Causes of Project Failure
Info: 19446 words (78 pages) Dissertation
Published: 7th Oct 2021
Tagged: Project Management
Project management has become increasingly important in the development of any nation. Various organisations have used project management techniques as a means of bridging the gap between failure and success in implementation of projects. Despite this increasing awareness of project management by organisations, projects still fail.
The purpose of this dissertation is to systematically investigate the causes of project failure and how these can be prevented, managed, or controlled. Research studies investigating the reasons why projects fail, has been ongoing for years, with various researchers, organisations and project management institutions, providing lists of reasons, which they believe, are the cause of project failure. However, despite these lists projects continue to fail, Atkinson (1999).
This research is done with the anticipation of not only adding information to the body of knowledge already in existence, but also examining the major issues currently causing project failure; this will help organisations effectively manage projects. To determine how to avoid project failure the criteria for measuring project success has to be properly determined and agreed upon; the major criteria commonly used are; cost, time and quality. Then the causes of project failure need to be determined.
This study also examined generalisations made from existing literature about causes of project failure and methods of avoiding project failure using three construction case studies in United Kingdom. This is a secondary or desk research, which involves the collecting and analysis of secondary data, or data that already exists, from which inferences have been made, and conclusions drawn.
CHAPTER 1: INTRODUCTION
1.1 Research background
Projects make a vital contribution to industrialisation and hence the growth of a nation’s economy. The importance of projects in the development of any nation cannot be overemphasized. This is demonstrated in various literatures explaining the success and failure of projects. Although projects are said to be important, its implementation can be an uphill task. Various researchers have discussed project management as a technique to help prevent against failure in projects. Others have established checklists to help prevent failure. Despite the increased project management awareness and these checklists, some projects still fail, Atkinson (1999).
All projects are constrained by inherent risks; knowledge of these risks will play an important role in achieving success and avoiding failure. Usually projects consist of three stages consisting of the approval, execution and evaluation stages. If any of these stages is not managed properly it may result to the failure of the entire project.
Failure or Success in projects is a multi-dimensional issue and may be influenced by so many factors. Some projects may have failed in project management practices including cost overrun, scope creep, delay in schedule etc, and other projects may fail in procurement practices. Despite these failures in the following areas the project may still be perceived as successful by the end users. An example is Wembley Stadium; despite all the issues associated with the project in terms of project management and procurement practices, it is still perceived to be successful and a state of the art stadium by the end users. This may result from the fact that it has hosted world class sporting events.
Usually, projects are designed to meet stakeholder’s objective. These objectives define the criteria for success of that project, and projects not satisfying these objectives are deem to fail. Effective communication and clarity in the stakeholder’s objective is vital to the project manager.
This thesis examines the causes of project failure and how these can be prevented, managed or controlled. It discusses project failure and success with the help of case studies in order to identify the critical success factors and reduce failure in the implementation of projects.
This research is done with the anticipation of not only adding information to the body of knowledge already in existence, but also in defining the criteria for project success and identifying the variables involved. This will help organisations effectively manage projects.
The aim of this research is to carry out appraisal on the causes of project failure and the appropriate methods of avoiding project failure. This aim is intended to be achieved with the following objectives.
To provide a review of project management
To analyze success criteria for projects
To explore factors that causes project failure or success
To examine methods of avoiding project failure
This research is based on construction projects executed in the United Kingdom over the last two decades.
1.5 Research Structure
Chapter One, Introduction this introduces the research; topic highlighting the aim, objectives and scope of the research.
Chapter Two, Literature review critically reviews the existing Literature regarding the subject. It establishes the definition of project success and the success and failure criteria / factors.
Chapter Three, Methodology describes the methodology used to undertake this research. It demonstrates the fact that secondary data was mostly used in undertaking this research.
Chapter Four, Case Studies – Case studies on projects from the UK construction Industry were discussed in this Chapter. These case studies were analysed and linked to the literature review chapter.
Chapter Five consists of the analysis of the discussion and findings. This is derived from critically analysing the Wembley, Heathrow terminal five (T5) and Holyrood case studies.
Chapter Six, Conclusion and Recommendation: This chapter concludes the research and suggests directions for further research.
CHAPTER 2: LITERATURE REVIEW
The importance of avoiding project failure in a rapidly evolving project-driven 21st century cannot be over-emphasized. Attempts to understand the causes of project failure and/ or success have proven problematic, despite attempt by many practitioners and academics over the years. Project demands have constantly increased over the last decade and have driven our society into a constantly changing environment.
Despite attempts to make project appraisal and delivery more rigorous, a considerable proportion of delivery effort results in project that does not meet user expectations and are consequently rejected. In our view this can be attributed to the fact that few organisations have the facilities, training and management discipline to bring project to successful completion.
Project success does not come easily; much has been contributed over the last decade to our understanding of the nature of and reason for successful and unsuccessful project completion. In addition many projects fail to complete at all. Sometime failure to satisfy all the original goals of a project can still be regarded favourably if the main sponsor is not satisfied with the outcome and the key stakeholders have gained in some way.
Generally, the key development considerations are to have the goal clearly defined, to plan how to realize the goal and implement the plan. Developing an alternative methodology for project management founded on stakeholders, senior management support and proper planning should lead to a better understanding of the management issues that may contribute to the successful delivery of projects.
This literature review is aimed at carrying out appraisal on the causes of project failure and the appropriate methods of avoiding it. It begins with key definitions, then analysis of causes of project failure and project success. Then it looks at success factors and criteria; also examine ways of avoiding project failure. The chapter ends with summary of the discussion.
2.2 What is a Project?
Gary and Larson (2008:5) defined project as “a complex, non routine, one-time effort limited by time, budget and resource, and performance specifications designed to meet customer needs. This is in contrast to how an organisation generally works on a permanent basis to produce their goods and services. For example the work of an organisation may be to manufacture a vehicle on a continual basis, therefore the work is considered functional as the organisation creates the same products or services over-and -over again and people hold their roles on a semi permanent basis.
A project can be defined as having constraints (usually centred around time and resources, but also including all aspect of the process and the outcome); projects are processes that in many circumstances are core business for organisation. The diagram below show different levels in project management.
2.3 What is Project Management?
According to Gray and Larson (2006) Project management is a task derived from an organisation that enables professional project managers to use their skills, tools and knowledge to plan, execute and control a unique project within a limited lifespan by meeting the specification requirements of the organisation. Since the outcomes of the capital projects have strategic implications on the success and profitability of the business, the ability to deliver based on pre-determined objectives should be critical to the company’s success.
And yet one-third of all the oil and gas projects exceed budget and time projections by more than 10 percent. Failure to deliver big projects on budget and on schedule is highly publicized and damage the companies profile with capital markets that predictability and strong returns. Continual use of traditional project management techniques will not alter this trend. Companies that want to change and improve on their performance with critical capital projects will need to adopt new techniques.
Munns and Bjeirmi (1996) also defined project management as a process used as a control to achieve the project objectives by utilizing the organisational structure and resources to manage a project with the application of tools and techniques, without disrupting the routine operation of the company.
‘Project management is the discipline of managing all the different resources and aspects of the project in such a way that the resources will deliver all the output that is required to complete the project within the defined scope, time, and cost constraints. These are agreed upon the project initiation stage and by the time the project begins all stakeholders and team members will have a clear understanding and acceptance of the process, methodology and expected outcome’.(http://www.projectsmart.co.uk/introduction-project-management.html accessed on 30/06/09)
Project management has been defined as “the process by which projects (unique, complex, non- routine, one-time effort limited by time, budget, and resources) are defined, planned, monitored, controlled and delivered such that the agreed benefits are realised” (APM, 2006:3)
Other definitions have been offered, Reiss suggests that a project is a human activity that achieves a clear objective against a time scale, and to achieve this while pointing out that a simple description is not possible, he suggested that project management is a combination of management and planning and management of change.
Despite all the suggestions about what is project management, the criteria for success, namely, cost, time, and quality remain and are included in the actual description. Meaning that Oisen’s definition of project management was either correct, or as a discipline, project management has not really changed or developed the success criteria over 50 years. Therefore project management is a learning profession. The significant point from all the definitions and suggestions of project management is that while the factors have developed and adopted, changes to the success criteria have been suggested but remain unchanged.
In 2008, a survey undertaken by Booz Allen Hamilton (project management consultant) which comprises of 20 companies in engineering, procurement and construction; shows that 40 percent of all projects executed where faced with cost overruns and behind schedule. These overrun in cost and schedule has led to client’s dissatisfaction on project performance; this view also agree with the research of M J Lang (1990). Therefore effective project management is very vital in such a volatile business environment.
2.4 Project Management Methodology
Generally, projects are split into three phases Initiation, implementation and closure. Every stage of a project has multiple checkpoints which must be met before the starting of the next stage. The degree to which a project will be managed depends on the size of the project.
For a complex project in a large organisation that involves a number of people, resources, time and money, a more structural approach is needed, and there will be more steps built into each stage of the project to ensure that the project delivers the anticipated end result. For a simple project in a small organisation, agreed milestones, a few checklists and someone to co-ordinate the project may be all that is required.
2.5 Defining Project Failure
From Penguin English Dictionary (1992), failure is define as unsuccessful project that fails to perform a duty or an expected action, non-occurrence or non-performance. Whereas success can be defined as the achievement of something desired, planned or attempted (Cambridge Dictionary, 2007). It is also said that success is an event that accomplishes its intended purpose (dictionary.com, 2007). Anything short of that is failure. Project failure is an unpleasant event that cost large amount of money to the organisation.
2.6 Causes of Project Failure
Pinto and Mantel (1990) carried out a research on the causes of project failure and revealed a good explanation that encompasses both internal efficiency and external effectiveness. They state that project failure is a vague concept, which has evoked much as to its definition, as the case with the definition of project success.
A project is considered a failure “whenever a project does not meet the expectations of the stakeholders”. This has lots of impact to both the organisation and all stakeholders to the project. They include: cost and time overruns, quality degradation, frustration and stress, sometimes resulting to people quitting, low corporate market value, low public opinion and negative media campaigns. The total effect can be very costly to the organisation; at times even force the company into closure.
Bienkoski (1989) identified ten factors that can lead to project failure and they are:
Lack of change management- happens when there is no method to handle or recognise changes.
Communication- causes delay or even failure since team members do not have the information they needed, issues or changes do not get escalated, project reporting is sluggish
Inadequate resources- Task take longer than expected to complete, deadlines and milestones get missed, and project completion date comes into jeopardy, one end of working more than necessary (double shift) to get the work done
No one is in control, not even the project manager, who is assigned to the project but not given the free hand to manage the project. This is most problem encounters in matrix organisation
Project lacks structure caused by things such as critical tasks being under rated
Inaccurate estimates. A top- down plan causes constraints on the prediction of the cost of the project
Poor risk management. The project initiation stage is not properly planned
Insufficient non-resources are not allocated to the project; for instance, it is not possible for a project to succeed if the right resources are made available for that project
Incompetent project management skill
Project changes from its original objective and goals. This can occur due to additional requirement from the client
Pinto and mantel (1990) argue that the major causes of project failure are changes in the project environment, as it goes out of hands of the management.
2.7 Defining Project Success
Lewis (2005) states that project success can be defined as meeting the required expectation of the stakeholders and achieving its intended purpose. This can be attained by understanding what the end result would be, and then stating the deliverables of the project. Shenhar et al. (2001) state the opposite: that project success is commonly judged by time and budget goals criteria, whereas in some cases this does not apply to some projects.
Thiry (2006) argues that project success can only be defined if executives are able to consider the contribution of benefits and if the project is able to achieve these measures in relation to resources, competencies and complexity within the project parameters.
2.8 Key Performance Indicators (KPIs) as a Measurement for Project Success
The purpose of the KPIs is to enable measurement of project and organisational performance throughout the construction industry (The KPI Working Group 2000).
Collins (2000) advocates that the process of developing KPIs involves the consideration of the following factors:
KPIs are general indicators of performance that focus on critical aspects of output or outcomes
Only a limited, management number of KPIs is maintainable for regular use. Having too many (complex) KPIs can be time-and resource-consuming
The systematic use of KPIs is essential as the value of KPIs is almost completely derived from their consistent use over a number of projects
Data collection must be made as simple as possible.
A large sample size is required to reduce the impact of project specific variables. Therefore, KPis should be designed to use on every building project.
For performance measurement to be effective, the measures must be acceptable, understood and owned across the organisation
KPIs will need to evolve and it is likely that a set of KPIs will be subject to change and refinement
Graphic delays of KPIs need to be simple in design, easy to update and accessible.
Key Performance indicators for measuring project success can be illustrated with the help of the diagram below (Albert & Ada, 2004).
They identified the following as the measurement of project success: Cost, time, quality, commercial profitable/value, environmental performance, user expectation/ satisfaction, health and safety and participants’ satisfaction. This will help in explaining what the project success might mean to different stakeholders.
Key Performance Indicators
Dvir et al. (2003) state that the ranking of success is a one-sided judgement, as the definition of success is difficult to define, because it has different meanings for different people; thus, the criteria of success should reflect the diverse interest and view that lead to a multi-dimensional and multi-criteria approach.
Baccarini (1999) states: that success entails “hard” criteria which often linked with cost, time and quality. He also states that hard criteria which can be easily measured can lead to some form of substantial agreement. In contrast, soft criteria are known to be one sided, restrained and not easily assessed. This implies that project success is a fantasy of the mind and only an individual can turn such vision into reality.
A contrasting view from Westerveld (2000) defined project success as “the satisfaction of all the stakeholders’, meaning that as long as the stakeholders are pleased with the outcome and gain profits or revenue from the project, then it is classed as a success.
One of the “Square’s root” corners, organisational benefits, drew much attention because of its significance and it was further analysed. Kerzner (2001, p6) suggests three criteria from the organization perspective in order for a project to be successful.
The first is that it must be completed “with minimum or mutually agreed upon scope changes”, even though stakeholders constantly have different views about projects’ results (Maylor, 2005, p288).
Secondly “without disturbing the main work flow of the organization” because a project has to assist organisation’s everyday operations and try to make them more efficient and effective.
Finally, it should be completed “without changing the corporate culture” even though projects are “almost exclusively concerned with change – with knocking down the old and building up the new” (Baguley, 1995, p8).
A project manager’s main responsibility is to make sure that he delivers change only where is necessary, otherwise he is doomed to find strong resistance from almost all organisational departments (Kerzner, 2001, p158) which ultimately could lead to project failure.
A more structured approach to project success is grouping the criteria into categories. Wideman (1996, p3-4) describes four groups, all of them time dependent: “internal project objectives (efficiency during the project), benefit to customer (effectiveness in the short term), direct contribution (in the medium term) and future opportunity (in the long term)”.
The characterization of ‘time dependent’ is based on the fact that success varies with time. Looking at the future benefits of the organisation can be really difficult, because in some cases they don’t even know what they want, yet it is vital to know what the project is trying to achieve after completion time so that success criteria are clearly defined in the early stages.
This is quite a different approach, because the focus moves from the present success criteria to the future, in a way that a project can be unsuccessful during execution if it is judged by criteria like cost and quality, but in the long term it can turn to be a thriving story.
A good example of this hypothesis is hosting the Olympic Games in Athens, Greece, which received mass criticism both during the planning period, due to delays in construction time, and when it was finished, due to huge cost. But the benefits that Greece will gain from the Olympic Games can be fully understood after 5 or maybe 10 years from the hosting year (Athens2004.com).
All the above success criteria “should be simple and attainable and, once defined, they should also be ranked according to priority” (Right Track Associates, 2003). Straightforward criteria are easy to understand by everyone involved in the project and therefore commitment is guaranteed.
Unrealistic criteria can put a ‘failure’ label on many projects because of the unreachable standards, can generate low team esteem and team performance in future projects and finally generate unfair disappointment among stakeholders. As for priority issues, it is inevitable that things will go wrong and the project manager will be in a tough situation where he must make the right decision having in mind that he has to sacrifice the least important success criterion.
Also Shenhar et ‘al (1997) are of view that project success can be seen from the four area:
Project efficiency, impact of the project to the customer, business success and finally what the project holds for the future. This was further explain in the diagram in 3.
2.9 Defining Project Success Factors and Project Success Criteria
Muller and Turner (2007) defined the two components of project success in relation to the use of project management as follows:
Project success factors are the elements of a project that can be influenced to increase the like hood of success; these are independent variable that makes success more likely.
Project success criteria are the measures by which judge the successful outcome of a project; these are dependent variable which measure project success.
We often hear or read about various success stories. But what is success and what criteria should organizations use to identify success? What factors lead to a successful project?
The purpose of this study is to define project success criteria, clarify their difference with success factors and analyse their importance in project management methodology.
One of the vaguest concepts of project management is project success. Since each individual or group of people who are involved in a project have different needs and expectations, it is very unsurprising that they interpret project success in their own way of understanding (Cleland & Ireland, 2004, p2).
“For those involved with a project, project success is normally thought of as the achievement of some pre-determined project goals” (Lim & Mohamed, 1999, p244) while the general public has different views, commonly based on user satisfaction.
A classic example of different perspective of successful project is the Sydney Opera House project (Thomsett, 2002), which went 16 times over budget and took 4 times more to finish than originally planned.
But the final impact that the Opera House created was so big that no one remembers the original missed goals. The project was a big success for the people and at the same time a big failure from the project management perspective.
On the other hand, the Millennium Dome in London was a project on time and on budget but in the eyes of the British people was considered a failure because it didn’t deliver the awe and glamour that it was supposed to generate (Cammack, 2005).
“In the same way that quality requires both conformance to the specifications and fitness for use, project success requires a combination of product success (service, result, or outcome) and project management success” (Duncan, 2004).
The difference between criteria and factors is fuzzy for many people. The Cambridge Advanced Learner’s Dictionary describes a criterion as “a standard by which you judge, decide about or deal with something” while a factor is explained as “a fact or situation which influences the result of something”.
Lim & Mohamed applied those definitions to project success and illustrated the difference. It is clear now that critical factors can lead to a series of events which ultimately meet the overall success criteria of the project, so they should not be used as synonymous terms.
Project success can be seen from two different perceptive, the micro and macro viewpoint (Lim & Mohamed, 1999). This can help in better understanding of what project success means to different people.
2.9.1 Success Criteria
Many lists of success criteria have been introduced in the previous decades by various researchers. Primal success criteria have been an integrated part of project management theory given that early definitions of project management included the so called ‘Iron Triangle’ success criteria – cost, time and quality. (Atkinson, 1999, p338)
Atkinson continues that “as a discipline, project management has not really changed or developed the success measurement criteria in almost 50 years”.
To meet the urgent need of modernizing the out of date success criteria, he suggest the ‘Square Route’ ( 3) success criteria instead of the ‘Iron Triangle’, where he groups the criteria that other academics have proposed.
The main change is the addition of qualitative objectives rather than quantitative, namely the benefits that different group of people can receive from the project. These benefits are seen from two perspectives, one from the organisational view and one from the stakeholders view.
It is obvious that each part will have benefit differently from projects. For example one organisation can gain profit through achieving strategic goals when a project is completed and at the same time these goals have a serious environmental impact in the stakeholders’ community.
This means that a successful project must bargain between the benefits of the organisation and the satisfaction of end users. The fourth corner of the ‘Square Root’ is the Information System which includes the subjects of maintainability, reliability and validity of project outcomes.
Belassi and Tukel (2001) are of the opinion that criteria for measuring project success/failure can grouped into two groups: the factor and system response groups. The identified factor groups are: factor related to project manager, factor related to project team members, factor related to the project itself, the organisation handling the project and the factor related to the external environment in which the project takes place. The diagram below shows this in more detail.
2.9.2 Success Factors
As mentioned earlier; “success factors are those inputs to the management system that lead directly or indirectly to the success of the project or business” (Cooke-Davies, 2002, p185). Some project managers “intuitively and informally determine their own success factors.
However, if these factors are not explicitly identified and recorded, they will not become part of formal project management reporting process nor they become part of the historical project data” (Rad & Levin, 2002, p18). Belassi & Tukel (1996, p144) classified these factors into 5 distinct groups according to which element they relate to.
126.96.36.199 The Organization
Top management support is the principal success factor for many independent research groups (Tukel & Rom, 1998, p48) (CHAOS Report, 2001, p4) (Cleland & Ireland, 2002, p210) (Tinnirello, 2002, p14), which means that no project can finish successfully unless the project manager secures true support from the senior or operational management.
It is extremely difficult to work in a hostile environment where nobody understands the benefits that the project will deliver to the organisation.
Stakeholder management and contract strategies (number of and size of the contracts, interface between the different contracts and the management of contracts) are separate success factors which are also considered part of organization issues (Torp, Austeng & Mengesha, 2004, p4).
188.8.131.52 The Project Manager
Having a project manager is not going to guarantee the success of a project. He must have a number of skills to use during the project to guide the rest of the team to successfully complete all the objectives.
In the 2001 CHAOS report (The Standish Group International, 2001, p6), business, communication, responsiveness, process, results, operational, realism and technological skills are mentioned as some of the most important skills a project manager should have to deliver success.
However, more resent research by Turner and Muller (2005, p59) has concluded that “the leadership style and competence of the project manager have no impact on project success”. It is very interesting to investigate why a highly respectable professional body for project managers published such a contradictive position.
A possible answer could be found in the fact that project manager’s results are difficult to prove and even more difficult to measure.
If the project is successful, senior management will probably claim that all external factors were favourable. On the contrary, if it turns to be a failure, project manager easily becomes the scapegoat.
184.108.40.206 The Project Team
Project managers are very lucky if they have the option to choose their project team. More often, their team is inherited to the project from various sectors of the organisation.
It is vital to have a good project team to work with, with core skills that can be evolved to core competences and capabilities for the whole organisation.
All members of the project team must be committed to the success of the project and the overall mission of the company.
Apart from their skills and commitment, project team members should have clear communication channels to access "both the functional manager and the project manager within a matrix organization.
Effective management of this dual reporting is often a critical success factor for the project" (PMBOK Guide, 2004, p215).
220.127.116.11 The Project Itself
The type of a project underlines some factors that are important to success. For example, if a project is urgent, the critical factor in that case is time.
The Wembley stadium is expected to be fully operational due to May's 2006 FA Cup Final and that is the primary target.
However, the increase of cost "that has thrown the management's calculations out of kilter" (Evans, 2005) was not a big issue at that time.
The size, value of a project and it's uniqueness of activities can be a puzzle for the project manager who is used to planning and co-ordinating common and simple activities (Belassi & Tukel, 1996, p144).
18.104.22.168 The External Environment
External environment can be the political, economic, socio-culture and technological (PEST) context in which the project is executed. Factors like the weather, work accidents or the government's favourable or unfavourable legislation can affect the project in all of its phases.
Note that if a client is from outside the organization, he should also be considered as an external factor influencing the project performance (Belassi & Tukel, 1996, p145).
Competitors should also be accounted as external factors which can undermine project success because the original project could be overshadowed by a more glamorous and successful project launched by another organisation.
2.9.3 Methods of Avoiding Project failure
Project success makes organisation stronger and better, and that means it is important to ensure that organisation choose the right project; allocate the right resources, track progress along the way and taking an unflinching look at actual result.(http://www.projectsmart.co.uk/pdf/do-you-know-where-your-project-is.pdf. accessed on 12/07/09). More ways of avoiding project failure will be discussed in detail in the subsequent chapter.
It is critical for a project manager to understand what the stakeholders consider as a successful project.
In order to avoid any surprises at the end of the project, there is an urgent need to identify the different perspectives of what success means before the project goes live.
It is also vital to remember that success criteria are the standards by which a project will be judged, while success factors are the facts that shape the result of projects.
Success criteria have changed considerably through time and moved from the classic iron triangle's view of time, cost and quality to a broader framework which includes benefits for the organisation and user satisfaction. An additional framework to capture success criteria depending on time was also described.
As for success factors, they were grouped into five distinct sets and the literature views were find to contradict on the issue of how critical a project manager is to the final success of the project.
A common factor mentioned by many authors is senior management support for the project and it is recognized as one of the most important factors of all.
In conclusion, early definition of success criteria can ensure an undisputed view of how the project will be judged and early detection of success factors will guarantee a safe path to deliver success.
CHAPTER 3: METHODOLOGY
Projects have become increasingly important in the development of any nation. Various firms have used project management techniques as a means of bridging the gap between failure and success in the implementation of projects. Despite this increasing awareness of project management by firms, projects still fail. Several factors may affect the outcome of a project. The researcher highlighted various success and failure factors of projects in an earlier chapter. This has formed the basis for the research question.
3.2 Research Questions
Yin (1994:4) suggests that the type of research method chosen for a study should depend upon three conditions:
1. The type of question posed;
2. The extent of control the investigator has over actual behavioural events; and
3. The degree of focus on current as opposed to historical events.
Based on the factors mentioned in the literature which may affect the project outcome; the following research questions were framed.
What are the criteria for measuring project success?
What factors lead to success/failure?
How can these issues be prevented or controlled?
Questions generally fall into two categories of ‘who', ‘what', ‘where', ‘how' and ‘why'. Each of these is best suited to different types of research methods according to Yin (1994:5).
Experiments, historical studies and case studies are mainly used to answer ‘how' and ‘why' questions while surveys and archival analyses are used to answer ‘who', what' ‘where' and ‘how'. Also Yin (1994:5) points out that ‘what' question, can be either exploratory or statistical. The latter type of ‘what' question is better answered through quantitative research while former benefits from enquiries.
The fundamental questions of this study are both exploratory (‘what') and explanatory (‘how'). The exploratory question, “what are the criteria for measuring project success?” and “what factors lead to success / failure”? are central to this study. Finally, this study ask “how can these issues be prevented or controlled” in order to avoid project from failing.
3.3 Research Design
The research design provides the direction in which the researcher used in carrying out this research. Based on the nature of this research, the selected research design utilised will be that of a case study. The research methodology will explain the various researches utilised. Ghauri and Gronhaug (2005:109) define research methods as an orderly collection of data for the purpose of obtaining information to answer a specific research objective.
3.4 Method of Data Collection
In this research, articles gathered from other authors were critically reviewed.
Bryman and Bell (2003, p.212) states that, the secondary analysis is considered to be the most suitable data collection method. The researcher employed the use of the following as a source of secondary data collection.
Secondary analysis - in this library -based dissertation proposal the secondary analysis is considered to be most suitable data collection method. It uses data that are collected by other researchers or by various institutions in the course of their business; for example official statistics.
Bryan and Bell (2003,p212) defined secondary analysis as: “the analysis of data by researchers who will probably not have involved in the collection of those data, for the purposes that in all likelihood were not envisaged by those responsible for the data collection”
Hence this method can be used in either qualitative or quantitative study method based on the nature of the data. Also the secondary source examination may be considered as producing a re evaluation that would then become a primary source and possible contribution to the literature. Saunders et al. (2003) classified secondary data in three types:
The researcher decided to use this method because it has the following number of advantages:
Opportunity for longitudinal analysis
Provides comparative and contextual data
Offers new interpretation of data
Provides comparative and contextual data
3.4.1 Desktop Study
The researcher analysed the work of various authors and authority on the subject matter. Information regarding project failure was obtained through the following including journals, published books, databases and Government websites.
In this study, the following journals were reviewed and analysed because they are well referenced. They are the work carried out by professional in the field with varied years of experiences over years. They help in clarifying the subject of this research; the journal include
European Journal of Innovative Management
International Journal of Project Management
Project Management Journal
Advanced Management Journal
Journal of Marketing Research
Journal of Operation Management
International Journal of Production Research
Strategic Management Journal
International Journal of Operation and Production Management
Databases contain very vital information and in this research I sought for information that relates to project management in different industries.
Web of Knowledge
Joule Library, The University of Manchester
3.4.4 Government Website
I sought for information in government website because this is a place where the laid down procedures are published and industries must strictly adhere to. For instance office of government commerce contain information relating to best practice which construction firms must follow in the United Kingdom. They include
Office of Government Commerce (OGC)
National Audit office (NAO)
Other potential sources of information are textbooks available in the library, academic research journals like the supply chain management journal, and the journal of operations and logistics. Publications and websites of Project Management Institutions like PMI (Project Management Institute) and APM (Association of Project Management). Refereed conferences, Dissertations/theses, reports/occasional papers, trade journals, newspapers, and magazines.
3.4.5 Literature Review
In carrying out any research project, it is important to first of all review any literature considered to be relevant to the research being carried out. It is during the reviewing related literature that a theoretical framework for doing any quantitative study is formed. For instance when an existing knowledge is carefully considered, key variables and relationships are uncovered. Because no research project exists as an island, previous studies must constitute part of the process of discovery. According to Ghauri and Gronhaug (2005:52), a literature review is principally intended to:
- Frame the problem being studied
- Identify relevant concepts, methods/ techniques and facts; and
- Position the study in terms of its intended contribution to knowledge
3.4.6 Case Studies
Case studies provide an opportunity for a problem to be studied in depth (Bell 2005)
Yin (2003) explains that case study approach facilitates the use of multiple sources of evidence. Ghauri and Gronhaug (2005:114) stressed that case studies are especially useful when the phenomena being investigated cannot practically be studied outside its natural environment and / or when variables being studied are not easy to quantify.
The researcher has used some construction case studies to highlight failure and success.
These case studies include :
Heathrow BAA terminal 5
Holyrood Parliament building
These case studies were used by the researcher because they cut the application of project management, their sizes, complexity and financial implications involved in the development of such projects. These projects also reflected the various processes which could result to failure or success if managed appropriately. Such processes include effective project management practices, procurement practices, management of stakeholders etc.
Several factors and lessons learned were identified and highlighted by the researcher to ensure best practice in the execution of projects.
Due to the time constraint in this research, the researcher based his case studies on the construction industry. Other industries should have been researched to establish the similarities and challenges involved in avoiding project failure.
Case studies of projects in developing nations should have also been discussed, to establish if Government policies, geographical locations and etc also impact projects.
Secondly, the literature review does not give a wider scope, covering project success and failure in all industrial sectors. Moreover data does not look at more than one company over a period of time to gain valuable and reliable data. Finally there are insufficient data on one definition of project success and failure; many authors work would have been reviewed before arriving at a conclusion.
CHAPTER 4: CASE STUDIES
The purpose of the case studies in this research is to identify the factors that have lead these projects to success or failure, by examining the main facts behind each project used in the case. These case studies are the most common ones in the construction industry and in terms of applications of project management. They are transferable to construction projects in any other geographical location in the world, though every project has its uniqueness. They are
The Holyrood (Scottish Parliamentary Building project)
These various case studies will be reviewed in detail to see examine which factors contributed to success or failure of these project.
4.1 Wembley Stadium Project- Successful/Failures
The aim of this project was to design and build a distinctive, state-of-the art national stadium; a world -class home for English football. Plus, in addition to hosting major football events, such as the FA final and England International matches, the stadium was to be capable of staging major athletics and music events. Its design was to be both functional and architecturally significant: an iconic replacement for the old Wembley stadium, world famous for its twin towers. A key prerequisite of the new venue was spectator comfort, for example, the provision of comfortable seats, generous leg-room, obstructable view of the pitch, and outstanding catering facilities.
The new stadium will generate an important new income stream for the FA with a proportion of the profits being reinvested in football.
4.1.1 Project Scope
Design and building of a stadium for staging football, rugby league and music events, also could be adapted to stage major athletic competitions with a removable platform, rather than a permanent running track. Incorporated in the project are hotel, office accommodation and a visitor centre.
Cost of Wembley Stadium project: Budgeted cost for this project was about £751M but due to design changes and unrealistic cost estimate the project cost more than budgeted.
Parties involved: Wembley National Stadium Limited (WNSL) is the client while Multiplex an Australian construction company is the major contractor with many subcontractors.
Purpose of the Project: To design and build a stadium for staging football, rugby league and music events.
4.1.2 Why Chosen Wembley Project as a Case?
This case study was chosen because of its size and complexity in terms of engineering design. Also it is an innovative project with many stakeholders, government involvement and a project with a single contractor managing many subcontractors. This project also cut the application of project management in a changing and challenging environment.
4.2 London Heathrow Terminal five Project
London Heathrow is one of the busiest airports in the whole world; an extension project to the terminal was initiated by British Airport Authority (BAA). The essence of this project is to build a terminal that would cater for more passenger as the number of daily passengers increases on daily basis (Aviation Daily 2001).
4.2.1 Reason for Choosing This Case (HEATHROW TERMINAL 5)
I chose this case because it is a project that cut across the project management best practice. Also it show how important it is for every project participant to be up and committed in ensuring that a project is delivered as agreed.
This project is intended to revolutionize United Kingdom construction project management practice, leading Brady et al. (2008) to classify the development as a ‘megaproject'.
4.2.2 Cost of London Heathrow Terminal 5 Project
4.3billion pound was budgeted for the construction of T5; though British Airport Authority invested £300 million in order to move to T5 bearing in mind that their bid would surpass that of their competitors, KLM and Air France. The project commenced in September 2002 and was funded by BAA.
An application for this project was filed by BAA in 1993. This project was well planned, as it was the longest project with public inquiry in British planning history; which contained 500 proofs of evidence, 5000 words of documents, 400 members of the public and 35MPs and MEPs, inclusive of 30million words collated from 700 witnesses, and 80,000 transcripts of evidences were produced. The project was approved in November 2001 by Stephen Byers, the transport secretary. BAA was both the client and the project manager for this project owing to the fact that they want to apply other project management method that is unique to the ones the UK construction industries has been using. There is no main contractor in this project; a framework agreement was use to appoint 60 tier one suppliers. Ten of the top suppliers are appointed based on the value of work performed.
T5 is the largest free-standing building-the waveform roof with airy, light and contemporary architectural design. It took about eighteen and half years to develop (planning and its associated public inquiry lasted 10 years). T5 is deemed as one of the UK's most successful construction programmes.
T5 project process was based on partnering and collaboration .Under the ‘T5 Agreement' BAA entered into a direct contractual relationship with all their ‘First Tier' suppliers (main suppliers, contrators and consultants),of which there were over 80.
T5 consisted of 16 projects, which in turn were divided into 147 sub-projects. Each sub project was run by an integrated design and construction team, containing between 6 and 25.First Tier Suppliers that was led by a BAA project manager.
4.2.3 T5 Contract
The main objective of the Agreement was to create a unique contract under which BAA retained all the risk relating to the project. Additionally, the contract needed to be flexible as BAA appreciated that their requirements would change during the course of the contract
The contract is generally considered to be a balanced agreement, which facilitates appropriate relationships and behaviours. Drafted in a non-adversarial style, the negative and potentially confrontational aspects of traditional construction contracts were replaced by a commercial model and policy that created commercial tension without erecting commercial barriers. While not explicitly derived from the NEC form, the two contacts have aspects of partnering and integrated working in common. The contract was designed to enable all participants to concentrate on:
The root cause of problems and not their effects
Working within integrated teams to deliver success in an uncertain environment
The proactive management of risk rather than the avoidance of litigation
Note: The T5 agreement was supported by BAA's novel risk insurance policy.
Each first-tier supplier was responsible for appointing, developing and managing their own supply chain (‘second' and ‘lower' tier suppliers/subcontractors). BAA expected the contractual arrangements within the supply chain to conform to the principles of the T5 agreement, for example, to avoid risks being transferred down the chain to those least able to carry them and to promote cooperative working methods. To this, BAA recommended the use of modified version of the NEC Engineering and Construction Contract (ECC) to appoint second tier suppliers.
4.2.4 Risk Management With Respect to T5 Project
A key component of the T5 Agreement, and a major departure from common practice, was the notion that BAA retained ownership of risk rather than seeking to transfer it.
Transferring risk will be counter-productive; many risks are unforeseeable before or during the bidding process and it is naive to behave as if they are:
“The old game would be to go to the market with an incomplete understanding of what you want, ask for bids without understanding the inherent risks and then get bids from contractors that are designed to beat the competition rather than address the real risks.” (Tony Douglas Managing Director of the T5 Project), no construction company would be able to carry the financial liabilities generated by the £4.2bn project
Irrespective of how risks are apportioned, ultimately the purchaser always bears and pays for the risk.
As a result BAA retained all risk on the Project (eliminating it from the supply chain) and insured it, rather than requiring suppliers to include it in their prices.
4.2.5 Cost Reimbursement
Pre-emptive risk management: Integrated teams were responsible for identifying the ‘root cause' of each risk in a timely manner, assembling the most appropriate resources and managing the risk as effectively as possible
Integrated teams - BAA''s strategy was to adopt a problem solving approach to risk, identifying its sources at an early stage and then assembling the best resources(integrated teams) to proactively manage them.
Promotion of a non-adversarial approach or no blame policy
Collaborative project software: To facilitate open and timely communication within the integrated project teams, T5 utilised a collaborative project software package that provided access to the programme, scope of work, and risk reports. The system was also credited with helping to reduce misunderstanding and delays
4.2.6 Difference between T5 and conventional contract principles
Cannot transfer risk
Transfer of risk
Price in advance
Profit at risk
BAA manages the risk
Active risk management
Reimburse properly incurred
Profit levels pre agreed
Skill and Care
Emerging pre-planned scope
Single integrated team values
Performance are not exceptional
Goals/target sometimes are not well defined
Conventional principle do not accept liability
BAA (T5) clearly went for relationship management. They understood that they were building a mega project which would have been difficult to transfer the risks involved to a contractors considering the potential changes in the project. They made the decision that they are better placed to manage the risks. Also, they had studied similar projects around the world and the outcome was not pleasing to them to follow the conventional way of doing a project. It seems that all the projects they examine both in the UK and abroad had cost overrun and delayed completion.
So they took the decision to manage the project themselves. It was a good decision but there were always elements of what if …….
BAA concluded that without the adoption of a fundamentally different delivery methodology, the T5 project would have exceeded budget by more than £1 bn.
4.3 The Holyrood Project
The Procurement Route and Construction Manager:
The decision to adopt construction management as the procurement vehicle for the construction of Holyrood building was found to be “one of the most significant, if not the most significant” decision taken during the course of the project. Construction management is one of the relatively new ‘fast track' methods of construction procurement, developed in 1980s.
Under this arrangement, (construction management design) tendering and construction overlap. The client employs a designer and, separately, a construction manager who is engaged as a fee earning consultant to programme and co-ordinate the design and construction activities.
The actual construction activities are divided into three packages which are sequentially put out to tender and are undertaken by trade contractors who are contracted to the client.
Construction management offers the advantage of speed but with the disadvantage of price uncertainty until the last package contract has been leased.
4.3.1 Reason for Choosing this Case Study (Holyrood)
This case was chosen because it shows an example of bad practice in project management. It be also be used to illustrate the importance of awarding a project contract based on merit. A big lesson can be learn from this project because it a project that involve the general public and the government.
4.3.2 Holy rood Project - Successful/Failure
The Scottish office chose the construction management procurement route in July 1998 after due professional consideration, including advice from the design team. However, they did not prepare a comprehensive procurement strategy document, and the procurement strategy for the new Parliament was incomplete in that:
There should have been a reason analysis supporting the adoption of the construction management route represented by the appointment of Bovis as construction managers in January 1999. Such a strategy consideration of the procurement route could have been best conducted at the beginning of 1998, in conjunction with the evaluation leading to the decision to proceed with an international designer competition for the new Parliament building.
There should have been a systematic assessment of the risk implicit in the chosen procurement route (designer appointment and subsequent construction management) and how best to manage these risk.
4.3.3 Cost Increase of the Project (Holy rood Building)
The increase in cost came after the handover in 1998; they can be attributed to request for redesign of the debating chamber in early 2000; increased requirement for space and budget, and increase in cost due to the foyer roof and use of Kemnay granite.
The Auditor General for Scotland undertook examination of the project under the Public Finance and Accountability (Scotland) Act 2000. This report identified a number of project management and government issues. For instance whilst recognising the unique and complex nature of the project, the report identified some shortfalls. These include shortfalls in the procurement strategy, on project cost reporting and in accounting for the risk.
CHAPTER 5: DISCUSSION
Project success and failures are dependent on how the stakeholders and people that will be affected by the project perceived it. For instance Wembley Stadium project received lots of criticism from the general public because of increase in cost originally budgeted for the project; dispute between the main contractor Multiplex and the subcontractors over payment and other issues. But at the end the project received several awards and at the same time termed as a successful project by the stakeholders. Project success can be seen from the following point of view:
5.1.1 Meeting design goals which include
- Operational specification
- Technical specification
- Time goals
- Budget goals
5.2.2 Impact on the customer
- Fulfilling customer needs
- Solving major organisational problems
- Actually used by the customer
- Level of customer satisfaction
5.2.3 Benefits to the organisation
- Level of commercial success
- Generated a large market share
- Opened a new market
- Opened a new line of product
- Developed a new technology
From Pinto and Mantel (1990); project success and failure can be assessed based on the implementation process, the perceived value of the project and client's satisfaction with the delivered project. The implementation process is primarily concerned with the internal efficiency of the project execution whereas value and satisfaction the client or the user had from the completed/ delivered project are the project external effectiveness and impact.
Therefore in more advanced phases of a project, external factors such as customer needs and satisfaction become more important. Baker, et al. (1988) suggested that overruns in budget and time cease to be important after the project is terminated. Then customer satisfaction and its relation to the project organisation continue to be important even beyond project boundaries.
5.3.1 Success Dimension 1- Project Efficiency
These measures project success in short- term, measure the efficiency with which a project process is managed. It simply tells us was completed on time and within the specified budget. It also show immediate dimension with which the project can be assessed, first during execution, and immediately after completion. Although success in this dimension may indicate a well-managed, efficient project, but may not indicate success in long-term nor benefit to the organisation.
However with increased competition and shorter product life cycle, time-to-market (time to initiate concept to market introduction) becomes a crucial component. Enhanced project efficiency should therefore be seen as adding to product competitiveness.
Some organisations may use additional measures of efficiency. For example, the number of design changes before the final design release, cost of material and tooling, efficiency and yield of production ramp (Wheel- Wright & Clark, 1992). Other measures may involve efficiency of reliability, safety etc. However one must realize that all of these measures relate to successful implementation of project execution, and does not mean total success.
5.3.2 Success Dimension 2- Impact on the customer
These had to do with the importance organisation should place on customer requirement and real needs. These involve meeting performance measure, functional requirement, and technical specifications.
From the contractors point of view, this dimension also includes the level of customer satisfaction, the extent to which the customer is using the product, and whether the customer is willing to come back for the a follow-up project.
5.3.3 Success Dimension 3- Business and Direct Success
This dimension has to do with the direct impact the project may have on the organisation. In the business context, these questions are asked;
Did it provide sales, income as profits as expected?
Did it help to increase business results and gain market share?
However this dimension may apply to projects not aimed at building new products. For example, internal reengineering projects (Hammer & Champy, 1993).
This is the measure with which such an assessment could be made. It will include measures of performance time, cycle time, yield and quality of the process, and total improvement of the organisational performance. All of these will assess the direct impact the project had on the organisation.
5.3.4 Success Dimension 4- Preparing for the future
This is the longest term dimension in measuring project success and involves the following question:
- How the project does prepare for future opportunities?
- Does it explore new opportunities for further markets, ideas, innovations and products?
- Does it build new skills that may be needed in the future, or develop new technologies and core competencies?
- Does it prepare to make a change and create the future in its industry or to adapt quickly and meet additional challenges, unexpected moves of competitors, and market and technology surprises?
5.4 Success- Time Dependent
Project success, therefore should be considered as an integrated concept in which both short-term and long-term implication are considered. The relative importance of each of these dimensions is more important at different times with respect to the moment of completion. The project efficiency dimension is the most important. In fact it is used for measuring deviation from plans and looking at various efficiency measures may be the best way for monitoring the project progress and control its course. Once the project is completed, however the importance of this dimension gradually declines. As times goes by, it matters less if the project has met the resource constraints; in most cases after about a year, it is completely irrelevant.
In contrast, after project completion the second dimension, impact on the customer and customer satisfaction, becomes more relevant. The third dimension, business and direct success can be determined later. It takes time before a new product or delivered project starts bringing profit or establish market share.
Preparing for the future can only be recognised and assessed much later. The long-term benefits of projects will affect the organisation after say three to five years. These can be illustrated using the diagram below.
In contrast, after project completion the second dimension, impact on the customer and customer satisfaction, becomes more relevant. The third dimension, business and direct success can be determined later. It takes time before a new product or delivered project starts bringing profit or establish market share.
Preparing for the future can only be recognised and assessed much later. The long-term benefits of projects will affect the organisation after say three to five years. These can be illustrated using the diagram below.
5.5 Earned Value Management as a Method of Measuring Project Success or Failure
Earned value (EV) is a management tool for tracking and communicating a project status. Earned value management (EVM) will let you know the actual state of the project by comparing the current project performance against plan. Knowing the project's performance will help in taking action needed to ensure that the project is completed on time and within budget.
From project magazine, earned value management is defined as, “A methodology used to measured and communicate the real physical progress of a project taking into account the work completed, time taken and the cost incurred to complete the work”, whereas field operative defines it as, “the physical work accomplished plus the authorized budget for this work. The sum of the approved cost estimates, (which may include overhead allocation) for activities, (or portions of activities), completed during a given period, usually project-to-date.
Therefore earned value differs from the usual budget verses actual cost incurred model, in that it requires the cost of work in progress to be quantified. The project manager needs to agree the project scope, create a work breakdown structure (WBS) and assign budget to each work package, the lowest level of the WBS, then create a schedule showing the calendar time it will take to complete the work.
The overall plan is baseline (plan value) and used to measure performance throughout the project.
As each work package is completed (earned), it is compared with planned value showing the work achieved against plan. A variance to plan is recorded as a time or schedule deviation. It is necessary to obtain the actual the actual costs incurred for the project from the organisation's accounting system. The cost is compared with the earned value to show an overrun or under run situation.
Earned value provides the project manager with an objective way of measuring performance and predicting future outcomes. This can also help in reporting progress with greater confidence and highlight any overrun earlier. It also enables the management team to make cost and time allocation decisions earlier.
5.6 Value the Client or User Derived From a Completed Project as a Measure of Project Success/Failure
Value management in its broadest sense, is the benefit to the client. That is, the project is worth doing and can be quantified in business terms not necessarily in financial terms for example, creating a better working environment.
Value means ensuring that the right choices are made about obtaining the optimum balance of benefit in relation to cost and risk. Therefore value management provides a structural approach to the assessment and development of a project to increase the likelihood of achieving these requirements at optimum whole life value for money.
The principles centre on the identification of the requirements that will add value in meeting the business need. Workshops led by value management facilitators are often used to identify value to the business.
These workshops should involve stakeholders and members of the integrated project team. Value management aims to maximise project value within time, cost and quality constraints. However it should be recognised that improving whole life project value sometimes requires extra initial capital expenditure.
The key difference between value management and cost reduction are that value management are:
Positive, focused on value rather than cost, seeking to achieve an optimum balance between quality, whole-life cost and time.
Value management structured, auditable and accountable
Multidisciplinary, seeking to maximise the creative potential of all project participants working together
All projects are likely to include some unnecessary cost, however, cutting cost without proper analysis is likely to lessen value; therefore only unnecessary cost should be removed where wasteful processes and /or practices contribute to cost. There most be no loss of functionality or quality, otherwise value is diminished or reduced.
For instance, the construction of Tunstall Western Bypass, a high-risk £12M project is completed 10weeks ahead of schedule, within budget and to the agreed high quality. The final cost of the project was reduced by £800,000 through joint value management and value engineering.
5.6.1 Importance of Value Management
It enables stakeholders to define and achieve their needs through facilitated workshops that encourage participation and team working. The focus of value management is on function and value for money not reducing cost.
5.6.2 Benefits of Value Management
Better understanding of the business needs, including the flexibility required to meet the future needs.
Simple, clear definition of specific stakeholder needs.
Achievement of optimum value for money while satisfying the range of user requirements.
According to office government commerce (OGC) “value for money” is defined as the best combination of whole-life cost and quality, to meet the public sector organisation's needs.
5.6.3 Function Analysis
This technique is designed to help in the appraisal of value by careful analysis of function: For instance the fundamental reason why the project components exist or are being designed (Merna, 2005). For example Wembley stadium project was designed to stage sporting and music events. It is a basic element in the creative stage of value management.
Once the value management team have received a full briefing on the project, it involves the value management team in brainstorming to identify the required functions of the project. This process will define the finer details that aid in the description of client requirement. It serves as the input for creating function analysis system technique diagram (Fewings, 2005).
5.6.4 Function Analysis System Technique (F.A.S.T)
This technique promotes a holistic view of project with a view to understanding the customer's perspective of the finished product. It uses a function diagram to illustrate the relationships and inter-relationships of all functions within a specific project.
Once the objectives are prioritized, we can evaluate the options that would return the most value based on predetermined value criteria, example targeting true customer needs and wants; Delivering requirements but still enable cost reduction by focusing on “what the function accomplishes” versus “what the product is.” It helps to define and understands customer's NEEDS and WANTS. It also promotes discussion and terms interaction, help to support the process of generating creative alternative solutions. Elimination of unimportant requirements; adding incremental costs to achieve large performance and reducing cost simultaneously (Sims, 2002)
5.6.5 Whole- Life Costing
Whole-life costing assesses the cost of an asset over its lifetime taking into consideration; capital costs, operational costs, maintenance costs and recycling costs at the end of its life. It enables investment options to be evaluated more effectively by taking into account the impact of all costs rather than only the initial capital costs.
In calculating whole-life costs, all future costs and benefits are brought back to a present day value through discounted technique. Example Wembley national stadium construction project exceeded its initial cost (budgeted) but still deemed as a successful project by its stakeholders, after assessing its long term returns.
5.7 Return on Investment as a Measurement of Project Success/Failure
Projects are not approved and funded on the basis of their estimated costs and/ or execution plans. Projects are only approved because of the value it creates or benefit(s) derived from it is more than the cost of the investment. Also, project sponsors are measured by and rewarded based upon the successful delivering of the promised benefits for which the project was initiated.
Therefore in the word of financial analysis, return on investment (ROI) is a tool that can be use in measuring or comparing capital expenditures, such as investment in capital and mega projects. These can be large projects that have a pre-determined useful life against which projected returns can be easily compared. Some large scale projects can effectively be quantified in terms of ROI, more often user experience improvements are an ongoing and iterative process.
For instance after completion of the Wembley stadium project, it received prestigious award owing to the fact that the stakeholders were satisfied with the project ; though the general public criticised the stadium due to cost over run and lots of delays the project encountered but the client and user were seeing the long tern return on investment.
5.8 Discussion on Causes of Project Failure and appropriate Methods of Avoiding Such Failure
5.8.1 Compressed or Unrealistic Timelines
This was seen in Wembley Stadium project; there was a tight schedule associated with this project owing to the fact that the client wanted to stage FA cup final. In this kind of project (innovative), adequate time need to be exercise to enable proper planning.
So compressed or unrealistic deadline can cause reduction in project scope, or even lead to extension of time from the contractor. Also this can cause conflict between the contractors and the subcontractors (Wembley National Project).
Unrealistic timelines are often the source of project failure. Compression of schedule can be cause by delays but the deadline are not also pushed back to accommodate the lapses caused by the delay. Instead, activities at the end are done more quickly and with les care and attention.
5.8.2 Failure to Adequately Define Requirement
Every project has a reason for engaging in it. In order words project are delivered to make something more efficient, improve a service to someone or because it will meet another of our organisation's objectives. So it is very important to define the requirement of the product to be created. If the requirements are not well-defined, it is likely that the end product will not meet the need or it will be significantly over-budget and behind schedule because changes are required.
A good example is the design and construction of Holyrood parliamentary building, the project manager fail to understand the customer requirement and this contributed to cost overrun, delays in construction and other issues that lead to failure of this project.
Therefore requirements developments are similar to creating the blueprints for a house. Imagine building a house with a blueprint. How many rooms do you want? What colour of tile do you want in the bathroom? How many floors do you need? Failure to define the requirement adequately, might lead to building a garage that you never wanted and without a bathroom that you really need. Once the building is completed, it is very expensive to incorporate the bathroom that was not there and to remove the garage. So the project manager and project team need to take time to think what they want to do and how they wanted to use it, this will result in a project that have a suited need.
Project managers should collaborate directly with the key project stakeholders in order to define specific detailed project requirements is necessary to maintain alignment of project tasks to desired business outputs, as well as to ensure that project have clear and specific project objectives established.
5.8.3 Lack of Planning
Once the requirement are known, then carrying out thorough, upfront scope planning is an essential next step to help project managers and stakeholders accurately and clearly define project scope.
It is very vital for a project organisation to understand that there is more than one approach.
Project scope management therefore is necessary to develop reasonable project estimates, enhance the management of customer and stakeholder expectations, and mitigate project risks such as cost overruns and schedule delays. Project manager should establish and standardize a scope management process to develop concise project scope statements and credible budget and schedule estimates.
5.8.4 Lack of Time Management
In project management, for the delivered products to be of benefit, it must be obtained within the timeframe agreed before commencement of project. Therefore time can have impact in the following ways on project:
Sometimes the output only has the desired benefit at a certain time. A good example is event management (sporting event) there is a defined time at which the event must start. If the project is late all the benefit is lost. This was encountered in Wembley stadium project; there was urgent need for the project to be completed before the date for FA cup final.
Sometimes the output only has the desired benefit over a limited market window. For instance Umbrella has its market window during rainy season. If the project is late, the benefit is not lost absolutely, but benefit is lost in proportion to any time the project is delayed.
Finally, because of the time value of money, the later the project is delivered the more it costs, and so value is eroded. In this case there is a need to draw on theory from another management subject (economics and finance) to enlighten our theory of project management.
5.8.5 Lack of Quality Management
Project deliverable must function in the desired way; that is to say it must perform. So it is important to specify how the product to be delivered will perform and what standards it should meet. Then the project management organization must ensure that the specifications and standards are met, that the output functions as required, and that the desired outcomes are achieved.
5.8.6 Lack of Cost Management
Project should be able to provide value to the owner, that is to say the benefit should justify the cost of the resources used. In order for this to be achieved, the cost must be kept within bounds. It does not necessarily have to be less than some arbitrary budget; it just has to be kept within bounds justified by the desired benefit.
5.8.7 Poorly Developed Budget Forecast
Before engaging in any project to avoid failure, it is necessary to go into thorough research and preparation in order to develop a reasonable budget estimate. Many organisations normally ignore this step or just do a very rudimentary estimate owing to the amount of work needed to complete the task. Using the estimated budget, the project managers should collaborate with stakeholders to help further refine the project scope and final deliverables. This can be achieved by using initial budget to base actual spending plans as well as to proactively track spending and respond immediately to potential issues in order to prevent failure. A good example of a poorly develop budget WNSL. The contractors Multiplex did not carry out the estimate to know the budget, and this is one of the issues that contributed to delays and cost overrun in that project.
5.8.8 Lack of Senior Management Support
Projects that are been sponsored by the public or government are highly political. This form of project may involve an excessive number of unnecessary or incorrect participants.
Organisation's executives should seek ongoing senior management endorsement, enforcement and approval of the planning process to keep the effort on track and to minimize pushback from the line of business (LOB) managers. Therefore senior management and staff involvement are both needed to drive and keep the effort focussed and moving. Ownership of the project must be shared to satisfy the demand of user management. Executives must convey this message to senior management to retain involvement and participation.
5.8.9 Lack of Change Management Process
Project changes are inevitable; however uncontrolled changes and insufficient change management process will increase the probability of project failure. A formal and structured change management process is necessary to ensure effects of any changed requirements are properly analysed, prioritized, and balanced according to the project budget, schedule, and scope. A good example is BAA process with respect to T5 project.
Project managers should consistently and publicly take a phased approach to projects, so that users understand that not all changes must be completed for the current release. This will help acceptance of trading off specific desired change for faster availability of greater functionality. This will also help reduce the impact of change onto the project, and allow for cost and time containment.
5.8.10 Frequent or Large Changes to Project Scope
Scope changes can significantly impact the cost, schedule, risks and quality of the entire project. Project managers should minimize the extent and frequency of changes to the project scope.
Project scope are defined in early stage in the planning and estimation phases, there are valid reasons for change. For instance a stakeholder may acquire additional insight into a problem during the course of the project or external market conditions and/ or government regulations can drive requests that extend beyond the initial project scope. However, changes to project scope can also occur as a result of developing a poor initial scope document.
Project managers must ensure that adequate time is spent on defining and redefining the work effort directly with key stakeholders.
5.8.11 Failure to Establish Appropriate Client/ User Expectation
Mismatched expectations in project execution normally lead to disputes; Missed project targets will cause delays, rework, and additional project spending. Setting user expectations are necessary to establish a baseline of what and what not to expect from the final product or deliverables.
Project managers should work with key stakeholders in establishing and prioritizing project requirements as well as reviewing budgets and schedules. Additionally, all people involved in the project should have periodic joint sessions, to ensure that same communications on project expectations are received by everyone.
5.8.12 Insufficient Resources
This is another cause of project failure. It can be seen from insufficient finance, manpower and equipments to bring a project to completion. Required resources are underestimated and schedule inaccurately planned. Project organization often encounter difficulties with resource allocation, as many project organizations do not spend enough time on resource scheduling and proper management.
In fact, it is very common for companies to overestimate the on-boarding of staff to a project, which will cause the project to be late and in difficulty, impairing construction image with LOB managers and executives. In addition resources are often utilized ineffectively, especially when individuals are required to support multiple projects concurrently. Insufficient resource supply will cause delays and impact overlapping projects.
Project Managers should plan according to the estimated project schedule estimates and work with concurrent project schedules to help ensure that resources are properly schedule.
5.8.13 Poor Communication
Time and time again in post-project assessment, project teams list communication as one of the most needed areas for improvement. Many times in difficult (Challenging) projects, team members feel that if the communication had been better, the project would have run smother.
Effective communication not only keeps everyone up-to date on the project progress, but also facilitates buy-in and ownership of major project decisions and milestones.
To ensure success of a project, much information including expectations, goals, needs, resources, status report, budgets and purchase request, need to be communicated on a regular basis to all the major stakeholders.
Preliminary model of project virtuality, project manager communication competency, team member satisfaction, and team productivity
Project communication can often be more difficult due to challenges unique to project management. Many projects take place within a short-term, and therefore project communication is temporary.
This means that the communication methods need to be established quickly in short period of time. It is just as important to develop a communication plan for the project as it is to develop task planning. Another challenge is that projects often include cross-functional or inter-organizational teams. Project teams are not normally natural team and sometimes do not even reside in the same geographical location. Unique delivery methods and communication devices need to be utilized to overcome this challenge.
But, it is possible to quickly implement effective communications that reach all affected parties, no matter how complicated or diverse the team may be.
The number of formal communication checkpoints will vary depending on the size of the project and the number of stakeholders involved.
In larger projects, a project manager assigned to the project normally arrange kick-off meetings with the project teams and the stakeholders on a regularly basis. These meetings establish project timelines, required resources, agreed-upon outcomes for the project, reporting schedules and others. This meeting serve to introduce the project team and formalize the project management aspects of the overall project. Secondly, it provides an opportunity for the project team to receive a more detailed briefing from the project team and to finalise user and stakeholder involvement.
22.214.171.124 Benefits of Effective Communication in Project
Every member of the project team will understand the ins and outs of the project and can pick up on any potential issues early.
When discussing with the stakeholders, the members of the team are well prepared and have a better idea of which question to ask.
5.8.14 Poor Risk Management
In order to manage risk, it is important to understand what risk is. Going by Larry Krankz definition, “A risk is combination of constraint and uncertainty”. Every project has its own constraint and uncertainty. So we can minimize the risk associated with a project by either eliminating the constraint or by reducing the uncertainty. This can be illustrated using the diagram below. The curved line indicates the acceptable level of risk, whatever may be in individual case. The risk may be reduced to an acceptable level by reducing either both of uncertainty and constraint. In practice, few managers have the opportunity to reduce constraint, while most practitioners focus on reduction of uncertainty. It is worth noting from the diagram that the total elimination of risk is rarely achieved. So we have to consider how to manage that remaining risk most effectively.
126.96.36.199 Effective Risk Management
Managing of risk is an ongoing process throughout the life of the project, as risks will be constantly changing. There should be a proper risk management plan in place to deal quickly and effectively with risks if they arise. It is also important to work as an integrated project team from the earliest possible stages on an open book basis to identify risks throughout the team's suppy chains.
From Professor James Garven, “risk management is the systematic process of managing an organization risk exposures to achieve its objectives in a manner consistent with public interest, human safety, environmental factors, and the law”. It consists of the planning, organizing, leading, coordinating, and controlling activities undertaken with the intent of providing an efficient pre-loss plan that minimizes the adverse impact of risk on the organization's resources, earnings and cash flow.
188.8.131.52 Effective risk management involves the following
- Establishing procedures for actively managing risk throughout the during occupation on completion
- Identifying and assessing the risk in terms of impact and probability
- Establishing and maintaining a joint risk register, agreed by the integrated project team
- Ensuring that members of the team have opportunity to engage in a dialogue that will promote agreement of an appropriate allocation of risk
- Updating risk information throughout the life of the project
- Ensuring control of risks by planning how risks are to be managed through the life of the project to contain them within acceptable limits
- Allocating responsibility for managing each risk with the party best able to do it
There are two stages in the process of project risk management; risk assessment and risk control. Risk assessment can take place at any time during the project. However, risk control cannot be effective without a previous risk assessment. Similarly most project managers think that having performed a risk assessment they have done all that is needed. For too many projects spend a great deal of effort on risk assessment and ignore risk control completely.
Risk assessment has three elements
Identify uncertainty: which involves exploring the entire project plans and looking for areas of uncertainty.
Risk Analysis: This can be done by specifying how those areas of uncertainty can impact the performance of the project, either in duration, cost or meeting the user's requirement.
Prioritize Risk: Establish which of those risks should be eliminated completely, because of political extreme impact, which should have a regular management attention, and which are sufficiently minor to avoid detailed management attention.
Also risk control has three element and they are
Risk Mitigation: This involves taking whatever actions possible in advance to reduce the effect of the risk. It is better to spend money on mitigation than to include contingency in the plan.
Plan for Emergencies: For all those risks which are deemed to be significant, have an emergency plan in place before it happens.
Measure and Control: Track the effect of the risks identified and manages them to a successful conclusion.
Protecting Project Value from Uncertainty: A Forward-Looking Approach to Future Risks.
Critical chain-based project management and the theory of constraints thinking processes provide a range of tools and processes to support risk management and protection of project value. A common thread then is a forward-looking approach to the management of projects. Planning with network building looks forward to the objectives of the project before considering the path of the activities to get there. The critical chain schedule looks forward to the final project deliverables without being distracted by intermediate task due dates that only serve to sub-optimize schedule performance ‘Relay race ‘ resource behaviours looks forward with fine focus on the making timely handoffs with quality. Synchronization looks forward to the capabilities of the pipeline. And buffer management eschews percent complete or earned value of completed work as water over the dam, and instead looks forward to the work remaining, and its variation and risks.
Management of uncertainty and risk in an effort to deliver promised project value with certainty is what project management is all about, and risk and uncertainty lie in the future. Critical chain scheduling and Buffer management is not only a technique for the development and tracking of project schedules. It is a coherent and comprehensive approach to project management that encompasses and effects other processes and practices associated with project management as well. Most importantly, its implications for looking forward and taking appropriate actions for accepting, avoiding and mitigating risk are significant and beneficial.
CHAPTER 6: CONCLUSION AND RECOMMENDATIONS
Most industries are dynamic in nature and the construction industry is no exception. Its environment has become more dynamic due to increasing uncertainties in technology, budgets, and development processes. The concept of project success has remained unambiguously defined. Project success is the ultimate goal for every project. However it means different things to different people. While some writers consider cost, time, and quality as the predominant criteria, others suggest that success is something more complex.
The section summarises all that have been said in the previous chapters of this research together. Also it cross-checks whether the aims and objectives have been achieved. Recommendations and suggestion are also made to enable further research to be carried on where necessary.
The aim of this research was to carry out appraisal on the causes of project failure and the appropriate method to avoid such project failure. In that sense, many factors were identified as the causes of project failure: they include cost overrun, time delays, quality of the delivered project, lack of senior management support, inexperience in project management, lack of change management, lack of risk management, lack of planning and many more. But this study identify factors like a project not meeting stakeholder's requirement as the most important cause of project failure. It was seen that the stakeholders had to determine what the project want to achieve before commencement of project.
Also methods of avoiding project failure identified include: good and proper planning, effective risk management, realistic budget and estimates, paying attention to breaking development and implementation into manageable steps, effective communication amongst project participants, having good and realistic business case, carrying out proper feasibility studies, having clear link between the project and the organisation's key strategic priorities, including measures of success and others that are not mentioned.
Requirement, statement of work and budget must align when during the initiation of a program. There is a need for proper planning, test it and get others from outside to review it. There is no question your plan will change along the way. But if you don't at least start with a good planning, it is almost impossible to succeed.
During project recovery process, it is very necessary to evaluate the overall project. An audit or project review using a series of standard questions should identify the key problems and the severity of each stage. This will allow you to prioritize project recovery planning and activity so that you tackle the most serious problems first, and then work down the list. During the review, some lapses might be discovered. For instance, if scope is unstable and forever changing, the introduction of a strict change control process should at least help to firm up and stabilize the scope.
The level of project planning for project recovery will vary from project to project. Some project may need a full “stop all work” to allow an operation to be performed (redefining scope or even another round of project planning). Some may stop any more changes until the project is stabilized. Whereas some may need corrective measures that may restrict progress but not stop the project. Therefore project failure is preventable with good planning based on a well- constructed deliverables- based work breakdown structure and proper controls. However, once a project starts to fail, there are techniques to recognise it, minimize the extent of the project failure and make the project recovery as successful as possible. There may be some casualties along the way, such as some reduction in scope, additional time and/ or additional cost, but with good project planning and timely intervention where required, these can be minimized. A project manager needs to be trained in these techniques not only to recover a falling project, but more importantly, reduce the chances of creating one himself in the future.
In conclusion, failure or success in projects is a multi-dimensional issue and may be influenced by so many factors. Some projects have failed in many areas for instance in management and procurement (Wembley) but still perceived as successful projects by its stakeholders.
In essence projects are designed to meet stakeholder's objective; and it is these objectives that defines the criteria for success of that project. Any project not satisfying these objectives are deemed to fail.
Also it has been noted that project success does not come easily and failure in project can also be attributed to lack of facilities, training and management by organisations to bring projects to successful completion. With many definitions by different practitioners concerning project management, the criteria for success lies on cost, quality and time mainly.
From the literature of this research study, it was noted that definition of project success is difficult in the sense that success has different meanings for different people. It was also identified in the literature that cost overrun contributed to about 40% of failures in projects.
Therefore for a project to be successful, the methodology employed for the execution is very important and this depends on the size of the project.
Project conceptual understanding has advanced significantly during the last decade. Instead of seeing projects as a job to get done, project should be perceived as major vehicles for organisational and societal prosperity.
Project manager can no longer afford to be detached from the organisation's strategic and long-term goals. Project definition, planning, and success assessment should become an integral part of strategic planning and strategic management in organisations.
The measurement of assessment should be set prior to project initiation, as part of the strategic goals of the organisation. These goals should be incorporated during project initiation into the decision-making process of top management. The multidimensional framework of project success may help articulate project expectations in an era of increased involvement and integration. A specific project should thus focus on its explicit dimensions and these dimensions should be determined according to a particular project type.
A common risk management process should be understood and adopted at all levels within the integrated project teams, and the risk register regularly reviewed and updated throughout the project lifecycle.
Risks inherent in the maintenance and demolition of a facility should be considered during design development and decisions about risks kept on the register for future reference. The buildability and maintainability of the facility are central to its long-term value; there must be ownership and management of these risks.
If the integrated project team does not include the facilities manager, the facility manager risks should be considered and owned early on usually by the client. The project lifecycle runs until the facility is demolished or disposal of; whoever acquires it in a disposal will need to know the risks on transfer.
There must be adequate time and early effort to identify and analyse the risks, and to develop a risk management plan governing how they are to be managed and funded. Risk should be allocated to individual risk owners within the integrated project team, who should fully understand the risks for which they are responsible.
Client should not make any financial commitment to a project or a major change, unless the integrated project team has identified and assessed the risk, allocated them and ensured that management action is in place.
The risk should be managed actively throughout the life of the project in accordance with the risk management plan; the plan should deal with all risk, whether retained by the client or transferred to others in the integrated project team. The business case should include a time element and the risks of that changing should be kept constantly under review.
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