.33
Average
R2 = 0.30
R2 = 0.30
Wang, and Gibson (2008) PDRI score of a building construction project is related to project cost and schedule success (R = 0.475) R2 = 0.23 R2 = 0.23
Overall Average R2 = 0.33 R2 = 0.33 R2 = 0.34

These studies used different methodologies and even different definitions of planning and success; however, the results appear to be generally consistent and we can report:

Conclusion 4: As an approximation, research shows an average value of R2 = 0.33 planning correlation with efficiency and R2 = 0.34 with success.

If we compare this to the approximately 20% to 33% effort spent on planning reported by Nobelius and Trygg (2002) and Wideman (2000), there appears to a clear return on this investment in terms of project success.

However, whether there is an ideal amount of effort that should be spent planning in a project is still an area for future investigation.

In summary, we make the following conclusions:

  1. Pressure exists in the project environment to reduce the time spent planning rather than increase it.
  2. The level of planning completeness is positively correlated with project success in the construction industry.
  3. Planning is associated with project success; both project efficiency and overall project success
  4. As an approximation, research shows an average value of R2 = 0.33 correlation with efficiency and R2 = 0.34 with success.

We now review the research questions:

1. Is planning important for project success?

• This is confirmed by conclusion 3.

2. What is the impact of the planning phase on project success?

• This is answered by conclusion 4.

3. What level of effort expended on the planning phase is most correlated with project success?

• The literature in this area does not appear to be consistent or recent in nature.

However, it is clear that additional research is warranted.

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2012, Pedro Serrador
Published as a part of the 2012 PMI Global Congress Proceedings – Vancouver, BC

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