Strategic planning is the basis for everything we do productively in the organization – or at least it should be.  It is the process of formulating and implementing decisions about an organization’s future direction. This process is vital to every organization’s survival because it is the process by which the organization adapts to its ever-changing environment, and the process is applicable to all management levels and all types of organizations.

The Formulation Process

Let’s look at the first step in strategic planning: the formulation process is the process of deciding where you want to go, what decisions must be made, and when they must be made in order to get there. It is the process of defining and understanding the business you are in and how to remain competitive within that business.

The outcome of successful formulation results in the organization doing the right thing in the right way (i.e., it results in project management) by producing goods or services for which there is a demand or need in the external or internal environment. When this occurs, we say the organization has been effective as measured by market response, such as sales and market shares or internal customer acceptance. A good project management methodology can provide better customer satisfaction and a greater likelihood of repeat business. All organizations must be effective and responsive to their environments to survive in the long run.

The formulation process is performed at the top levels of the organization.  Here, top management values provide the ultimate decision template for directing the course of the firm. Formulation: 

- Scans the external environment and industry environment for changing conditions 

- Interprets the changing environment in terms of opportunities or threats 

- Analyzes the firm’s resource base for asset strengths and weaknesses 

- Defines the mission of the business by matching environmental opportunities and threats with resource strengths and weaknesses 

- Sets goals for pursuing the mission based on top management values and sense of responsibility

The Implementation Process

The second step in strategic planning, implementation, translates the formulated plan into policies and procedures for achieving the grand decision. Implementation involves all levels of management in moving the organization toward its mission. The process seeks to create a fit between the organization’s formulated goal and its ongoing activities. Because implementation involves all levels of the organization, it results in the integration of all aspects of the firm’s functioning. Integration management is a vital core competency of project management. Middle- and lower-level managers spend most of their time on implementation activities. Effective implementation results in stated objectives, action plans, timetables, policies and procedures, and results in the organization moving efficiently toward fulfillment of its mission.

Project Management Process

Strategic planning for project management is the development of a standard methodology for project management, a methodology that can be used over and over again, and that will produce a high likelihood of achieving the project’s objectives. Although strategic planning for the methodology and execution of the methodology does not guarantee profits or success, it does improve the chances of success.

One primary advantage of developing an implementation methodology is that it provides the organization with a consistency of action. As the number of interrelated functional units in organizations has increased, so have the benefits from the integrating direction afforded by the project management implementation process.

Methodologies do not have to be complex. As you can see in the figure below, the methodology begins with a project definition process, which is broken down into a technical baseline, a functional or management baseline, and a financial baseline.

Strategic planning - Implementation

The technical baseline includes, at a minimum:

- Statement of work (SOW) 

- Specifications 

- Work breakdown structure (WBS) 

- Timing (i.e., schedules) 

- Spending curve (S curve)

The functional or management baseline indicates how you will manage the technical baseline. This includes:

- Resumes of the key players

- Project policies and procedures

- The organization for the project

- Responsibility assignment matrices (RAMs)

The financial baseline identifies how costs will be collected and analyzed, how variances will be explained, and how reports will be prepared. Altogether, this is a simple process that can be applied to each and every project.

Without this repetitive process, subunits tend to drift off in their own direction without regard to their role as a subsystem in a larger system of goals and objectives. The objective setting and the integration of the implementation process using the methodology assure that all of the parts of an organization are moving toward the same common objective. The methodology gives direction to diverse activities, as well as providing a common process for managing multinational projects.

Another advantage of strategic project planning is that it provides a vehicle for the communication of overall goals to all levels of management in the organization. It affords the potential of a vertical feedback loop from top to bottom, bottom to top, and functional unit to functional unit. The process of communication and its resultant understanding helps reduce resistance to change. It is extremely difficult to achieve commitment to change when employees do not understand its purpose. The strategic project planning process gives all levels an opportunity to participate, thus reducing the fear of the unknown and possibly eliminating resistance.

The final and perhaps the most important advantage is the thinking process required. Planning is a rational, logically ordered function. This is what a structured methodology provides. Many managers caught up in the day-to-day action of operations will appreciate the order afforded by a logical thinking process.

Methodologies can be based upon sound, logical decisions. Figure 3–2 shows the logical decision-making process that could be part of the project selection process for an organization. Checklists can be developed for each section of Figure 3–2 to simplify the process. 

The Project Selection Process

Methodologies can be based upon sound, logical decisions. The figure below shows the logical decision-making process that could be part of the project selection process for an organization. Checklists can even be created for each section showing in the figure to help the project organization simplify the process.

The first box in the figure is the project definition process. At this point, the project definition process simply involves a clear understanding of the objectives, which should be defined in both business and technical terms.

Project Selection Process

The second box is an analysis of the environmental situation. This usually includes a market feasibility analysis to determine:

- The potential size of the market for the product

- The potential risks of product liability

- The capital requirements for the product

- The market position on price

- The expected competitive response

- The regulatory climate, if applicable

- The degree of social acceptance

- Human factors (e.g., unionization)

The third box in the figure above is an analysis of the competitive situation and includes:

- The overall competitive advantage of the product

- Opportunities for technical superiority:  Product performance, Patent protection, Exceptional price-quality-value relationship 

- Business attractiveness:  Type and nature of competitors, Structure of the competition/industry, Differences among competitors (price, quality, etc.), Threat of substitute products

- Competitive positioning:  Market share, Rate of change in market share, Perceived differentiation among competitors and across various market segments, Positioning of the product within the product line

- Opportunities for market positioning:  Franchises, Reputation/image, Superior service

- Supply chain management:  Ownership of raw material sources, Vertical integration 

- Physical plant opportunities:  Locations, Superior logistics support

- Financial capabilities:  Available capital, Credit rating impact, Wall Street support

- Efficient operations management:  Inventory management, Production, Distribution, Logistics support

The next box in the figure above is resources and capabilities. Analysis of resources and capabilities, combined with the analysis of competitive positioning just discussed, allows us to determine our strengths and weaknesses. Identifying opportunities and threats lets us identify what we want to do. However, it is knowing our strengths and weaknesses that lets us identify what we can do. Therefore, the design of any type of project management methodology must be based heavily upon what the organization can do.

Internal strengths and weaknesses can be defined for each major functional area. The design of a project management methodology can exploit the strengths in each functional area and minimize its weaknesses. Not all functional areas will possess the same strengths and weaknesses.

The following illustrates typical strengths or weaknesses for various functional organizations:

- Research and development:  Ability to conduct basic/applied research, Ability to maintain state-of-the-art knowledge, Technical forecasting ability, Well-equipped laboratories, Proprietary technical knowledge, An innovative and creative environment, Offensive R&D capability, Defensive R&D capability, Ability to optimize cost with performance

- Manufacturing:  Efficiency factors, Raw material availability, and cost, Vertical integration abilities, Quality assurance system, Relationship with unions, Learning curve applications, Subsystems integration

- Finance and accounting:  Cash flow (present and future projections), Forward pricing rates, Working capital requirements

- Human resource management: the turnover rate of key personnel, Recruitment opportunities, Promotion opportunities, Having a project management career path, Quality of management at all levels, Public relations policies, Social consciousness

- Marketing:  Price-value analysis,  Sales forecasting ability, Market share, Life cycle phases of each product, Brand loyalty, Patent protection, Turnover of key personnel.

The go-no-go decision on projects 

Having analyzed what we can do, we must now look at past performance to see if there are any applicable lessons learned files that could impact the current project or selection of projects. Analysis of past performance, as shown in the figure below, is usually the best guide for the specifications of the present project.

Related reading: Project Go/No-Go Decisions: Everything you need to know

The final box in the figure above is the decision on whether or not to undertake the project. This type of decision-making process is critical if we are to improve our chances of success. Historically, less than 10 % of R&D projects ever make it through full commercialization where all costs are recovered. Part of that problem has been the lack of a structured approach for decision-making, project approval, and project execution. All this can be satisfied with a sound project management methodology.

Project decision process

In the absence of an explicit project management methodology, decisions are made incrementally. A response to the crisis of the moment may result in a choice that is unrelated to, and perhaps inconsistent with, the choice made in the previous moment of crisis. Discontinuous choices serve to keep the organization from moving forward. Contradictory choices are a disservice to the organization and may well be the cause of its demise. Such discontinuous and contradictory choices occur when decisions are made independently to achieve different objectives, even though everyone is supposedly working on the same project. When the implementation process is made explicit, however, objectives, missions, and policies become visible guidelines that produce logically consistent decisions.

Small companies usually have an easier time in performing strategic planning for project management excellence. Large companies with highly diversified product lines and multiple management styles find that institutionalizing changes in the way projects are managed can be very complex. Innovation and creativity in project management can be a daunting, but not impossible, task.

Effective strategic planning for project management is a never-ending effort, requiring continuous support. The two most common continuous supporting strategies are the integration opportunities strategy, outlined in the figure below, and the performance improvement strategy, shown in the last figure.


Project decision process


The integration opportunities strategy figure outlines the opportunities that exist to integrate or combine an existing methodology with other types of management approaches that may be currently in use within the company. Such other methodologies available for integration include concurrent engineering, total quality management (TQM), scope change management, and risk management. Integrated strategies provide a synergistic effect.