Support for the performance of projects

To understand the possible effect of the FE to the project, first, the project success has to be defined. Project success is a broad term and a subject itself for academic studies.

The basic definition by project management for project success is meeting the requirements of the stakeholders (PMBOK 2012). Going a step further project success can be divided into strategic and tactical success (Olsson & Samset 2006) or delivery and outcome success which captures the supplier and the client perspective better (Williams et al. 2019). Tactical success is related to the traditional project management goals cost, time, and quality. Strategic success on the other hand measures the relevance, sustainability, and effectiveness, in other words, how the project adds value for the stakeholders of the project. (Olsson & Samset 2006) Understanding this division is important since it is typical and easy to focus on the short term, tactical, success and forget the longer term, strategic, success (Samset & Volden 2016). A project can by this definition be successful in the eyes of one stakeholder and unsuccessful in the eyes of the other (Hermanides et al. 2010). Hence, it is important to find a balance between all of the success criteria and try to prioritize and meet the most important ones.

To assess the possible supporting effect on the performance of the project is analyzed in Appendix B. The results verify that the FE has an impact on the performance of the projects in multiple ways. The FE is stated to be the most impactful activity in the management of construction projects (Flyvjberg 2013; Collins et al. 2017). Morris (2013) stated that the FE is a critical activity for project success and that project management in particular can have a major impact on it. Multiple studies have identified a linkage between the FE and overall project success. (Flyvjberg 2013; Samset & Volden 2016;

Williams et al. 2019). Notably, Hermanides et al. (2010) in their quantitative study of the effects of the FE activities, identified four tasks in the FE directly and five tasks indirectly improving the performance of the complex projects. Kähkönen (1999) and Cano & Lidon

(2011) also identified the FE to be the biggest factors affecting project success, especially in more complex projects. In addition, more than often the reasons for project success or failure can be traced back to the project FE (Edkins et al. 2013). Williams &

Samset (2010) studied the issues in the FE and found out that projects with well-executed FE had a success rate of 80 % compared to 25 % of the ill-well-executed FE. Both tactical and strategic effects were found in the literature. It is quite intuitive that well-defined projects with clear objectives are more successful than ill-well-defined ones (Elearn 2007). Another factor behind this effect is the rather linear nature of projects in which previous phases create the base for the next ones. Still, more research is needed in this domain (Williams et al. 2019).

The literature confirmed that the FE can have a supporting effect on the project's schedule and budget performance. According to Williams & Samset (2010), it is typical to underestimate costs in the FE, and as the execution begins, the costs jump to the actual levels. This can be attributed to for example strategic underestimation ergo, for example, sales organization trying to maximize the opportunity to get the project. In addition, there can be a bias to overestimation of benefits. This can lead to a "double-dip" when there is also a cost overrun in the execution phase and thus having a major negative impact on the performance. (Williams & Samset 2010) The effect of successfully executing the FE can be in the range of 5-20 % cost improvements and similar improvements to schedule performance (CII 1996; Collins et al. 2017). The effect is typically bigger for smaller projects since more focus and resources are often given to larger rather than smaller projects (Collins et al. 2017). The performance improvement also means less variance and cost changes in the execution phase (CII 1996; George et al. 2008). A statistically significant difference for smaller projects is harder to find since a short delay of a day can be a major delay in small projects with shorter overall schedules. It is important to note that project business organizations have lots of projects so even small improvements can make a big difference on the organizational level.

(Collins et al. 2017)

A good FE improves team performance in projects. Successful FE creates better team cohesion and teamwork which helps to battle issues and complexity in the project (Hermanides et al. 2010; Williams & Samset 2012). As a result of a well-executed FE, the project team has clearer objectives and the team is aligned to them. If the goals are uncertain it is unlikely that the team will perform that well. The team is also typically better selected for the project improving performance. (Edkins et al. 2013; Dinsmore &

Cabanis-Brewin 2014) Especially trust built in the FE helps the project performance during the construction (Mesa et al. 2016). Well executed FE can create a committed,

well communicating, and trusting core team which helps the project to perform better (Williams 2016). In addition, according to Turkulainen et al. (2013), a well-executed FE enables a good transfer of information for the executing team.

Successful FE supports the value creation for both client and supplier. One identified way is to by creating flexibility to the project which can create value by decreasing the cost of changes in the execution or even during the operation increasing profitability and, further, customer satisfaction (Biesek et al. 2014). Building this flexibility in the FE is possible because the flexibility in the FE is high and the cost of changes low (Williams et al 2009; Olsson & Samset 2006; Williams & Samset 2010). The investment in the FE also results in better quality in the FE reducing costs for the project and increasing customer satisfaction (George et al. 2008). Good FE also takes into includes benefits management for the client and delivering organization. This helps to assure that both are satisfied with the results of the project (Edkins et al. 2013). Good benefits management can help to better differentiate between the needs and wants of the client and thus focus the efforts in important areas. This means that the client's needs are understood beyond the stated initial requirements. This process can also help the client to better understand the delivery thus increasing satisfaction and delivery acceptance. (Neal 1995; Williams

& Samset 2012) A better FE also typically leads to better-defined deliverables and thus clear requirements to be met. Well defined deliverables between the supplier and client increase the chances of project delivery success. However, strictly defined deliverables can also become an issue for the supplier if the requirements cannot be met. (Elearn 2007)

Better FE leads to better-managed risks in the execution. The FE is defined by uncertainty and risks but the cost of making changes is minimal compared to later phases when commitments have been made. (Williams et al 2009; Olsson & Samset 2006;

Williams & Samset 2010; Samset & Volden 2016) Thus, one of the main purposes of the project FE is stated to be managing the risks and reducing them to an acceptable level.

The investment of time and money in the FE decreases the risks and incurred costs in the execution phase creating value (Gibson & Bosfield 2012; Williams & Samset 2012;

Edkins et al. 2013).

Better FE also reduces changes throughout the project. This means fewer change orders and less unnecessary work overall (Collins et al. 2017). Oh et al. (2016) also confirm this concluding that due to the better FE there are less rework and changes in the projects.

In addition, better cooperation with the customer and understanding the requirements and needs of the client, surprises are minimal and fewer changes are needed. In addition, the project is better defined and understood. (George et al. 2008; Collins et al.

2017) This means that a well-executed FE reduces risks and unnecessary work in the execution phase, in turn, decreasing the extra costs for the project.

To conclude, focusing on the nature of the FE, example gratia, limited information, uncertainty, and communication with stakeholders, has the potential to support project performance. For example, focusing on validating information inside the organization and with the client reduces risks and thus improves the tactical performance. The focus on serving the client, on the other hand, supports the strategic performance.