Planning to Fail: When Is Project Planning Counterproductive?

Abstract

Planning-performance theory suggests that formal planning has a positive impact on performance. Accordingly, traditional project management methodologies advocate formal planning as an essential process in any project. However, alternative recent project management methodologies (e.g., Agile) promote less focus on a formal planning process at the start of a project. In this article, we question when formal planning is effective, when it is counterproductive, and which planning approach (strategic or tactical) is more effective for various project risk levels and performance dimensions (efficiency and effectiveness). Results from analyzing 2002 projects suggest that strategic planning has a higher value than tactical planning. Furthermore, tactical planning has a negative impact on project efficiency in low-risk projects as it increases project duration and cost but adds little value. In practice, in low-risk projects, managers may limit their focus on counterproductive tactical practices, such as risk, and procurement planning, and focus instead on long-term strategic planning, such as human resources planning. Theoretically, this article sets boundaries of effectiveness for planning-performance theory and advances the literature on the planning fallacy.