Planning for the future in construction firms

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Planning for the future has always been a integral part of human life. An simple example being the plans that most people make in the early morning, about their daily activities. In business, plans are developed to guide current actions and to guide business entities in order to achieve desired objectives. The activity of developing a future plan is a complex exercise mainly due to various uncertainties and risks associated with that project. There are external uncertainties due to the environment in which the firm is operating as well as internal uncertainties within the firms. The stakeholders of the firm, being the originator of the plan impose a degree of uncertainty to the process due to their own individual perception of uncertainty in the future and the manner with which they articulate their perception to others within the group hence it is important that their underlying pre-conception of thinking about the future is well understood for enhancing the process and output of the future plan.

Construction firms operate in a highly dynamic and competitive sector .Greater preoccupation of 'getting the job done' and 'winning the next project' may have denied construction firms for thinking strategically for their future. The lack of strategic thinking is further exacerbated by the prevalence of small construction companies in the sector. Inadequate resource capacities, tough competition and the transient nature of construction employment often results in smaller companies struggling to survive, let alone plan for the long term. Although there is little capacity for strategic planning and little emphasis on the need for long term planning, greater emphasis on 'sustainability' has underlined the importance of thinking longer term for survival and competitiveness.

In today's engineering and construction industries, the concepts of company loyalty, traditional competitors, and employee development are changing at a pace that has not previously been encountered in postindustrial times. Hence both, private and public organizations are increasing their emphasis on long-term or strategic planning. Private organizations, focus on identifying as well as pursuing new market and customer opportunities that are emerging throughout the global business environment. For public organizations such as municipalities and Federal agencies, strategic planning efforts are a response to the new roles that agencies will be performing in the next century, including greater emphasis on sustainable communities, mass transit, and environmental protection .Besides, technology, communication, and market advances are changing the global perspectives of time, distance, and spatial boundaries. Earlier organizations used to identify themselves as local, regional, national, or international in scope. However, with the emergence of technological innovations, these boundaries have been broken to and any organization can participate in a design or construction project in any location given that they have sufficient resources to do so. But most importantly the emergence of following three issues form the need for a strategic planning by construction organizations are knowledge workers, new markets, and information technology.

1.1 Knowledge Workers

Engineering Industry is evolving from a skill-based environment to one that is knowledge-based. The construction industry is witnessing the emergence of knowledge-based tasks as a central focus of organization operations as previously, professionals were educated in specific disciplines and encouraged to remain with a single employer for an extended period of time in the tradition of professional apprenticeships. However, this trend is changing with the emerging focus on expertise in areas such as technology, automation, economics, and market development. The ability to access information from sources such as the Internet, government and corporate databases, and private agencies has become a critical attribute as information exchange is now a fundamental component of the business operation.

1.2 New Markets

A second challenge for the construction industry is the area of emerging markets and competition. Earlier, the construction industry was divided into heavy, industrial, commercial, or residential clients. This division provided the opportunity for organizations to dig deep into narrowly defined competitive markets.But now with pressure increasing on profit margins and market boundaries, the construction organizations are moving out of traditional markets. Boundaries accepted as the limits of market focus are no longer constraining the organization from exploring alternative income opportunities.

1.3 Information Revolution

The information revolution is impacting all aspects of the construction profession as current computing technologies are providing construction professionals with access to rapidly expanding information repositories and evolving communication path-ways. This access has profound implications for the construction industry in several areas including intra office communications, client relations, and site management. At the core of this transformation is the evolution from hierarchical information transfer to the concept of hyperarchical information access and transfer (Evans and Wurster 1997). Hyperarchical information access allows any individual to access information repositories anywhere in the world. Advancements in communication technologies are expanding these concepts by bringing project participants together through video, audio, and virtual reality environments. Communication, organization, marketing, human resource, and operational processes are fundamentally changing, forcing organization to focus their attention to these technologies as a component of their long-term development.

2. Strategic Planning

Strategic planning is an important management tool for the design and construction industries. It provides a method for assuring that organizations regardless of them being large or small, maintain their effectiveness during turbulent times. This kind of planning requires a review of operations, marketing and financial performance, human and other resources, and the business environment. Appropriate objectives, action plans and timetables are then be developed to address opportunities and effect needed improvements. The methods described require input from the management team who will later become responsible for its implementation.

Peter Drucker (1974) defines strategic planning as "the continuous process of making present, entrepreneurial decisions systematically and with the greatest knowledge of their futurity . . . (and) the efforts needed to carry out those decisions."The quality of those decisions depends entirely upon the honesty and thoroughness of the first phase of the planning work, and the strategic review of "where we are" and "how we're doing." Results are also positive for service firms, though not as positive as for product oriented firms.

Strategic planning was originally developed by rulers and military leaders attempting to broaden their empires, the concept of strategy can be traced to the beginnings of recorded history. Examples of strategies that remain a part of today's vocabulary or military foundation include the use of the Trojan Horse, the development of the warship, and the concept of the fortified castle. Each of these examples represented a new approach that responded to a current situation, predicted the needs of the future, or presented a new method for achieving a goal. Similar to the expansion of political empires, the expansion of business entities requires organizations to take proactive steps for both existing and anticipated industry conditions. The modern business interpretation of this concept is exemplified in industries as varied as telecommunications and grocery chains. The expansion of digital communications, global mergers, and the introduction of lean production have modified business practices to anticipate twenty-first century scenarios. These ideas are not implementation plans, but rather the visions from which specific action plans are being developed. In this context, strategy is defined as the underlying concept that responds to, or anticipates, industry conditions for the purpose of developing long-term plans .The development of strategic concepts, whether from a military perspective or a modern business perspective, does not occur spontaneously. The development of strategic concepts requires an environment that fosters strategic thinking and focus. The establishment, continuation, and enhancement of this environment is the focus of strategic management.

2.1 The Implementation Side of Strategy

Academic and business writers have written many strategic planning models provide specific instructions for approaching, executing, and evaluating the development of strategic concepts(Davis 1987; McCabe and Narayanan1991; Mintzberg 1994; Lemmon and Early1996). Common model emphasizes the need for an organization to:

1. Build a strategic planning team

2. Set the strategic planning objectives

3. Gather member input

4. Synthesize the developed ideas

5. Develop an implementation plan

6. Execute the plan

7. Evaluate the success of the ideas prior to the start of the next strategic planning timeframe

However, as with any topic that focuses on procedural processes, the number of strategic planning methods is increasing at a rapid rate. The strategic planning process is one element of the overall strategy topic. Strategic planning is the focused attention to the development of strategic concepts based on response to internal and external business conditions.As illustrated in Fig. 2, the seven areas of strategic planning can be pictured as a series of segments within an overall structure. Underlying this entire structure is the understanding that the purpose of these focal points is to provide the environment that allows organizations to formulate strategic concepts. Strategic planning is the focused attention to the development of strategic concepts based on the inputs provided by the seven areas of strategic management.A strategic plan is required to outline the goals, objectives, mile-posts, and evaluation criteria that must be followed to achieve the developed strategy. However, translating a strategy into a series of tasks is challenging. The time required to focus on broadening client bases, or examining new revenue streams, is often overridden by demands by projects for attention to budget, schedule, or personnel matters. Given this conflict for attention, a specific set of instructions is required to ensure that an organization remains focused on organization-level concerns. This set of instructions is the strategic plan which helps the managers to measure outcomes that can evaluate for progress and final achievement.

2.2 When Should Strategic Planning Be Done?

The scheduling for the strategic planning process depends on the nature and needs of the organization and the its immediate external environment. For example, planning should be carried out frequently in an organization whose products and services are in an industry that is changing rapidly. In this situation, planning might be carried out once or even twice a year and done in a very comprehensive and detailed fashion with attention to mission, vision, values, environmental scan, issues, goals, strategies, objectives, responsibilities, time lines, budgets, etc. On the other hand, if the organization has been around for many years and is in a fairly stable marketplace, then planning might be carried out once a year and only certain parts of the planning process, for example, action planning i.e objectives, responsibilities, time lines, budgets, etc are updated each year.

Some of the suggested guidelines are as mentioned below

1. Strategic planning should be done when an organization is just getting started.

2. Strategic planning should also be done in preparation for a new major venture.

3. Strategic planning should also be conducted at least once a year in order to be ready for the coming fiscal year

4.Each year, action plans should be updated.

Generally during implementation of the plan, the progress of the implementation is reviewed at least on a quarterly basis by the board but again the frequency of review depends on the extent of the rate of change in and around the organization

2.3.Uncertainty, risk and opportunity

This gives us ample reason as to why strategic planning should be done especially in a dynamic and uncertain environment as that of Construction firms because discourse about the future and uncertainty is commonly associated with risk .Risk is an uncertainty that influence the achievement of objectives(Hillson and Murray-Webster 2005). The term 'risk' is often associated with adversity or threats to an entity but we need to treat opportunities (the up-side of risk) in an equal footing as threats (the down-side of risk). The reason is simply that threat and opportunity are seldom independent and an event may be a threat and at the same time opportunity for an entity or different parts of an entity(Ward and Chapman 2003),. Managing risk generally involves activities of identifying, assessing, responding and monitoring the risks(Cooper et al. 2005) . Identification of risks and opportunities is the first and most important stage in the process because uncertainties which have not identified cannot be managed(Maytorena et al. 2007). Despite many techniques for identifying uncertainties, brainstorming session is seen as the preferred approach if there is little previous experience and information(Cooper et al. 2005). In contrast to the other activities, identification session is characterized by high degree subjectivity, heuristic,bias, intuition, utilizing tacit knowledge of individuals and groups.

A conceptual model for enhancing understanding of this phenomenon was developed by scholars is presented in Figure 3 below. The model was developed based on an in-depth review of empirical research in perception of risk (e.g. Slovic 2000), decision making under uncertainty(e.g. Tversky and Kahneman 1974, Sadler-Smith and Shefy 2004, Miller and Ireland 2005), risk attitude of individual and group (e.g. Hillson and Murray-Webster 2005).The model postulates two levels of analysis, namely individual and group level. Perception of uncertainty and identification of risks and opportunities at group level can be considered as the composite of those at individual level, although this does not mean that they are equal to the sum of those at individual(Hillson and Murray-Webster 2005). The model identifies factors which may influence the way the future is perceived and the identification of risks and opportunities arising from plausible future events. Also the factors may influence each other, e.g. culture and value. As a consequence, it could be difficult to identify influencing factors definitively from an expressed perception and behavior. At individual level, the perception of the future is a product of heuristics, intuitions, affective, value, and other socio-political and cultural factors. Heuristic method is particularly used to rapidly come to a solution that is hoped to be close to the best possible answer, or 'optimal solution'. Intuition-as-expertise is an accumulation of conscious and unconscious learning over time, and often overlapped with the heuristics, whereas intuition-as feeling is more dominant in the exploration of future uncertainty. Affective is a form of emotion and defined as positive ('like') and negative ('dislike') evaluative feeling towards a particular issue(Slovic 2000).. Value is related to 'worldviews, ideology and belief, which are often overlapped and related to each other. The other influencing factors may be sociopolitical and cultural factors, such as religion. At collective level, the factors at individual level may exert their same influence Many factors are thought to influence perception at collective level, but there is little empirical evidence of their significance and manner by which they are related with collective perception and possibly amplified the factors from individual level. In sum, the model has illuminated a number of factors that may influence individual and collective's perception of the future. Investigation of how these factors work in practice should be conducted in such a manner which appreciates interplay between these factors with other essential aspects of strategic thinking in a real organizational context.

The following section presents the proposed framework, which is aimed to enhancing the capacity and capability of construction organizations for thinking about the future.Figure 4 depicts a visual representation of the proposed activity framework. The framework comprises five independent but closely related activities. The pyramidal form with an activity in each corner is considered an appropriate representation of the framework as it suggests the nature of the interrelationships between activities. The framework embraces a sense of flexibility, in which activities can be undertaken in no particular order, although the first iteration would intuitively commence with establishing business goals.

Establishing business goals

Business goals are derived from corporate mission and provide the purpose of a business unit for undertaking a particular action in relation to the strategic plan. Business goals are usually determined by higher level management within organization. Increased emphasis on the role of public stakeholders in corporate governance has elevated the act of establishing business goals to higher level of complexity. This has provided an opportunity to infuse the spirit of social responsibility and sustainability agenda within the firm.

Establishing context

Business exists within an environment which is characterized by dynamic interplay amongst a plethora of interconnected factors. Several tools and techniques have been used to enhancing understanding of organization context, such as PESTLE (or STEEP) and SWOT analyses, to name a few. PESTLE analysis, a form of horizon scanning activity, explores a range of political, economic, social, technological, legal and environmental issues which might impact the business now and in the future. SWOT analysis systematically identifies internal factors as the strengths and weaknesses of the business, and external factors as opportunities for and threats to the business.

Analyzing stakeholders and establishing their roles

Stakeholders hold the key to successful process, but are also a major source of uncertainty (Ward and Chapman 2008).. This activity identifies stakeholders and clarifies their roles in the process. Stakeholders may be internal to the firm, but are not closely involved in the process. The analysis of all possible stakeholders will enhance understanding of the context in which strategy is going to be enacted. It is also important to develop a reasonable awareness of those individuals and groups within organization, who may have different (and may be competing) agendas). Their views will provide richness and diversity, which are essential to the identification of plausible futures.

Developing individual and group self-awareness

The intended aim of this activity is on developing reflective individuals and groups for improving corporate agility. Besides rational thinking, exploration of plausible futures and uncertainties utilizes much of innate skills and tacit knowledge of individuals and groups within organization. Creativity and intuition are encouraged and deemed as a vehicle to devise a breakthrough solution in the decision making.

Eliciting and communicating tacit knowledge

This activity concerns the articulation of the tacit knowledge by individuals and the interaction of articulated knowledge during strategic thinking. This involves bringing together the identified stakeholders in brainstorming workshops where future uncertainties and ideas are generated and discussed from the lower to higher levels of management. Communication is facilitated through the representation of this tacit knowledge or mental models of individuals involved. Cognitive mapping technique provides a framework to objectively exhibit these mental models in terms of constructs (e.g. events, issues), their interconnections and relations to goal(s) of an entity (e.g. individual, business, corporate).The interaction between stakeholders provides an opportunity to extent the sphere of collective thinking, by merging two (or more) individual cognitive maps. In sum, this activity stimulates individuals to utilize their rationality and intuition for thinking about the future, and amalgamate the other activities for developing strategic plan.


There are many approaches to strategic planning but typically a three-step process may be used:

Major activities in strategic planning process:

1. Strategic Analysis

This activity can include conducting some sort of scan, or review, of the organization's environment i.e the political, social, economic and technical environment.Planners carefully consider various driving forces in the environment, for example, increasing competition, changing demographics, etc. Planners also look at the various strengths, weaknesses, opportunities and threats (SWOT) regarding the organization.

§ Situation- evaluate the current situation and how it came about.

§ Target- define goals and/or objectives (sometimes called ideal state)

§ Path- map a possible route to the goals/objectives

One alternative approach is calledDraw-See-Think

§ Draw- what is the ideal image or the desired end state?

§ See- what is today's situation? What is the gap from ideal and why?

§ Think- what specific actions must be taken to close the gap between today's situation and the ideal state?

§ Plan- what resources are required to execute the activities?

An alternative to theDraw-See-Thinkapproach is calledSee-Think-Draw

§ See- what is today's situation?

§ Think- define goals/objectives

§ Draw- map a route to achieving the goals/objectives

In other terms strategic planning can be as follows:

§ Vision- Define the vision and set a mission statement with hierarchy of goals and objectives

§ SWOT- Analysis conducted according to the desired goals

§ Formulate- Formulate actions and processes to be taken to attain these goals

§ Implement- Implementation of the agreed upon processes

§ Control- Monitor and get feedback from implemented processes to fully control the operation

When developing strategies, analysis of the organization and its environment as it is at the moment and how it may develop in the future, is important. The analysis has to be executed at an internal level as well as an external level to identify all opportunities and threats of the external environment as well as the strengths and weaknesses of the organizations.

There are several factors to assess in the external situation analysis:

1. Markets (customers)

2. Competition

3. Technology

4. Supplier markets

5. Labor markets

6. The economy

7. The regulatory environment

It is rare to find all seven of these factors having critical importance but it is also uncommon to find that the markets and competition are not of critical importance. Analysis of the external environment normally focuses on thecustomer. Management should be visionary in formulating customer strategy, and should do so by thinking about market environment shifts, how these could impact customer sets, and whether those customer sets are the ones the company wishes to serve.The terms that are manjorly used in strategic planning are desired end states, plans, policies, goals, objectives, strategies, tactics and actions. Definitions vary, overlap and fail to achieve clarity. The most common of these concepts are specific, time bound statements of intended future results and general and continuing statements of intended future results, which most models refer to as either goals or objectives (sometimes interchangeably).

One model of organizing objectives uses hierarchies. The items listed above may be organized in a hierarchy of means and ends andnumberedas follows: Top Rank Objective (TRO), Second Rank Objective, Third Rank Objective, etc. From any rank, the objective in a lower rank answers to the question "How?" and the objective in a higher rank answers to the question "Why?" The exception is the Top Rank Objective (TRO): there is no answer to the "Why?" question. That is how the TRO is defined.

People typically have several goals at the same time. "Goal congruency" refers to how well the goals combine with each other. Does goal A appear compatible with goal B? Do they fit together to form a unified strategy? "Goal hierarchy" consists of the nesting of one or more goals within other goal(s).

One approach recommends having short-term goals, medium-term goals, and long-term goals. In this model, one can expect to attain short-term goals fairly easily: they stand just slightly above one's reach. At the other extreme, long-term goals appear very difficult, almost impossible to attain. Using one goal as a stepping-stone to the next involvesgoal sequencing. A person or group starts by attaining the easy short-term goals, then steps up to the medium-term, then to the long-term goals. Goal sequencing can create a "goal stairway". In anorganizationalsetting, the organization may co-ordinate goals so that they do not conflict with each other. The goals of one part of the organization should mesh compatibly with those of other parts of the organization. Organizations sometimes summarize goals and objectives into amission statementand/or avision statementOthers begin with a vision and mission and use them to formulate goals and objectives An objective is a simple statement of what you will achieve in a particular area of concern previously identified as a key-results area. To be effective and useful, objectives need to say what, specifically, will be achieved or done or changed or accomplished. This is best shown by indicators, sometimes called measures of performance.

Examples of indicators or measures might be:

• Fees/revenues.

• Increases/decreases.

• Unit costs.

• Trends.

• Key ratios.

• New groups, divisions, offices, services, etc.

• Numbers of people.

• Specific improvements spelled out.

• Percentages up or down..

2. Setting Strategic Direction

Planners carefully come to conclusions about what the organization must do as a result of the major issues and opportunities facing the organization. These conclusions include what overall accomplishments (orstrategic goals)the organization should achieve, and the overall methods (orstrategies)to achieve the accomplishments. Goals should be designed and worded as much as possible to be specific, measurable, acceptable to those working to achieve the goals, realistic, timely, extending the capabilities of those working to achieve the goals, and rewarding to them, as well

The statement of the firm's mission or purpose is fundamentally important.It reduces the hassles and disagreements in the planning work.It also provides a guide to all employees in all functions in their daily work activities. It's more important than policy or procedures and yet helps form the basis for them. An effective mission statement answers the following questions:

• What is our basic business and service(s)?

• What makes us unique compared to similar organizations?

•What are we striving to become in the near-term future?

It will also address, explicitly or implicitly, the firm's relationship or responsibility to owners, clients, suppliers, employees, community, and profession. A Mission defines the fundamental purpose of an organization or an enterprise, basically describing why it exists and what it does to achieve its Vision. It defines the customer and the critical processes. It informs you of the desired level of performance It is not an objective with a timeline, but rather the overall goal that is accomplished over the years as objectives are achieved that are aligned with the corporate missionVision defines the desired or intended future state of an organization or enterprise in terms of its fundamental objective and/or strategic direction. Vision is a long term view, sometimes describing a view of how the organization would like the world in which it operates to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria.Values are beliefs that are shared among thestakeholdersof an organization. Values drive an organization's culture and priorities..

An advantage of having a statement is that it creates value for those who get exposed to the statement, and those prospects are managers, employees and sometimes even customers. Statements create a sense of direction and opportunity. They both are an essential part of the strategy-making process.

Many people mistake vision statement for mission statement, and sometimes one is simply used as a longer term version of the other. The Vision should describe why it is important to achieve the Mission. A Vision statement defines the purpose or broader goal for being in existence or in the business and can remain the same for decades if crafted well. A Mission statement is more specific to what the enterprise can achieve itself. Vision should describe what will be achieved in the wider sphere if the organization and others are successful in achieving their individual missions.The mission statement can galvanize the people to achieve defined objectives, even if they are stretch objectives, provided it can be elucidated inSMART(Specific, Measurable, Achievable, Relevant and Time-bound) terms. A mission statement provides a path to realize the vision in line with its values. These statements have a direct bearing on the bottom line and success of the organization.The fundamental purpose or the mission is the current situation in terms of internal resources and capabilities (strengths and/or weaknesses) and external conditions (opportunities and/or threats), and where you want to go - the vision for the future

Features of an effective vision statement include:

§ Clarity and lack of ambiguity

§ Vivid and clear picture

§ Description of a bright future

§ Memorable and engaging wording

§ Realistic aspirations

§ Alignment with organizational values and culture

To become really effective, an organizational vision statement must become assimilated into the organization's culture. Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging others to craft their own personal vision compatible with the organization's overall vision. In addition, mission statements need to be subjected to an internal assessment and an external assessment. The internal assessment should focus on how members inside the organization interpret their mission statement. The external assessment - which includes all of the businesses stakeholders - is valuable since it offers a different perspective. These discrepancies between these two assessments can give insight on the organization's mission statement effectiveness.The flow chart shown in Fig. 2 indicated the major activities that make up the process of strategic planning. These activities, in some form, are usually required for almost any kind of organization including: service agencies and firms; commercial and manufacturing businesses; networks and associations; and churches and schools.

3. Action Planning

Action planningis carefully laying out how the strategic goals will be accomplished. Action planning often includes specifyingobjectives, or specific results, with each strategic goal. Therefore, reaching a strategic goal typically involves accomplishing a set of objectives along the way -- in that sense, an objective is still a goal, but on a smaller scale.

Often, each objective is associated with atactic,which is one of the methods needed to reach an objective. Therefore, implementing a strategy typically involves implementing a set of tactics along the way -- in that sense, a tactic is still a strategy, but on a smaller scale.Action plans may be developed in the planning session by assigning each of the top 5 to 10 objectives to a small sub-group of one, two or three people to attain the following

• Obtain high quality information from all parts of the firm, division

• Gain commitment of key people through their involvement in planning.

• Assure adequate representation of operations, marketing, finance and staff.

• Contribute to planners' mutual education about other areas of the firm.

• Develop a plan that is creative, relevant, and focused on the few important issues.

It is usually helpful to limit the planning group to seven or fewer people if possible, to expedite discussion and decision-making.

Action plans are "how to" steps or programs which will advance a particular objective.Action planning also includes specifyingresponsibilitiesandtimelineswith each objective, or who needs to do what and by when. It should also include methods tomonitorandevaluatethe plan, which includes knowing how the organization will know who has done what and by when.Organizations develop Annual plan also called theoperational planormanagement plan includes strategic goals, strategies, objectives, responsibilities and timelines that should be done in the coming year or work plans for each major function, division department, Usually,budgetsare included in the strategic and annual plan, and with work plans. Budgets specify the money needed for the resources that are necessary to implement the annual plan. Budgets also depict how the money will be spent, for example, for human resources, equipment, materials, for example operating budgets are usually budgets associated with major activities over the coming year. Project budgets are associated with major projects, for example, constructing a building, developing a new program or product line, etc. Cash budgets depict where cash will be spent over some near term, for example, over the next three months and Capital budgets that are associated with operating some major asset, for example, a building, automobiles, furniture, computers, etc.

There are different planning models depending on the type of organization as listed below:

Model One - "Basic" Strategic Planning

This very basic process is typically followed by organizations that are extremely small, busy, and have not done much strategic planning before. The process might be implemented in year one of the nonprofit to get a sense of how planning is conducted, and then embellished in later years with more planning phases and activities to ensure well-rounded direction for the nonprofit. Planning is usually carried out by top-level management. The basic strategic planning process includes:

1.Identify your purpose (mission statement)-

2.Select the goals your organization must reach if it is to accomplish your mission

3.Identify specific approaches or strategies that must be implemented to reach each goal-.

4.Identify specific action plans to implement each strategy-

5.Monitor and update the plan-

Note that organizations following this planning approach may want to further conduct step 3 above to the extent that additional goals are identified to further developing the central operations or administration of the organization, e.g., strengthen financial management.

Model Two - Issue-Based (or Goal-Based) Planning

Organizations that begin with the "basic" planning approach described above, often evolve to using this more comprehensive and more effective type of planning. The following table depicts a rather straightforward view of this type of planning process.

Summary of Issue-Based (or Goal-Based) Strategic Planning

1. External/internal assessment to identify "SWOT" (Strengths and Weaknesses and Opportunities and Threats)

2.Strategic analysis to identify and prioritize major issues/goals

3.Design major strategies to address issues/goals

4.Design/update vision, mission and values

5.Establish action plans (objectives, resource needs, roles and responsibilities for implementation)

6.Record issues, goals, strategies/programs, updated mission and vision, and action plans in a Strategic Plan document, and attach SWOT, etc.

7.Develop the yearly Operating Plan document(from year one of the multi-year strategic plan)

8.Develop and authorize Budget for year one(allocation of funds needed to fund year one)

9.Conduct the organization's year-one operations

10.Monitor/review/evaluate/update Strategic Plan document

Model Three - Alignment Model

The overall purpose of the model is to ensure strong alignment among the organization's mission and its resources to effectively operate the organization. This model is useful for organizations that need to fine-tune strategies or find out why they are not working. An organization might also choose this model if it is experiencing a large number of issues around internal efficiencies. Overall steps include:

1. The planning group outlines the organization's mission, programs, resources, and needed support.

2. Identify what's working well and what needs adjustment.

3. Identify how these adjustments should be made.

4. Include the adjustments as strategies in the strategic plan.

Model Four - Scenario Planning

This approach might be used in conjunction with other models to ensure planners truly undertake strategic thinking. The model may be useful, particularly in identifying strategic issues and goals.

1. Select several external forces and imagine related changes which might influence the organization, e.g., change in regulations, demographic changes, etc. Scanning the newspaper for key headlines often suggests potential changes that might effect the organization.

2. For each change in a force, discuss three different future organizational scenarios (including best case, worst case, and reasonable case) which might arise with the organization as a result of each change. Reviewing the worst-case scenario often provokes strong motivation to change the organization.

3. Suggest what the organization might do, or potential strategies, in each of the three scenarios to respond to each change.

4. Planners soon detect common considerations or strategies that must be addressed to respond to possible external changes.

5. Select the most likely external changes to effect the organization, e.g., over the next three to five years, and identify the most reasonable strategies the organization can undertake to respond to the change.

Model Five - "Organic" (or Self-Organizing) Planning

Traditional strategic planning processes are sometimes considered "mechanistic" or "linear," i.e., they are general-to-specific or cause-and-effect in nature. i.e these processes begin by conducting a broad assessment of the external and internal environments of the organization, conducting a strategic analysis ("SWOT" analysis), narrowing down to identifying and prioritizing issues, and then developing specific strategies to address the specific issues.

Another view of planning is similar to the development of an organism, i.e., an "organic," self-organizing process which is preferred by certain cultures,like Native American Indians. Self-organizing requires continual reference to common values, dialoguing around these values, and continued shared reflection around the systems current processes. General steps include:

1. Clarify and articulate the organization's cultural values.

2. Articulate the group's vision for the organization. Use dialogue and story-boarding techniques.

3. On an ongoing basis, e.g., once every quarter, dialogue about what processes are needed to arrive at the vision and what the group is going to do now about those processes.

4. Continually remind yourself and others that this type of naturalistic planning is never really "over with," and that, rather, the group needs to learn to conduct its own values clarification, dialogue/reflection, and process updates.

5. Be very, very patient.

6. Focus on learning and less on method.

7. Ask the group to reflect on how the organization will portray its strategic plans to stakeholders, etc., who often expect the "mechanistic, linear" plan formats.

Benefits of Strategic Planning

Strategic planning serves a variety of purposes in organization, including to:

1. Clearly define the purpose of the organization and to establish realistic goals and objectives consistent with that mission in a defined time frame within the organization's capacity for implementation.

2.Communicate those goals and objectives to the organization's constituents.

3.Develop a sense of ownership of the plan.

4.Ensure the most effective use is made of the organization's resources by focusing the resources on the key priorities.

5. Provide a base from which progress can be measured and establish a mechanism for informed change when needed.

6. Bring together of everyone's best and most reasoned efforts have important value in building a consensus about where an organization is going.

7. Provides clearer focus of organization, producing more efficiency and effectiveness

8. Bridges staff and board of directors (in the case of corporations)

9. Builds strong teams in the board and the staff (in the case of corporations)

10. Provides the glue that keeps the board together (in the case of corporations)

11.Produces great satisfaction among planners around a common vision

12. Increases productivity from increased efficiency and effectiveness

13. Solves major problems


Strategic planning's need is often first realized by an organization through an understanding that strengths exist, gaps exist, and priorities need to be set to focus upon these areas. In some instances,significant investment is required to move forward toward strategic objectives. In these instances, organizations must set priorities and balance availableresources. For example, if an organization finds itself with gaps in education and competitive analysis, then a decision must be made as to which of these gaps requires the greater attention at the current time. Since each of these gaps will require an investment of time, planning, and monetary resources, the organization must determine where the resources will be allocated.

Often overlooked by organizations except in the context of market share or revenue projections, strategic evaluation emphasizes the need to evaluate the progress of each strategic area on a regular basis. Similar to an emphasis on business development evaluation, strategic planning evaluation is required to determine progress toward achieving strategic objectives. However, in contrast to the business development evaluation, strategic planning evaluation may not be quite so clear and well defined.Items such as education and core competencies cannot be measured in terms of dollars and market share.

Rather, these strategic issues need to be evaluated in terms of organization progress and movement toward an ultimate goal. Evaluation criteria may be based upon outcome measures such as the increase in clients requesting services related to the core competency, or the

number of new hires related to the core strengths. In any case, the evaluation criteria focus less on dollars and more on building a foundation for long-term success. Further evaluation of relationships between outcome measures is also possible by a cross-impact analysis(CIA) and mathematical models(Venegas and Alarcon1997). . Communication of the strategic plan to other staff is an important yet often overlooked piece of work. Most managers will be helped by having all the planning documents The team process for strategic planning can provide the organization with clear answers to questions like these:

• Should we grow? If so, how and how much? • Should we diversify and/or specialize?

• Should we re-shape our organization?

• Should we open a branch office? Where?

The process works from a clarified mission, then a strategic review of the firm's position, resources, and markets. The new directions (objectives, organization, market segments) that emerge are almost always unique to the firm, a little surprising, and energizing to key staff. For service firms or agencies, following several critical factors contribute to positive results of strategic planning. These include:

1. Objective client (or user) feedback is required, preferably as a result of serious study or survey work prior to planning.

2. Financial performance, by branches, departments, and project or client type should be available, preferably over the last 2-3 yrs.

3. The planning work must involve the top management team of the firm or unit, including the senior manager.

4. Simple but clear documentation of decisions, timetables and accountabilities is needed by top management, as well as a summary of plans by all key people.

Case Study 1


The Bureau of Engineering, with over 1,000 employees, is a part of the City of Los Angeles' Department of Public Works and is responsible for the planning, design,and construction management of Capital Improvement.Projects (CIP) including municipal facilities, stormwater, sewer, street, and other infrastructures projects. The Bureau is headed by an executive group comprising the City Engineer, Chief Deputy City Engineer, and two other Deputy City Engineers. Beneath this level is the division head/program manager level. Division heads function as the leaders for each of the Bureau's program by providing guidance and support to each Project personnel and are ultimately accountable for the success of all facets of the operations of all projects within their program


The Bureau's division heads are responsible for all aspects within their particular program, both strategic and tactical and are also responsible for problems for each individual projects caused due to the program...The solutions to problems are based on individual experience and expertise. In the past, however, short-term needs were satisfied with little consideration of long-term solutions to recurring problems. Problems were solved with immediate solutions for the division, rather than long-term solutions for the entire Bureau. Hence, definitions were created within each division, and ideas were not communicated between division heads. Problems such as development of new project cost and schedule control tools was neglected, implementation of modern technology was slow, and increased customer needs were not identified as a result organizational health suffered from this lack of strategic planning resulting in decreased day-to-day project performance. In 1996, the senior executive staff of the Bureau recognized this problem and began to consider the creation of a separate group of Bureau staff to plan Bureau strategy. In September 1996, the Bureau's Strategic Planning Task Force (SPTF) was created-corresponding to the common model planning effort step 1: build a team,consisting of 18 staff members from a variety of civil service levels (junior staff to senior staff to executive level staff) and classifications(i.e., civil engineers, drafting technicians, clerk-typists, etc.).

Initial Planning Efforts

Over the next two months, the group began the strategic planning process by formulating a vision statement. The vision statement created is shown in Fig. The SPTF took great effort to publicize the vision statement. The statement was conspicuously posted in all conference rooms and bulletin boards in the building. It was published repeatedly in the Bureau's biweekly employee newsletter, and was a topic of discussion in each division's monthly staff meeting and were similarly publicized to all 1,000 employees

Concurrent to publicizing the vision statement,the second task of the group was to identify Bureau customers and conduct a SWOT (strengths, weaknesses,opportunities, and threats) analysis. The SWOT analysis results are shown in Table 1. As shown in Table

No emphasis on direct monetary profit, less emphasis on development of a niche market since with its size and wide breadth of knowledge, the Bureau is able and expected to design all elements of practically all types of projects, and a long list of potential customers .Based upon the vision and SWOT analysis, the SPTF then formulated a list of strategic issues that the planning effort needed to be based upon-corresponding to the common model planning effort step 2: set the objectives. These issues and the reasons for their importance are shown in Table 2. These strategic issues emphasised on marketing services (since again, the Bureau is capable of designing all elements of practically all types of projects and it has an inherent base of potential customers).

Creation of Subcommittees

In early 1997, the SPTF created nine subcommittees to analyze each of the new strategic issues. The committees created were:

• Marketing Our Services to Key Customers

• Identify Services of Cost Effective Benefit to the Public

• Right Staff and Right Skill to Meet Commitments

• Develop Processes to Ensure Commitment to Project and Service Delivery

• Balance Quality with Cost Effectiveness and Timeliness

• Customer Satisfaction

• Increase Financial Management/Responsibilities/Skills

• Create a Culture of Personal Responsibility

• Create a Culture which Fosters Proactive, not Reactive Response

Subcommittee composition was similar to composition of SPTF

This step corresponds to the common model planning effort step 3: gather member

Sample recommendations from each of the five completed reports are shown in Table 3.


In addition to providing guidance for the future of the Bureau of Engineering, the strategic planning process also provides lessons learned that can be used in future strategic planning efforts within the Bureau or within other engineering organizations.

• The concept of strategic planning works. Overall Bureau health and performance has improved.

As Fewer staff were needed to deliver the same number of projects, CIP program project delivery has improved, customer satisfaction with respect to project performance and communication has increased, and employee morale is up.

• The communication requirement was underestimated i.e keeping a staff of 1,000 informed about conceptual issues related to strategic planning is even more difficult. Any large effort should have a dedicated staff to publicize, document the process, and hold sessions at the division level to keep staff informed and participating.

• Implementation takes time. Engineers in the Bureau are used to seeing tangible progress for efforts expended. Strategic planning is a long-term process with the implementation of ideas taking years.



By Paul S. Chinowsky,1 Associate Member, ASCE, and James E. Meredith2

2) Strategic Management

JOSEPH F. LEWIS, PricewaterhouseCoopers LLP


By Karen Lee Hansen1 and C. B. Tatum2, Fellow, ASCE


By Melville Hensey,1 Fellow, ASCE


By John A. Kuprenas,1 Paul S. Chinowsky,2 Members, ASCE, and Winifred Harano3


By Melville Hensey,1 F. ASCE