The Superior Project Manager (Center for Business Practices)

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Author: Frank Toney

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ISBN: 0-8247-0639-0 This book is printed on acid-free paper. Headquarters Marcel Dekker, Inc. 270 Madison Avenue, New York, NY 10016 tel: 212-696-9000; fax: 212-685-4540 Eastern Hemisphere Distribution Marcel Dekker AG Hutgasse 4, Postfach 812, CH-4001 Basel, Switzerland tel: 41-61-261-8482; fax: 41-61-261-8896 World Wide Web http:/ /www.dekker.com The publisher offers discounts on this book when ordered in bulk quantities. For more information, write to Special Sales/Professional Marketing at the headquarters address above. Copyright  2002 by Marcel Dekker, Inc. All Rights Reserved. Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, microfilming, and recording, or by any information storage and retrieval system, without permission in writing from the publisher. Current printing (last digit): 10 9 8 7 6 5 4 3 2 1 PRINTED IN THE UNITED STATES OF AMERICA

Series Introduction

The organizational environment needed for project success is ultimately created by management. The way that the managers define, structure, and act toward projects is critical to the success or failure of those projects, and consequently the success or failure of the organization. An effective project management culture is essential for effective project management. This Center for Business Practices series of books is designed to help you develop an effective project management culture in your organization. The series presents the best thinking of some of the world’s leading project management professionals, who identify a broad spectrum of best practices for you to consider and then to implement in your own organizations. Written with the working practitioner in mind, the series provides ‘‘must have’’ information on the knowledge, skills, tools, and techniques used in superior project management organizations. A culture is a shared set of beliefs, values, and expectations. This culture is embodied in your organization’s policies, practices, procedures, and routines. Effective cultural change occurs and will be sustained only by altering (or in some cases creating) these everyday policies, practices, procedures, and routines in order to impact the iii

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Series Introduction

beliefs and values that guide employee actions. We can affect the culture by changing the work climate, by establishing and implementing project management methodology, by training to that methodology, and by reinforcing and rewarding the changed behavior that results. The Center for Business Practices series focuses on helping you accomplish that cultural change. Having an effective project management culture involves more than implementing the science of project management, however—it involves the art of applying project management skill. It also involves the organizational changes that truly integrate this management philosophy. These changes are sometimes structural, but they always involve a new approach to managing a business: projects are a natural outgrowth of the organization’s mission. They are the way in which the organization puts in place the processes that carry out the mission. They are the way in which changes will be effected that enable the organization to effectively compete in the marketplace. We hope this Center for Business Practices series will help you and your organization excel in today’s rapidly changing business world. James S. Pennypacker

Preface

The more than 80 companies that participate in the Top 500 Project Management Benchmarking Forum consider the selection and nurturing of project managers among the most important factors influencing the outcome and success of projects. The associated identification of actions, traits, and skills that maximize the probability of project goal achievement is also of highest importance. In response to those needs, the results of nearly 10 years of benchmark forum research are documented and supplemented by hundreds of studies conducted by others. The output is a compilation of validated best practices that can be immediately applied to improve project performance. Validated best practices and competency standards provide the means for project managers to improve their performance, increase personal earnings and upward career mobility, and enhance peer recognition as well as the image of professionalism. Companies benefit from improved ability to select project managers, assess performance, and structure individual and group development programs. For customers and stakeholders, application of best practice standards maximizes the probability of project success and gives assurance that the project approach will be predictable and consistent. Frank Toney v

Acknowledgments

Representatives from approximately 60 organizations worked for nine years developing best practices and competencies for project managers and project organizations. Several of the participants started project organizations before any information was available to assist in the process. Some suffered failure. In every case, the individuals involved were willing to share their experiences in an effort to help others. All the people who provided time to the benchmarking effort did so on a volunteer basis. I sincerely thank the following people and the companies they represent for their contributions in communicating their experiences and supporting the increasingly high levels of professionalism found in project management. Aeroquip, Yvette Burton Alcoa, Alan Kristynik Allied Signal, Tom Booth American Airlines, Susan Garcia AMEX, Mary Burgger Amway/Access, Ed VanEssendelft Arizona Republic, Larry Lytle Avnet, Julee Rosen Battelle, Steve S. Eschlahta

Bellsouth, Ed Prieto Cablevision, Dave Steinbuck, Steve Potter, Cliff Hagen, Jackie Ernst Calpers, Doug McKeever, Michael Ogata, Kristen Sawchuck Capital One, Bob Stanley, Debbie Adams Caterpillar Inc., Dave Harrison vii

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Center for Business Practices, Jim Pennypacker CH2M Hill, Starr Dehn Chase Manhattan Bank, Ruth Guerrero Citibank, Warren Marquis, Lou Rivera Compass Telecom, Ray Powers Computer Horizons, Jack Routh Deluxe Checks, Clark Hussey Development Dimensions International, Pat Smith Dinsmore Associates, Paul Dinsmore Disneyland, Bob Teal Dow Chemical, Bill Lehrmann DuPont Agricultural Products, Julie Eble Eastman Kodak, Fred Bassette EDS, Carl Isenberg, Mike Wall, Paul Schwartz Electric Lightwave, Michael Golob Eli Lilly, Sheldon Ort Ernst & Young, Steve Sawle, Dan Roth Federal Express, Don Colvin, Dinah Allison Fortis, Inc., David Cupps General Services Administration, John Bland, Hugh Colosacco GlaxoSmithKline, Derek Ross Harding Lawson Associates, Don Campbell Hartford Insurance, Eilleen Rosenfeld IBM, Sue Guthrie InFocus Systems, Scott Stevenson ITT Hartford, Sue Steinkemp JD Edwards, Kelly McCormick, Nancy Tilson Kelly Services, Pat Donahue, Joanne Bolas, Kathleen Tabaczynski, Gloria Sirosky, Deborah Polley

Acknowledgments

Kemper, Debbie Hoyt Logistics Management, Tripp Home MetLife, Carol Rauh Micro Age Inc., Dan McFeely Miller Brewing, Lowell Skelton Morgan Stanley, Tom Tarnow, Rolan Armove, Andrew Posen Motorola, Martin O’Sullivan, Richard Gale, Boyd Mathes NCR, Pat Peters Nissan Motor Corp., Randal Macdonald Northrop Grumman, Frank Catalfamo Northwestern Mutual Life, Marge Combe, Judy Koening, Margie Dougherty, Patricia Weber Nynex, Kathy Kuzman Oracle, Meg Trobiano Philip Morris, Barbara Miller, Bob Riley Rust Environmental, Gary Scherbert Sabre Group, Chris Thomas, Ed Fox SBC/AIT, Terri Hart-Sears, Margaret Currie Southern Company, Andy Hidle, Nancy Bradley Sprint, Kenneth Binnings, Rachel Kussman, Don Albers, Robert Ramos SRM/Hennepin County, Derek Mantel Texaco, Richard Legler Transwestern Publishing, Julie Freeman Washington Gov., Richard Humphry West Group, Jeannene Dorle Zurich, Joe Lunn, Jerry Egger, Brent Kedzierski

Contents

Series Introduction Preface Acknowledgments Introduction

James S. Pennypacker

1. Global Competency Standards: An Overview 1.1. Factors Impacting Project Goal Achievement 1.1.1. The Superior Project Manager 1.1.2. The Project Office Organization 1.1.3. The Host Organization 1.1.4. The External Environment 1.2. Project Management Core Success Factors 1.2.1. Professional Project Manager 1.2.2. Multifunctional Teams 1.2.3. Senior Level Support 1.2.4. Competitive Product or Service 1.2.5. Strong Economic Demand 1.2.6. Structured Project Approach 1.3. Measurement of Competencies and Best Practices

iii v vii xv 1 1 4 6 7 7 8 8 8 8 9 9 9 9 ix

x

2.

3.

Contents

The Project Manager: Global Competency Standards 2.1. An Overview of Superior Project Manager Competency Standards 2.1.1. Character, Background, and Traits 2.1.2. Leadership and Management Skills 2.1.3. Project Skills 2.2. Project Manager Core Competencies 2.3. Measurement of Project Manager Competencies Standards for Project Manager Character, Background, and Traits 3.1. Character and Truthfulness 3.1.1. Definition of Honesty and Truthfulness 3.1.2. Truth Is a Core Competency 3.1.3. Truth and Project Leadership 3.1.4. A Caveat 3.1.5. Benefits of Truthfulness and Trust 3.1.6. Dangers of Being Too Trustful 3.1.7. Dishonesty and Unethical Behavior on Projects 3.1.8. The Motives Behind Dishonesty 3.1.9. Building Trust on the Project Team 3.2. Project Manager Background 3.2.1. Educational Background 3.2.2. Project Leadership and Management Experience 3.2.3. Functional Training in the Project’s Subject Area 3.2.4. Has Learned from Failure 3.2.5. Backgrounds: Nonvalidated Competencies 3.3. Project Manager Traits 3.3.1. Self Confidence and Faith in a Positive Outcome 3.3.2. Competency: Ambition 3.3.3. Above Average Intelligence 3.3.4. Competency: Emotional Stability 3.3.5. Nonvalidated Competency–Related Traits: Not All Leadership Traits Can Be Directly Linked to Goal Achievement 3.4. Conclusion and Measurement of Project Manager Character, Background, and Traits

15 15 15 17 18 18 19

21 21 22 22 23 23 24 30 31 32 34 35 36 36 37 37 39 39 40 49 51 51

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Contents

4. Project Manager Professionalism: Standards and Best Practices 4.1. Goal-Achieving Practices 4.1.1. Leadership and Management Skills and Actions 4.1.2. Project-Specific Technical Skills 4.1.3. Entrepreneurial CEO Skills 4.1.4. Global Leadership Issues 4.2. Manage for Goal Achieving Speed, Efficiency, and Effectiveness 4.2.1. Speed 4.2.2. Efficiency 4.2.3. Effectiveness 4.2.4. Speed-, Efficiency-, and EffectivenessRelated Best Practices 4.3. People Skills 4.3.1. People Management for Speed, Efficiency, and Effectiveness 4.3.2. General Leadership Skills 4.4. Critical and Analytical Analysis of Alternatives and Opportunities 4.4.1. Flawed Decision Making 4.2.2. Analytical Decision-Making Techniques 4.5. Environmental Awareness 4.5.1. When Environmental Knowledge is Most Needed 4.5.2. Result of Inadequate Environmental Knowledge 4.5.3. Information Sources and Tools Used 4.5.4. Global Environment 4.6. Conclusions and Measurement of Project Manager Professionalism 5. Project-Specific Competency Standards 5.1. A Structured and Predictable Approach 5.1.1. Project Phases 5.1.2. Flexible and Simple Approach 5.1.3. Standardized Methodology Advantages 5.1.4. Structured Methodology Caveats 5.2. Project Phases and Associated Best Practices 5.2.1. Project Initiation and Selection 5.2.2. Planning Phase

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57 57 59 60 61 64 66 67 68 71 71 89 90 108 119 120 121 127 128 129 130 131 136 141 141 142 144 145 147 149 149 166

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Contents

5.2.3. Execution and Control Phase 5.2.4. Project Closing and Termination Phase 5.3 Conclusions and Measurement of Project-Specific Competencies

182 198

Background Information 6.1. The Top 500 Project Management Benchmarking Forum 6.2. Leadership Competency Measurement Problems 6.3. Definitions 6.3.1. Competencies 6.3.2. Best Practices 6.3.3. Standards 6.3.4. Leadership 6.4. Characteristics of Competencies 6.4.1. Relationship of Competencies to the PMBOK Guide 6.4.2. Impact on Goal Achievement 6.4.3. Observable and Measurable 6.4.4. Drive Superior, Not Average Performance 6.4.5. Are Scientifically Validated 6.4.6. Are Weighted for Impact on Project Goal Achievement 6.5. Levels of Competency 6.5.1. Superior or Transformational Competence 6.5.2. Moderate Competence 6.5.3. Inept Competence 6.5.4. Dysfunctional Incompetence 6.6. Important Competency Considerations 6.6.1. Might Not Pertain to You 6.6.2. Focus on Winners 6.7. Historical Research Support for Competencies 6.7.1. Ancient Competency Literature 6.7.2. Renaissance Competency Research 6.7.3. Von Clausewitz’s Military Strategy 6.7.4. Taylor’s Scientific Approach 6.7.5. Fayol and Organizational Leadership 6.7.6. Nothing New in Project Leadership Science

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213 214 215 216 216 216 216 217 217 217 218 218 218 220 221 221 222 222 223 223 223 223 224 224 224 225 226 226 227

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6.7.7. 6.7.8.

The Gilbreths’ One Best Way Likert’s Leadership Competency Predictions 6.7.9. Barnard and Leadership Behavior 6.7.10. Mintzberg and Leadership Best Practices 6.7.11. The Bass Catalogue of Leadership Research 6.7.12. Current Leadership Research Emphasis Appendix A: Project Manager Competencies Ranked by Research Source Appendix B: Project Manager Competency Questionnaire Appendix C: Project Charter Checklist Appendix D: Risk Analysis Matrix: Key Risk Factors Affecting Project Success References Index

227 228 228 229 229 229

231 269 277 283 289 303

Introduction

The Top 500 Project Management Benchmarking Forum initiated and conducted the study on which this book is based. The results are presented as two companion volumes of global standards and best practices. The Superior Project Manager identifies, provides research validation for, and weights best practices that are predictors of project manager competency. The Superior Project Organization addresses global standards and best practices of project offices and host organizations. The man who lacks competence can know neither the good nor any good thing. Plato (ca. 400 BC) The Republic

As Plato inferred over 2400 years ago, people have long engaged in a quest to find and then emulate the behavior of superior role models. After all, what better and more effective way to learn than to pattern one’s behavior after that of a respected individual. In 1520, Machiavelli’s book The Prince presaged this view: ‘‘A prudent man xv

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Introduction

should always enter upon the paths beaten by great men, and imitate those who have been most excellent.’’ In modern times, the concept has become so well respected that the learning value of role models can be quantified. With this in mind, it should be no surprise that painting a portrait of the superior project manager is a high priority of industry groups, academia, researchers, and project management professional associations. This volume of standards and best practices is designed to serve as a companion to books of knowledge such as the Project Management Institute’s PMBOK Guide. The PMBOK Guide, as well as the numerous other books about project management, details what the project manager should know. The Superior Project Manager: Global Competency Standards and Best Practices details what the project manager should do. It is similar in approach to that taken by the accounting profession—there is a large body of knowledge about accounting but ‘‘Generally Accepted Accounting Principles’’ (GAAP) address the specific approaches and activities to be taken by the Certified Public Accountant. Standards and best practices detailed in this book reflect historical research data as well as the views of some of the leading project management practitioners in the world. Included are a wealth of practical ideas gained from 9 years of forum meetings and research that will hopefully improve project management performance in all organizations.

0.1. COMPETENCY STANDARDS ASSUMPTIONS The assumptions under which the forum discussions were held and the research conducted and presented as standards and best practices are as follows. 0.1.1.

Large Functional Organizations

The focus is on the use of project management in large functional organizations. For example, the company size of benchmarking participants ranges from about $1 to $155 billion in sales, with the mean being about $75 billion. The average number of projects for the project organization is 74, with one project group executing 7500 projects a year. The myriad of smaller matrix-type and informal, single-department–oriented projects are not covered. Nevertheless, most of the concepts described apply equally well to those smaller projects.

Introduction

0.1.2.

xvii

Full-Time Project Manager

The primary interest of the forum and this book is on larger projects that require a full-time manager. The assumption is made that the probability of project goal achievement is maximized when the project is executed by a qualified project manager who is given authority and accountability to accomplish the project objectives within established parameters. 0.2. RECOMMENDATIONS FOR THE USE OF COMPETENCY STANDARDS As the study has progressed, participants have developed recommendations regarding the most effective implementation of the standards and best practices. They are to •

• •

•

• •

•

Develop a strategic framework on which to direct one’s organizational and personal approach to project management. The strategic framework also provides a valuable tool to resist the temptation to react to organizational pressures and agendas of other stakeholders. Insist on rising to the highest level of project management quality and effectiveness. Make project management and leadership character, professionalism, and methodology the mantra to guide individual project decisions and develop objectives and courses of action. Diagnose project manager’s strengths and weaknesses. Then develop a plan to resolve the weaknesses and enhance the strengths. Prioritize the best practices in terms of the greatest gain they will generate for the individual and organization. Develop a training and development program to align the organization and individual project managers with the concept of best practices. Move quickly to assume a leadership role in making one’s own project management skills more efficient and effective.

0.3. BENEFITS OF COMPETENCY STANDARDS Developing and validating project manager competencies and presenting the results in the form of a volume of standards, best prac-

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Introduction

tices, and competencies represent a major opportunity to benefit project stakeholders. For professional project managers, improvements can be expected in earnings, the image of professionalism, and job performance. For companies and large governmental agencies, competencies enhance project manager selection, performance evaluation, and personnel development. 0.3.1.

For Project Management Professionals

The objective of The Superior Project Manager is to raise the level of professionalism and predictability of job performance for existing and future professional project managers. The successful negotiation of the more rigorous hurdles can be expected to translate into higher income, elevated job position in the organizational hierarchy, improved career mobility, and enhanced peer recognition and respect. 0.3.2.

For Employers of Project Managers

0.3.2.1. For Project Manager Selection The Top 500 organizations have a thirst for standards and best practices that define project manager–related competencies that have the highest impact on project success. They seek to improve the ability to predict project leader performance when there is (a) insufficient historical experience to evaluate future performance, (b) the experience base is different from the job being considered, (c) experience cannot be verified, (d) the individual is in a personal development process, or (e) candidates are being evaluated for promotion to a job they have not performed before. 0.3.2.2. For Project Manager Performance Evaluation Often project managers cannot be evaluated solely on the basis of project success. Sometimes the individual is arbitrarily assigned to projects that are subject to outside forces, constraints, and influences, or the project is high risk and failure may be possible and even probable (e.g., pure research, smoke jumper situations). 0.3.2.3. For Personal Development: Guiding, Measuring, and Rewarding Validated competencies can be used to (a) identify areas of strengths and weaknesses and to tailor training accordingly, (b) identify the range of pay for an individual’s competency in performing the job, and (c) determine how much each job category should pay.

Introduction

0.3.3.

xix

For Project Customers and Stakeholders

Application of validated competencies assures project customers and stakeholders that the probability of project success is improved. It signals to customers and stakeholders that the project management professional will, on the average, outperform the nonprofessional. It provides assurance that the approach taken by the project leader will be predictable and consistent from project to protect, between varied project leaders, and in differing time periods and project environments. Stakeholders will have confidence that the project leader possesses a defined set of competencies and will implement best practices. The stakeholder is assured that the superior project leader will be (a) honest and of sound character, (b) a professional at team leadership and management, and (c) skilled in the application of projectspecific methodologies, templates, and procedures. 0.3.4.

For the Development of Project Leader Theory

There are millions of project managers and leaders. The quality of their performance ranges from fantastic to abysmal. Nevertheless, they are all, for one reason or another, called project managers and in project leadership positions. A standardized and validated method is needed for measuring, evaluating, and quantitatively comparing leaders in differing environmental settings and over varying periods of historical time. A set of validated competencies serve as a benchmark to (a) make it possible to compare project leaders in different continents, on vastly different projects, and even in different centuries; (b) provide an easily comprehended picture or portrait of global project leadership competence; (c) give a best practices–based explanation for the phenomenon of worldwide project leadership competency; (d) offer a method of predicting, within a broad set of constraints, leadership competence; and (e) result in a generally accepted conceptual framework and body of competencies and best practices that can be passed on, in the form of training and mentoring, to future project leaders.

1 Global Competency Standards: An Overview

1.1. FACTORS IMPACTING PROJECT GOAL ACHIEVEMENT Project goal achievement is influenced by four basic groups of factors: the superior project manager, the project office organization, the host organization, and the external environment. As depicted in Figure 1.1, the impact of these various factors can be weighted. For purposes of generalized discussion, the project manager influences approximately 50% of project success, the project office organization about 20%, the host organization 20%, and the external environment 10%. Note that these percentages can change dramatically depending upon the situation. For example, for projects conducted in foreign countries, the external environment could be the major influencer of project success. In most situations, the superior project manager is the single most important influence impacting successful project goal achievement. However, as inferred by Figure 1.1, consistent, efficient, and effective project management success necessitates input from, and a balance between, all the key components. Although any one compo1

2

FIGURE 1.1

Chapter 1

Global Competency Standards: An Overview

3

nent can be strong and compensate for weakness in other areas, the probability of goal achievement is maximized when project teams have a goodness of fit with the organizational and environmental components. The consistently superior project team will ideally be found in a team-friendly organizational environment conducive to goal accomplishment. When all the factors influencing project goal achievement are in balance, everything required for project success is provided. At the same time, there is no excess of resources, complexity in structure, procedures, tools, or resources. As a result, project speed, efficiency, and effectiveness are maximized. In situations where there is minimal unity between the project team, the project office organization, the host organization, and the external environment, various performance anomalies often develop. The team approach might be adopted in situations where individuals could do just as well, project groups may feel they are unsupported and begin acting as autonomous units, project teams may feel isolated from the organization or even distance themselves from organizational activities, barriers may be encountered by the project team that constrain goal achievement or resources may not be available to perform the project successfully. Even if the project team, project office organization, and host organization work in harmony, an unfavorable market, aggressive competition, restrictive laws, and changing technology could have an adverse impact on the project outcome. The need for unity between critical performance components often necessitates give and take and compromise. In all cases, the project groups are required to make a positive and clearly identifiable contribution to the organization’s bottom line and strategy. Inversely, the company may set aside short-term profitability to make an investment in a project whose benefits will not be felt for years.

Standard:

Project goal achievement probability is maximized when the project manager, project office organization, host organization, and external environmental components work in unity to achieve common objectives.

References: Forrester and Drexler, 1999; Campion, Papper, and Medesker, 1996; Banner and Gagnle, 1995; Mohrman, Cohen, and Mohrman, 1995; Shonk, 1992; Hackman, 1990.

4

1.1.1.

Chapter 1

The Superior Project Manager

Standard:

Stakeholders recognize the superior project manager as the single most important factor impacting project goal achievement.

A superior project manager is the most important component influencing the probability of project success. This is true in virtually all project environments surveyed, studies researched, and historical literature reviewed. The leader is responsible for the project’s entire operations. Team outcomes, both strategies and effectiveness, are viewed as reflections of the values and cognitive base of the team leader. The project manager leads the team in assuming project ownership, responsibility, and accountability. The superior project manager has the ability to overcome nearly any controllable obstacle, and research indicates that the dominant events related to project success are, in fact, generally in the controllable category. The project manager also is the key factor in recognizing and mitigating the impact of uncontrollable events. The project office organization might be nonexistent, the host organization could be weak, and adverse conditions might be encountered in the external environment. Nevertheless, the superior project manager will minimize these obstacles and work to achieve project goals. Thousands of years of literature attest to the importance of the team leader and the leader’s impact on success related to that of the organization and environment. As early as 500 BCD, Sun Tzu summarized the importance of the team leader with his statement: The value of a whole army—a mighty host of a million men—is dependent on one man alone—the leader. The consensus of the literature since then agrees that the leader is a major determinant of the organization’s capability to achieve goals. The manner in which the project is governed largely determines the success of the project team in achieving the goals. The manifestation of this theory is often observed when a project is in trouble. A responsive action taken by many organizations is to install a superior project manager. Some companies often have special names for these individuals such as a ‘‘smoke jumpers.’’ Several studies have quantified the impact of leadership on teams and organizations. Lieberson and O’Connor’s analysis of leadership changes in 167 companies over a 19-year period showed that


5

leadership changes could influence as much as 47% of the goal’s total variance (as measured by profit margin). The study of Wiener and Mahoney indicates that leadership stewardship accounts for 44% of the unexplained variability in goal achievement (i.e., profits). The direct effects of leadership behavior account for a total of 34% of the variance in unit performance affirmed Avolio and Howell in 1994. Numerous researchers conclude that the project leader is the pivotal figure in the determination of project success. The research of Clark and Fujimoto concludes that the superior project manager commands greater respect, attracts better team members, and keeps the group focused and motivated. The project leader serves as the link pin between the project team and stakeholders. The superior project leader is the key element in lobbying for resources and working within complex political and cultural environments. They protect the group from outside interference. The superior project manager commands greater respect from stakeholders, attracts better members to the team and keeps the group focused and motivated. Krech and Crutchfield observe that by virtue of his or her special position in the group, the leader serves as the primary agent for the determination of group structure, group atmosphere, group goals, group ideology, and group activities. The leader is always the nucleus of a team’s ability to perform and the focus of group change, activity, and process. About 500 years ago, Machiavelli analyzed leadership by studying the attributes of Italian political figures. He said: I judge that it might be true that fortune is the arbiter of half our actions, but also that she leaves the other half, or close to it, for us to govern. Machiavelli (ca. 1520) The Prince

Machiavelli’s statement of 500 years ago is a timely reminder that although the leader is an important element, a large portion of project success is a reflection of factors outside the control of the project manager. A project that is doomed to failure will still be doomed to failure no matter what quality its leader. The same research that emphasizes the importance of the project manager also can be interpreted to show that approximately 53 to 65% of the factors impacting project success are outside the sphere of control of the project manager. Examples of factors beyond the control of the project manager are market conditions, competition, government edicts, laws and regulations, and even political events within the organization. Research conclu-

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Chapter 1

sions also caution that being in the central leadership position within the group is not assurance that the leadership is competent. References: Forrester and Drexler, 1999; Brown and Eisenhardt, 1995; Clark and Fujimoto, 1991; Hise and McDaniel, 1988; Hambrick and Mason, 1984; Cooper and Kleinschmidt, 1987; Bass, 1982; Krech and Crutchfield, 1948.

1.1.2.

The Project Office Organization

The project office organization integrates the work of the project groups and provides coherency between the project teams, the host organization, and the external environment. It has primary responsibility to ensure that corporate strategy is attained at the tactical or project level. Most project office organizations are also charged with increasing the probability of project success by providing support to the project manager. The project office organization ensures that the project teams are provided tools and resources. Compensation and reward systems, performance measurement and appraisal, training, and mentoring nurture professionalism. The project office organization strives to ensure that the application of organizational policies supports project success. The structure of the project office organization is important. Superior organizations tend to utilize the simplest structures needed to achieve effectively and efficiently the organization’s goals. Although the specific project office organizational structure varies between organizations, its arrangement generally falls into one or more of the following categories: the project manager center of excellence, project support office, program management office, and project office. 1.1.2.1. Project Management Center of Excellence The center of excellence is generally a high-level group within a large functional organization. It serves as an advocate for project management and communicates project management benefits to senior management and other functional areas. The group develops strategy for the project group and ensures that project strategy and tactics are compatible with that of the host organization. The center of excellence strives to build project management professionalism and generates and provides tools and methodologies to the project teams. 1.1.2.2. The Project Support Office The project support office supports projects, although it does not directly manage the projects themselves. It gives administrative support such as document management and financial monitoring. It develops,


7

provides, and assists with the application of tools, methodologies, and templates. 1.1.2.3. The Program Management Office The group manages project portfolios and groups of projects. It often participates in the selection of projects and helps optimize portfolios to achieve host organization objectives. It manages and administers project managers and assesses project performance. 1.1.2.4. The Project Office The Project Office. This team manages a single large project. It is typically found where there is a full-time project group working on a large, multifunctional project. 1.1.3.

The Host Organization

Project goal achievement is impacted by the host organization (e.g., the company or government agency in which the project group resides). The most consistently successful project teams tend to reside in organizations that are supportive of project teams. Higher project success can be predicted if the project and project organization receives senior level support, if adequate resources are provided, if the host organization is financially strong, if it is oligopolistic with few competitors, and if the project group is assigned a superior product or service to develop. The host organization provides policies, strategies, and a philosophy of management and behavior to the project organization and teams. The superior host organization structures the project organization for project efficiency and effectiveness. 1.1.4.

The External Environment

Many remote forces outside the influence of the project team, the project office organization, and the host organization impact project success. A strong economy and market give support to all the organization’s activities, as does a favorable social and political environment. A weak competitive arena combined with few external technological threats has a positive impact on project goal achievement. All of these forces shape the external environment and can dramatically improve or seriously hinder the ability of the project team to attain its goals. The external environment heavily influences projects conducted in foreign environments. Cultural values and mores impact acceptance of team personnel and relationships between stakeholders. The political environment will determine the government’s attitude, approach, and acceptance of the project. Varying approaches to human

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Chapter 1

resource management will impact availability, quality, and relationships with labor. Different financial systems and markets including different accounting and taxation regulations affect all elements of the project involving cash flow and funding. The legal system will define the contractual relationships between the parties and attitudes toward personal and property rights. General topography, working environment, and logistics influence the mechanics of executing the project. All these factors could easily result in the external environment representing the dominant element impacting the probability of project success. 1.2. PROJECT MANAGEMENT CORE SUCCESS FACTORS A review of the research literature indicates that there are several core factors and competencies that have the highest impact on the probability of project success as well as the most influence on project productivity and efficiency. An organization could maximize its probability of consistently attaining project goals by immediately implementing these competencies and developing strategies to optimize the impact of the associated factors. The core factors and competencies are discussed below. 1.2.1.

Professional Project Manager

The project manager has direct influence over 34 to 47% of project success according to various studies. An organization can maximize its probability of consistently attaining project goals by recruiting, developing, nurturing, and retaining superior project managers. 1.2.2.

Multifunctional Teams

Many of the phenomenal increases in revenue and reductions in cost associated with projects are the result of utilizing multi functional project teams. By definition, the teams consist of representatives from each functional area (i.e., engineering, marketing, production, finance, and accounting) that are impacted by the project. The primary output of multifunctional teams is increased speed compared to performing projects in a sequential manner. 1.2.3.

Senior Level Support

The support of senior manager translates to project success. Resources are provided and organizational cooperation is increased.


1.2.4.

9

Competitive Product or Service

A key to project success is selection of a competitive product or service. Even the best managed project teams are burdened if they are working on a product or service that is deficient or noncompetitive. 1.2.5.

Strong Economic Demand

A strong economy and market demand for the project’s product or service represents demand and positive acceptance. 1.2.6.

Structured Project Approach

Use of an analytical, structured, broad, and flexible methodology results in a predictable approach and project outcomes. The methodology should be the least complex that is appropriate to attain efficiently and effectively the project goals. 1.3. MEASUREMENT OF COMPETENCIES AND BEST PRACTICES To be accepted as valid, standards and best practices should be observable and measurable. The measurement aspect of the equation is accomplished by questionnaires and subjective evaluations. The competency wheel is a tool that graphically displays the numerical results and visually depicts the potential for project goal achievement (Figure 1.2). In Figure 1.3, the specific rankings correspond roughly to the results of historical research that quantifies the importance of each category. Also shown is a dotted ‘‘baseline’’ showing the average ranking for the superior project organizations as defined by the Top 500 Project Management Benchmarking Forum questionnaire results. The spokes of the competency wheel represent each of the broad areas impacting project success: the project manager, project organization office, the host organization, and the external environment. The competency wheel approach is flexible and adaptable to different situations. Users can change the relative values of each competency to reflect a particular project group, company, organization, or global culture and location. The competency wheel can be used in several different manners. Probably the easiest is subjectively to compare one’s organization in each of the categories with the rankings of superior project organizations. For those desiring additional detail or wishing to rate themselves as project managers, self-rating questionnaires and more de-

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Chapter 1

FIGURE 1.2

tailed competency wheels are supplied at the end of each section in this book. In the companion volume, The Superior Project Organization, detailed organizational rating forms are provided. The total values of each of the sub wheels roll up to equal the overall project success competency wheel. As examples of the detailed competency wheels, Figures 1.2, 1.3, and 1.4 show competency wheels for the project office organization and the host organization. One can use the wheels to evaluate subjectively themselves or their organizations in the same manner as for the overall project success wheel. In addition, individual evaluation questionnaires located throughout the text can be completed to determine a detailed numerical individual or organizational rating for each element of the wheel. The advantage of the competency wheels is that they are visual and provide a quantitative and comparative format. They define how


11

FIGURE 1.3

an individual or organization conforms to a predetermined benchmark or measurement standard. The competency wheels also graphically display the relative emphasis placed on each action. If several project managers, groups of project managers, or organizations are plotted, the chart shows the difference in importance placed by each individual or group on each of the factors. The competency charts are relatively easy to develop, use, and interpret. Competency wheels are a systematic way of telling whether a test result falls within specified boundaries. They can be used to monitor changes in individuals or organizations, to track the results of corrective or training actions, and to compare managers or organizations in dissimilar work environments or time periods. They are

12

Chapter 1

FIGURE 1.4

suitable for statistical identification of variances as well as subjective evaluations. Significant variances from the baseline ‘‘norm’’ can be highlighted or flagged. This ensures that variances are graphically obvious to observers and users of the data. The competency wheels have many applications. They can measure the results of project manager and organizational changes and training. For example, there is a well-based body of knowledge that infers that future success as a leader can be predicted based upon existing competencies; further, that the methodology, or actions, traits, and skills that result in goal achievement can be learned and taught. Plotting the results of the questionnaires provide managers guidance in modifying and supplementing their actions to improve organizational goal achievement. The wheels serve as a common basis of measurement for different time periods, applications, and loca-


13

tions. For self-evaluation, aspiring leaders can visually compare their personal ratings with those of proven superior performers. The research concludes that it is possible to develop a normative profile of goal achievement generating leaders that could be used for selecting, training, and developing promising candidates for higher level executive positions. The resultant information could be used by search firms and personnel departments in defining characteristics desirable in candidates for leadership roles. Consequently, the future impact on organizational goal achievement resulting from hiring project managers with goal achievement–related best practices and competencies could probably be predicted with reasonable accuracy. The identifiable and measurable nature of the actions and traits indicates that individuals can be selected for the leader position based on their possession of leadership and goal achievement skills. References: Moretti et al., 1991; Hornaday and Aboud, 1971; Likert, 1961.

2 The Project Manager: Global Competency Standards

2.1. AN OVERVIEW OF SUPERIOR PROJECT MANAGER COMPETENCY STANDARDS Three broad competency groupings compose the superior project manager. They are (a) character, traits and background, (b) professionalism consisting of leadership and management skills; and (c) project-specific skills comprising of the application of structured methodologies and procedures. Figure 2.1 presents a portrait of the superior project manager and associated validated competencies that are supported by empirical research. 2.1.1.

Character, Background, and Traits

Character anchors the superior project manager. Of all the factors that describe character, the most important that correlates with goal achievement is truthfulness (honesty). Truthfulness is essential to leadership competence. It serves as the foundation upon which goalachieving behavior is based and trusting relationships are formed. Honesty is so important that it compensates for a lack of leadership 15

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FIGURE 2.1

expertise in other areas. As the father of modern management, Henri Fayol stated in his 1916 book, General and Industrial Management, ‘‘The slightest moral flaw on the part of a higher manager can lead to the most serious consequences.’’ Background impacting project goal achievement is education in the form of a college degree and/or PMP (Project Management Professional) certification. At least 2.5 year’s experience managing and leading teams is also a key factor in successful management of projects and leading groups. Other traits of less importance are ambition and a desire to lead,

The Project Manager: Global Competency Standards

17

FIGURE 2.2

a service attitude or gaining satisfaction from helping others, above average intelligence, self-confidence and faith in a positive outcome, and emotional stability. 2.1.2.

Leadership and Management Skills

After the foundation of character, background, and traits is set, the superior project manager is surrounded with an ambiance of professionalism. Professionalism is exhibited through application of the skills related to leading and managing groups of people. A moderately high degree of competence in the project’s technical field is also a factor. An overarching skill is the ability to interact with and motivate people.

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Chapter 2

The probability of project goal achievement is significantly increased when the project manager paints a vision, maintains constant focus on goals, and ties the project’s strategy to that of the host organization. The most successful project managers critically analyze alternatives and opportunities. They seek the right answer rather than building support for a preconceived idea. They scan the environment and are aware of environmental events, threats, and opportunities. They optimize all channels of information. 2.1.3.

Project Skills

Those who master all the skills of war win; those who do not, are defeated. Sun Tzu (ca. 400 BC ) The Art of War

Sun Tzu recognized over 2400 years ago that even with the correct character, background, and professional skills, the superior leader must be proficient at the technology of their field. In the world of project management, the superior project manager displays a high degree of expertise in the application of structured project goal achievement methodologies and procedures. The methodology is broad based and flexible and the most simple that is appropriate for the project being managed. The superior project manager thoroughly understands how the methodology of project selection, planning, implementation, and termination are applied effectively and efficiently to a variety of projects in diverse global and cultural environments. He or she fully comprehends how the application of character and professional leadership and management skills optimize team performance during each project phase. 2.2. PROJECT MANAGER CORE COMPETENCIES The best practice project manager has four core characteristics that are mandatory to the consistent attainment of project goals. The trait of honesty provides the foundation on which goal-achieving behavior is based. Honesty is such an important trait that it compensates for other shortcomings. The most successful project manager maintains constant focus on project goals. There is a high degree of competency in the skills of leading and managing projects. The superior project manager critically analyzes alternatives and opportunities and searches for the correct answer rather than relying upon personal opinion.

The Project Manager: Global Competency Standards

19

Project Manager Core Competencies Mandatory to Maximize Project Goal Achievement • • •

•

Honesty. Best practice project managers are truthful in all dealings and relationships. Goal Focus. The best practice project manager maintains constant focus on the project goal. Professionalism. The best practice project manager applies leadership and project management best practices. Analytical. Best practice project managers critically analyze alternatives and opportunities. They search for the right answer.

2.3. MEASUREMENT OF PROJECT MANAGER COMPETENCIES The project manager competency wheel is a subcomponent of the overall project goal-achievement competency wheel introduced in the previous chapter. It is used to quantify, compare, and contrast individuals or groups of project managers. As displayed in Figure 2.2, the greatest weighting is given to character, background, and traits at 20 points. Professionalism and the application of project skills are rated somewhat less at 15 points each. Note that these weights can be changed to reflect specific global, cultural, project, or environmental factors. Individuals can rank themselves subjectively on the wheel or can answer the questions associated with each general area of competency discussed in the chapters that follow.

3 Standards for Project Manager Character, Background, and Traits

3.1. CHARACTER AND TRUTHFULNESS Character refers to the attributes that distinguish an individual. As used in competency research, character pertains to the application of ethical values, overall moral excellence, and firmness in conviction regarding those values. Character is the complex of main and essential ethical qualities that serve to distinguish one person from others. Of all the myriad factors that are elements of character, the most dominant, easy to measure, and clearly observable is truthfulness.

Standard:

The best practice project manager is truthful in all dealings and relationships.

The application of truthfulness and honesty has a direct impact on project success and efficiency, because truthful organizations, teams, 21

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Why Truthful People and Companies Make More Money • • •

Sales are increased. Costs are lower. General efficiency improvement benefits.

and individuals are consistently more successful at achieving goals than the unethical. Honesty is essential to project leadership competence. It is such an important factor that it compensates for other major project leadership shortcomings. When interviewing team members, one hears statements such as, ‘‘My project manager has shortcomings, but I am always given an honest answer! I admire that!’’ Truthfulness and trust are ancient competencies. They have been written about and validated through usage for at least 3400 years. The Bible mentions truthfulness and trust as a mandatory competency dozens of times. Sun Tzu, the Chinese general of approximately 400 BC, states in his book, The Art of War, that truthfulness, trust, and moral values are fundamental components to military (i.e., project) leadership. About trust, he said, ‘‘When orders are consistently trustworthy and observed, the relationship of a commander with his troops is satisfactory.’’ And about the value of morality, Sun Tzu stated, ‘‘The consummate leader cultivates the moral law and strictly adheres to method and discipline; thus it is in his power to control success.’’ 3.1.1.

Definition of Honesty and Truthfulness

Honesty and truthfulness refer to keeping one’s word and to being nondeceitful. Truthfulness is used synonymously with the concept of firmness as well as to stand fast. The opposite of the truth and keeping one’s word is the lie. The opposite of trust is distrust. There is nothing in between. The scientific view of trust and distrust is that they are mutually exclusive and opposite conditions. Trust is viewed as good and distrust and lies as bad. Although a few scientists are proposing new relationships such as ‘‘situational’’ honesty, the traditional remains the prevailing view. 3.1.2.

Truth Is a Core Competency

Modern business scientists and ancient sources of world wisdom agree that truthfulness is a core competency essential to leadership

Standards for Project Manager

23

goal achievement. On a broader scale, Lewicki’s 1998 research established that truthfulness and its associated outcome trust are mandatory for the maintenance of social and organizational order. The Toney study of Nasdaq chief executive officers shows that the single factor with the highest correlation to company profitability is truthfulness. Kouzes and Posner’s 1993 survey of 15,000 people finds that credibility is the single most important attribute of leaders. Honesty is judged so important by the Academy of Management that the entire July, 1998, issue of the research journal The Academy of Management Review is devoted to the topics of truthfulness and trust. 3.1.3.

Truth and Project Leadership

Project leaders in particular should be truthful. Truthfulness is closely linked to superior project and team leadership. Kirkpatrick and Lockes’ study concludes that honesty forms the foundation of trusting relationships between leaders, peers, and followers. Effective leaders are credible with excellent reputations and high levels of integrity states leadership researcher Bass in 1990. Project managers are role models and have considerable impact on building trust throughout the project team. Whitener’s 1998 research proposes that since they provide the foundation, it is the project manager’s responsibility to initiate the trusting process. The process of trust is started when one individual voluntarily provides a benefit to another. The gift or conveyance of trust obligates the receiving party and generates reciprocation. The favorable exchange of benefits gradually expands over time. 3.1.4.

A Caveat

It is generally considered acceptable to select carefully one’s words. The truth can be diplomatically stated in a kind and considerate fashion. Truthfulness should not be used as a tool to hurt others.

Why Truthful People and Companies Make More Money • • • •

Sales are increased. Costs are lower. Risk is reduced. General efficiency improvement benefits.

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3.1.5.

Chapter 3

Benefits of Truthfulness and Trust

The results of trust can be measured in the form of increased sales and reduced costs as well as reduced risk and a myriad of general organizational and personal benefits. 3.1.5.1. More Sales: People Buy from Those They Trust Project teams with the reputation for honesty have a natural advantage in the sales arena. The old adage applies: ‘‘People like to buy from people they trust.’’ Confidence is greater that the project team and any associated products or services will perform as represented. After the project agreement is reached or the project-related product or service is purchased, there is increased assurance that performance will be as characterized. When problems arise, there is more conviction they will be resolved and the product or service will be supported. Speed to market is also increased. According to the research of Lewicki, trust improves organizational sales and marketing efficiency. A high level of trust can be translated into faster performance. When applied to new product development and other projects, increased speed to market means more sales, higher profits for the first market entrants, and improved market share. When there is evidence of lying, loss of business and severed business relationships is the predictable result. Many individuals and organizations are reluctant to deal with individuals and teams that have a reputation for dishonesty. Lying is insidious in that the person who lies or the project team with a reputation for dishonesty rarely sees an immediate negative impact. Usually, when others know the person is lying or the group is dishonest, there is no feedback given. They simply avoid the liar and dishonest group.

Increased Sales Through Truthfulness and Trust •

•

People buy from people they like and admire. • There is confidence the product will perform as advertised. • There is confidence the product or service will be supported. Speed to market is increased.


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3.1.5.2. Lower Costs and Better Efficiency Truthful project teams record a myriad of advantages in the area of lower costs and greater efficiency. 3.1.5.2.1. Increases Team Output and Efficiency. Controlled tests of small groups conclude that project teams composed of members who have a high degree of trust are more efficient and achieve greater output. The trustful groups spend more time on productive activities and less time on paperwork, writing agreements, and building control mechanisms. When events occur that insinuate someone might have done something questionable, the truthful group assumes a positive yet time-efficient stance; i.e., that the person did not intend to do a wrongful act. Rousseau’s 1998 data supports that trust is an important element for giving team members the faith to self-organize. Helpfulness, cooperation, and a feeling of responsibility for the group are descriptors of cohesive team relationships. Truth and trust foster the subjugation of personal needs and ego for the greater common good. Truthfulness makes complex strategic alliances possible. Success is rarely a reflection of the contract that defines the terms of the joint effort, since it is impossible to monitor and provide controls for every detail. Successful alliances are characterized as honest relationships with commitment from all partners, and confidence that each partner will perform as represented. 3.1.5.2.2. Behavioral Consistency and Predictability. Consistent behavior over time and in various events gives team members the ability to predict courses of action that are consistent with leadership strategy and philosophy. Team members become more willing to accept the risk of taking action without specific guidance from project leadership. 3.1.5.2.3. Reduced Need for Control Mechanisms. Multiple studies show that trust is a substitute for control mechanisms. Control mechanisms are created when adequate trust does not exist. They are expensive and time consuming to develop, monitor, and enforce. Note that control procedures and tools do promote cooperation where limited or conditional trust exists. In distrust, the individuals begin establishing rules of behavior and establishing control devices. Various legal, personal, and institutional mechanisms are used to control mistrust, such as: •

Contracts. Contracts become more lengthy, detailed, restrictive, and specific as distrust increases.

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Reduced Costs and Improved Efficiency Through Truthfulness and Trust • •

• • • • • • • • • •

• •

•

•

• • •

Increased team output and efficiency. Behavior is consistent and predictable. Codes of Ethics give people guidelines for behavior. They make the organization more efficient and reduce the amount of supervision required. Employees don’t have to ask, ‘‘What should I do?’’ so much. Minimizes the need for control mechanisms. Increases communications accuracy and openness. Improves flexibility. Trust is self-curing or self-healing. Encourages help-seeking behavior. Ensures fairness. Improves confidentiality. Encourages empowerment and delegation of authority and control. Reduces legal fees. Being truthful and trusting is the easiest and most efficient approach. It is not necessary constantly to start from scratch. It makes life simpler. Being ethical makes it easier to stay out of trouble.

Auditors. Distrust results in more auditors, quality control inspectors, and sanctions for infractions. Due Diligence Investigations. Background research, credit reports, formal planning, monitoring, and reporting guidelines all reflect the degree of trust. Deterrents and structural safeguards. These include costly reporting and checking devices, written notices of departure from contracts and agreement, audits, cost control, quality control, arbitration clauses, and lawsuit provisions. Regulations. These define the expectations for behavior. They also add cost to the organization. They take the form of laws, standards by professional bodies, and contractual constraints and guidelines. Guarantees and warranties. These protect against the failure to perform. Information Restrictions. Access to confidential information might be limited. Threat of Disclosure. If an individual or organization


27

cheats on a credit application, they face the risk of disclosure. Future credit ratings will be negatively impacted. 3.1.5.2.4. Increases Communications Accuracy and Openness. Truthfulness and trust make possible the free exchange of knowledge and information. Trust is necessary before sensitive materials and information can be divulged to others. Knowledge is a source of power. Turning it over to others increases the risk that it could be misused. Employees perceive managers as truthful persons who take the time to explain decisions and answer sensitive and embarrassing questions in a forthright manner. 3.1.5.2.5. Improves Flexibility. With trust there is faster response and more flexibility to adjust to new situations not covered in the original contract. Trust is manifested by flexibility. Incomplete contracts or phased contracts are made possible only when there is a high degree of trust. Many information systems projects are based on technology that is changing as the project unfolds and the customer desires the new technology. Some projects are being bid in phases. Trust ensures that neither party will be taken advantage of as the scope of the project unfolds and changes. 3.1.5.2.6. Trust Is Self-Curing or Self-Healing. Trusting relationships require constant monitoring, quick correction of inaccuracies, and repair of trust as tensions arise. Trusting individuals promote interdependence and cooperation. McKnight’s 1998 studies disclose that in trusting relationships, evidence that appears to contradict the trust is viewed as suspect, denied, or considered as being unimportant. As a result, participants do not waste time attempting to determine motives. 3.1.5.2.7. Encourages Help-Seeking Behavior. There are often constraints that discourage individuals from seeking help from their colleagues. There could be a fear that others would think them inadequate or unqualified for the job. 3.1.5.2.8. Ensures Fairness. Trust assumes fairness and equity with each party being confident they will be rewarded in relation to the amount contributed. 3.1.5.2.9. Fosters Confidentiality. Truthfulness assures people that their interests will be protected as well as promoted, they can feel confident about divulging negative personal information, they are assured a frank and full sharing of information, and they are willing to overlook and understand apparent breaches of the trust relationship.

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3.1.5.2.10. Encourages Empowerment and Delegation of Authority and Control. A key outcome of truthfulness and trust is the willingness to give subordinates authority and control. Empowerment and delegation reduce costs by having decisions made at the lowest and most economical level. Trusting is also directly related to the capability to manage larger spans of employee control. Funds expended on supervision are reduced. 3.1.5.2.11. Reduces Legal Fees. One of the most visible measures of truthfulness and ethics is the amount of funds expended on legal fees. Those who are distrustful spend more on litigation and defending accusations. Other penalties directly attached to lying may be legal and court imposed. The failure to keep a commitment may involve sanctions, including paying the costs of noncompliance. 3.1.5.2.12. Being Truthful and Trusting Is the Easiest Approach. Investigation by Gareth and George supports the conclusion that in new relationships, trust is the easiest, most efficient, and effective option. To determine if the other party is not worthy of trust requires considerable effort and time. Even so, initially the trust is typically conditional and controls are usually in place. Trust is extended as long as the other party behaves appropriately, reciprocates the trust, and conforms to the controls. 3.1.5.3. Trust Reduces Project Risk Projects are conducted in an environment of uncertainty. Bhattacharya, in his 1998 empirical studies, concludes that trust reduces risk by increasing the predictability or expectancy of the behavior of individuals and teams. As a result, trust augments the willingness of the participants in the project to take short- and long-term risks. Since trust is directly related to risk and the reduction of risk, the project goal achievement aspects of trusting and truthfulness are solidly linked to the fundamental objective of maximizing project performance while minimizing risk. 3.1.5.3.1. Dependency and Vulnerability Related to Risk. Trust involves placing one’s own and the project team’s fate, dependence, or vulnerability in the hands of another according to the 1998 research results of Sheppard and Sherman. Trust is a particularly relevant factor to project goal achievement any time there is potential for one or more of the participants or stakeholders to lie, exit, betray, or defect. There is never a guarantee that the trust given by the first party will be reciprocated. Risk is reduced, because the trustful team member or project manager will perform as they have represented.


29

As a result, action is taken based upon the representations of the other party. 3.1.5.3.2. Trust Creates More Trust and Reduces Risk. Initially, the parties involved tend to take small risks and limit their commitment. As positive experience accumulates, it serves as justification for increased risk taking and investment in the association. Each step along the way is measured by increasing amounts of trust. 3.1.5.3.3. Risk Is Reduced Over Time. Doney’s 1998 research shows that the trust/risk relationship is reciprocal and builds upon itself. When the trustee knows that the trustor is taking risk based upon truthfulness, there is a tendency to continue to behave in a truthful manner. The reciprocal nature of the relationship is a key element in building and strengthening the relationship. The risk element is mandatory, because truthfulness is demonstrated only when the other party takes action based upon the truth. Trust emerges as the parties determine that past actions provide a foundation upon which to predict positive future performance. Trust building ideally includes information about the individual’s past actions. Sources come from experience, word-of-mouth, or reputation. 3.1.5.4. General Efficiency-Improving Benefits 3.1.5.4.1. Serves as Evidence of Other Values. Truthfulness serves as evidence of a broader value set in the truthful person. The participants assume that truthfulness is the cornerstone in a foundation of other solid ethical competencies and best practices. Truthfulness tends to maintain an ethical focus on the part of the truthful individual. Inversely, lies blur ethical focus. Teams that suffer from dishonesty tend to exhibit greater amounts of goal incongruence, negative internal politics, shifting coalitions, and conflicts conclude Elangovan and Shapiro.

General Benefits Resulting from Truthfulness and Trust • • •

Serves as evidence and other ethical values. Prospective employees are attracted to ethical individuals and companies. The value of truthfulness is geometrical: trust creates more trust and stronger relationships.

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3.1.5.4.2. Higher Quality Team Members. People prefer to work with project managers and project team members that they admire and trust. Consequently, the pool of prospective team members is larger and the quality is greater. 3.1.5.4.3. The Value of Truthfulness Is Geometrical. The experience of the truthful individual with others has a multiplier effect with the result that the person gradually acquires an expanding reputation for honesty, documents McKnight in his research. Testimonials and word-of-mouth certify as ‘‘proof sources’’ that the person can be trusted. The parties remember the behavior, accumulate it over time, and communicate the experience with others. Reputation has high value when isolated negative events occur. Lies too are geometrical. However, lies have disastrous consequences, because each lie requires additional lies to support it. Eventually, the weight of the untruths and the support needed to sustain their logic becomes overwhelming and collapse occurs. 3.1.5.4.4. Reduces Stress and Anxiety. A high degree of trust results in less individual and organizational anxiety and stress according to investigator Bhattacharya. Working conditions are improved, morale is higher, and medical expenses are reduced. 3.1.5.4.5. The Truth Builds Stronger Relationships. Trusting relationships with other people, the project team, and organizations are more solid—they tend to endure longer concludes the 1998 research of Sheppard and Sherman. As truthful experiences multiply, the relationship between the parties becomes increasingly interdependent and more tightly bonded together. The relationship between the trustor and the trustee is an important factor in influencing the potential for lying. It is important to note that people are in a position to betray only because they have established themselves as trustworthy. When trust is betrayed, the result is a strong set of negative emotional responses, as detailed researchers Gareth and George in their 1998 work. 3.1.5.5. Other Benefits Many benefits of trust are personal. Trust affects one’s reputation, and perception of an individual’s degree of trustfulness can have a powerful effect on their career. Other benefits are noneconomic in value. Examples are friendship, support, and social approval. Trust is built on expectations, which are partially emotional. 3.1.6.

Dangers of Being Too Trustful

The most efficient way to initiate a relationship is to be trustful. The position of role model encourages a trusting stance, since the role


31

model is typically the initiator and definer of the trust relationship. Even so, lofty and idealistic commitment to truth does not mean that a person should be naive about the trustfulness of others! The warning arises because truthful people tend to have a predisposition to be more trusting—even when not justified by the facts at hand. In laboratory tests, trusting individuals passed money to others without any assurance that the generosity would be reciprocated or secured. Their trust was a reflection of a broader faith in humanity and belief that people are generally well meaning and reliable. Such individuals typically justify taking a trusting stance by professing that they will obtain better interpersonal outcomes by accepting people as truthful—even though there is a clear risk that this is not always the case. McKnight labels such trust as ‘‘cognitionbased,’’ because it relies on rapid, perceptual clues or first impressions as compared to trust that builds over time as a result of personal experience. Since trust in the project management world can be evaluated in the framework of risk analysis, the question arises about the degree of probability that the people we are dealing with are honest. Overall, the research indicates that about 4 of 10 people will steal under the right set of circumstances. Two major studies have addressed betrayal in the work place. The respondents to the study indicated that approximately 25% of men and 10% of women felt that their boss or coworkers had betrayed them. Most people consider betrayal a significant breach of a trust relationship. Many of the subjects remembered incidents that had occurred over 20 years ago. 3.1.7.

Dishonesty and Unethical Behavior on Projects

Lying rapidly shifts a trusting relationship to one of distrust. The research of Elangovan and Shapiro in 1998 recognizes that a great danger to organizations is lying and betrayal by ambitious, selfish, deceitful people who care more about their own interests than those of others and the organization. Lack of trust includes the potential for cheating, or simply the neglect of the task at hand or omission of the trustor’s interests. It also carries a risk of abuse if one party has leverage over the other (i.e., might know confidential information). Rouseau’s 1998 investigation shows that an evaluation by the trustee and the trustor is made whether the costly sanctions that must be in place exceed the potential benefits from opportunistic behavior. Ingram’s research concludes that 50% of failed projects are the result of problems related to the integrity and ethics of the project leader and/or stakeholders. Examples of negative ethical behaviors Ingram observed were:

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Chapter 3 •

• • • • •

•

3.1.8.

Getting the toe in the door. Projects are approved while the proponents know full well that it will exceed the forecasted costs. The logic is to obtain approval and then worry about the cost later. Said one person interviewed by Ingram, ‘‘It’s better to do something wrong and beg forgiveness than to not do it in the first place.’’ Striving personally to benefit at the expense of the project. Taking credit for successes and passing blame to scapegoats. Empire building. Expanding budgets and personnel. Misrepresenting progress. Painting a portrait of project progress when little or no progress exists. Creating project change to avoid accountability. Creating changes in scope or allowing stakeholders to change scope without adequate controls disguises failure to meet original commitments and makes it increasingly difficult to measure cost, schedule, functionality, and quality performance. Ego feeding. Ignoring or disregarding suggestions and communications from subordinates that would improve the situation. The Motives Behind Dishonesty

Considering the massive amount of historical and current support for the positive value of truthfulness, it could be questioned how a person could justify lying as a practice. Even so there are a myriad of excuses and justifications for lying. Often those who breach a trust manage to minimize the seriousness of the event or make excuses for their behavior. Such excuses also serve as mechanisms to minimize the feelings of guilt or shame tied to the violation of trust. Lying and betrayal are thought out, conscious acts that are the outcome of a decision making process, where they are judged to be the most favorable options. The lying/betrayal option is basically a utility calculation that evaluates the potential personal gain from the betrayal as well as the potential penalty for breaking the trust. In some cases, the principles involved in the betrayal are assessed. People evaluate the perceived seriousness of the breach of principles. Most people associate lying and violations of trust with disloyalty, treachery, and unethical behavior. Consequently, the perceived seriousness of the ethical breach as well as the ability to rationalize the breach are factors highlighted by the research conclusions of Elangovan and Shapiro in 1998.


33

Self-interest is the dominating root cause of lying and betrayal. The major justifications for lying are (a) perception that no one will know, (b) it is payback for a perceived or actual past wrong, (c) commitment to a higher value, (d) it is safer or easier than telling the truth, and (e) people just do not care. 3.1.8.1. No One Will Ever Know A fundamental premise of the accounting profession is that if a $100 bill is left unwatched on a table, eventually someone will take it. The act of placing a camera over the $100 bill will greatly increase the probability that the bill will remain untouched. The conclusion is that a common reason for dishonesty is that people judge that they will not get caught. The same logic applies to lying. The project management lesson learned is to serve notice that the assets are being watched and that controls are in place. 3.1.8.2. It Is Payback One of the most difficult forms of betrayal and dishonesty to prevent is the kind perpetrated by someone who feels he or she has been wronged. This is the person who says, ‘‘I’m just paying them back.’’ In a business setting, there is an old saying, ‘‘Cheat an employee out of a dollar and they’ll get you for three!’’ Many experienced business managers profess the company will be lucky if the aggrieved employee stops at three. Basically, there are few ways to protect against a victim who feels wronged other than not to treat people unfairly in the first place. 3.1.8.3. Serving a Higher Value Statements such as, ‘‘I don’t want to hurt their feelings,’’ or ‘‘It’s necessary for the company or project’’ are examples of the Robin Hood theme. The logic is that one important value is compromised to serve a perceived loftier purpose; e.g., ‘‘It’s acceptable to rob from the rich to give to the poor.’’ Minimizing or trivializing the violation and substituting a higher value weakens the commitment to the trust relationship and makes it easier to be untruthful earlier. 3.1.8.4. It Is Safer or Easier Than Telling the Truth Violators use the simple logic that to lie is easier than telling the truth or it is necessary for self-preservation. 3.1.8.5. People Just Don’t Care The decision to be untruthful includes an assessment of such factors as (a) the balance (equity) or perceived inequity in the exchange and

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(b) the potential for continuity. If the liar perceives the relationship will be long term, the potential penalty of betraying the trust is maximized. When they feel there are others who trust them, the importance of the betrayal at hand is minimized. If they have few other friends or people who trust them, then greater value is placed on the relationship, which can serve as a deterrent to betrayal. All these reasons are excuses that trivialize the value of truthfulness. The Elangovan and Shapiro 1998 research also shows that those at higher levels of moral development (i.e., the religious) are less likely to be influenced by such external variables and to discount the importance of truthfulness and trust. 3.1.9.

Building Trust on the Project Team

3.1.9.1. Tell the Truth The fundamental best way to build trust is to implement the project manager best practice: Be truthful in all dealings and relationships. 3.1.9.2. Establish Controls As the accounting profession has known for years that one way to build trust and security is to serve notice that honesty is being monitored. Establishing controls does this. The degree of detail depends on the situation and the amount of risk involved. For example, more controls are justified when the project manager is in a legal and fiduciary role; e.g., managing the funds of others. On the other hand, those who have partnered in trustful relationships for years may have virtually no formal controls. 3.1.9.3. Structure the Organization to Encourage Trust The organization can be structured to encourage truthfulness and trust. Policies and team culture can teach and reinforce high stan-

Truth Building Best Practices • • • • • •

Be truthful in all dealings and relationships. Establish controls that encourage honesty. Structure the organization for truthfulness. Communicate. Reward trust and truthfulness. Punish dishonesty.


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dards of honesty in relationships among employees, project management, and other stakeholders. 3.1.9.4. Communicate Open and prompt communication is indispensable. The reciprocal process creates credibility, a sense of openness, and intimacy. 3.1.9.5. Reward Trust and Truthfulness Patterns of honesty should be rewarded. For example, one company has a formal evaluation process that rewards project teams who develop a track record of truthful dealings with increasingly larger project responsibility. 3.1.9.6. Punish Dishonesty The threat of sanctions and/or the disclosure of dishonesty serve as an effective deterrent conclude Hagan and Choe in 1998. For the unethical party, disclosure could prove economically devastating if stakeholder associates learn of the dishonesty. People lie when they perceive a low likelihood of suffering severe consequences. Both the likelihood and the severity of the penalty are analyzed before action is taken. Also analyzed is the possibility of being identified as the perpetrator of deceit. Elangovan and Shapiro add that expectation of forgiveness is also a factor. In cases where the chance of detection is high, there could also be a high expectation of forgiveness. Forgiveness essentially means that there will be no penalty attached to the betrayal. References: Bhattacharya et al., 1998; Doney et al., 1998; Gareth and George, 1998; Hagan and Choe, 1998; Ingram, 1998; Elangovan and Shapiro, 1998; Lewicki et al., 1998; McKnight et al., 1998; Rousseau et al., 1998; Sheppard and Sherman, 1998; Whitener et al., 1998; Kramer and Tyler, 1996; Barney and Hansen, 1994; Rogers, 1994; Kirkpatrick and Locke, 1991; Bass and Avolio, 1992.

3.2. PROJECT MANAGER BACKGROUND Although the specific make-up of a project manager’s background is not a precursor to success, it can have a significant influence on the ability to achieve goals. The most important element of the superior project manager’s background is experience with activities related to goal achievement, leadership, management, and working with teams and organizations. Superior project managers typically have college

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degrees in business or engineering and professional project training and certification. The project manager’s background effects the team’s performance and ability to achieve goals. Functional experience in the project-specific technical area, work experience, education, and experience with the project team all have a positive impact on the bottom line. Childhood background has been tied to leadership but has not yet been correlated with project goal achievement and executive leaders. What seems to have little impact on project management performance is age. 3.2.1.

Educational Background

Standard:

The best practice project manager has a minimum of a 4-year college degree.

Studies agree that a business or engineering degree is an asset. Fiftyseven percent of top-performing business leaders in Chandy’s study have business or technical undergraduate degrees. Sixty-six percent have at least one graduate degree and of these 60% were MBAs. Reference: Chandy, 1991.

Standard:

The best practice project manager is PMP (Project Management Professional) certified.

The consensus of members of the Top 500 Project Management Benchmarking Forum is that the PMP certification from the Project Management Institute is an indicator that the project manager has a foundation of knowledge needed successfully to manage projects. 3.2.2.

Project Leadership and Management Experience

The leader’s leadership and management work experience is a significant factor in determining the project activities emphasized and determining those considered important influences on project goal achievement. Empirical support can be shown for links between the


37

prior leadership and management working experience among the project team members and project success. The strong impact of previous leadership and management work experience on the project leader’s perceptions and actions suggests that project leaders can be trained to achieve a particular orientation. Choosing a particular career path can mold a young project manager into a potential successful executive leader. It is important to note that two studies have shown that the duration of the experience seems to be immaterial after approximately 2.5 years. In other words, the work performance of the individual seems to improve for the first 2.5 years on any job and then levels out. Lack of leadership experience is a definite handicap. Norburn’s research study concluded that many less successful business leaders had not run a for-profit enterprise or multifunctional project before becoming organizational leaders. References: Norburn, 1989; Govindarajan, 1989; Hise and McDaniel, 1988; Roure and Maidique, 1986.

3.2.3.

Functional Training in the Project’s Subject Area

The functional training in the project-specific subject area is positively correlated with competence and ability, although the correlation is less than that for general leader and managerial experience. Project teams that are most likely to achieve superior performance are those that match the requirements of their technology, project management, and leadership strategies with the background and expertise of their project managers. References: Chandy, 1991; Braham, 1991; Bassiry and Dekmejian, 1990; Govindarajan, 1989; Norburn, 1989; Miller, Toulouse, and Belanger, 1985; Gupta and Govindarajan, 1984; Hambrick and Mason, 1984; Hitt, Ireland, and Palia, 1982; Miller, Kets de Vries, and Toulouse, 1982; Kotter, 1982.

3.2.4.

Has Learned from Failure Standard:

The best practice project manager has experienced and learned from failure.

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Bibeault states that the phenomenal success of many superior leaders has followed on the heels of an earlier failure. It is his conclusion that the lessons learned in failure moderate the personal character and abilities of the successful leader. The process involved when a project manager faces adversity and impending failure is described as similar to tempering to remove impurities from steel. It is a violent process but the endproduct is more refined, durable, and capable of holding a sharper edge. Scientific support for these opinions is broad. Leaders consistently avow that the impact of previous personal failure as a learning tool is significant, states Toney’s 1996 studies. They suggest that the initial learning curve in the first job as project leader is steep. These failures are not reflected in most studies of leaders, because they occur in the first year or two of becoming a project leader, or early in the prior experience of currently successful leaders. The importance of failure is surprising to many. A 1994 survey of student reactions to the biographies of 25 historical leaders found that students were taken aback to discover that many great leaders had failed in the past. The learning experience for the students was to reconcile the past failures with the current high esteem held by stakeholders. The rational for evaluating project failures is that understanding one’s past deficiencies and failures is a first step in determining solutions and corrective action. The lesson learned is that the superior leader learns from errors and uses this knowledge to achieve success. In a 1990 study, Makridakis found that leaders who have not experienced major failures tend to be biased in their decision-making processes. Since they do not have a clear understanding of the factors that cause failure, they are not conditioned to recognize signs of impending disaster and to take preventative action. The 1994 research of Doyle finds that leaders in many large organizations have never experienced failure. They are the products of a promotion system that rewards winning and has little tolerance for anything else. Many are on such a fast track promotion program that their failures could hardly be detected if they did occur, because they are quickly moved to a different job. The rising stars are accelerated through a series of jobs at such a rapid pace that they never really learn any one job— nor stay long enough to see what they have accomplished. Often they refuse to recognize failure as a possibility. One organizational leader, described by his colleagues, would not allow the possibility of failure to be discussed. Team members who mentioned the possibility that a project could fail or not achieve the preordained level of success were branded as ‘‘negative’’ or nonteam players.


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One formal method for learning from failure on projects is through the lessons learned or the project journal process. Lessons learned are typically compiled during the termination phase. The key to successful use of the lessons learned and project journal format is that successive project teams must read them. Successive project groups review the lessons learned during the kickoff meetings and during the project planning process. Project journals are maintained throughout the course of the project in a similar fashion to the ship’s log on marine vessels. Many consider the project journal a more effective manner of transferring information than lessons learned, because it provides a chronological description and usually is more thorough in the presentation of details. References: Doyle, 1994; Fagan, Bromley, and Welch, 1994; Cooper, 1979; Bass, 1961.

3.2.5.

Backgrounds: Nonvalidated Competencies

3.2.5.1. Childhood The literature does not show a clear link between childhood experiences and project leadership competency, although there is evidence the two are associated. The conditioning of managerial attitudes from childhood family experience is suggested by Collins and Moore and by Hunt. 3.2.5.2. Age There is little if any correlation in any of the studies between age and project leadership proficiency.

3.3. PROJECT MANAGER TRAITS Trait is used broadly to refer to people’s general characteristics, including capacities, motives, and patterns of behavior. Findings reported by Lord, DeVader, and Alliger indicate that many personality traits are associated with leadership behavior. However, few traits are strongly correlated with leadership competence and the leader’s ability to achieve a goal. The leader traits recording positive correlation with goal achievement include self-confidence and faith in the future, ambition (a broad term that includes achievement and a desire to organize and lead groups; e.g. power) a moderate level of intellect, and emotional stability.

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The major impact of trait research on project leadership and goal achievement is the conclusion that traits primarily endow people with the potential for leadership. To be converted to success, traits must be supplemented with professionalism and project-specific skills and then applied to the achievement of project goals. References: Kirkpatrick and Locke, 1991; Bass, 1990; Lord and DeVader, 1986; Benis and Nanus, 1985; Katz and Kahn, 1978; Miner, 1978; Gordon, 1975; Bowers and Seashore, 1966.

3.3.1.

Self-Confidence and Faith in a Positive Outcome

3.3.1.1. Impact on Goal Achievement A component of the superior project manager’s approach to leadership is their degree of self-confidence as well as faith that everything eventually turns out for the best. 3.3.1.2. Definitions Self-confidence is the belief that one can do better than the facts warrant. Faith is the belief that external events generally have a positive outcome even when not justified by the facts at hand. Faith is closely linked to the concept of trust. It is the belief that external events will occur in the manner expected. 3.3.1.3. Research Support Various studies agree that self-confidence and faith in a positive future outcome translate into improved project and organizational goal achievement. 3.3.1.3.1. Research Support for Faith in a Positive Future. In the study by Toney, superior leaders rated themselves 27% higher than the lower performing group in the belief that the future will have a positive outcome.

Standard:

The best practice project manager has faith that the future will have a positive outcome even when that view is not supported by the facts.

3.3.1.3.2. Self-Confidence and Goal Achievement Research. Project leader success is related to self-confidence. Multiple research studies conclude that leaders who have confidence in their


41

ability to influence the direction of organizational events are more likely to exhibit superior leadership behaviors than leaders who believe that events are due to luck, fate or chance. Self-esteem shows a positive 0.36 correlation with successful leadership concludes the research of Bass. At the other end of the bell curve, those least confident in their abilities displayed less potential for team accomplishment recording relative success of negative 0.37. The Bass research is validated by recent investigation. The research of Toney required leaders to self-evaluate their actions and skills exhibited to achieve goals. Those leaders in the upper performance group, as measured by organizational goal achievement, consistently stated that they perform the actions listed more often than leaders in the middle 50% and lower 25%. This was true for 14 of the 21 (67%) of the factors evaluated. The same self-image was evident in the ratings of the middle 50% of project goal achievement compared to the lowest 25%. The middle 50% leaders ranked themselves as taking the leadership actions more often than the lower 25% in 15 action categories (71%). Leaders in the lowest 25% of goal achievement category indicated they performed the leadership actions less than more project goal achievement leaders in 13 of the 21 action categories (62%).

Standard:

The best practice project manager has confidence his or her personal performance will result in a positive outcome even when not supported by the facts.

3.3.1.4. Benefits of Self-Confidence and Faith in the Future Numerous benefits accrue from self-confidence and faith in a positive future outcome 3.3.1.4.1. Increased Propensity for Project Leadership. Self-esteem increases the likelihood of attempting leadership. There is a significant positive relationship of 0.42 between self-esteem and attempted leadership according to the research of Bass. 3.3.1.4.2. Enhanced Entrepreneurial Risk Taking. McClelland’s global research proposes that self-confidence and faith in a positive future are key components of entrepreneurial leadership.

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He defines an entrepreneur as the person who organizes the firm or organizational unit and increases its productive capability by taking risks. According to an axiom of finance, the greater the risk, the greater the potential return and/or loss and even failure. The entrepreneurial propensity to take risks has a positive impact on project goal achievement, net income, and even increases in personal wealth. Self-confidence and faith in a positive future outcome induce the leader to engage in ventures that less confident people would hesitate to embrace. The entrepreneurial project leader is more willing to accept accountability for project success—and failure. There is a perception among superior leaders that one’s self-confidence and faith tends to be protection against the negative impacts of failure. Consequently, the probability of long-term success is higher. 3.3.1.4.3. Improved Team Perception. The perception by team members of the degree of the leader’s self-confidence is also important. Leaders project the impression of confidence, which in turn arouses followers’ confidence. In one study by Bass, the correlation between esteem held by the most successful teams toward their leaders was twice as high as for the least successful teams. If the group combines high self-esteem with high esteem, the more successful will be the leadership. A leader’s self-esteem may also be much higher than that accorded by the group (inflated ego). In those cases, leadership attempts are more likely to be rejected. 3.3.1.4.4 Gains Trust. Self-confidence plays an important role in decision making and in gaining other’s trust. If the leader is not sure what decision to make, or expresses a high degree of doubt, then the followers are less likely to trust the leader and be committed to the vision. 3.3.1.4.5. Reduces Stress. Self-confidence and faith in the future relieve the pressure of worrying about the present. 3.3.1.4.6. Signals Stability. Self-confidence is also associated with emotional stability. References: Bass, 1961, 1990; McClelland, 1961; Kirkpatrick and Locke, 1991; Keown et al., 1996; Toney, 1996.

3.3.1.5. Self-Confidence Related to Ego and Humility 3.3.1.5.1. The Problem. There is danger in listing self-confidence as a best practice of superior project leaders. The line between self-confidence and an inflated ego can be treacherously thin. The data generated by psychologist de Vries concludes that self-confi-


43

dence and faith in a positive future outcome may be transformed into a damaging combination of egoism and self-centeredness. Engrim’s 1999 research of failed projects demonstrates how ego has caused many a project manager’s downfall and the wounding and even destruction of the team or organization they lead. A project manager with a healthy level of self-confidence believes that a positive outcome will result from his or her performance. The project manager whose self-confidence becomes excessive risks falling victim to an excessive ego. The phenomenon occurs when the project manager begins believing that their personal abilities, intellect, skills, and performance are better than others. Self-confidence and faith, when maintained in proper balance, increase the probability of project goal achievement. Excessive ego can lead to dysfunctional team performance and disastrous consequences. Note that a person can have self-confidence in their abilities, be able to convey pragmatically their skills and achievements to others, and still be humble. Ingram’s research of large failed projects disclosed that inadequacies in project leadership competency combined with a large ego lead to susceptibility to falling prey to various ego traps. Among them are, charge ahead despite a plethora of negative data; always appearing confident, never admitting a lack of knowledge or failure, never admit to lack of personal skills or competence; and spending money, hiring people, and looking busy. 3.3.1.5.2. Humility Defined. Humility is often described as giving credit to others and defined by what it is not rather than what it is. Webster’s Collegiate says that humility is the opposite of arrogance or thinking that one is better than others. It also describes being humble as being reflective, modest, and nonluxurious. 3.3.1.5.3. Humility Does Not Come Naturally. Many believe that being humble is contrary to the flow of their personalities, training, and the success they have achieved. After all, superior project managers are often ambitious, self-confident, achievement-oriented people who wield power and influence through leadership of the project. They are generally admired by the stakeholders and peers. 3.3.1.5.4. Humility Is an Unpopular Practice. In an age when business and political leaders openly brag about their achievements, humility is a rare trait. In many social groups, humbleness is an alien concept. It has not been a widely admired characteristic throughout history and it is not in modern times. Greek philosophers ridiculed humility, because to them it implied inadequacy, a lack of dignity and self-confidence, low self-image, and worthlessness. Ital-

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Benefits of Humility • • • • • •

It is a cornerstone of the servant approach to leadership. It results in more correct decisions. It is often a legal requirement in business. It encourages recognition of psychological flaws. It protects against believing gratuitous flattery. It conditions the leader for potential failure.

ian writer and diplomat Count Baldasare Castiglione observed more than 400 years ago, ‘‘As for me, I have known few men excellent in anything whatsoever who did not praise themselves.’’ There is also a common perception that a truly humble person will be handicapped in attaining upward career mobility. As anecdotal support for this judgment, one interviewee in the Toney research was involved with the hiring of senior managers for major corporations. He expressed the opinion that a person who exhibited humility probably would have little chance of being selected for a leadership position. He said most organizations are seeking leaders who emote self-confidence and articulate to the public and stakeholders the message of the company as well as the organization’s and his or her own achievements. 3.3.1.5.5. Benefits of Humility as a Practice. Despite this rather negative introduction, humility offers many measurable and empirically supported benefits to projects and modern day organizational life. Humility Is a Cornerstone of the Servant Approach to Leadership. Worthy established that leaders who have a philosophy of ‘‘serving’’ their subordinates and associates consistently attained superior team performance results. Subsequent research has confirmed his conclusions and defined the specific benefits of servant leadership. Spans of management control are broader and hence more cost effective. Authority is delegated to the lowest and most efficient level where a particular decision can be made. Quality of employees and associated output tends to be higher. Amounts spent on subordinate training are greater resulting in improved performance and profitability. Mistakes made by subordinates are recognized as learning tools rather than punished, and hence employees are more willing to shoulder responsibility and take risks. Overall leadership focus is on people rather than organizations and systems.


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A precondition of successful servant leadership is the humilitybased belief that others will do as well or even better than the leader. Kets de Vries, clinical psychologist, psychoanalyst and researcher, has studied the psychological make-up of many organizational leaders. His research concludes that a sense of humility keeps the leader focused on others, the team, and the organization. De Vries says the egotistical leader emphasizes self-promoting activities and financial rewards within a team or organization. Such individuals become fixated on achievements, power, status, prestige, and personal gains. They do not seriously look for larger meaning in their lives. It Results in More Correct Decisions. Superior project and organizational performance results from seeking the right answer to questions rather than building support for preconceived opinions. The probability of finding the right answer is maximized by utilizing a pragmatic decision-making process that emphasizes external information. Specifically, the views and experiences of others are held in higher regard than those of oneself. The process in its most highly disciplined form is titled ‘‘the scientific approach to business.’’ It was conceptualized and made popular by Frederick Taylor in his 1911 book, The Principles of Scientific Management. Of all modern disciplines, the scientific approach most represents a model of the humble approach to problem solving and alternative selection. The scientific approach is based on the presumption that humans are flawed and biased in the way they make decisions. Consequently, the opinion of the researcher is discounted through the process of a formal methodology. The input of large samples of others and the resultant quantitative data are relied upon as the primary source of decision-making information. The second element of the scientific approach to business is to eliminate the bias of the researcher by utilizing mathematics (statistical and accounting techniques) to represent the subject being studied. Mathematics allows the data to be repeated and confirmed by other researchers, and enables one set of data to be compared with others. Finally, all the scientific data and conclusions are submitted to peers for critical review. The key element of the scientific approach is that the business leaders and decision maker are placed in a role of humility. The ego-driven project leader is usually not a proponent of the humble application of the scientific or analytical approach to business. Kets de Vries’ research shows that the egotistical leader receives little critical analysis of alternatives and shoulders increasing responsibility for all decisions. The leader is fed information that is biased toward their publicly stated or signaled views. Commands and

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directions produce an immediate response, all of which tends to intensify the egomania. As the leader’s power within the team or organization becomes more absolute, there is increasing insulation from outside realities and the boundary between personal fantasy and reality becomes vague and hard to define. Brown and Toney’s 1997 study of incompetent business leaders discloses that the situation worsens as many ego-driven leaders take active measures to ensure that they do not receive unbiased and correct information. They may continually maneuver others into supporting decisions that feed their self-esteem, and may make a practice of taking advantage of others to achieve their personal ends. They often have a sense that the rules do not apply to them and that they are entitled to favorable treatment. To some leaders, ego becomes a narcotic. Hearing and seeing what the leader wants to hear or see may enhance its effects. Team members who present a suggestion, criticism, or recommendation for change that does not fit the leader’s self-image will receive a negative response. The member may be labeled a non–team player, negative thinker, or even a troublemaker. The response of the leader to unwelcome ideas rapidly becomes known throughout the organization. The leader becomes increasingly isolated as team members mold themselves into subservient, dependent employees. Resultant decisions increasingly lack support from external feedback and critical evaluation by subordinates. Humility Is a Legal Requirement for the Project Management Professional. There is a legal element to being humble. When the project leader makes statements to the public, produces literature about the project’s product or service, or presents himself or herself as an expert or agent of the company, misrepresentation can have negative legal consequences As individuals ascend the ranks of management, attain the PMP (Project Management Professional) certification, and college degrees, they increasingly become recognized as an expert, agent, or legal spokesperson for the team or organization. Once people achieve the status of expert, they have a legal obligation to promote themselves in a factual manner. The courts have consistently made it clear that when a person represents themselves as an expert, (a) they better really be an expert (i.e. no puffery), and (b) the expert has a legal obligation to be honest and humble when promoting their skills to the public. In particular, resumes should contain only verifiable facts with no puffery or inflated claims. It Encourages Recognition of Psychological Flaws. Despite outward appearances, every leader has weaknesses. ‘‘Even the most successful organizational leaders are not exactly rational, logi-


47

cal, sensible, and dependable human beings, but in fact are prone to irrational behavior,’’ says research psychologist Kets de Vries. All people are carrying a bag of psychological strengths and flaws. Adopting an attitude of humility tends to keep negative psychological flaws in check. Humility encourages recognition and acknowledgement of one’s flaws. As a result, the flaws are compensated for and have fewer harmful consequences on organizational performance. Success is then achieved despite the psychological flaws. This is particularly true if the leader is surrounded by competent subordinates whose strengths balance the leader’s deficiencies. It Protects Against Believing Gratuitous Flattery. Most leaders welcome applause, admiration, flattery, and mimicked behavior. Although most project leaders can put obvious flattery in perspective, it is difficult not to fall into the ego trap. Personality and character flaws are accepted, reinforced, and copied. Feedback tends to be positive in nature, supportive of the leader’s signaled preconceptions, and addictively complimentary. Self-recognition of problems is often blocked by peers and team who have a natural inclination to massage and inflate the leader’s ego. Ego stroking from subordinates, associates, and stakeholders tests the leader’s competence. Although delightful, flattery represents skewed and biased input for the decisionmaking process. A conscious effort is necessary to combat the egoexpanding tendencies of flattery. It Conditions One to Capitalize on Failure. The humble approach to project management recognizes that some battles will be lost. Personal and project failures will invariably occur. Project leaders whose perspective is blurred by egocentric fantasies are likely to see themselves as indispensable. With their history of winning, and supported by reinforcement from natural self-confidence and faith in a positive future outcome, the egotistical project leader is inclined to assume they will continue to win any battle that arises. They are prone to reinforcement traps and to strong social and motivating factors that may impel them to continue ill-fated courses of action for unreasonable lengths of time. Persistence in the face of adversity is normally associated with strength and character, whereas withdrawing and accepting failure are perceived as signs of weakness. But persistence and determination can be transformed into stubbornness if the leader has a commitment to his or her own self-image and interests. A project leader whose career has been spent in a company culture that rewards nothing less than ‘‘wins’’ may be even more reluctant to recognize and abandon a losing project. The ego-driven project leaders cannot conceive of being unsuccessful or of failing in a course of action once it has been chosen. Project leaders stake their jobs and their reputations on team

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and project performance. Often there is a belief that the organization rewards winners, and that those who stick with problems in the face of hardship will triumph in the end. There is a psychological tendency for people to delay the termination or abandonment of unsuccessful projects according to Brown and Toney. Rather than evaluate the financial aspects of terminating or continuing a project, research indicates that the CEOs evaluate whether the psychological benefits of continuing exceed the psychological costs of termination. The concept of reinforcement, or Slot Machine Theory, is a factor. This means that random rewards motivate people to continue an activity well beyond the point where continued behavior will clearly have little effect on the outcome. In addition, the Utility Theory says that when people have invested a great deal in a course of action, the potential risk and cost of continuing is less than the penalty for discontinuance. The theory is reinforced by the possibility that the salvage and closing costs of the project may exceed the expense of keeping the project going. All of these normal reactions become leveraged into an entrenched position when a strong ego exerts its force. The strong egos of leaders are manifested by a need to defend their actions in the face of public criticism. They may become personally committed to losing projects and be inclined to accept high risks with insufficient mitigation alternatives. The result of their flawed judgments can range from depressed performance to project failure and collapse. As Count Castiglione observed in 1528: ‘‘Their ignorance, together with a false belief that they cannot make a mistake and that the power they have comes from their own wisdom, brings them to fall to their ruin by their own weight, and pass from one error to a great many.’’ Inability to recognize and discontinue failed projects that are already underway is a major problem in organizations. As an example, at a meeting of 21 information systems companies, none of the companies reported ever killing or terminating a project. The humble approach recognizes that some projects and organizations fail. By applying a nonpersonal, pragmatic, external auditing process to project evaluation, failures are recognized sooner. For example, one of the companies attending the information systems meeting, took 4.5 years simply to recognize that a project was a failure. After implementing an arm’s length evaluation process, they were able to recognize and terminate failed projects within 6 months. Significant savings and improved organizational profits resulted. By understanding that there are many forces at work other than those of the individual, the humble approach becomes less susceptible to social pressure that holds failure in disfavor. The humble approach


49

means that all variables are considered. It acknowledges that persistence in the face of adversity is not always the pragmatic alternative. All in all, the humble approach to life and leadership minimizes the impact of failure through preplanning and accepting it as a normal part of intellectual and project leadership growth. Optimizes the Use of Finesse. In 500 BC, Sun Tzu said, ‘‘He who knows the art of the indirect approach will be victorious.’’ Sun Tzu was cognizant that the direct, confrontational approach is not always the most effective way to solve problems and achieve objectives. He recognized that the effective leader sometimes is successful without appearing to be taking overt action. Sun Tzu repeatedly talked about the clever fighter as the one who won battles without bloodshed. He pointed out that the circumstances of the battle would never come to light and the warrior would never receive credit nor enhanced reputation for his wins. He summarized his view, ‘‘The world knows nothing of them; and the warrior therefore, wins no reputation for wisdom and credit for courage.’’ Humility is a prerequisite for the use of finesse, since no one will ever know who, how, or why problems and conflicts were solved and goals achieved. The ego-driven person desires that everyone is aware of the achievement and who is responsible. Consequently, it is difficult for them to use subtle techniques that make it appear as though they are doing nothing. References: Ingram, 1998; Brown and Toney, 1997; Toney, 1996; Kets de Vries, 1994.

3.3.2.

Competency: Ambition

A trait that lends itself to superior project management goal achievement is ambition. The term refers to several motives that reflect a high effort level and include power motivation (the desire to organize and lead groups) and desire for achievement (i.e., an interest in attaining personal goals, ranks, and recognition). Ambition is part and parcel with the psyche of the superior project leader. The view of superior leaders as being inherently ambitious is well supported by empirical research. In 1926, C.M. Cox wrote in Traits of Three Hundred Geniuses that great military, religious, and political leaders are characterized by a ‘‘desire to excel at performances.’’ Hanawalt, Hamilton, and Morris mathematically validated Cox’s work and found that the level of aspiration for leaders is much higher than for nonleaders. Since then, at least six other studies have established the importance of ambition as a leadership factor in busi-

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ness leaders’ goal achievement. It has also been noted that ambition can easily become a purely self-centered motivator. As such, it can get out of control and lead to the compromising of principles. 3.3.2.1. Power Motivation: The Desire to Organize and Lead Groups A trait related to leadership motivation is the desire to lead but not to seek power as an end in itself. Leadership is preferred over the subordinate role. In much of the research literature the desire to organize and lead groups is labeled as being ‘‘power motivated.’’ In general usage, there are often negative connotations associated with the pursuit of power. In competence research, power motivation simply refers to a person who likes to organize and lead groups. Successful leaders use power or organizing and leading groups as a means to achieve their desired results or vision. The power-oriented person is easily identifiable. Any time an activity is being planned, such as a picnic, social event such as going to dinner or the movies, or initiating a project, the power-oriented person is the one who voluntarily begins making preparations, outlining the schedule of events, and organizing the participants.

Standard:

The best practice project manager exhibits eagerness to organize and lead groups.

3.3.2.2. The Desire for Achievement Leaders also demonstrate high achievement needs say numerous researchers. In 1961, McClelland set out to determine why some countries develop faster than others. At the conclusion of his extensive and well-documented global research, McClelland concluded that superior industrial societies are rooted in the fundamental motives of people and the way they organize relationships with their associates. The personality types drawn by McClelland were described as ‘‘achievement’’ oriented. Achievement-oriented leaders strive to attain accomplishments such as evidenced by college degrees, professional certifications, career advancements, and project milestones and goals achieved.


Standard:

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The best practice project manager exhibits evidence of a strong desire for goal achievement (i.e., degrees, certificates, ranks, and other goals achieved).

References: Kirkpatrick and Locke, 1991; Norburn, 1989; Miller and Toulouse, 1986; Miner, 1978; McClelland, 1961.

3.3.3.

Above Average Intelligence

Many outcomes in life such as job performance and educational and occupational success are related to intelligence. Several research efforts conclude that leaders can be characterized as being intelligent, but not necessarily brilliant and conceptually skilled. Strong analytical ability, good judgment, and capacity to think strategically are more essential for effective leadership than high intelligence. Leadership requires above average intelligence, but not genius.

Standard:

The best practice project manager has above average intelligence

Several studies show correlation between intelligence and job satisfaction and happiness. A 1988 study of over 15,000 participants by Ganzach concludes that intelligence and happiness are directly associated with job complexity. The more intelligent the individual, the more complex an occupation they seek or to which they aspire. Once a suitably complex role is found, the job satisfaction of the intelligent individual is high. References: Kirkpatrick and Locke, 1991; Lord, De Vader, and Alliger, 1986; Kotter, 1982.

3.3.4.

Competency: Emotional Stability Standard:

The best practice project manager is even tempered.

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The superior project leader generally does not become angry or enraged. Emotional stability is important when resolving interpersonal conflicts and representing the project to stakeholders. A leader who impulsively flies off the handle will not foster as much trust and teamwork as one who maintains emotional control. Leaders are more likely to derail if they lack emotional stability and composure. References: Kirkpatrick and Locke, 1991.

3.3.5.

Nonvalidated Competency–Related Traits: Not All Leadership Traits Can Be Directly Linked to Goal Achievement

There is little doubt that project leaders have different traits than traditional functional managers. Norburn’s study concluded that business leaders are different than middle managers. Of 59 variables tested, 42% showed a significant differentiation. However, with the exception of honesty, ambition, and intelligence, few traits have been strongly correlated with leadership competence and project goal achievement. For example, charisma (personality), flexibility, and creativity may be irrelevant as major variables affecting the probability of project goal achievement. Most current researchers agree that traits alone do not create a project leader who automatically achieves the team’s goals. Leaders who possess the requisite traits must take action to convert the traits into goal achievement (e.g. formulate a vision and goals and communicate them to followers). Reference: Norburn, 1989.

3.3.5.1. Charisma Charisma is a trait with less clear-cut evidence of project leadership impact. Effective project leaders may or may not have charisma; however, this trait may be particularly important for political leaders. There is no proof that charisma is always a good thing or even that project teams experience measurable benefit from charismatic leaders. The trait of charisma seems most important in project situations that are turbulent and volatile. Charisma can have dysfunctional effects upon the project team when the charismatic leader lacks skill, is unethical, or directs the group to destructive goals. In its most widely accepted usage, charisma describes the individual with a sparkling or magnetic personality. The person with charisma captivates others with wit and charm. They lead through the


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force of their personality. It is the quality of behavior that wins the devotion and love of large groups of people. Social researcher Weber identified charisma as a major reason people are loyal and inclined to follow a leader. The 1998 research of Gibson and her team defines the actions of charismatic leaders that attract followers. Included are painting of vivid word pictures portraying the project’s vision and goals, eagerness to present their ideas to anyone who can assist, and excellent sales and negotiation skills. People with charisma display a strong desire to affect changes and a willingness to take risks. They act as role models and lead by example. Being a charismatic leader has a visual component. It includes having physical beauty, captivating eyes, an energetic voice, energy, and endurance. Gibson’s work also discloses that the charismatic leader is typically sensitive to the needs of others and is encouraging. The charismatic leader tends to emerge in a position of power in specific situations. Most common is when the environment is unstable, is unknown, or contains ambiguity and anxiety. These conditions necessitate exceptional effort, behavior, and sacrifice. There may also be a need for moral involvement that raises the issue to a higher ethical or spiritual level. Charisma seems most influential in startups, turnarounds, and turbulent unpredictable conditions, according to the investigation of House. At those times, the charismatic leader motivates team members to perform above the normal requirements of the job. The Dark Side of Charisma. With all the outstanding characteristics and attributes, it would seem that charisma should be a best practice and an admirable trait to possess. In project management, the evidence does not support this conclusion. Although individuals like Winston Churchill, John F. Kennedy, and Martin Luther King are notable charismatic leaders in the twentieth century, it is timely to remember that Hitler and Mussolini are also examples of leaders who early in their careers could have been poster boys for the definition of charisma. Other stereotypic charismatic leaders have encouraged followers to commit suicide or commit massacres. Cohen’s research of military leaders discloses that many use deception as a leadership strategy. Conger and Kanungo disclose that charisma-related flaws in leaders manifest themselves in extreme narcissism and self-serving and grandiose goals. Such leaders lose touch with reality. Gibson concludes that most American chief executive officers rank low on the charisma scale. The interviews and research of Toney

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support her view. Almost all the research agrees that charisma as a trait can be as dysfunctional as it is good. The motive of the leader is the primary determinant of the value of charisma. The unethical charismatic is focused on achieving personal goals. Their need for personal ego support is also a factor. The ethical charismatic tends to focus on others and achieving the aims of the organization. References: Gibson, 1999; Conger and Kanungo 1998; Toney, 1996; Toney and Powers, 1998; House, 1992; Cohen, 1992; Howard and Bray, 1988; Weber, 1947;

3.3.5.2. Creativity There is little clear evidence for traits such as flexibility and creativity. Reference: Kirkpatrick and Locke, 1991.

3.4. CONCLUSION AND MEASUREMENT OF PROJECT MANAGER CHARACTER, BACKGROUND, AND TRAITS An evaluation of one’s character, background and traits can be numerically quantified using the character competencies subwheel (Figure 3.1). The numerical results from this wheel are rolled up or transferred to the master project manager competency wheel described previously. Truthfulness is judged more important than most other character and background attributes. Consequently, its spoke is allocated 10 points. Note that in a work place application, the user can use their judgment to weight each of the competencies. For example, in a highly technical situation, the importance of work experience and functional background might be considered more important than other factors.


FIGURE 3.1

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Ranking Scale Frequently, if not always

Fairly often

Sometimes

Once in awhile

Not at all

5

4

3

2

1

EVALUATION QUESTIONS 5 5 5 5

4 4 4 4

3 3 3 3

2 2 2 2

1 1 1 1

1. 2. 3. 4.

5 4 3 2 1

5.

5 4 3 2 1

6.

5 4 3 2 1

7.

5 4 3 2 1 5 4 3 2 1

8. 9.

5 4 3 2 1

10.

Yes

No

11.

Yes

No

12.

I am truthful in all dealings and relationships. I am emotionally stable (Traits). My intelligence is above average (Traits). I am motivated by and strive to achieve goals (i.e., degrees, certificates, ranks, and other goals achieved) (Traits). I am the first to volunteer to organize and lead groups (Traits). I have faith that the future will have a positive outcome even when that view is not supported by the facts (Traits). I have confidence that my personal performance will result in a positive outcome even when not supported by the facts (Traits). I am even tempered (Traits). My work and functional experience is directly related to my current role (Background). Failures represent a key learning aspect of my experience (Background). I have a minimum of a 4-year college degree (Background 5 pts for yes, 0 for no). I am a certified PMP (Project Management Professional) (Background, 5 pts for yes, 0 for no).

To determine the number of points to apply to the character subwheel, score the questions as follows: Total self-rating Maximum Question 1: multiply the points selected by 2 Questions 2–8: add the points and multiply by 0.14 Questions 9–12: add the points and multiply by 0.25

10 5 5

Total points to apply to the master PM wheel

20

4 Project Manager Professionalism: Standards and Best Practices

Professionalism includes global project manager competencies and best practices that optimize the functioning of the team and on a broader scale, the organization (Figure 4.1). It includes the body of specialized goal achievement knowledge taught on-the-job or in reputable business and technical schools. Included are leadership and management skills and actions, project-specific knowledge, as well as the entrepreneurial risk taking element. The superior project manager optimizes the goal-achieving speed, efficiency, and effectiveness of the project team. The leader uses analytical decision making to determine the correct alternative, opportunity, or solution rather than building a case to support a preconceived opinion. People skills are outstanding and combine with in-depth knowledge of the internal and external environment. 4.1. GOAL-ACHIEVING PRACTICES The most successful project managers exhibit a high degree of competence in three major goal-achievement arenas. The first, and most important, is competence at leadership and management skills and 57

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FIGURE 4.1

practices. Second is technical competence in the field or knowledge area in which the project team is involved. Of these two, leadership and management skills have a higher degree of positive impact on project goal achievement. Even so, technical skill in the project technical areas is respectably high. As project size increases, the leader’s technical competence in the project field tends to decrease—primarily because he or she spends more time and attention involved in the leadership and management details of the project. In theory, project group performance is highest on large projects when the project manager influences administrative matters and the functional team members provide specific technical exper-

Project Manager Professionalism

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tise. Keller’s research posited that a balance between technical and project leadership skills is associated with superior team performance. 4.1.1.

Leadership and Management Skills and Actions

Leaders in general, and specifically project managers, have leadership and managerial skills that result in the attainment of project goals. Inversely, a deficit in any of the core leadership and management characteristics significantly increases the chance of project delay and even failure. All of these managerial and leadership skills can be observed, measured, and empirically evaluated in existing and prospective project managers. Leadership and managerial competence at governing projects is acquired through experience on prior projects, formal academic and business training programs, and via certification programs such as offered by PMI.

Standard:

The best practice project manager is professionally skilled at leading and managing goal-achieving project teams.

Many surveys document the importance of leadership competence to a person’s success and effectiveness as a project leader. The highest performing leaders exhibit superior competency at actions and skills that result in goal achievement according to the Toney study of leaders. The response to the question ‘‘I know how to lead and manage a goal-achieving team’’ represents a major difference between the top goal-achieving leaders and the less successful goal achievers. Likert’s research of organizational leader competencies provides support that the leader is an important source of leadership and management knowledge for members of the group. The importance of managerial competence and goal-achieving knowledge is also supported by Argenti’s study of failed organizations. The leaders of the failed organizations lacked basic goal achievement skills. They failed to employ empirical and pragmatic analysis techniques, overleveraged their resources, and took on large, risky projects. There is general agreement that leadership and management skills have greater impact from the viewpoint of project goal achievement than being well versed in the project’s area of technical exper-

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tise. Consequently, the team management, leadership, and goalattaining skill transcends the fundamental prerequisite of knowledge of the project’s technical area. References: Toney, 1996; Bass, 1990; Bibeault, 1982; Argenti, 1976; Likert, 1961.

4.1.2.

Project-Specific Technical Skills

The value of project-specific technical skills can be introduced by answering the question ‘‘Does the best programmer on a software project make the best project manager?’’ Most respondents to surveys and participants in the benchmarking forum respond that the answer is ‘‘No, the best project manager is the professionally trained project manager.’’ For example, there are many people who have knowledge and a high degree of success in a particular technical field but are less skilled at leading and managing groups. There are also people who have successfully assumed control of, or managed, projects with technologies they were totally unfamiliar with. Even so, respondents at some point, invariably make the remark, ‘‘But, project-specific skills are important—particularly on complex technical projects.’’ Even though leadership and management skills are more important in respect to goal achievement, the value of project-specific skills and knowledge cannot be discounted. For example, in the case of military strategy, they could even be considered life or death competencies. Those who master [all the skills of war] win; those who do not, are defeated. Sun Tzu (ca. 400 BC ) The Art of War

Sun Tzu recognized over 2400 years ago that even with the correct background, character, and leadership/management competencies, the superior leader must be skilled at the technology of the project being governed. Many surveys document the importance of technical competence to a person’s success and effectiveness as a leader, and that the leader is an important source of technical knowledge for members of the group. Effective leaders have a high degree of knowledge of the project conclude the research of both Bass and Kirkpatrick and Locke. Benchmarking forum participants report numerous incidents where a lack of knowledge of the technical aspects of a particu-


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lar project has resulted in the inability of the project manager successfully to manage the project team.

Standard:

The best practice project manager has project-specific skills appropriate to the size and complexity of the project being managed.

As project size increases, the leader is likely to not be the most technically competent member of the team. On larger projects and organizations, the leaders surveyed by Toney express relatively low self-judgment of their technical proficiency in the project’s subject matter area. In fact, this leadership factor grouping receives the lowest self-ranking by superior leaders of any factor grouping in the survey. It is also relevant that on the open-ended questions the least successful leaders in terms of large project goal achievement are the only group of leaders that express the importance of getting actively involved in dayto-day technical activities. Survey respondents indicate that on larger projects, the project manager tends to be removed through necessity from day-to-day technical activities. As an example, the forum participants often describe the project management environment as similar to a small entrepreneurial business. Generally, the entrepreneurial leader in a startup or small company is highly competent in the technical skills associated with the business. As the size of the organization increases, the successful leader focuses more on leadership and management. In the same manner, over time, the superior project manager retains a core of technical knowledge but leadership and management skills become dominant. References: Toney, 1996; Bass, 1990; Keller 1986; Allen and Cohen, 1969; Likert, 1961.

4.1.3.

Entrepreneurial CEO Skills

The research indicates that the superior project manager performs essentially the same role and possesses the same set of competencies as the superior entrepreneurial chief executive officer. The most recognized characteristic of the entrepreneur is willingness to take a risk and to accept accountability for its associated rewards and/or poten-

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tial for failure. The chief executive officer aspect of the entrepreneur infers that the individual is responsible for all functional aspects of the enterprise. The superior project manager shares both of the key entrepreneurial characteristics. Benchmarking forum attendees unanimously agree that the type person excelling at the project manager role tends to be more willing to accept risks than others in functional organizations. On large projects in superior project organizations, the project manager is responsible for all the functional elements of the project including its success or failure.

Standard:

The best practice project manager is recognized as the entrepreneurial chief executive officer (leader) of the project.

The project management profession provides a challenging and rewarding position for the entrepreneurial individual within the typical large functional organization. Best practice organizations treat the entrepreneurial element of the project manager as a valuable characteristic. The project manager role serves as a venue to provide rewards for risk taking and assumption of bottom line responsibility and ensures the organization a future source of executive leadership material. Functional areas and organizations are increasingly using the project manager role as a training ground for future executives. The host organization invests time, effort, and money to train and nurture professional project managers. Senior executives report that the entrepreneurial leader is the type person who formally was inclined to leave large organizations and start businesses for themselves. The project management profession represents a venue to retain such entrepreneurial resources within the organization. The entrepreneurial element of the outstanding project manager is recognized as a valuable commodity by other corporate areas. Companies report that their best project managers are diverted (hired away) to manage business units and profit centers. The most competent and skilled project managers often have more financial incentives to move than to stay within the project management group and within the project manager career track.


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Industry recognizes the beneficial results from utilizing entrepreneurial project managers to improve the bottom line. Correspondingly, project scope, size, complexity, and project manager responsibility is expanded. As a result, the standards of project manager professionalism are constantly raised. Benchmarking forum participants recount numerous examples of project managers being responsible for larger amounts of resources, people, and strategic impact on the organization than many vice presidents. As a result organizations are adjusting the reward system to compensate for the expanded role. 4.1.3.1. Entrepreneurial Accountability and Responsibility Team performance is highest when the project manager has responsibility and accountability for project success. Superior project managers have responsibility and accountability for profit and loss performance, all involved functional areas and salaries and promotions.

Standard:

The best practice project manager is responsible and accountable for project success and failure.

Some companies report that their culture discourages singling out individuals for either public reward or reprimand. Others prefer matrix styles of project management with more than one person being responsible for project success or failure. Some have self-empowered teams that take joint responsibility for project management. In each case, on the average, team speed, efficiency, and effectiveness will likely be compromised compared to placing accountability with the project manager. The research of Gupta and Wilemon concludes that accountability is particularly important, because project management is complex and involves the integration of people, tools, processes, and plans. Project management consists of a broad body of knowledge that encompasses thousands of years of leadership, management, and project-specific history. If the elements of accountability are ignored or short-changed, the project process becomes confused and less effective. Twenty-nine percent of the interviewees in the Gupta and Wilemon study of failed projects described accountability–related project management deficiencies such as insufficient monitoring of project progress, insufficient control systems, undefined and conflict-

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ing roles, and complex team organizational structures. Responsibility for and ownership of project deliverables was unclear and stakeholders did not understand project problems. Reference: Gupta and Wilemon, 1990.

4.1.4.

Global Leadership Issues

The fundamental project manager competencies and best practices optimize project goal achievement in nearly all global environments and cultures. Historical studies of great leaders around the world show common characteristics as outlined in this book. However, the research indicates that the relationship between leadership and team members as well as the team organizational structure may vary. A successful leadership team relationship in one country may not be equally effective in another. An effective goal-achieving team structure may require modification to be equally suitable in other parts of the world.

Standard:

The best practice project manager adapts the application of best practices and competencies to different cultures.

Psychology researcher Hofsted gathered data on over 100,000 people in 40 countries. He identified four basic areas that impact the relationship between leaders and team members. The first was power distance, or the perception of leaders as being superior; second was individualism versus collectivism, then uncertainty avoidance, or inclination to risk acceptance; and finally, masculinity versus femininity, or the degree to which masculinity-based values pervade the culture. Note that Hofsted urged caution when using the data. He emphasized that countries typically have numerous cultures and that culture is constantly changing with the times. In a project management environment, global training of common approaches (such as from the Project Management Institute) tends to result in a common global project management approach and culture. Even so, the research demonstrates that the superior project manager is sensitive to cultural variances and flexible in the manner of application of their project management best practices.


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4.1.4.1. Power Distance Various cultures exhibit differing attitudes toward individual intellectual and physical diversity. Hofsted judged that high power distance countries, are those that have a wider range between those with power and wealth and those without. In high power distance countries, the relationship between the leader and team members tends to be more formal. The leader is expected to make the final decision. The leader’s judgment is accepted as correct even when it is wrong, and team members or employees are reluctant to make other than routine decisions. Lines of authority tend to be vertical, and all employees know the reporting structure and protocol. Low power distance countries tend to exhibit a higher degree of equality between the leader and team members. Organizations generally have fewer layers of management and formal controls. In low power distance countries, there is a greater inclination toward participative decision making and informal communications. Hofsted’s data concluded that Latin American and Asian countries rate high on the power distance scale. Western nations such as the United States, Canada, and Britain exhibit low power distance results. 4.1.4.2. Individualism Versus Collectivism In individualist countries, the ties between individuals are less tight and individual freedom and achievement are highly regarded. The individual is primarily responsible for their personal performance and welfare. They have less expectation of support from the organization. In collectivist societies, people tend to emphasize the interests of the family, team, and others within the group over self-centered interests. Individuals belong to groups that provide mutual protection and support in exchange for loyalty. Team members and employees expect their organizations to provide security and to defend each member’s personal interests. Supervision is inclined to be more paternal. Organizations in individualistic countries tend toward high levels of delegation and individual decision making, whereas collectivist countries are inclined toward group-based decision-making processes. Countries exhibiting high individualism are the United States, England, the Scandinavian countries, and Canada. Countries at the collectivist side of the spectrum are the Asian and Latin American countries. 4.1.4.3. Uncertainty Avoidance The extent to which people are willing to accept risks and enter into ambiguous situations determines their degree of uncertainty avoid-

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ance. People in countries that avoid uncertainty tend to place higher value on job security, retirement benefits, and other uncertaintyreduction actions. Hofsted found that they also feel a stronger need for rules and regulations, expect leaders to issue clear instructions, and desire tightly controlled initiatives. Organizational change could be expected to receive strong resistance in high uncertainty avoidance countries. In countries where people are more willing to accept risk, there is less resistance to change and job mobility is accepted more willingly. The results of Hofsted’s data were less polarized with a broad dispersion of cultures across the range of certainty. Countries most inclined toward risk taking are Singapore, Hong Kong, Denmark, and Sweden. Countries least inclined toward uncertainty are recorded as Greece, Portugal, and the Latin American countries. Countries in the middle of the data displaying both certainty and uncertainty characteristics were the United States, Germany, Pakistan, Australia, and Indonesia. 4.1.4.4. Masculinity Versus Femininity The relationship between and attitudes about the role of males and females vary from culture to culture. Hofsted judged the more masculine countries to be those in which the sex roles were sharply defined. Masculine values were more evident such as assertiveness, acquisition of money and status, achievement of organizational rewards, and displays of power. In feminine societies, the differences between men and women performing the same job tend to be more equal. Increased emphasis was recorded for people relationships, concern for others, and overall quality of life. The most masculine countries recorded were Japan, Austria, Venezuela, and Mexico. The least masculine were the Scandinavian countries. Falling midway between the extremes were the United States, other Asian countries, the European countries, and most Latin American countries. References: Hofsted, G. The Cultural Relativity of Organizational Practices and Theories, The Journal of International Business Studies 14, 1983.

4.2. MANAGE FOR GOAL ACHIEVING SPEED, EFFICIENCY, AND EFFECTIVENESS An analogy of the superior project manager’s application of speed, efficiency, and effectiveness is to envision the task of an individual


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desiring to travel from Los Angeles to New York City. The speed aspect of the task means that the individual will fly in a jet rather than drive an automobile or ride a train. To be efficient the person would take the most direct, nonstop route instead of a circuitous route with numerous stops and aircraft changes. The traveler becomes effective when the goal of reaching the destination has been attained. In like manner, the superior project manager is constantly cognizant of the necessity for speed while maintaining efficiency and effectiveness.

Standard:

4.2.1.

The best practice project manager manages projects for goal-achieving speed while maintaining efficiency and effectiveness.

Speed

The overshadowing aspect of speed permeates nearly all elements of superior project management. Sun Tzu recognized the fundamental importance of speed 2500 years ago: ‘‘Speed is the essence of war! To the soldier, overwhelming speed is of paramount importance, and he must never miss opportunities. This is the great principle of war. Surveys of project customers support that the most important performance measurement of project success is meeting time targets. Time is consistently rated as more critical than meeting cost targets and satisfying technical and functional specification requirements. Speed consciousness serves as a natural restraint against the tendency for organizations and people to add increasing amounts of complexity, bureaucracy, formality, methodology, use of templates, project software, and planning. The speed factor forces recognition that excess in any of these areas will slow the project and that there is a constant need efficiently and effectively to achieve the project goal. Maidique and Zirger established that companies with short product development times consistently out perform those with longer cycles. The first product into a high-demand market can command a premium price as well as establish a market niche and respond to rapidly changing customer demands according to the supporting research of Hopkins. A McKinsey and Company model was more specific. It showed that high tech products entering the market 6 months late earn 33% less profit even though they came in on budget. The projects in the study that came in on time and 50% over budget reduced profits only 4%.

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Project speed offers many benefits for the host organization. Being first to market amplifies competitiveness. It results in faster response to market needs, higher market share, and access to higher profit margins. Bringing the project in on schedule results in happier customers and offers greater potential for additional future business. Managing for speed reduces product cost. By increasing the number of projects completed by the project team, return related to project team cost is multiplied. Rapid technological change and the resultant product obsolescence and shortened product life cycles also encourage faster project completion. Corporate growth objectives, global strategic initiatives, and pressure from senior management are added to result in the conclusion that the superior project team has no choice but to reduce project end-to-end cycle time. Superior project teams are found in organizations where speed is a central objective of the firm and part of its mission and strategy, according to Cordero’s research. His data suggest that increased project speed combines positive qualitative estimates with traditional cash flow and capital justification. Gupta and Wilemon show the value of speed when it is an integral part of the organizational culture. They also show that speed is a difficult concept for many organizations to embrace. In their study, 53% of respondents feel their organizations are unwilling to take the appropriate steps necessary to shorten development time. Excessive red tape, organizational inertia, risk aversiveness, conservatism, and low priorities for project-based programs are obstacles reported. Just as in driving a car, there are dangers associated with speed. The project manager is required to maintain a high state of alertness while applying superior piloting skills. When there are problems, they occur at a faster rate, can cause more damage to the project and associated stakeholders, and demand all the superior project manager’s capabilities to control and mitigate. For these reasons, it is stressed that the speed aspect of superior project management must be accompanied by efficiency and effectiveness. References: Cordero, R. 1991; Eisenhardt and Tabrizi, 1990; Gupta and Wilemon, 1990; Maidique and Zirger, 1984; Hopkins, 1980.

4.2.2.

Efficiency

The superior project manager takes the shortest and most direct route between two points. The specified project activities, tasks, and deliverables, and no more, are completed and delivered. Fulfilled are the functional, technical, and quality specifications for the project


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without adding unneeded extras. Utilized are the most simple and least complex amount of methodology, formality, procedures, and templates necessary speedily and effectively to attain the project goal. In general, researcher Galbraith concluded that when situations are certain and predictable, there is greater emphasis on planning and organizing. There is also greater reliance on routine and bureaucratic and mechanistic teams and organizations. In conditions of high uncertainty, a more flexible, adaptable structure and style is appropriate. Efficiency problems are observable. It is common for benchmarking participants to relate that their organizations initially adopted the attitude that if a little methodology, a few templates, and project structure are good, then a lot should be even better. Some have generated and attempted to implement multiple volumes of project management procedures and methodologies. One university with a consulting arm has widely promoted and has gained acceptance of a project organization maturity model based on increasing amounts of formality, procedures, and bureaucracy; and in which, the project manager is considered a less important consideration. The result of all of these approaches invariably is a tools–and procedures–dominated project approach that is slower and more cumbersome than a less burdened approach. The project manager can also suffer inefficiency handicaps. Reports are common about project managers who spend such a large proportion of their time on the computer updating and manipulating the project schedule or filling out reports and other associated documentation that they fail to manage the people on the project. For example, one of the questions forum participants answer is, ‘‘What percentage of your time do you spend on the tools of project management?’’ (e.g., the software, methodology, templates). Answers ranged from 25 to 75% with even distribution over the entire range. A basic statistics text would indicate that such a result is an indicator of a survey anomaly. Consequently, a control question was added which asked, ‘‘What percentage of time do you spend on face-to-face management of projects?’’ Again the responses ranged from 25 to 75% of the time with even distribution over the entire range. Clearly there was an unknown factor involved, since the two questions were diametrically opposed to each other. After discussion at several benchmarking forums, it was concluded that project managers early in their careers tend to spend more time on the tools of project management; in fact, as much as 75% of their time according to the survey results. As they become more comfortable with the tools and the project management process, they exert more time on the face-to-face aspects; again, as

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much as 75% of their time. There was general agreement that the face-to-face management style used by more experienced project managers resulted in greater efficiency. The conclusion of benchmark forum participants was that as the typical project manager becomes more proficient and advances along the learning curve, they naturally become more efficient at the project managing process. Eisenhart and Tabrizi’s studies of fast-moving, volatile hightechnology projects showed that excessive use of planning and software slowed down the project and reduced effectiveness. In the tests, planning resulted in slower product development time as did increased supplier involvement. Use of software also slowed product development. Utilization of cross-functional teams consistently resulted in faster product development as did overlapping development phases, powerful team leaders, and frequent testing combined with higher numbers of design iterations. Face-to-face interaction, flexibility, rapid learning, and improvisation were considered essential by the most effective and fastest teams. Eisenach speculates that the overemphasis on software slows projects in uncertain situations, because it takes a long time to learn how to use it effectively. Also, some firms tested used incompatible software programs. Further, some team members became so enamored with and addicted to the software that they lost focus on the project itself. Others stated that sometimes software simply automates well-known procedures and old approaches. Although they are applicable to predictable projects, they should receive less emphasis when working on projects that are changing often. Overemphasis on planning for uncertain projects slows down developers and teams who could move more quickly. One explanation given is that for high-velocity projects that change rapidly and unpredictably, extensive planning is simply a poor use of time. Planning may also slow down the project pace when information is obsolete or incomplete. Note that it is emphasized by benchmarking participants that people new to the project management profession should continue to rely upon planning and the methodology and software tools of project management. The schools and training organizations should continue to emphasize project management tools. As usage of tools, methodologies, templates, and procedures becomes familiar, then the superior project manager will naturally devote more time to people management and accelerating project speed. It is also emphasized that the more predictable and repeatable the project, the more it lends itself to the use of extensive planning and use of project software tools, References: Eisenhardt and Tabrizi, 1990; Galbraith, 1973.


4.2.3.

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Effectiveness

No matter how fast and efficient the project team, if it does not reach its goal, it is considered by most to be a failure. Using the flight from Los Angeles to New York as an example, the aircraft could be flying at record speeds with a good tail wind and taking the most direct and efficient route; but if it lands at the wrong airport either through design or because of bad weather, error, or emergency, most of the customers will likely be unhappy with the project outcome. In project management, the superior project manager attains the goal, terminates the project, and moves on to the next. Effectiveness problems are common report benchmarking participants. In one benchmarking forum attended by 21 high-tech companies, every company indicated that there were numerous projects within their companies that never terminated. Several reported that their organizations never terminate any project. As a result of the forum discussion, one company conducted an inventory of their organization’s project portfolio. The evaluation disclosed that 5% of the people were working on projects that had no foreseeable termination and were unlikely to make a measurable contribution to the organization. After presenting the data to senior management, a project audit program was initiated. Subsequently, expensive, resource-consuming projects were terminated on a timely basis and 5% more people (as well as cash and material resources) became available for more strategically beneficial projects. 4.2.4.

Speed-, Efficiency-, and Effectiveness-Related Best Practices

There are many observable and measurable best practices related to speed, efficiency, and effectiveness in project management. Prior chapters discussed the positive improvements resulting from the best practice of being truthful. Now are addressed the benefits generated by other goal-achieving best practices. Multifunctional team composition dramatically shortens project cycle times by conducting project activities simultaneously in parallel rather than sequentially. Fast tracking represents the application of the superior project manager’s intellect to the acceleration of the project. It consists of overlapping project phases and schedule simplification, delay elimination, and removal of unnecessary steps and activities. Overlapping project phases shorten development time by reducing overall slack time and dependency on total project phase gates and go–no go decision points. The elements of speed, efficiency, and effectiveness are reflected in the project team structure. Leadership style is also impacted and tends to lend itself to ‘‘expert’’ leadership, rapid decision making, and

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delegation of authority and control to team members. Emphasis on planning and monitoring of project schedules during project implementation is a key success variable. Milestone goals, periodic reviews and audits speed the project process by emphasizing near-term goals as well as resulting in arm’s length and objective suggestions for improvement or even the elimination of time- and resource-consuming marginal projects. References: Millison, et al., 1995; Cordero, 1991.

4.2.4.1. Project Team Structure Ideally, team structure is a reflection of the project leader. The earliest organizational researchers recognized that superior leaders assert the importance of organizing or, specifically, creating the structure and lines of authority and responsibility for the team. The concept is observable in superior sporting teams. They are structured to capitalize on the skills of the players and organized around a series of preplanned ‘‘plays.’’ The project management manifestation of the premise of the need for a basic team structure is most commonly evidenced by the multifunctional project team approach. In addition, the speed, efficiency, and effectiveness conscious project manager exhibits a proclivity toward a trusting, supportive style of leadership. The team structure tends to include broad spans of responsibility and minimal layers of management. Bureaucracy is minimized, staffs are small, and information flows freely.

Standard:

The best practice project manager structures the team for speed, efficiency, and effectiveness.

References: Kirkpatrick and Locke, 1991; Miller and Toulouse, 1986; Bourgeois, 1984; Weick, 1979; Child, 1974; Lieberson and O’Conner, 1971; Fayol, 1916.

4.2.4.1.1. Multifunctional Teams. A fundamental way to improve project speed and efficiency is through the multifunctional or cross-functional project team structure. Multifunctional teams comprised team members from all functional areas involved in the project. For example, a new product development group might include design engineers, marketing, production, and finance personnel.


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Multifunctional team members work simultaneously, in a parallel effort, on each of the functional aspects of the project. Discarded is the traditional sequential approach where each functional area performs its activity and then passes the project to the next functional area. Clark’s research team concluded that the multifunctional project team is the critical element in achieving project objectives. Maidique and Zirger agreed and said that multifunctional teams result in smoother execution of all phases of the development process and is the major factor in the rapid attainment of project goals. In Gupta and Wilemon’s study, 33% of respondents reported that the multifunctional project approach is the primary means to improve project speed.

Standard:

Best practice project managers build their teams with representatives from all the functional areas the project impacts

Phenomenal results have resulted from the multifunctional approach. One company in the benchmarking group reduced lead time to market from 52 months to 18 months and generated an estimated $4 billion in incremental sales. Cross-functional teams have cut development time by 20 to 70% boosted white collar productivity 20 to 100, and increased sales 5 to 50 times, details the research of Zangwill. Eisenhardt and Tabrizi report an almost perfect positive correlation of .87 between the use of multifunctional teams and timely project goal achievement. Include Suppliers and Vendors. Gupta and Wilemon found that the multifunctional approach was particularly beneficial when applied to suppliers and vendors. The researcher’s investigation of product development projects in heavy industry determined that the fastest moving projects actively involved suppliers in the process. Malbert and research team also concluded that strong formal ties to suppliers improved the project process. Effective project leaders delegated project steps to suppliers. Lorenz identified specific areas where supplier involvement improved project goal achievement. Supplier involvement during development reduced the workload on the primary team. Supplier involvement let the primary team focus on the tasks and skills that maximized their core competencies and skills. Suppliers applied their own skills to result in the maximization

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of synergy. Suppliers also served as outside sources of critique and elimination of future problems as well as suggestions to improve process and product. Suppliers were highly skilled in specialized areas which gave them the capability to fulfill sudden and unusual requests promptly. Early involvement of suppliers improved the outcomes of the design process, judged the research team of Clark, Chew, Fujimoto. There was a positive correlation between supplier involvement and project success found Brown and Eisenhardt. They judged that suppliers and customers are key players in the project process. Supplier involvement can alert the team to potential downstream problems early on when they are easier to fix. One benchmarking organization made suppliers a key component in the project plan for a $3-billion global communications project. It was important that the project come in on budget. Suppliers were involved from the beginning and were required to make a commitment to hold costs to their original estimate and to avoid scope changes. If one supplier came in over cost, the others (including the managing partner) were committed to absorb the cost of the change. The process required a high degree of coordination and communication but was considered successful in maintaining cost while attaining its technical and functional results. References: Brown and Eisenhardt, 1995; Mabert, et al., 1992; Lorenz, 1990; Clark, Chew, and Fujimoto, 1987.

Multifunctional Team Benefits. In addition to the benefits resulting from parallel rather than sequential efforts, other gains accrue from the multifunctional approach. •

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Problem Recognition. Several researchers have observed that multifunctional teams recognize current and downstream problems and mistakes earlier than other forms of team structure. Each functional team member ensures that problems that could occur in the team member’s department are avoided early in the process. As a consequence, the problems tend to be smaller, easier, and less expensive to correct. Later scope changes are minimized. Improved Communications. Representation from more organizational functional areas results in better communications. The organizational and knowledge diversity of the multifunctional team increases the amount and variety of information available to the team, both between members of the team as well as with other functional areas.


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Team members tend to communicate more with outsiders who have similar functional backgrounds. Consequently, the more functions on the team, the broader and more comprehensive the external communications. Dougherty’s research showed that on multifunctional projects, the team members combine their views in a more highly interactive fashion with the result that information content is increased. Increased Asset Turnover. Conducting projects in parallel rather than sequentially means that the team completes more projects in a given amount of time. Project team cost related to output is minimized. More Compatible with Overlapping Design Phases. Involving multifunctional representatives early in the process reduces wait and slack time between phases and activities. Cross-functional teams permit overlap of project phases since each functional team member or group is working on its subproject at its own pace. Consequently, it is common for each project functional group to progress at different rates.

Dangers of Multifunctional Teams. Like many aspects of superior project management, there are inherent dangers associated with the multifunctional approach: the dramatic increases in project speed necessitate heightened project leader vigilance and skill; project time performance is harder to measure, since each functional team element is likely working at different paces; often key functional elements of the project team are not included as a result of cultural influences, and expertise of team members may decline or be limited compared to traditional functional approaches. •

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Increased Need for Coordination. Multifunctional teams are fast. They often are working at three to four times the speed of a sequentially phased project. The differing rates of progress by the functional team members complicate the role of the project manager and require careful coordination and communication. Harder to Measure Performance. The sequential project approach of working toward total project phase gates, go–no go decision points, or project milestones make it easy to measure time performance. Either the project phase is completed on the scheduled date or it is early or late. The variance in such cases is measured in units of time (e.g., days, hours, months and early or late). Overlapping activities and project phases make overall project time performance more difficult to measure and pres-

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•

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ent clearly to stakeholders. Since each of the team functions could be working at a different pace, it is likely that the functional elements will arrive at overall project milestones at different times. To measure time performance effectively for the project necessitates use of more conceptually difficult non– time–based performance measurements such as percentage of work packages complete, percentage of funds expended, or an earned value variance measure (i.e., budgeted cost of work performed compared to budgeted cost of work scheduled). Some Functional Areas Are Overlooked. Companies in the benchmarking forum report that there is often a cultural bias toward excluding specific functional areas from the project team. Sometimes companies are not even aware that key functional elements are being excluded. Nonaka’s research indicated benefits from involving often overlooked vendors at the early stages of the project. He found that understanding of goals and project objectives was improved as was loyalty and trust. In another situation, a major manufacturing organization reported that their project teams were truly multifunctional. The teams included members from engineering, manufacturing, and service support. When asked why finance and marketing were not involved, the response was, ‘‘Why would we want to include them?’’ After discussion, the company representatives realized that finance is a key success component, because like a CEO, to achieve success the project manager needs to control the money. And of course, marketing is key because the initial sales generate all other activities. The two key functional areas had been excluded simply because, ‘‘That’s the way we have always done it.’’ Individual Expertise May Decline. Multifunctional project teams typically recruit and obtain team members from their respective functional organizational areas. The physical detachment of the individual from the technical area of expertise sometimes makes it more difficult for professionals to maintain currency with developments in their field as well as within the company. Marquis and Straight found examples on highly technical projects where multi functional teams recorded poorer performance than would occur in the highly specialized functional areas.

References: Jassawalla, Avan, and Sashittal, 1999; Donnellon, 1996; Liedtka, 1996; Kahn, 1996; Brown and Eisenhardt, 1995; Ancona and Caldwell, 1992b; Zangwill, 1992; Dougherty, 1992;


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Cordero, 1991; Dougherty, 1990; Eisenhardt and Tabrizi, 1990; Lorenz, 1990; Nonaka, 1990; Stalk and Hout, 1990; Clark, Chew, and Fujimoto, 1987; Maidique and Zirger, 1990; Gold, 1987; Marquis and Straight, 1965.

4.2.4.1.2. Physical Proximity. Most large organizations work in a global and geographically diverse environment. It is important to consider the impact of physical proximity of team members upon project speed, efficiency, and effectiveness. In general, the closer the team members, the more effective the communications of the team. Even with communications technology advances, there is consensus among practitioners and researchers that distance normally reduces project speed and efficiency. Researcher Allen measured distance between desks and team members in engineering groups and found a direct relationship with the positive communication of scientific and technical knowledge. Other researchers found that communications effectiveness declined when workers were more than 20 feet apart. Zangwill’s research found that communication is maximized at little effort when the entire team is located in one room. Benchmark forum participants describe numerous challenges faced by project teams in diverse geographical location. The most successful project managers strive to minimize the impact of distance by optimizing communications and attempting to duplicate the activities of a group in close proximity. They have on-line lunch together and celebrate personal events such as births and weddings. All emphasize communications quality.

Standard:

The best practice project manager places the project team members in close proximity to each other. Where diverse team member work sites are necessary, proximity is emphasized through maximizing communications.

Benchmarking participants report exceptions to the research showing productivity decreases associated with distance. On large projects that can be conducted simultaneously around the globe, production increases can result from globally focused scheduling. For example, one company writes software and develops information systems. A

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project team will work in the United States for the first 8 hours, then the project is handed off to company counterparts in Asia. Other benchmarking companies are staggering work activities across European and United States time zones. The end result is that there are two shifts working on the project each day rather than one. It is conceivable that a project could attain three-shift productivity by starting in the United States, handing the project activities off to the Asian office, who would then pass it to a European facility, who would then return it the next day to the US office. By having the work ‘‘follow the sun,’’ production in theory could be tripled. References: Top 500 Benchmarking Forum Minutes, 2000; Zangwill, 1992; Keller, 1986; Keller and Holland, 1983; Bourgeois, 1980; Allen, 1977.

4.2.4.1.3. Team Authority Focused on the Project Manager. Researchers find a direct relationship between the authority of the project manager and probability of project goal achievement. Highest probability of project success comes from a full-time project manager who has responsibility for all the functional activities of the team. Weak matrix projects where the authority rests with a functional manager will, on the average, have a lower probability of success. It is noted that on small projects, the matrix approach is the only option. Reference: Gupta and Wilemon, 1990.

4.2.4.1.4. Group Size and Diminishing Returns. The literature indicates that group performance increases only up to a point as the team size expands. At the initial stages of growth, new members add cross-functional information and knowledge. Past a certain point, subgroups begin developing and the cost of communications and coordination increases costs and decreases relative performance. References: McGrath, 1984; Shaw, 1981.

4.2.4.2. Project Fast Tracking Project fast tracking refers to techniques that accelerate projects while minimizing the need for additional resources. Included in the tool kit of fast-tracking techniques is the process of overlapping project phases, the analysis of project schedules in a pragmatic manner, using peer groups to assist in the process, softening project specifications, and transferring activities and involving vendors in the fasttracking process.


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4.2.4.2.1. Overlapping Project Phases. Before all the work on one phase of the project is complete, the next phase is initiated. For example, an automotive manufacturer might identify a market need for a new model. Even though the initial marketing study is not complete, if the results appear favorable, the company could initiate construction of a prototype. Half way through the prototype evaluation and test, positive results might justify the commencement of work on the preproduction model. In the meantime, the initial market studies are completed as is the prototype is built and tested. Assuming favorable results from the preproduction model, the decision could be made to proceed directly to a pilot run and full production. Zangwill identified examples of companies that cut leadtime to market in half by conducting overlapping product development. Nonaka concluded that a special characteristic of the more successful product introductions that he studied involved overlapping every phase of the developmental process. Problem solving can also be enhanced by overlapping project phases, disclosed the study by Lorenz. Clark and Fujimote recorded significant reductions in product development cycle time by overlapping product development phases such as integrating die design and die making. Eisenhardt and Tabrizi recorded a moderately high correlation at ⫹0.38 between overlapping product development and goal achievement. References: Zangwill, 1992; Clark and Fujimoto, 1991; Lorenz, 1990; Stalk and Hout, 1990; Eisenhardt and Tabrizi, 1990.

Benchmarking participants and researchers have identified other fast-tracking methods. Among them are the following. 4.2.4.2.2. Pragmatic and Critical Schedule Analysis. Stalk and Hout determined that project speed could be increased simply by critically evaluating the time elements associated with each work package and activity. Often conditions have changed since the original schedule was compiled. In many cases, activities can be shortened without materially affecting the project cost or outcome. Schedule analysis lets the project team eliminate unnecessary steps and sequence activities in a more efficient order. 4.2.4.2.3. Peer Reviews. Gold’s research found that the fasttracking process lends itself to a group effort. Teams utilizing peer reviews accelerated project progress.

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4.2.4.2.4. Softening Quality, Technical, and Performance Specifications. Often project teams build in higher standards of performance than specified by the customer. A critical ‘‘value analysis’’ approach may result in softer, more easily attainable and even less costly requirements, according to Gold. 4.2.4.2.5. Involve Outside Suppliers. Projects can be accelerated, often with little increase in overall costs, by buying, licensing, and contracting technology and services from external sources. Supplier involvement reduces project team workload and frees time to focus on the tasks and skills that maximize core competencies and skills. Application of supplier’s skills maximizes synergy. Suppliers also serve as an outside source of critique and elimination of future problems as well as suggestions to improve processes and product. One word of caution, Eisenhardt and Tabrizi found that early involvement of suppliers seems to be less effective in uncertain projects, because often the final suppliers are unknown. In their research, the fastest moving project managers tended to delay supplier selection until the final stages of the project. References: Clark and Fujimoto, 1991; Cordero, 1991; Eisenhardt and Tabrizi, 1990; Stalk and Hout, 1990; Gupta and Wilemon, 1990; Gold, 1987.

4.2.4.3. End-to-End Project Team Involvement There is agreement among benchmarking forum participants that the earlier the involvement of project leadership in the project, the higher the probability of project success. On complex project proposals some companies are sending the project manager to visit the customer along with the sales person. Reportedly the process has successfully ensured that the customer has a better understanding of deliverables, the project process, and relationship between the stakeholders. Overall project speed, efficiency, and effectiveness has improved as a reflection of the clearer definition of project functional and technical specification as well as a minimization of the problem of selling project features and outcomes that are outside the scope of the project team to perform. Standard:

The best practice project manager is actively involved in the project management process from inception to termination.


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Numerous other best practice project organizations involve the project groups in the strategic aspect of the organization; notably, the management of the project portfolio. Overall focus of project portfolio management is to use speed, efficiency, and effectiveness to attain organizational strategic objectives, optimize strategic asset value of project outcomes while minimizing and diversifying project portfolio risk. In this sense, project portfolio management is similar to the management of any other groups of sizable organizational assets. The project groups are involved in taking inventories of existing projects, optimization of the project portfolio through the selection and elimination of projects, maximizing of organizational revenues, minimizing portfolio risk, and global and strategic diversification. Gupta and Wilemon’s research supports the benchmarking conclusion about the need for early involvement by project management. They say that integration and involvement of the project group at an early stage in the process results in greater shared commitment, clarified stakeholder needs, and better definition of product specifications before large amounts of money are spent. Response time is reduced, because future changes are minimized. In the Gupta and Wilemon research, 71% of respondents said that projects that failed to meet time and cost targets were the result of poor definition and understanding of customer requirements and insufficient knowledge by sales people of the product’s technology. 4.2.4.4. Strategy Unity, Vision, Goals, and Planning Speed, efficiency, and effectiveness are positively impacted from the implementation of the host organization’s strategy, setting of the team vision, establishment of clear goals and deliverables, and developing the appropriate level of project-specific planning. The superior project manager’s approach to the leadership of a multifunctional project team is fundamentally the same as that of the chief executive officer of an organization. Best results occur when the leader paints a compelling vision of the ultimate project outcome, the vision is translated into specific goals and deliverables, both vision and goals are compatible and supportive of the host organization’s strategy, and there are plans made to attain the vision and goals and effectively to implement the strategy. Chief executive officers state that the only difference between the leadership of the entire organization and the leadership of a multifunctional project is that the CEO works with a strategic plan and the project manager uses a project plan. The purpose of both tools is to increase the probability of organizational goal achievement.

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The issue of project leadership support in attaining goals is important. The leader is the source for the motivation to do better and stimulates innovation. Gupta and Wilemon’s research disclosed that 18% of their respondents felt that a lack of strategic thinking was a key element in project failures. Common problems noted were leadership focus on fire fighting, failure to see the big picture, a lack of company focus, and ignored alternative technologies emerging in other industries. References: Gupta and Wilemon, 1990; Miles and Cameron, 1982; Snow and Hrebiniak, 1980; Priem, 1993; Fayol, 1916.

4.2.4.4.1. Unity with Organizational Strategy. The value of organizational strategy has been documented for thousands of years. A key component of effective organizational strategies is that each project or battle should be a key link in eventually achieving the organization’s goals (e.g., winning the war). Sun Tzu’s book, written in 500 BC, repeatedly stated that the ultimate objective of individual battles and the associated planning project was to win the war. By approximately 1830, strategic planning had evolved to the point where it contained all the key elements used currently. The importance of overall strategy and its relationship to individual battles (i.e., projects) was first detailed and researched in a scientific manner by Carl Von Clausewitz. He said: Strategy is the employment of the battle to gain the end of the War; it must therefore give an aim to the whole military action, which must be in accordance with the object of the War; Strategy forms the plan of the War, and to this end links together the series of acts which are to lead to the final decision. Carl Von Clausewitz (ca. 1827) On War

In the mid-1800s, Henri Fayol was a successful CEO of a French mining firm with over 10,000 employees situated around the globe. In the latter part of his career, Fayol redirected himself to business research and writing. He set out and defined the application of business strategy and the techniques of internally analyzing the organization. He stressed the importance of organizational strategy as an element in successful goal achievement and said that the best strategy is based upon an analysis of the organization’s resources, work in progress, and future trends.


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Project management leaders surveyed consistently express the view that a major purpose of leadership and management in organizations is to improve the ability of the host organization to achieve its goals. Seasoned project and program managers also say that the project team must be cognizant of how the project vision, goals, deliverables, and project plans interface and support the organizational vision and strategy. Otherwise, there is a tendency to flounder and lack direction. When the host organization’s goals and strategies are clear, the project group is more confident about the validity of their specific target. Compatibility with the host organization is evidenced by project management groups that are strategically structured, have senior management support and/or report to an executive level group, have smooth relationships with horizontal functional management groups, have end-to-end involvement in the project process, and manage the organization’s project portfolio, and are provided with adequate resources and support in the form of funds, people, and materials.

Standard:

The best practice project manager aligns and integrates the project vision, goals, and plan with those of the host organization.

The degree of project manager impact on host organization strategy depends upon the size and organizational structure of the organization. Analysis by Miller has shown that the smaller the organization and more centralized the decision-making power within it, the greater the association between strategy making and leader personality. In large, decentralized organizations, the leader may not have enough influence to make a significant impact. Reference: Miller et al., 1985.

4.2.4.4.2. Vision. The superior project leader paints a vivid portrait of the vision of the project. As a result, the superior leader stimulates action and is the source of the motivation to do better. The vision statement provides the team a unified view of the project direction and objectives. It tends to make decision making faster and more efficient. When team members know the overall vision, there

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is less need to ask for specific instructions each time new situations, alternatives, dilemmas, and alternatives are encountered. The most effective vision statements tend to be short, one-sentence summaries of the ultimate team goal. Bass showed that the best examples of envisioning goals tend to be lofty in nature and involve intuition, spirituality, fantasy and dreaming, not just analytical, systematic, and conscious thought processes. Martin Luther King’s vision statement, ‘‘I have a dream,’’ is a good example. Winston Churchill Prime Minister of Great Britain during the Second World War, expressed his vision statement by holding up two outspread fingers in the ‘‘V’’ for victory symbol. A study conducted by Kirkpatrick and Locke indicates that the painting of a goal portrait

Standard:

The best practice project manager articulates a compelling vision of the future, direction, and goals for those they lead.

is considered an important characteristic for all leaders. Brown and Eisenhardt explained that the project leader exhibits vision by integrating a large variety of factors into a creative image that can be easily communicated to others. Specifically, they mesh together firm competencies and strategies with the needs of the market. The project leader in combination with senior management shape the project concept and communicate it to the team. Clark and Fujimoto concluded that the most successful project managers build strong visions by communicating the project concept. They suggested that effective vision communication encourages enthusiasm, commitment, compliance, team desire to attain the vision, and overall performance in a superior fashion. The result of this communication process is that the highest performing leaders are viewed as charismatic and inspirational. Superior leaders integrate a large variety of factors into a creative portrait that can be easily communicated to others. Goal-oriented leaders communicate their vision to followers through inspirational speeches, written messages, appeals to shared values, acting as role models, maintaining focus in times of stress and discouragement, and by projecting self-confidence.


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References: Zenger, Musselwhite, Hurson, and Perrin, 1995; Ray and Bronstein, 1995; Brown and Eisenhardt, 1995; Clark and Fujimoto, 1991; Bass, 1961.

4.2.4.4.3. Goals and Deliverables. The attainment of the host organization goals and the related project vision become achievable through restatement in the form of project goals and deliverables. Goals and deliverables focus the team on the critical success elements upon which the performance of the team will be judged. They force the team to look ahead, identify potential risks and problems, and plan for flexibility. Goals and deliverables typically create team alignment and limit time-consuming bickering. Zangwill found that without goals and deliverables there is a tendency for the team to drift and gradually to become diverted from the primary purpose of the exercise. He also found that in addition to setting overall project goals, the best project teams establish specific process goals that define performance of the project team itself. Examples are such factors as responsiveness to customers, meeting time and cost targets, attaining milestone measurements and achieving quality standards. Maintain Focus on Goals. For goals and deliverables to become reality the superior project leader maintains constant goal focus to the point it becomes an overshadowing factor in making daily decisions. Sun Tzu recognized the importance of the premise 2500 years ago with his statement, ‘‘Victory [i.e., successful project termination] is the main object of war.’’ His entire treatise about waging battles constantly emphasized the importance of goal setting as a prerequisite to the building of the battle plan. Modern researchers and benchmarking forum practitioners agree with Sun Tzu’s ancient wisdom. Brown and Eisenhardt judged that superior leaders improve project cycle times by maintaining focus on the goals. The superior leader maintains a disciplined vision that keeps the disorder of the project under control. Chandy’s comparison of Fortune 500 leaders over a 16-year period showed a shift in emphasis toward focusing on bottom line goals and deliverables. In the Toney study, the Goal Focus category is best described by the best practice, ‘‘I maintain focus on project goal achievement.’’ The top performing leaders differ from lower ranking leaders with a correlation coefficient of 0.96 and a self-rating of 4.44 out of a maximum of 5 points. Both the middle and lower performing groups rated themselves relatively lower at 4.16 and 4.13, respectively. The emphasis placed on this category by survey respondents agrees with the research interviews. In the interviews, leaders indicated that one of the

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main reasons they consistently achieve project goals is because they constantly focus on goal achievement when making decisions.

Standard:

The best practice project manager maintains constant focus on the project goals.

Goal Focus Caveat. It is fine line between goal focus and goal obsession. Likert’s study shows that when there is high management pressure for attaining production goals in relation to supportive leadership or management behavior, there is a feeling of unreasonable pressure on the part of subordinates. There are also indications that too much focus on the goal can generate short-term stress and unhappiness of the leader as evidenced by phrases such as, ‘‘I’ll never be happy until the project’s goals are achieved.’’ Goal Difficulty. Likert’s research shows that subordinates achieve and maintain higher performance when there are highperformance goals. References: Toney, 1996; Brown and Eisenhardt, 1995; Zangwill, 1992; Chandy, 1991; Likert, 1961.

4.2.4.4.4. Project Planning. The project plan is a microversion of the organizational strategy. It represents the tactics that will be applied to a specific project that support the organizational strategy. Multiple studies throughout the history of strategic management have shown that leaders who utilize an appropriate amount of planning consistently outperform those who react to the environment and events. Like strategy, examples of the importance of planning date back thousands of years. The Old Testament of the Bible contains numerous examples of well-planned battles as well as detailed plans for the building of the temple and the wall around Jerusalem. As history has unfolded, other military leaders and scholars have refined the process. Napoleon reportedly stated, ‘‘Any leader with a plan will defeat a leader without a plan.’’ In 1827, Carl Von Clauswitz compiled his multiple volume reference book about strategic planning which serves even today as the foundation for the strategic management approach. At the turn of the 20th century, Henri Fayol, French mining company CEO and business management researcher, recognized the importance of planning as an element in implementing organiza-


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tional strategy and successful goal achievement. He defined planning as defining goals to be accomplished and the plan of action. The plan is based on an analysis of the organization’s resources, work in progress, and future trends. Fayol stated that the leader takes the initiative in planning, sets the objective and scope, and decides upon the line of conduct to be followed by the enterprise. The key element in successful planning is the project manager. Multiple research efforts conclude that the project leader is the creator of the team strategy and the project plan is a reflection of that strategy. The superior leader and his or her ability to translate strategy, goals, and deliverables into essentially simple workable plans is crucial in avoiding decisions that lead to failure, says Makridakis. Priem established that project leadership uses planning to mesh firm competencies and strategies with market needs. In the open-ended questions on Toney’s research, leaders rated strategic planning as one of the most important things they do to achieve project goal achievement. Brown and Eisenhardt showed that the leader in combination with other senior management shape the organizational concept and communicates it to the team.

Standard:

The best practice project manager develops a project plan appropriate for the complexity and risk of the project.

The definitive word in the standard linking superior project managers with planning is appropriate. Excessive planning delays the project and restricts the ability of the project team to react to changing events. One research study determined that too much planning and analysis results in poorer decisions, because the planner loses sight of the big picture and gets sidetracked on insignificant issues. In some cases, the planning process has become an end in itself and consumed hours and days of unjustified effort. It also can become so structured that flexibility is lost and the ability to respond to opportunities is diminished. In general, it is best to have an appropriate level of planning that leaves the project manager and team open to take advantage of opportunities. Brown and Eisenhardt’s research of high-technology projects found that often the project team is working with a technology that is changing while the project is in progress. The situation

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becomes even more turbulent and uncertain when the customer demands the latest technology be incorporated in the project deliverables. In such situations, excessive planning had a negative effect on project goal achievement. The more planning that was conducted, the less efficient and effective was the project outcome. It was concluded that in highly volatile and uncertain projects, the superior project manager, not detailed plans, was the key element in attaining project success. The project manager offers flexibility and the capability rapidly to analyze, respond to, and capitalize on changing events, opportunities, and alternatives as they present themselves. On projects that are predictable and have been performed many times, such as building a house, more detailed planning is appropriate and results in faster speed, efficiency, and effectiveness. References: Toney, 1996; Brown and Eisenhardt, 1995; Priem, 1993; Clark and Fujimoto, 1991; Makridakis, 1990; Lamb, 1987; Miles and Cameron, 1982; Snow and Hrebiniak, 1980.

4.2.4.5. Scope and Technological Discipline Projects with shifting scopes almost by definition fail to meet time and cost targets. Particularly on high-technology projects, there is a tendency for the technology to change while the project is underway; and the customer wants the latest technology. Research discloses a myriad of problems resulting from scope and technology changes. In addition to time delays and associated cost increases, often the new technology is incompatible with existing technology, does not deliver its promised improvements, is not fully developed, is unreliable, and is of poor quality. In an ideal world of maximized speed, efficiency, and effectiveness, the scope and technology of the project would be frozen and never changed. In real life, scope changes are a necessary reality. Many companies recognize scope and technology changes as sources of revenue. Scope changes provide for project functional and technical updates, changes in direction, and correction of errors. Even so, all stakeholders should recognize that the fewer scope and technology changes, the higher the project speed and degree of efficiency and effectiveness. Consequently the superior project manager will formalize the scope change process and manage scope changes rigorously. 4.2.4.6. Asset Turnover One of the fastest and easiest ways to generate cash is to increase asset turnover. Inventory turnover is the most common example. If


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a company has an inventory of $1 million and it takes a year to sell it, there is an inventory turnover of one time. By only buying 1 month’s worth of inventory at a time, inventory turns increase to 12 times per year. Since the inventory is sold in 1 month, only 1/12 as much cash is required ($83,333) as when a year’s supply of inventory was on hand. The excess of $916,667 is made available for other applications. The same principle applies to multifunctional project management. By executing projects in parallel rather than sequentially, completion time is much faster. Hence, asset turnover is increased, more projects are completed, and each project is completed at a faster rate. 4.3. PEOPLE SKILLS Application of best practices and competencies related to people skills are broken into two categories: people skills that directly improve project speed, efficiency, and effectiveness and those that have a more generalized beneficial effect on project team performance. In the 1500s, there were over 1000 books that dealt with leadership, its attributes, and people skills associated with teams. Machiavelli was said to have commented that the advice offered by the general literature was more descriptive of the traits needed by a monk in a monastery than those of a pragmatic political leader dealing with followers. Consequently, Machiavelli chose several historical leaders and analyzed their activities and success rates. His conclusions were far different than the righteous and benevolent opinions of other ‘‘nonscientific’’ writers of the time. It could be said that not much has changed over the last 400 years. There are myriads of books, fads of the year, and generalized theories about the best way to improve one’s people skills. In project management, the situation is somewhat less complex. People skills are evaluated in reference to their impact on project goal achievement. The research of Toney discloses that the highest performing leaders have relatively low self-evaluations of their people skills. The most superior leaders in terms of goal achievement ranked their overall people skills in the mid range of leadership actions used to achieve goals. They ranked skills such as goal focus, technical competence, environmental scanning, and critical analysis of decision alternatives as being important, and often more important, than people skills. Reference: Machiavelli, 1520.

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People Management for Speed, Efficiency, and Effectiveness

Several elements of managing and leading the team specifically lend themselves to speed, efficiency, and effectiveness. 4.3.1.1. Impact of Speed on Leadership Styles Since democratic and committee-based decision making is time consuming, it tends to be less suitable to speed-oriented project leadership than expert and decisive leadership. Note that expert and decisive leadership should not be interpreted as being autocratic and nonparticipative. The multifunctional nature of speed-oriented teams by definition includes experts from each functional area. The functional area experts provide a high degree of decision-making information and feedback to the project leader. The broad spans of management control and delegation of responsibility and authority also lend themselves to participative decision making. Even so, it is emphasized that the superior project manager represents final decisionmaking authority. In situations where time is limited, the superior project manager accepts accountability to make decisions based on his or her experience, expertise, and knowledge. The generalizations about leadership style have numerous exceptions. In global cultures and diverse work environments there are a broad variety of accepted applications of the project leadership fundamentals. Benchmarking forum attendees report that it is common for a project manager with a generalized background to be working with a team of experts. In some cases, the expertise of the team members far exceeds that of the project leader such as when working with PhDs, scientists, professors, and specialized engineers. Often the experts are more self-motivated by the work itself and their internal drive than from leadership actions. Effective control is administered more by peer pressure. In those cases there is a tendency for the project leader to exert efforts to keep the team focused on the final goal and coordinate and support the efforts of the expert’s. Speed and meeting the project’s time commitments are emphasized. 4.3.1.2. Reward Speed Rewards have an important effect on project speed documents the research of Gold. His investigation recorded shortened development times when project team members were rewarded for designing for speed. Gupta and Wilemon also showed that rewards have an immediate and positive impact on project speed. They concluded that rewards are particularly effective when the project process is predict-


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able. Speed increases because team efforts focus on tasks directly related to the project goal. A common example of the concept is to withhold final payment of the contract fee until the project is completed. Other project teams offer bonuses if the project comes in on time or give recognition and awards for time goal achievement. 4.3.1.3. Competition Any form of competition designed to encourage the attainment of speed targets results in higher performance levels say Gupta and Wilemon. Even ‘‘fun’’ competitions that involved no cost outlay are effective. References: Cordero, 1991; Gupta and Wilemon, 1990; Clark, Chew, and Fujimoto, 1987; Gold, 1987.

4.3.1.4. Political Skills Benchmark forum participants continually stress that a key element impacting project speed and success is the ability of the project team to successfully interface with an entrenched host organizational culture, bureaucracy and political system. The burden to achieve success in this arena rests squarely on the shoulders of the project manager. Failure to understand the political aspects of the project can lead to project speed and efficiency reductions and even outright project termination. Ingram’s data showed that there is sometimes a tendency for project leaders to think of projects as independent groups whose success depends mainly on the technical quality of the work performed and the professionalism of tools used such as quantitative and rational schedules, nicely prepared Gantt charts, resource leveling, cost benefit analysis, and completed templates. The reality is that project success was often dependent upon other more complex human and group factors. Projects are political organizations within larger and multiple other political organizations. Ingram found that project leaders, team members, stakeholders, and the myriad of political groups were often primarily motivated by their own self-interests which were in direct conflict with the objectives of the project. Consequently, the superior project manager understands the political environment. He or she serves as ambassador, buffers the team from external distractions, and lobbies for resources and recognition of project needs and accomplishments. 4.3.1.4.1. Ambassadorial. A clear behavior pattern of successful teams is emphasis on ambassadorial, impression management, public relations, promotional, lobbying for team interests and

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needs, and involvement in political issues impacting the project. Ambassadorial activities enhance project visibility and outsider’s perceptions of team competency.

Standard:

The best practice project manager is an effective ambassador who represents, protects, and advances the interests of the team with outside political groups.

Top project managers consider the ambassadorial activity essential. If its need is not readily apparent, senior management, customers, and other stakeholders often necessitate it. The importance of the ambassadorial role is supported by the literature. The research of Clark and Fujimoto showed that superior project managers serve as linking pins that coordinate project activities with outside areas and work with senior management. Dutton and Ashford showed a positive correlation between successful ‘‘issue selling’’ and team performance. Ancona and Caldwell found that promotional activities on the part of the team leader enhance visibility and outsider’s perceptions of competency and power. The more effective groups attempted to control the external image of themselves through impression management. Researchers linked ambassadorial activities with the achievement of positive project outcomes in both the short term and long term. Clark and Fujimoto found that project managers who lobbied for resources were consistently more successful. In particular, most effective project managers actively worked to attain senior management support judged Ancona and Caldwell. The extensive research of Ancona and Caldwell quantified the positive impact of specific ambassadorial activities on project goal achievement. They found a high correlation in the 0.7 range for the activities of ‘‘Absorbing outside pressures for the team so it can work free of interference,’’ ‘‘Protecting the team from outside interference,’’ and ‘‘Preventing outsiders from overloading the team with too much information or too many requests.’’ Activities recorded in the ⫹0.6 range included ‘‘Persuading other individuals that the team’s activities are important,’’ ‘‘Scanning the environment inside the organization for threats to the team,’’ Negotiating with others for delivery deadlines,’’ and ‘‘Talking up the team to outsiders.’’ In the lower but


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still significant range of ⫹0.5 were ‘‘Persuading others to support the team,’’ ‘‘Acquiring resources (e.g., money, members, equipment) for the team’’, ‘‘Finding out whether others in the company support or oppose the team’s activities,’’ and ‘‘Finding out information on the company’s strategy or political situation that may affect the project.’’ Note that the objective of ambassadorial activities is to optimize project speed, efficiency, and effectiveness. For ambassadorial activities to be meaningful, they must be followed up with performance. Ancona and Caldwell associated an excess of ambassadorial activities with reduced performance. 4.3.1.4.2. Team Buffering. The superior project manager serves as a buffer or ‘‘gatekeeper’’ between the team and the external political environment. Brown and Eisenhardt found that the project manager’s gatekeeper function is an important facet of project success. The superior project manager impacts project performance by increasing the amount and variety of information available to the team. The gatekeeper attains more diverse information for the team. The gatekeeper function gathers, understands, and translates information into more meaningful and useful information for team members. As a consequence, gatekeepers are extremely valuable in increasing the probability of project goal achievement suggest researchers Allen and Cohen.

Standard:

The best practice project manager buffers the team from external pressures, demands, and politics.

4.3.1.4.3. Lobbies for the Team. The ability of the project manager to communicate the needs, interests, and accomplishments of the team to outsiders and stakeholders is an element of project success. A successful project requires good people, facilities, tools, and other resources said Gupta and Wilemon. Lobbying by the project manager attains these needs.

Standard:

The best practice project manager lobbies for resources and project needs.

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4.3.1.4.4. Communicates Project Benefits. The success of project management groups in large functional organizations is not simply the result of open armed acceptance by peer groups and superiors. It involves an effort on the part of the project manager to communicate and promote the benefits of the project. This is not necessarily a self-serving approach, but is designed to inform others of the ways that the project has improved the ability of the organization to achieve goals. Project speed and efficiency is maintained by reducing the need constantly to justify activities and search for resources. References: Ingram, 1998; Brown and Eisenhardt, 1995; Ancona and Caldwell, 1992b; Clark and Fujimoto, 1991; Ancona and Caldwell, 1990; Gupta and Wilemon, 1990.

4.3.1.5. Conflict Resolution Early and at Low Levels Two generalized conflict-related factors have a direct impact on achieving project success judge the research team of Hayes. First is the need to bring conflicts to the surface early and second is the need to resolve conflicts through mutual accommodation at low levels in the hierarchy. In either case, unresolved conflicts can disrupt project speed, efficiency, and effectiveness. Most often, conflict resolution within the team rests upon the shoulders of the project manager. The majority of conflicts are handled in an informal fashion. For more serious conflicts, some best practice organizations have formal conflict management procedures. For example, some of the benchmarking organizations report success with a ‘‘48-hour conflict resolution commitment.’’ Antagonists attempt to resolve the conflict at the lowest level. If unsuccessful the conflict is taken to the next higher level of management. If it is not resolved with 48 hours, the conflict proceeds to the next level. According to respondents, it is rarely that problems ever ascend over one or two levels. It is noted that a danger of the approach is that antagonists sometimes bury a problem rather than face higher levels of management. In those cases, the root problem’s causes remain unresolved.

Standard:

The best practice project manager addresses conflicts early and at lower levels in the organization.


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It is also noted in the research literature that many problems do not demand the immediate attention of the project leader. Small inconsequential spats often resolve themselves. In other cases, it is necessary for people to have an avenue to voice frustration. If intervention occurs before the individual has vented their concerns, then the conflict will remain unresolved. The benchmarking forum attendees and researchers agree that there is one area of conflict that demands constant monitoring and an immediate response by the superior project manager. The relationship and association of the project team with the host organization and its imbedded culture represents a major area of potential conflict that can have a negative impact on project goal achievement. Project managers have a primary objective of meeting time and budget targets and achieving project objectives. Invariably they are working in a environment heavily influenced by functional managers who have ongoing activities to perform that are unrelated to the project but just as important and time consuming. By its nature, the project intrudes upon the functional areas. Projects often appear to ‘‘commandeer’’ personnel and other resources and interfere with functional area routines. If the functional area is a revenue or production producer, the project group activities could have negative impact on sales efforts and production output. Further, the successful completion of the project tends to result in accolades for the project leadership and team. In the meantime, the functional areas are performing their tasks with seemingly less acknowledgment. All of these differing elements and objectives create a natural conflict between project and functional management. Kingdon concluded that any organization that balances multi functional projects with the interests of functional departments would encounter three fundamental areas of conflict. The first involves work and potential solution-related technical decisions. Often the work of the project team distracts from the day-to-day activities of the functional departments. Secondly are results related to team member’s salaries and career management. To have highest effectiveness in managing and motivating team members, the project manager would ideally have full authority over pay and remuneration. In addition, companies are increasing project managers pay and recognizing successful project leadership as potentials for executive leadership often in preference to traditional functional department approaches. Finally are decisions related to staffing and assignment of team members to specific project activities. Personnel for project teams typically come from the functional organizations. Often the project has high visibility, referent authority, and status from senior

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management and is working on interesting activities that directly relate to organizational strategy. As a result there is a tendency for project managers to have leverage in selecting people from the functional areas. The end result is conflict. The potential impact of the natural tendency to have conflict between project teams and functional organizations cannot be overstated. Benchmarking forum participants stress that conflicts with the host organization can and have resulted in the termination of project teams and entire project organizations. Conflicts with the host organization are particularly delicate, because they are based on strong and entrenched cultural differences and perceived threats to the careers and well-being of people who are often at high levels of the organization. Benchmark participants have repeatedly reported that the more successful the project organization, the more it is perceived as a threat to many members of the functional organization. The role of the project manager is diplomatically to balance the interest of both functional areas and the project team. Consequently, one of the responsibilities of the project manager becomes that of the ambassador to ensure effective operations. References: Thomas, 1992; Hayes, Wheelwright, and Clark, 1988; Allen, 1977; Kingdon, 1973; Cleland, 1968.

4.3.1.6. Motivation Superior team leaders place high value on motivation as a project performance tool. Motivation has a direct and immediate effect on project speed, efficiency, and effectiveness in achieving goals. Motivated team members work together and exert more effort to attain the vision and to perform in a superior fashion than they would have without the motivating influence. A self-evaluation statement on the Toney survey dealing with the frequency of motivational activities was, ‘‘I motivate those I lead to do more than they thought they could.’’ The higher performing groups of leaders consistently recorded higher rankings than the lower performing groups. The motivation skills of successful leaders are most apparent in times of crisis, stress, and discouragement confirms the research of Avolio and his team.

Standard:

The best practice project manager motivates team members to do more than they thought they could do.


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The most effective leaders generate enthusiasm, commitment, and compliance say Kirkpatrick and Locke. A key capability of the effective leader is to stimulate, excite, and motivate the team. The superior leaders in their study appealed to the self-interests of followers, their shared values, and the need collectively to maximize group performance. Weick’s studies found that superior leaders motivate the pace of the project and reduce anxiety about the future. References: Toney, 1996; Avolio and Howell, 1994; Avolio et al., 1993; Weick, 1993; Kirkpatrick and Locke, 1991.

4.3.1.7. Effective Communications The objective of project communications is to transmit and receive the optimum amount of information needed to maximize the probability of project goal achievement. The team and associated stakeholders seek critical performance, technical, organizational, and political information. A body of research focusing on interpersonal communications in teams and organizations convincingly supports that project performance is related to communication within the team throughout the host organization and with other stakeholders. The project leader must stimulate the communication process. The findings support the need for a project manager with leadership and managerial skills in preference to technical skills. Allen’s research disclosed that many highly technical team leaders were unable to communicate effectively with external stakeholders. Team leaders with a broader leadership and management skill set gathered, understood, and translated information into more meaningful and useful information for team members. It is worth noting that in Katz’s study, none of the five groups with the least success had a strong project leader who was effectively fulfilling the communications function. Katz’s research also demonstrated that quality of communications is more important than quantity. Generally when benchmark forum participants described ‘‘communications problems,’’ they detailed communications that was ineffective or inappropriate rather than insufficient. Communications quality and processes affect project speed, efficiency, and effectiveness assert researchers Brown and Eisenhardt. Information is essential to superior teams. Communications breaks down barriers, enhances shared group experiences, and smoothes nonroutine rule breaking. Misunderstandings are minimized. Frequent communications with outsiders opens the team to new and diverse information.

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Particularly in a global environment, communications quality impacts project performance. At least two companies in the benchmarking forum have communications specialists assigned responsibility for improving understanding between diverse cultures. A large U.S. and a major Japanese company formed one of the first joint ventures. In the beginning, the cultures were so different that joint meetings resulted in totally different understandings between the two groups. After about 6 months of frustration, an American was sent to Japan and a Japanese was sent to the United States office. The role of both parties was to facilitate communications. They did so by interpreting the meaning of correspondence and messages. After important meetings they would talk to their respective participants and relay the understanding and conclusions to the other culture. Addition of the communications specialists resolved many of the communications problems. High levels of communications result in cohesive bonds among groups of scientists making major changes in their field of science say researchers Griffith and Mullins. As a result the teams were better able to advance revolutionary ideas in the face of resistance from other scientists.

References: Brown and Eisenhardt, 1995; Katz, 1982; Allen, 1970; Griffith and Mullins, 1972; Pelz and Andrews, 1966; Allen and Cohen, 1969.

4.3.1.7.1. Communications Quality Versus Frequency. The type and quality of external communications in which the team engages rather than the amount determine the performance conclude Ancona and Caldwell’s research. They also showed that teams with a communications strategy and plan outperformed those without. The data from their research established that often the teams who communicated least attained the highest performance related scores. Even so, much of the historical literature suggests that frequent and consistent communications are a key to project success. Various research teams have shown that reduced communications levels have serious consequences on project goal achievement. The contradictory research results make the need clear for a plan that defines a consistent, quality oriented and appropriate amount of communications for each internal and external stakeholder group.


Standard:

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The best practice project manager develops and implements a plan for consistent, quality-oriented, and appropriate project communications.

References: Brown and Eisenhardt, 1995; Ancona and Caldwell, 1990; Utterback, 1974; von Hippel, 1978.

4.3.1.7.2. Informal Versus Formal Communications. Most studies conclude that informal communications (face-to-face, telephone, informal meetings, social events) provide a richer body of information over a broad range of project types than do formal communications (e.g., reports, periodic forms and templates, schedules). In particular, informal communications lend themselves to volatile projects experiencing turbulence and change. On projects that are more predictable and have been repeated numerous times, informal communications supplemented with more formal and structured communications pattern are effective. Grinyer and Norburn’s study supports the conclusion that higher performance is strongly associated with the use of informal channels of communication. The research conducted by Allen verified that consistent and high-quality interpersonal communications rather than technical reports, detailed schedules, and other written documentation are the major way that team members collect and disseminate new ideas and information pertinent to the project being performed. When events are unclear, changing rapidly, and there is strategic uncertainty, there is a greater preference for personal modes of information. Informal communications value is increased when supplemented with formal information tools. Particularly when the informal communication signals are weak and inconsistent, communications quality is enhanced when it is enhanced with objective data from complementary and multiple mediums expresses the Weick research.

Standard:

The best practice project manager emphasizes informal communications supported by appropriate formal and multimedia communications tools.

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References: Ancona and Caldwell, 1992b; Daft, Sormunen, and Parks, 1988; Weick, 1985; Grinyer and Norburn, 1975; Allen, 1977; Holland, Stead, and Leibrock, 1976; Menzel, 1965.

4.3.1.7.3. Communications Flexibility. Studies suggest that project teams function differently and have alternative means of communications depending on the type project being performed. Projects that are high risk and involve unproven technical concepts require higher levels of internal and external communications than projects that have a product or service that has been completed numerous times. Researchers agree that superior communications involves an appropriate amount of internal and external sources, and formal and informal methods. References: Allen, Lee, and Tushman, 1980; Dewhirst, Arvey, and Brown, 1978; Katz and Tushman, 1979; Whitley and Frost, 1973.

4.3.1.7.4. Internal Communications. Teams with better internal communications define goals better, have improved and more workable plans, prioritize work better, and generally have superior projects judge researchers Ancona and Caldwell. In particular, highly technical service teams that are superior performers emphasize internal communications among team members substantiates the investigation of Allen, Lee, and Tushman. Katz and Tushman demonstrated that frequent internal communications increased the amount of information, built team cohesion, cut misunderstandings, and broke down barriers to communication. References: Ancona and Caldwell, 1992; Katz and Tushman, 1981; Allen, Lee, and Tushman, 1980.

4.3.1.7.5. External Communications. Although internal communications is important, a differentiating factor between the superior project manager and others is the emphasis placed on communications with nonteam stakeholders and external sources. The extensive communications research by Ancona and Caldwell conclude that teams mold the views of top management with vertical communications and coordinate work and obtain feedback with horizontal communications. A large body of research supports external communications as a best practice. Several studies show that frequent and consistent external communications opens up the team to new information Proj-


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ect leaders with superior results communicate more often overall with people outside their team. In a study by Katz and Tushman, research projects achieved higher performance by emphasizing communications with external professionals, clients, and members of other organizational divisions. External communications impacts project performance by increasing the amount and variety of information available to the team validates the research of Brown and Eisenhardt. Superior project managers bring information into the project organization and dispense it to team members. In addition, they facilitate the external communications by team members and gather and translate the external communications say Katz and Tushmane. Clark and his research team observed intensive stakeholder dialogue through the entire development process in the top-performing teams. In another study by Clark and Fujimote the data showed that frequent external communications opened up the team to more new information than on teams with less external communications. The research of Ancona and Caldwell showed a high positive correlation between specific external communications activities and project success. Noted was a correlation of ⫹0.77 for ‘‘Resolving design problems with external groups,’’ a ⫹0.66 rating for ‘‘Coordinating activities with external groups,’’ a ⫹0.55 for ‘‘Reporting the progress of the team to a higher organizational level,’’ ⫹0.52 for ‘‘Keeping other groups in the company informed of the team’s activities,’’ and ⫹0.52 for ‘‘Review of product design with outsiders.’’ All the ratings were judged significant. Katz studied various types of projects and found that a major factor that impacts the amount of communications needed by the project team is the amount of interdependence of the project task with other functional areas. Also, the need for access to technological changes and developments, as well as outside professional communication, and the rapidity of technological change are variables that increase communications needs. The most effected by the need for external communications were highly technical projects in areas with rapidly changing technologies that had a strong dependence upon communications with other organizational areas. Katz interpreted the results to mean that rarely do teams in these arenas contain all the technological knowledge and expertise to complete the project. External knowledge, information, and resources need to be acquired. An investigation by Sherif and another by Alderfer found that performance is reduced when teams become overbound to the point there is high internal loyalty and strong inner dynamics but are unable to reach out to the external world.

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Standard:

The best practice project manager communicates an appropriate amount of information externally to the team.

Negative Aspects of External Communication. Research identifies negative elements to excessive external communications. External activities may be engaged at the sacrifice of internal operations. The problem of groupthink can promote external stereotyping and discourage external communication that might damage the group’s consensus conclude multiple studies by Janus. Groups can become unbound by having external ties and relations that prevent the group from coalescing and bonding together attest two studies by Smith. There may also be intergroup conflict resulting from external communications that indicate outsiders have different goals, styles, and attitudes say several different studies. References: Brown and Eisenhardt, 1995; Dougherty, 1992; Clark and Fujimoto, 1991; Ancona and Caldwell, 1990; Lorenz, 1990; Smith, 1983, 1989; Clark, Chew, and Fujimoto, 1987; Janis, 1982, 1985; Katz, 1982; Katz and Tushman, 1981, 1979; Alderfer, 1976; Shaw, 1981; Schmidt and Kochan, 1972; Allen, 1971; Sherif, 1966.

4.3.1.8. Lead by Example: Be a Role Model The superior project manager takes his or her role model position more seriously than lower performing team leaders. Superior project leaders apply frequent actions to guide and shape the behavior of subordinates. Rather than words, the project manager’s actions exhibit and validate their beliefs and attitudes about team performance, expected behavior, and best practices. The example set by the project manager sets the overall tone for project speed, efficiency, and effectiveness. The effectiveness of the role model approach is validated by the literature and the statistics are significant. The open-ended questions in the Toney study show a clear progression in the importance leaders think should be placed on this leadership factor. All leader categories ranked as essential the leadership activity of serving as a ‘‘role model’’ but the leaders recording superior performance rated it the highest in importance.


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The best practice project manager acts as a role model to communicate positive values and guide the behavior and performance of the team.

Researchers and students of leadership from the earliest times recognized the significance of leading by example. Research pioneer Fayol declared that the leader should set a good example and generate energy, initiative, and loyalty among the personnel. He said, ‘‘One of the most effective methods of training is by example.’’ He also stressed that setting a bad example results in serious repercussions on the unit as a whole. Researchers Kirkpatrick and Locke asserted that effective leaders present themselves as role models and personally act in a way that is consistent with their vision. As a result, followers are motivated to attain the vision and to perform in a superior fashion. The importance of serving as a role model is apparent in times of crisis, stress, and discouragement concludes Avolio’s investigation. The projected self-confidence when confronted with unusual events gives rise to leaders being viewed as charismatic, if not inspirational. References: Toney, 1996; Toney and Powers, 1998; Avolio et al., 1993; Kirkpatrick and Locke, 1991; Fayol, 1916.

4.3.1.9. Build an Efficient and Effective Team Benchmarking participants say the building of the project team is one of the most important factors that impacts project speed, efficiency, and goal-achieving effectiveness. One company reports that team selection is considered so important that their project portfolio is developed around the availability of people rather than other resources such as funds. They judge that professional and qualified people are their most scarce resource and major constraint on strategic success.

Standard:

The best practice project manager builds an effective and efficient team.

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Researchers agree that a key best practice of superior project leaders is to build effective teams. Likert’s studies found that the leader is responsible for building subordinates into an effective team. The leader’s role is to train subordinates in group decision making, group interaction, technical competence, setting high and realistic goals, and monitoring performance to ensure the goals are attained. Likert also determined that a function of high-performing leaders is to build high team or group loyalty. His research findings demonstrated that the stronger the loyalty of group members to the group, the greater is the motivation to attain the goals of the group, and the greater is the probability of attaining those goals. Numerous theorists judge team building as being so important that they define leadership in terms of its instrumental value for accomplishment of group goals and satisfaction of needs. Lieberson and O’Connor use the example in their study of a coach building a sports team. The ideal winning model is to have a superior coach and superior team members. Even though sports history abounds with examples of mediocre teams winning titles, they are exceptions rather than the norm. References: Kirkpatrick and Locke, 1991; Lieberson and O’Connor, 1972; Likert, 1961.

4.3.1.9.1. Successfully Select Team Members. Top-performing team leaders build their teams by acquiring people who are needed to attain the vision and achieve the leader’s goals. Individual and team skills are maintained and upgraded say Kirkpatrick and Locke. Leaders are made stronger by complementing themselves with other people. Weak areas are reinforced. Ingram’s studies showed that poor selection of people has a negative impact on the probability of project success. Training, qualifications, and talent was noticeably lacking in teams selected by the project managers of failed projects. In some cases studied, friends of the project manager were brought into the project. Although utilizing friends is generally fine, it has negative consequences if favoritism is shown or the friends receive excessive leadership protection. References: Ingram, 1998; Kirkpatrick and Locke, 1991.

4.3.1.9.2. Team Spirit. Time combined with team interaction, cultural experiences, meaningful team experiences, and natural bonding encourage the team to become a homogeneous group. The strengthening of cultural bonds between team members provides a


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strong sense of identity and differentiates the group from others. If the process becomes excessive, it contributes to a sense of superiority over others and isolation from outside communications. References: Katz, 1982; Salancik and Pfeffer, 1978; Homans, 1961.

4.3.1.9.3. Team Duration and Its Impact on Performance. Researchers have differing views about the value of group tenure or the amount of time the group has been working together. Overall it can be concluded that group tenure when combined with group cohesiveness seems to improve performance. Nevertheless, some researchers show that after about 3 years the effectiveness of the team levels and then declines. It is suggested that groups with high tenure begin isolating themselves from outside critiques and sources of information. There are numerous examples of teams that have worked together for years and maintain high levels of performance. Smith found that patents and technical papers as a measure of group performance consistently increased along with group tenure. O’Keefe, Kernaghan, and Rubenstein concluded that groups with long tenures and high cohesiveness maintained intellectual competitiveness within the group and encouraged innovativeness with resultant high performance ratios. Griffith and Mullins found high levels of communication, organization, and cohesive bonds among research groups that generated revolutionary changes despite resistance from other scientists. They also determined that groups with low tenure lacked development of sufficient role and status relationships. Porter and his research team found that over time, team members become specialized in their particular functional area of expertise, project assignment, and problem areas. As the role differentiation becomes increasingly defined and stabilized, and the perceptions of other team member’s capabilities, interests, and contributions are clarified, there is less need to interact within the group. The group knows and expects a predictable output and pattern of behavior from each of the other team members. Efficiency of effort and effectiveness is improved. As the longevity of the team increases over time, interrelated social influences and processes begin impacting the behavior of the group. In the research, members of groups increasingly shared a common set of beliefs about the project and work setting. Consensus with each other increased until there was a team congruity. Stalk and Hout found that groups tend to organize their work environment to

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reduce stress and streamline the efficiency, predictability, and clarity of the team’s effort determined. All of these forces can be directed toward maintaining high performance levels or may encourage less effective team behavior. As discussed previously about individual performance, some research suggests that group effectiveness increases to a certain point and then levels off. Several studies even show that many natural tendencies promote a performance decline in aging groups. Shepard’s investigation of research and development groups concluded that team performance improves up to 16 months but then decreases. Pelz and Andrew’s research as supported by Smith, determined that the optimum group longevity is between 3 and 4 years. The performance decline is encouraged and manifested by several factors. Internal Focus and Isolation. The group can become increasingly isolated from external forces and sources of information. Researcher Sherif found that groups may become internally focused to the point there is high internal loyalty and strong inner dynamics but the team is unable to reach out to the external world. As a result the team becomes increasingly isolated from external sources of important information and technology advancements. As time passes the team perceives that there is less of a need to seek audits, critiques, and new information that could impact the team’s performance agreed the findings of Petz and Andrews. Not Invented Here Syndrome. As group tenure increases with time, there is a tendency to acknowledge only information that is compatible with the team’s preconceived viewpoints, interests, and perspectives determined Rogers and Shoemaker. This is sometimes titled the ‘‘not invented here’’ syndrome. Communications are increasingly targeted to other individuals and groups who reflect the views of the team and are likely to exhibit agreement with the team’s approach. Team members even selectively interact with external stakeholders to avoid conflicting messages and information. Group Think. As teams work together, they develop standardized approaches, work patterns, communications interfaces, and team member relationships that are familiar and comfortable. The shared perceptions that become stronger with time, may constrain individual attitudes, opinions, and approaches. Although a great deal of assurance is provided to the team itself; nevertheless, they are sometimes become increasingly isolated from outside information say Petz and Andrews. The research suggests that as a result teams become less and less responsive to unusual challenges and approaches to their task. In particular, the team becomes less receptive toward


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any information that signals a significant disruption of their now imprinted, work practices and team behaviors. Egotistical Behavior. Time combined with team interaction, and natural bonding through cultural and meaningful team experiences encourage the team to become a homogeneous group. The strengthening cultural ties between team members provide a sense of identity and differentiate the group from others. Researcher Homens found that if the process becomes excessive, it contributes to a sense of superiority over others and isolation from outside communications. Team members increasingly perceive that they possess adequate expertise, knowledge, and skills in their technical areas. It becomes increasingly less important to look to the outside for critiques and new ideas. The team members place their project approach on a psychological pedestal in terms of its perceived technological superiority. They view outside competitive approaches and conflicting approaches as inferior by definition. References: Ingram, 1998; Toney, 1996; Stalk and Hout, 1990; Katz, 1982; Pfeffer, 1981; Porter, Lawler, and Hackman, 1975; O’Keefe, Kernaghan, and Rubenstein, 1975; Griffith and Mullins, 1972; Rogers and Shoemaker, 1971; Smith, 1970; Pelz and Andrews, 1966; Sherif, 1966; Homans, 1961; Shepard, 1956.

4.3.1.10. Authority Delegation A fundamental characteristic of supportive leadership is a willingness to delegate authority. In the Toney surveys, superior business leaders professed to delegate authority about 6% more than lower performing leaders.

Standard:

The best practice project manager delegates authority to the lowest level where the task can be performed effectively.

Delegation has an impact on the bottom line while at the same time improving morale. Delegation increases efficiency by moving decision making to the lowest and most economical level at which the task can be effectively completed. Consequently costs are reduced. Speed is increased because the individuals closest to the work situation can

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immediately make decisions rather than taking time to consult with superiors. References: Toney, 1998; Randolph, 1995.

4.3.2.

General Leadership Skills

Numerous skills and best practices apply to leadership in general. Although they all have an impact on speed, efficiency and effectiveness the linkage is not as clearly defined as in the preceding topics. The general leadership skills provide overall benefits to project management. 4.3.2.1. People Emphasis Over Tools The consensus of benchmark forum participants is that superior project managers emphasize face-to-face interaction with the team in preference to spending time using the tools of project management such as scheduling, software, and templates. At the same time, participants stated that managers new to project management should emphasize use of the tools until they gain a higher level of confidence. The general view is that superior project managers use the tools for support. It is common for project managers to become too engrossed with the tools. There are numerous cases where the project was a failure simply because the project manager did not know what was going on.

Standard:

The best practice project manager emphasizes project and people management over ‘‘tools.’’

4.3.2.2. Supportive Leadership Supportive leadership is often titled servant leadership in the literature. The supportive approach to management embodies an attitude or philosophy about people. It involves the leadership view that their role is to support and help subordinates. It differs from more directive styles of leadership in its emphasis that team members are competent and skilled. Supportive leadership necessitates building the team with skilled and effective people, having broad spans of control and delegating authority. The research of James Worthy at Sears showed benefits from


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what has since been recognized as servant or supportive leadership. In stores where management demonstrated trust, support was evidenced by broad spans of control and extensive delegation, higher sales, better profit performance, and lower payrolls as a percentage of sales. Employee morale was higher, more people were promoted to positions of authority in the company, and the caliber of people was judged to be better. Quality of planning was considered better, because it was developed at lower levels from people closer to the front lines. Worthy noted that the attitude of the supportive leader is evident in their conversations as well as their face-to-face interaction with subordinates. When moving around the organization, the supportive leader tended to stop frequently to talk with employees, ask about concerns they might have or support they need, and showed pride in the employee’s performance. Supportive leadership assumes a trusting relationship with others. Worthy found that supportive leaders place the interests of others over their own—even when little or nothing is expected in return. Every effort is made to treat people with respect and dignity. This attitude is reflected in the type organizations that leaders create and the manner in which they relate to people. Executives who take the supportive approach tend to have organizations with broader spans of management control. For this approach to work, it is necessary to have highly qualified people. Consequently, the executive has a strong incentive to seek out and work with superior people. The desired capabilities of the managers tend to reflect those of the servant executive; they willingly assume responsibility, are trustworthy, use good judgment (wisdom), and can work on their own without constant guidance. The impact on the bottom line is positive, because expensive management is reduced and decisions are pushed to lower and more economical levels. Indirectly, sales are increased because morale and enthusiasm are higher. The danger of the supportive approach to management is that the resultant increased authority of subordinates tends to increase the risk of mistakes being made. The trusting servant leader encourages the subordinate to use those mistakes as learning tools. They tend to recount the errors and disasters in their own lives as examples. Overall, the nature of trusting supportive leadership is that it forces subordinates to exercise initiative, develop self-reliance and confidence, and to learn from errors and experience. The supportive attitude is by definition people oriented as compared to system oriented. The supportive attitude is evidenced in nu-

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merous people-oriented best practices. It includes providing others with the information needed for job performance, team building, training, coaching, and mentoring. The supportive leader places faith in the ability of people to maximize opportunities and to minimize problems. The very nature of trusting and supporting people tends to result in systems that are efficient. Consequently, once the supportive approach to management is put in place, systems problems tend to take care of themselves. For example, if the performance of a division were suffering, the supportive approach would be to see how management could be supported and provided tools for improvement. Solutions would be more management strengthening rather than system improvement oriented. The supportive approach to management emphasizes training people. Executives see themselves as teachers or mentors for those with less experience. Their approach is to work with others to improve their levels of confidence. The objective is to nurture the person so that they can take on even greater amounts of authority and responsibility while minimizing their need for supervision and direction. References: Worthy, 1952 (see The Journal of Leadership Studies 1998, Vol. 5, No 4. for a complete issue dealing with subsequent research and best practices associated with Worthy’s research).

4.3.2.3. Training, Teaching, Coaching, and Continuous Learning The value of training has long been recognized. Sun Tzu stated, ‘‘Training soldiers habitually reinforces commands and ensures the army will be well disciplined.’’ Training that directly applies to the project management and associated technical activities can increase project speed efficiency and effectiveness dramatically. However, it must be carefully selected. Otherwise, the time applied to training can distract from effort needed on the project.

Standard:

The best practice project manager places high priority on teaching and coaching team members in skills that directly translate to improved project performance.


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Benchmark forum participants agree upon the value of training for project managers and team members—as long as it produces results. The forum respondents view training as an investment in better performance. The training process includes maintenance of project manager and team skills, measurement of the results of training, and rewarding those who exert effort to become trained. All attending companies have formal training programs. Several have or participate in distance or on-line project tutoring system. Some state that they have sent thousands of project managers through training using both outside and internal training as well as encouraging PMP certification and attainment of university degrees. Emphasis on training is a major area that differentiates the superior team leader. There is a high ranking of the value of training by top-performing leaders as well as strong positive correlation between training and project goal achievement. Superior leaders rank training significantly more important than either of the other groupings in the Toney surveys. In open-ended questions the top project goal achievement generating leaders listed training as the second most important activity after strategic planning. The emphasis of the superior goal-achieving leaders on team training was also evident by their response to the ‘‘most important things I do.’’ The top quartile of leaders in terms of performance listed training type activities more than any of the lower successful groups. It is noteworthy that among the lower ranges of project goal achievement success the respondents to Toney’s surveys failed to even mention training as a factor in achieving high project goal achievement. Ingram’s investigations agreed. He determined that project management training and certification was lacking, insufficient, or nonexistent on a significant percentage of failed projects. Best practice project managers and their companies emphasize maintenance of project management competencies and continuing education. Once the individual project manager’s competency strengths and weakness are defined, they are used as measurement and training guides to improve individual performance. These efforts range from standardized performance evaluations, to programs of individual skills enhancement and the development of self-improvement programs. Some participants’ companies require as much 40 hours of training each year. References: Ingram, 1998; Toney and Powers, 1998; Wick and Leon, 1993.

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Standard:

The best practice project manager has a personal development program based on identification of skills and competencies.

4.3.2.4. Treat People as Individuals Avolio and Howell’s studies indicate that leaders who displayed more individualized consideration positively contribute to the achievement of business unit goals. Toney’s research supported the conclusion. For example, one question, ‘‘I treat those I lead as individuals rather than members of a group,’’ received a high self-rating and correlation by the top-performing leaders.

Standard:

The best practice project manager treats team members as individuals rather than members of a group.

Respondents explain their responses by stressing the importance of establishing personal relationships with employees. Treating people as individuals is evidenced by learning about families, personal aspirations, work history, and other factors that make each individual unique. Respondents talked about being impressed with those who could remember names and the background of a broad variety of individuals. References: Toney and Powers, 1998; Avolio and Howell, 1994.

4.3.2.5. They Network by Helping Others There is a body of research supporting the judgment that superior leaders network more than their less effective counterparts. Superior leaders stress that networking is much more than knowing ‘‘the right people.’’ As one interviewee remarked, ‘‘What good is it to know 10,000 people if they all think you are incompetent?’’ Superior business leaders think of networks in terms of helping other people. In turn, when they need help from others, the network works both ways.


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The best practice project manager consciously builds and maintains long-term friendships and relationships, networks, and helps others even when nothing is expected in return.

Studies by Syme, and by Wolf and Bruhn list the benefits of networking. For people facing social and ethical dilemmas, involvement in a network provides a sounding board of opinions and a source of advice. In stressful times, the network becomes a support group. Finally, the social interaction required to function in a network results in participants being less secretive and deceptive. Networks tend to be formal. They include professional, minority organizations, fraternal orders, religious groups and sororities. In large organizations people often refer to the ‘‘good old boy network.’’ These networks are composed of individuals who have experience working together. 4.3.2.6. Treat People as Assets Rather than Variable Costs Although nonvalidated by extensive research, there is evidence that superior organizations and leaders are reluctant to layoff or fire people. The concept is grounded in financial and accounting logic that recognizes that employees are assets that represent a sizable organizational investment. When the total cost of hiring, training, and indoctrinating people in the organizational culture are added to the potential costs of firing and rehiring, the total investment in a typical employee is phenomenal. The opposite approach is to consider employees as variable costs. This view takes into consideration only the immediate payroll costs associated with each individual. The variable cost approach occurs because prevailing accounting systems record employee costs as variable costs rather than as assets. The shortcoming of the variable cost approach is that it tends to encourage executive management to layoff people as an approach to improving the bottom line. The immediate wages of the employee are saved. Unfortunately, the investment in the employee and the costs of rehiring an eventual replacement are not shown as a cost of firing. One research study supported the

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conclusion that very few companies utilizing massive layoffs reported any significant improvements in the bottom line. On the other hand, employee loyalty was significantly diminished even among those who remained on the payroll. 4.3.2.7. Flexible Leadership Skills: Are Effective in a Broad Range of Situations The application of project management best practices varies in different situations and cultures. For example, superior leadership is expected to have greater impact on followers’ performance in teams operating in turbulent, unstable external environments than those in more routine, stable external environments determined the investigation of Avolio and Howell. The same research concluded that superior leaders are flexible in dealing with unusual and hectic situations. Particularly in a global environment, flexibility is mandatory. Even though the application of best practices and competencies varies widely, it is stressed that the basics remain the same. A globally valid best practice applies to any situation or culture. For example, the concept of timeliness varies from culture to culture and even from one organizational facility to another. Nevertheless, in the world of professional project management, timeliness means starting on the time specified. In every culture and work environment, if a meeting were scheduled to start at 8:00 AM, the superior project manager would start the meeting at precisely 8:00 AM. The premise of a universally acceptable best practice is that same as the foundation of business science; that is, there is one best way to do things. The concept of ‘‘the one best way’’ is supported by the use of standardized methodologies, templates, and procedures. Frederick Taylor pioneered the theory in his 1916 book, The Principles of Scientific Management. The time and motion research greats Frank and Lillian Gilbreth supported the validity of its logic. In Lillian’s book about their life’s work, The Quest for the One Best Way, she said, ‘‘A few of us seek for one thing only, and that apparently forever unattainable. These few are those who dedicated their lives to a quest for the one best way.’’ The more modern researcher, Rensis Likert, developer of questionnaire testing scales and leadership measurement methods, affirmed the philosophy. Likert studied corporate executives and the actions taken to achieve goals. In his book, The Human Organization: Its Management and Value, he repeatedly stated that there is a best way to lead and to manage—and that a diligent search can find those ways.


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Studies show that project teams function differently and have alternative means of communications depending upon the circumstances. There are two major areas that require the highest degree of flexibility in the application of best practices and competencies. The first is high-technology projects where changes are occurring as the project is underway and the customer demands the latest changes. Projects such as these, which are high risk and involve unproven technical concepts, are different from projects that have a product or service that have been executed numerous times. High-technology– based product development projects require higher levels of internal and external communications showed the investigations of Whitley and Frost. The second category of projects necessitating flexibility on the part of the project manager is global projects conducted in diverse cultural and environmental situations. Daft and Sormunen disclosed that one distinctive characteristic of the higher performing leaders was their response to a broader range of sociocultural factors. The superior performers adapted to diverse geographical and organizational issues and differences. Lower performers placed more emphasis on task-related data. References: Avolio and Howell, 1994; Daft, Sormunen, and Parks, 1988; Whitley and Frost, 1973.

4.3.2.7.1. High-Technology Projects. Investigations conducted by the Benchmarking Forum and supported by outside research agree that the characteristics of high-technology development programs, information systems, and volatile and high-risk projects require the application of different leadership and management best practices than do more conventional projects. Researcher Ingram was intrigued by the statistic that 90% of utility facility construction projects come in on time and budget while evidence suggests that information systems and other volatile projects fail to deliver promised schedule, cost, and performance benefits over 50% of the time. He found sizable differences inherent in complex, high-risk, rapidly changing projects with unknown and evolving technology. The major differences were as follows: Learning Curve Disadvantages. The unknowns related to volatile projects make it difficult to do it right the first time. Other industries have been managing projects for longer periods of time. For example, buildings have been constructed for thousands of years

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and are repetitions of the same fundamental set of activities. Even production activities like manufacturing products on assembly lines undergo constant reiterations and improvements. For repeatable projects, planning and budgeting is reasonably precise. On complex projects dealing with a rapidly changing technology, it is much more difficult to achieve cost and time management efficiency. Customers Often Lack Full Understanding of the Technology. In many situations the technical nature and complexity of the project is poorly understood by customers and stakeholders. Volatile projects are more difficult to monitor and control. Customer expectations are more likely to be unrealistic and needs and requirements may constantly change. Many organizations derive the majority of their profit from the successful operation of functional activities or the day-to-day production of the product. The importance of the high-tech project may be less clear. The effectiveness and need for the project is often masked by the profitability of the host organization. As a result of all these uncertainties, functional managers may not be as willing to accept project buy-in and accountability. Rapidly Changing Technology. High technology almost by definition consists of knowledge bodies that are rapidly changing and evolving. New technologies quickly obsolete existing systems and products. Product life cycles are short. Pressure to enter the market speedily may encourage corner cutting. Competitive pressures encourage quick development and marketing of new products. As the pace of change accelerates, there is continuing pressure for faster project performance. Numerous Scope Changes. The rapidly changing nature of volatile projects results in numerous changes to plans, financial management baselines, and scope of the project. Performance becomes more difficult to measure and accountability tougher to enforce. Consequently, projects can become skewed, go off track, continue into perpetuity, be subject to personal interests, and performance problems can be more easily disguised. In highly volatile projects there is much greater reliance upon the superior project manager to maximize the probability of project goal achievement. Eisenhart and Tubrizi showed a significant positive correlation between an improvisional and adaptive style on the part of the project manager and project success. There was a negative relationship between the amount of use of formal project tools and performance. The more planning that occurred on volatile projects the less the success. The interpretation of the researchers was that in volatile projects, excessive use of tools such as structured method-


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ologies, planning software, templates, and procedures reduced the flexibility of the project manager to take advantage of and respond to opportunities and alternatives as they unfold and present themselves. References: Top 500 Project Management Benchmarking Forum unpublished minutes. Ingram, 1998;. Eisenhardt and Tabrizi, 1990, Gupta and Wilemon, 1990.

4.3.2.7.2. Understands Global Project Management Applications. The vast diversity in global cultures and work environments has numerous and broad implications for project selection, planning, implementation, and termination. Various studies conclude that one-third to one-half of foreign assignments result in failure as evidenced by a request to return home. Generally the unsuccessful individual has recorded exemplary performance in the areas of management and leadership competence as well as the application of project methodologies and tools. Situations encountered in the global environment often catch even the best project managers by surprise, because they include sensitive subjects such as race, religion, politics, personal appearance, manners, and social behavior that are not always addressed in an academic environment. Project managers also experience problems, because navigating the global environment and particularly unfamiliar cultures cannot be packaged in tidy best practices teaching modules or predictably solved with management tools. It involves learning and applying a complex and nebulous body of knowledge that embraces nearly every discipline and strongly held set of beliefs associated with human behavior. Although it has been said that people around the world are basically the same, it is also generally agreed that the specifics vary tremendously. A global approach to project management best practices strives to minimize the differences by providing a universal work platform. Even so, the superior project manager recognizes that cultural, leadership, language both verbal and nonspoken, religion, and a myriad of other factors can make the difference between individual success and failure in an unfamiliar culture. Culture refers to a group’s system of values and norms. Culture varies dramatically from country to country and even within geographical areas of the same country or city. It includes attitudes toward basic values such as capitalism, freedom, honesty, truth, marriage, and sex. Norms are social rules and guidelines for behavior. Included are folkways that have little moral significance and include

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dress codes, manners, etiquette, social graces, and grammar. Even though folkways have less moral significance, lack of understanding can destroy a project manager’s credibility, social acceptance, and make project success more difficult. Mores are norms that are important to society’s functioning and include fundamental views toward such subjects as theft, incest, and cannibalism. Leadership and Management. The basic best practices associated with leadership and management are roughly the same throughout the world although the relationship with team members may differ. Hofstede’s Power Distance, as previously discussed, reasons that people are viewed as unequal in physical and intellectual capacities. In low-power countries, leaders and subordinates are viewed as equal. High-power cultures consider the follower as unequal. Other factors impacting the relationship between the leader and the follower are uncertainty avoidance and the concept of masculinity versus femininity. Spoken and Nonverbal Language. This includes communications utilizing eyes, smiles, facial expressions, space, and gestures. Prevailing wisdom for project managers in unfamiliar cultures is to keep the hands at the sides of the body, avoid arm motions and dramatic displays of emotion, facial expressions, or behavior. Religion. The fundamental values of any culture are grounded in religion. The views and beliefs of religion permeate nearly every aspect of a society or cultural group. The most popular religions of the world are Christianity, Islam, Hinduism, Buddhism, and Confusianism. When operating in a culture with an unfamiliar religion, the superior project manager will become knowledgeable about religious holidays, attitudes toward work and social behavior, public customs, and other views that could affect project speed, efficiency, and effectiveness. Human Resource Management. Included in this subject is the ability to recruit skilled personnel for the project, implications of foreign assignments including all associated family challenges, e.g., culture shock, repatriation, compensation, and the value of perquisites (perks). Other human resource topics that could impact project success are the amount of labor participation in management, degree of influence of unions, human resources laws, and regulations impacting the project. Performance appraisal traditions, approaches, and problems can be different between cultures and organizational environments. Labor. Topics impacting project success include labor availability, skills levels, productivity, work laws, mobility, guest worker rules, sources of management talent, selection and training require-


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ments and needs, and the culture’s view toward women or minorities in the workplace. Miscellaneous People-Oriented Subjects. These include esthetics (i.e., the concept of beauty), education and training capabilities, social institutions, relationships of individuals versus groups, and the rigidity of the social class system including the importance of castes, social strata, class consciousness, and social mobility. References: Any university level text dealing with global business will contain detailed discussion about each of the subjects summarized above.

4.4. CRITICAL AND ANALYTICAL ANALYSIS OF ALTERNATIVES AND OPPORTUNITIES For projects to be successful, consistently correct decisions must be made. To do so requires the best practice project manager to find the right answer rather than building support for a preconceived opinion. He or she critically analyzes past performance and future alternatives and opportunities. Input from others is a key element in the process. Empirically based analytical techniques combined with experience are relied upon to make valid decisions. As a group, superior leaders indicate they engage in analytical decision making more than the lower goal achievement groups according to the research of Toney. Analytical decision making clearly differentiates the superior leader from others. There is a near perfect correlation of ⫹0.98 between analytical decision making and successful goal achievement. Not only does analytical decision making increase the probability of project goal achievement but also project manager credibility among stakeholders is improved. The best practice project manager that employs a pragmatic approach presents the image that the conclusions and recommendations are founded on solid decision-making principles. Benchmarking participants note that the analytical approach is often confused with the use of project management tools such as software, standard procedures, and templates. Although important, in some companies the development of project tools has assumed undue importance. It is agreed by participants that the particular tool used is not critical as long as it supports the analytical decision making process. The core success factor is that the project team members are constantly striving to find the right answer to alternatives and opportunities.

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Standard:

4.4.1.

The best practice project manager uses a pragmatic analytical approach to make the correct decision rather than building support for preconceived opinions.

Flawed Decision Making

Flawed decision making is a problem in organizations. Professor Nutt analyzed approximately 350 major decisions and their effect on the organization over a multiyear period. He concluded that approximately one-half were incorrect as determined by whether the action remained in effect after 2 years. He also determined that the most consistently successful approaches to decision making were the least used. In many cases, managers utilizing obviously flawed decisionmaking approaches were unaware that better approaches were available. The most popular method observed by Nutt’s analysis was to make decisions by dictate. The method was also the least successful. In decision making by dictate, managers perceive an opportunity or define a problem and then find a quick solution. The solution is then mandated to subordinates. There is minimal input from others in the process. Between 26 and 42% of decisions were made in this fashion of which only 44 percent were successful. Decision making by dictate is tempting in a project management environment. Speed and efficiency are constant factors, the answer to problems and alternatives seems obvious, and there is a need to move forward with the project. By definition, project managers are time focused and action oriented. The incentive to make decisions by dictate, is increased because often managers are under pressure from stakeholders to make rapid decisions and to begin implementing some form of solutions. There is sometimes even an inferred necessity and motivating factor to appear decisive. The flaws in the decision by dictate approach result in project problems. Nutt’s research disclosed that project managers who made decisions by dictate often spent greater amounts of time and other resources trying to make the idea work. Decision making by dictate also resulted in an inordinate amount of time spent defending the decision. Leaders who utilized decision making by dictate expended three times as much time defending their actions as the manager who received broad input and then made a decisive judgment. Nutt also


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determined that leaders who impose a unilateral decision create a misleading sense of clarity. It is misleading because making the correct decision often necessitates the evaluation of ambiguous and uncertain issues. Finally, the research disclosed that project managers who consistently announce decisions by edict attain the reputation for being heavy-handed and dictatorial. As a result, it becomes more difficult for them to form and nurture willing teams. Other researchers have shown conclusively that the most common reason for organizational failure is flawed decision making. Argenti’s study of failed companies found that the antithesis of the superior leader who consistently attains organizational and team goals is the leader who destroys or bankrupts a team or organization. Argenti said that the major shortcoming in failed organizations was the inability to make pragmatic, analytical decisions. Failure to use, accounting and finance analysis techniques was the most common root cause. As a result leaders tended to have cash flow problems and took on excessively large and risky projects. Ingram also associated poor decision making with project failure. He judged that project managers failed to make business decisions related to the (a) financial and strategic justification for the project; (b) balancing scope, cost, and deadlines; and (d) maintaining realistic and objective technical approaches. 4.4.2.

Analytical Decision-Making Techniques

From this it can be seen that arriving at the correct decision is vastly different that shooting from the hip with a fast decision or building a case for a preconceived idea. Specific analytical approaches and success factors that serve as evidence of pragmatic decision-making expertise are disclosed by the research. The superior project manager gathers input from others by soliciting critiques, benchmarking, and encouraging independent and objective audits. Critical success factors for the project are identified in advance. Analytical tools are utilized with particular emphasis on accounting and finance techniques. The superior project manager is skeptical of quantitative reports and balances them with validation from observation of the project and supporting facts. All of these techniques and factors are supported with intuition and experience with the end result that the probability of making the correct decision is maximized. 4.4.2.1. Gather Input from Others Setting objectives and gathering input from others about methods to achieve the objectives, increased decision-making success in Nutt’s

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research. The result was a 70% success rate and one of the most successful decision-making methods found. The approach gave all parties involved freedom to investigate alternatives and the capability to provide input. The project leaders made themselves open to receive any information that might achieve the desired result or encourage making the correct decision. Gathering decision-making input from others engaged stakeholders in the search for the correct answer. Not only was the chance for failure reduced, so was the criticism. The decision-making approach also encouraged learning and leadership development on the part of team members. Involving others in the decision process generated multiple options.

Standard:

The best practice project manager gathers information from others before making important decisions.

Obtaining decision-making input is not always easy for the project manager. Many of those surveyed said they found the process time consuming and difficult to use. There was also fear that it resulted in a loss of project control. 4.4.2.2. Solicit Critiques Leaders with highest performance indicate they solicit critiques about their performance more often than the lower performing leaders in Toney’s surveys. Specifically they solicited objective criticism about deficiencies in personal and project performance. Critical but objective information was obtained through surveys of stakeholders, focus groups, one-on-one discussions and through third party investigations.

Standard:

The best practice project manager solicits critical suggestions to improve decisions.

4.4.2.3. Benchmark and Use of Role Models Professor Nutt’s investigation of decision making found that the least used method of decision making was to benchmark the performance


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of respected organizations and then to copy or tailor the successful approach to one’s own organization. On a personal basis the approach would be to pattern one’s behavior after other superior project manager role models. Although the least used, the benchmarking approach was the most successful. Two years after benchmarking-based decisions were made, they were successful in 96% of the cases analyzed. Benchmarking varies in its approach. Some are data intense and include comparisons of project process and performance data. Others deal with broad conceptual issues where project managers and stakeholders discuss and search for best practices relating to specific problem areas or topics. The most successful benchmarking decisions in Nutt’s studies were made when a problem was identified and a search conducted for solutions. In many cases the benchmarking involved discussing and comparing performance with respected individuals rather than entire organizations. In numerous cases benchmarking involved observing the practices of several different organizations and amalgamating the best features from each. Using the benchmarked organization as an example provides credibility to the quality of the suggested decision. The access one gains to the best practices of other successful organizations strengthens the decision maker’s knowledge base. Benchmarking opens the group to new ideas and bypasses the ‘‘not invented here’’ syndrome. Benchmarking is also reported to be one of the least expensive ways of making decisions as other organizations have performed the pioneering work.

Standard:

The best practice project manager benchmarks and implements best practices from other individuals, teams, and organizations.

4.4.2.4. Audit Projects The audit is an independent and objective evaluation of a project. It originated in the accounting profession but has direct application to superior project management. Audits involve the pragmatic analysis of the project. Generally outsiders conduct the audit, although it can also be performed by the team itself if a rigorous and honest appraisal process is used. One objective of an audit is to avoid the natural biases of the project team. It is particularly appropriate in identifying prob-

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lems and in evaluating the performance of a single project related to a portfolio of projects.

Standard:

The best practice project manager audits project performance by conducting independent and objective evaluation.

4.4.2.5. Identify Critical Project Success Factors Before project success and progress can be measured, definition of the measurement metrics should occur. These are the critical factors that determine project team success. They could include financial, quality, political, customer satisfaction, technical, functional, organizational, strategic, or any other set of deliverables and controls. Typically included is a review of stakeholder interests related to the work breakdown structure. Once metrics are identified, they can be incorporated in the project schedule, budget, and functional and technical specifications. The identification of critical team success factors improves the quality of decision making by keeping the best practice project manager focused on important issues.

Standard:

The best practice project manager defines team performance–related success factors in advance, revalidates them periodically, and uses them to evaluate project team success.

4.4.2.6. Accounting and Finance Analytical Tools. Many valuable tools in the superior project manager’s toolkit improve decision making. Stakeholder needs and communications definition, risk analysis, scope definition, and control and functional and technical specifications are all examples. Of all the tools, the research indicates that accounting and financial analysis most dramatically improves the probability of making the correct decision. As early as 1916, Fayol recognized that, ‘‘Nothing happens within an organization without the financial function playing a part.’’


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Hise and McDaniel’s study expanded the empirical base of Fayol’s theories by showing a high level of significance attached by superior leaders to financial planning and control. The accounting and finance activities were considered important current and future source of organizational growth and project goal achievement. Leaders in the study spent more time on financial and accounting activities than on any other and anticipated continuing doing so. There are many important reasons why the superior project manager needs to be thoroughly versed in project accounting and finance. From the view of the host organization the projects being performed have been approved primarily because they achieve financial and strategic objectives. Ability to use and communicate financial and accounting conclusions is paramount when making presentations or preparing reports for executive offices. Portfolios of projects are managed predominately by the use of accounting and finance evaluation, performance measurements, and summarizing techniques. Project selection involves financial ranking. Development of the project group’s strategy often focuses on the financial contributions of the group and its portfolio of projects. On an individual project basis, accounting and finance knowledge is fundamental in setting the budgets that ensure the project meets its cost and performance targets. Truthfulness is supported by numerically based proposals and project control reports. Accounting and financial tools lend themselves to the structured methodologies that are an element of project success. They make possible the pragmatic evaluation of project risks as well as the ability to measure the overall successes and failures of the team’s efforts. From this knowledge base, modifications can be made to budgets and financial forecasts. Reports and recommendations can be submitted to project stakeholders. Researchers Argenti and Bibeault conducted independent research but concluded that the primary reason organizations fail is the result of a lack of accounting information. Bibeault concurred in his conclusion that if management of a company is poorly handled it will be lax in developing or utilizing financial control information. His survey results indicate that about 30% of business decline can be attributed to lack of financial control caused by lack of accounting and finance information or failure to make use of existing information. 4.4.2.7. Critical Analysis, Skepticism, and the Project Manager The superior project manager takes the view that reports, plans, financial statements, and other forms of written documentation rarely

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if ever truly reflect the actual details of the project. They are words and numbers on pieces of paper. They are not the project itself. Be definition, projects are unique. Consequently, project management methodology and recommended analysis methods are broad and flexible. Adaptable planning, implementation, and control systems are needed to present the appropriate portrait. The major advantage of the flexible approach is that it can be applied to the broad variety of projects. Its major disadvantage is that it is easy to present a biased picture or to flavor the presentation with a slanted view. A higher degree of knowledge is needed to interpret the accounting knowledge and information. In addition, the superior project manager soon learns to view any analytical data, including accounting and financial statements, with a critical eye. 4.4.2.8. Intuition and Experience: Their Impact on Decision Making Although the research shows that the superior project manager relies upon an analytical decision-making approach, the same studies reveal that they also rely upon intuition. Toney’s studies showed that the highest performing leaders consistently said that they based decisions on intuition more than lower performing leaders. Correlation of those using intuition with goal achieving performance was a high ⫹0.80. Intuition is defined as experience, ‘‘gut-feel,’’ inspiration, common sense view of correctness, vision, or an innate understanding of a complex situation. In any case, the most superior organizational leaders often display an uncanny ability to make the correct decision and provide the proper course of action in turbulent and volatile situations. Benchmarking participants describe situations where experienced project leaders identified in seconds major problems, dilemmas, and approaches for solutions that had eluded less experienced team members. Throughout history leaders with intuition have consistently won battles, coached winning teams, and been leaders of successful organizations when others failed in similar conditions.

Standard:

The best practice project manager makes judgments on the basis of intuition and experience.

Benchmarking participants caution that there is great danger in basing decisions on intuition alone. When this happens the practice


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effectively becomes decision making by dictate. The recommended approach is to use all the decision-making techniques previously discussed to form a knowledge foundation. From this, the superior project manager can apply intuition and experience in making the final decision.

References: Nutt, 1999; Ingram, 1998; Toney, 1996; Bibeault, 1982; Hise and McDaniel, 1988; Argenti, 1976; Fayol, 1916.

4.5. ENVIRONMENTAL AWARENESS Knowledge and awareness of the environment includes all relevant physical and social factors outside the boundary of the team that are taken into consideration during decision making by the project manager. It includes general knowledge about such things as risks, current events, operating conditions, competition, politics, and developing trends. The project manager is charged with primary responsibility for organizational and external environmental alignment, compatibility, and responsiveness. Leaders of high-performing teams are successful in perceiving signals and trends in their infancy that others miss. The superior project manager avoids pitfalls resulting from lack of knowledge. Environmental awareness represents the primary link in the way a best practice project manager adapts the team to changing conditions. Knowledge of the environment is particularly important when conducting global projects. The impact of the global environment can be one of the most influential elements impacting project success. In global project management, the environment more than any other factor can affect team structure, internal processes, managerial decision making, and the ultimate success of the project. The formal process of gaining knowledge about the organization’s operating environment is not a new concept. The general process as applied by Moses was recorded in approximately 1500 BC . Interested in the land of Canaan, Moses sent out eleven representatives to conduct research about the territory. His instructions for information gathering were specific and focused toward their ultimate goal. Sun Tzu in 500 BC repeatedly emphasized the need for knowledge of the environment. For example, he stressed, ‘‘We are not fit to lead an army on the march unless we are familiar with the face of the country—its mountains and forests, its pitfalls and precipices, its marshes

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and swamps.’’ He was also the first to say, ‘‘Know the enemy and know yourself; in a hundred battles you will never be in peril.’’ In modern times, research results support the conclusion that superior leaders monitor and scan the external environment more frequently and broadly than their counterparts in low performing organizations; particularly, in response to strategic uncertainty. The data from Toney’s research shows a high correlation between leadership success and monitoring the environment. To measure environmental awareness Toney asked leaders how often they were caught by surprise by events occurring outside their organization. The highest performing leaders were caught significantly less than the lower performing leaders. Ancona and Caldwell correlated leadership monitoring or scanning of the external environment with project success. The highest performing leaders scouted and monitored the environment for useful information. The data showed a high positive correlation (⫹0.65 to ⫹0.79) between project performance and specific actions such as ‘‘finding out what competing firms or groups are doing on similar projects,’’ ‘‘scanning the environment for marketing ideas and expertise,’’ and ‘‘collecting technical information and ideas from individuals outside the team.’’ The most successful teams engaged in comprehensive external strategy determined Ancona and Caldwell. Katz and Tushman came to a similar conclusion with their conclusion that the more knowledgeable the project leader and team are about external events and conditions, the higher the potential for project success.

Standard:

4.5.1.

The best practice project manager engages in frequent and broad monitoring of the environment to the point they are not caught by surprise by unfolding events.

When Environmental Knowledge Is Most Needed

The best practice of being knowledgeable about the external environment is more than acquiring a vast accumulation of facts and figures and information. On all projects, the environment creates uncertainty for the project manager and the uncertainty represents risk. Since time is always of the essence, the superior project manager is selective and focuses on the broad areas that create the project uncertainty and risk. The uncertainty and risk necessitate risk analysis, information processing and monitoring, identification of opportuni-


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ties, detection and interpretation of problem areas, and implementation of strategic actions. The research team of Daft, Sormunen, and Parks found that superior leaders tailored monitoring of the environment to the area of perceived uncertainty and information needed. Aaker’s research determined when the external events are perceived as having an impact on the organization or team’s performance, then leaders amount of interest increases. The extensive research of Daft, Sormunen, and Parks found that the more uncertain the environment, the higher performing leaders monitored more frequently and broadly than their counterparts in lower performing organizations. Even though monitoring emphasis focused on known areas of risk, the superior leader also broadly scanned other pertinent environmental bodies of knowledge. The higher performing teams monitored more frequently in every relevant sector as uncertainty increased. The lowest performing organizations emphasized technological information and searches for information through existing routines. Higher performing teams also emphasized technological monitoring but their search for information was much broader in nature and tended to emphasize the general environment more than the task environment. Broader monitoring of germane information improved performance by providing better knowledge and enabling the team or organization to develop a better strategic fit. Correlations from Eisenhart and Tabrizi’s and supported by Galbraith’s research support that projects in fast-moving, nonroutine and uncertain organizational processes require more environmental monitoring than in more predictable projects. In these settings, projects are characterized as progressing through uncharted and unclear waters. Markets and technologies may be shifting. The most effective project management approach found by Eisenhart and Tabrizi was to be flexible and to improvise in response to the changing environmental conditions and new alternatives and developments. Other researchers spotlight the need for environmental information in highly competitive situations. Acquisition of superior information provides a competitive advantage. Leaders also consider that information from important stakeholder sectors provides strategic advantage. 4.5.2.

Result of Inadequate Environmental Knowledge

Lack of knowledge about the external environment is easily discernible. The project manager is unfamiliar with pertinent sources of risk and current events and lacks knowledge about the culture, governing

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bodies, politics, rules, and other details of conducting projects in an unfamiliar environment. Insufficient knowledge of the environment often results in a negative impact on the project. In the global environment it is not uncommon for the project manager to be brought back home as a result of inability to work in an unfamiliar environment. When an organization fails or a project is terminated, the leader often blames the external environment (e.g., bad economy, government regulations). But the fact is, other projects that are operating in the same environment do not terminate. The question is what are the projects that fail doing differently? Bibeault states that if leadership and management of an organization are poorly handled, they will fail to respond promptly to changes in the external environment. In less well-managed organizations, failure to keep pace with change caused about one-quarter of the internal management mistakes recorded in Bibeault’s research. Ancona and Caldwell measured performance of teams that isolated themselves from outside information. Basically such teams engage in little environmental monitoring, ignore outside negative feedback, and concentrate on internal activities. Management scored the teams low, although they ranked high in internal task processes and cohesiveness. 4.5.3.

Information Sources and Tools Used

As uncertainty increases, the superior team leader utilizes both internal and external sources of information; all of which serve as input for risk analysis. To obtain information, the best practice project manager develops tools and methods for acquiring adequate environmental information. Generic risk analysis checklists force the investigator to look at the most common areas of project risk. Internal information tends to supplement input received from external sources. Research shows that the more uncertain the situation the more face-to-face interaction with team members and group meetings are utilized to process the external information being received. Internal information sources include reports and memos, as well as discussions with associates. External information includes personal tours, discussions with peers in other organizations, trade magazines, newspapers, and association meeting attendance. References: Case, 1995; Ancona and Caldwell, 1992b; Toney, 1996; Ancona and Caldwell, 1990; Eisenhardt and Tabrizi, 1990; Daft, Sormunen, and Parks, 1988; Rhyne, 1985; Jemison, 1984;


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Culnan, 1983; Aaker, 1983; Katz and Tushman, 1981; Lindsay and Rue, 1980; Ansoff, 1975; Meyer, 1979; Tung, 1979; Pfeffer and Salancik, 1978; Galbraith, 1973; Duncan, 1972.

4.5.4.

Global Environment

A distinctive feature in high-performing teams is a response by the leaders to sociocultural sectors of the environment concluded the investigation of Daft, Sormunen, and Parks. The significance of the finding is that leaders of successful teams enhance their project-oriented knowledge with broader social awareness. The results are particularly appropriate to global projects where success or failure often reflect environmental rather than technical factors. Adding complexity, challenge, and opportunity for the best practice project manager are the trends occurring within the global environment. Categories of broad environmental knowledge areas include the foreign government, the manner in which business is conducted, and factors resulting from distance. 4.5.4.1. Governments The host government in the host country has a pervasive influence on project success. Usually information about governments is freely available through traditional sources such as embassies, libraries, the popular press, and over the internet. Political environment. The type of government affects almost every aspect of conducting projects within a country. Governments can be categorized in numerous ways. Types include democratic (vote for leaders), communism (government ownership and aggressive implementation), and socialism (government ownership). Totalitarian governments have dictatorial leadership and include communism, theocratic totalitarianism (e.g., countries ruled by religious bodies), tribal, hereditary (monarchies), and right wing dictatorships (e.g., military). Traditional hostilities and conditions of war will complicate the project process. Economic system. The type of economy and its management impact project success. Economies are classified as pure market (controlled by supply and demand), command (government planned and controlled), and the mixed economy (a little of both). Another economic factor is the stage of economic development.

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Business environment. Affecting projects is the government’s attitude toward international investment, the country’s political stability, views regarding government ownership of business, encouragement of foreign direct investment versus inclination toward privatization and nationalism, business incentives, type of economic system, and degree of regional integration (NAFTA, EU). Legal system. Effective and efficient project management is dependent upon a business foundation based on law and a structured legal system and process. Included are subjects such as ownership rights including intellectual property protection (copyright, trademarks, and patent), government protection of individuals and organizations, antitrust regulations, restrictive trade laws and regulations, degree of product liability, price and wage controls, contract laws and enforceability, and common law structure (based on historical precedence) or civil law (based on detailed laws and codes). It is also important to know whether the project is subject to domestic or foreign laws; and the amount of protection against private action (e.g., theft, blackmail, piracy) and public action (protection against public officials). Trade policy. Numerous subjects are classified as trade policy and can impact international projects. There can be tariffs, subsidies, import quotas, export restraints, local content requirements, administrative policies, government intervention, retaliation, and even embargoes. 4.5.4.2. Business Conduct Although there is a generalized approach to for-profit business throughout the world, the specifics vary from culture to culture. Corporate strategy. The strategy of the host organization related to international projects is critical. Included are the strategic implications of the profit impact of the project, its linkage to other international activities, and views of the host organization toward global expansion. Organization structure. In an international environment with diverse geographical locations the structure of the project as well as the host company can affect project speed, efficiency, and effectiveness. Topics for consideration include control issues, centralization versus decentralization, and vertical differentiation versus horizontal types of control systems. The various types of relationships and international organizations


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include strategic alliances, exporting, turnkey projects, licensing, franchising, joint ventures, and wholly owned subsidiaries. Financial management. Almost all projects involve some form of money flow. In the international environment the process is more complex than domestically. Diverse factors are included such as cash flow management, trade and project financing, banking relationships, availability of capital, equity, international funds and profits transfers, and currency exchange, stability, and convertibility. Other subjects for consideration are transaction exposure risk, project portfolio implications, international institutions (World Bank, IMF, GATT, OPEC, EU, NAFTA), export and import financing (L/C, bills of lading, drafts), intracompany pricing, leasing versus purchase, trade and counter trade, and make or buy options. Accounting and taxation. Virtually no two independent countries of the world have the same axccounting system and financial reporting requirements. Currencies differ in value and inflation rates vary wildly. All these impact project budgeting, control, procurement, and performance evaluation. Variations in views about secrecy affect public availability of the financial details of a project. It may be difficult or even impossible to remove funds and equipment from some countries after the project is terminated. The sophistication and education of users of information affect its quality and format. Other accounting subjects commonly encountered internationally are taxation regulations (jurisdiction, tax types), accounting for and disposition of foreign income, intercompany transfers, exchange rates, foreign investments, inflation, interest rates, and payment procedures Decision-making tools. The availability of decision-making information varies from country to country. Factors to consider are market data availability, variances in accounting reporting systems, and utilization of software with graphics in other languages. Vendors. Projects will invariably require outside resources. Vendor topics include the availability of services and materials, sourcing problems, make or buy options, availability of technology, and availability of trade credit. 4.5.4.3. Distance Factors International projects often involve movement and communications over vast distances. Sometimes the project manager is placed in a totally unfamiliar geographical environment. Various factors related

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to distance can have major consequences on project speed, efficiency, and effectiveness. Logistics. Movement of goods, people, and other resources is complicated by higher costs, personnel travel time, transportation and shipping expenses and details, import and export restrictions, documentation requirements, types of distribution channels available, storage availability, and problems and packing needs to ensure safe arrival. Communications. Even with modern communications tools, physical distance and location can significantly reduce capabilities. In many locations communications technology is unavailable or lacking. Language and local dialects reduce and complicate understanding. Marketing. The multicultural element of international project management is particularly evident when evaluating marketing options. Decisions must be made whether to take a global or a localized approach to marketing (products, ads), different product and technical standards and laws must be considered, distribution strategy could be different, and pricing is more complex. Topography. International project managers often tell stories about arriving in an international location and encountering unexpected working conditions such as climate and availability of natural resources. 4.5.4.4. Global Trends The global project management environment is in a state of constant change. Vigilance in monitoring global trends is a necessity for the superior project manager. A few of the major trends are summarized below: Globalization, MTV culture. A phenomenon is occurring for the first time in the history of humankind. True global cultures are developing. One group of scientists has labeled it the MTV culture. Their research reveals that youth the world over are patterning behavior after the MTV entertainment channel on TV. The global presentation of music and ads has resulted in youth having similar taste in music, clothing and other items advertised on the network. Professional project management also represents a global approach. It is a universal method for conducting projects that


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applies to every world culture. The platform of methodology and tools remains the same as does the fundamental value system and leadership and management skills of the project manager. There are varieties of application techniques but the fundamental components remain the same. Internet. The internet represents a revolution that has impact on international project management. Communications and dissemination of project information is broad based and inexpensive. The rapidly evolving and expanding nature of the internet requires constant training on the part of the superior project manager. Regional trading blocks (EU, NAFTA). Geographical groups of countries are joining together to form large blocks. Their objective is to be more competitive in the world market. The European Union has implemented a currency and a governing body. The trading blocks typically have preferential privileges for members and restrictions against outsiders. For the project manager planning to operate in a trading block, it is necessary to understand the import and export regulations, quality and other technical standards, and any regulations or laws that could impact the performance of the project. Technology. Advances in technology make international project management easier to conduct and administer. Communications advances have improved the ability to be in constant contact with team members and stakeholders. Computer equipment and associated software improve ability to track project status as well as to share information. Rich-poor gap. The income expanse between the poorest and the richest of companies is widening. Many global companies have wealth exceeding that of all but the largest of countries. For the project manager from industrialized countries, performing projects in the less wealthy countries represents cultural, political, economic, moral, ethical, and organizational challenges. Multinational companies. The last decades have seen the rise of an economic power center never before witnessed. The multinational company has wealth and economic power that is intimidating to many countries. Those countries who have experienced colonialism where resources are exported and few internal contributions are made are particularly apprehensive about the intrusion of large multinational companies. The astute project manager associated with large international com-

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panies will be aware that to many in the world they represent very powerful organizations and will be welcomed with caution. References: Any university level text dealing with global business will contain detailed discussion about each of the subjects summarized above.

4.6. CONCLUSIONS AND MEASUREMENT OF PROJECT MANAGER PROFESSIONALISM An evaluation of one’s project management degree of professionalism can be numerically quantified using the professionalism competencies sub-wheel. The numerical results from this wheel are rolled-up or transferred to the Master Project Manager Competency wheel described previously. The professionalism sub-wheel in Figure 4.2 shows the major competency areas of goal achievement, maintaining speed, efficiency, and effectiveness, having a high degree of people skills, using the analytical approach to make correct decisions and being aware of environmental factors. All are equally weighted at 3 points each. The total of 15 points corresponds with the weighting allocated from the master project management wheel (i.e., the master wheel allocates 15 points for professionalism, 15 points for methodology, and 20 points for character. Note that the weighting can be altered to fit various situations. For example, a project manager leading a global project might have more weight allocated to ‘‘environmental awareness.’’ Each of the spokes of the professionalism wheel is further broken down into a weighting for the specific best practices detailed in the chapter. The questions below are presented in the format of a selfevaluation. They can be modified to analyze the performance of others by changing the word ‘‘I’’ to ‘‘He or she.’’


FIGURE 4.2

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1. I am professionally skilled at leading and managing goal achieving project teams (goal skills). 2. I have project specific skills appropriate to the size and complexity of the project being managed (goal skills). 3. I am recognized as the entrepreneurial chief executive officer (leader) of the project (goal skills). 4. I am responsible and accountable for project success and failure (goal skills). 5. I adapt the application of best practices and competencies to different cultures (goal skills). 6. I manage projects for goal achieving speed while maintaining efficiency and effectiveness (Speed, efficiency, effectiveness). 7. I structure the team for speed, efficiency, and effectiveness (Speed, efficiency, effectiveness). 8. I build the team with representatives from all the functional areas the project impacts (Speed, efficiency, effectiveness). 9. I place the project team members in close proximity to each other. Where diverse team member work sites are necessary, proximity is emphasized through maximizing communications (Speed, efficiency, effectiveness). 10. I am actively involved in the project management process from inception to termination (Speed, efficiency, effectiveness). 11. I align and integrate the project vision, goals and plan with those of the host organization (Speed, efficiency, effectiveness). 12. I articulate a compelling vision of the future, direction, and goals for those I lead (Speed, efficiency, effectiveness). 13. I maintain constant focus on the project goals (Speed, efficiency, effectiveness). 14. I develop a project plan appropriate for the complexity and risk of the project (Speed, efficiency, effectiveness).


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I am an effective ambassador who represents, protects and advances the interests of the team with outside political groups (People skills). I buffer the team from external pressures, demands, and politics (People skills). I lobby for resources and project needs (People skills). I address conflicts early and at lower levels in the organization (People skills). I motivate team members to do more than they thought they could do (People skills). I develop and implement a plan for consistent, quality oriented and appropriate project communications (People skills). I emphasize informal communications supported by appropriate formal and multimedia communications tools (People skills). I communicate an appropriate amount externally to the team (People skills). I act as a role model to communicate positive values and guide the behavior and performance of the team (People skills). I build an effective and efficient team (People skills). I delegate authority to the lowest level where the task can be performed effectively (People skills). I emphasize project and people management over ‘‘tools’’ (People skills). I place high priority on teaching and coaching team members in skills that directly translate to improved project performance (People skills). I have a personal development program based on identification of skills and competencies (People skills). I treat team members as individuals rather than members of a group (People skills). I consciously build and maintain long-term friendships and relationships, networks and help others even when nothing is expected in return (People skills).

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I use a pragmatic analytical approach to make the correct decision rather than building support for preconceived opinions (analytical). I gather information from others before making important decisions (analytical). I solicit critical suggestions to improve decisions (analytical). I benchmark and implement best practices from other individuals, teams and organizations (analytical). I audit project performance by conducting independent and objective evaluation (analytical). I define team performance related success factors in advance, revalidate them periodically, and use them to evaluate project team success (analytical). I make judgments on the basis of intuition and experience (analytical). I engage in frequent and broad monitoring of the environment to the point I am not caught by surprise by unfolding events (environmental awareness).

To determine the number of points to apply to the Professionalism Competency Subwheel, score the questions as follows: Total self-rating Maximum Question 1–5: multiply the points selected by 0.12 Questions 6–14: add the points and multiply by 0.066 Questions 15–30: add the points and multiply by 0.036 Questions 31–37: add the points and multiply by 0.085 Question 38: multiply the points by 0.6 Total points to apply to the master PM wheel

3.0 3.0 3.0 3.0 3.0 15.0

5 Project-Specific Competency Standards

5.1. A STRUCTURED AND PREDICTABLE APPROACH A person may enjoy the type personality suitable for project management, have the requisite leadership and management skills, yet still not know how to run a project. Required to be a superior project manager, are project-specific best practices. Included are the skills and actions best practice project managers are expected to execute when they walk on the job. The best practices encompass the steps taken, the processes followed, or the methodology employed for project selection and initiation, planning, execution and control, and termination. Project-specific standards and best practices instill predictability in the profession by using a common approach that provides a frame of reference for all users in all geographical and cultural environments, and can be used by project managers and their management to define and measure expected behavior and performance. Like nearly all aspects of project management, the need for a structured methodology is ancient. Sun Tzu identified and addressed its value in 500 BC. He stated, ‘‘By method .. is to be understood the marshaling of the army in its proper subdivisions, the gradations of 141

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rank among the officers, the maintenance of roads by which supplies may reach the army, and the control of military expenditure.’’ The use of a structured approach to project management is not always the easiest way. Benchmarking forum participants report that there is a tendency for project managers to skip fundamental steps and gradually return to ad hoc methods of managing projects. Research conclusions by Hise and team agreed with the benchmarker’s judgment. Even though Hise and team’s data showed a positive correlation between performing key project activities and a higher project success rate, they also determined that 76% of the project managers surveyed skipped fundamental process steps. Project managers who eliminated steps did so because they felt they could save time. When there was pressure to conclude the project, the tendency was to bypass or ignore the steps of the process. Resultant effects were weak designs, malfunctions, liability suits, product recalls, and potentially higher production costs of new products being developed. Hise and team concluded that a piecemeal approach to reducing project cycle time did not lead to a successful transformation—only frustration and disappointment rate. The higher performing teams managed to be on a fast track and still maintain project quality by performing the fundamental process steps. As depicted in Figure 5-1, project-specific best practices represent a structured and predictable approach. The approach is methodical yet broad based and flexible. It contains best practices that are appropriate for the broad variety of large projects encountered globally. The most simple methodology or processes appropriate to the project are applied. Core documentation is used on all large projects. The documentation templates can be expanded and detailed to fit the specific project. 5.1.1.

Project Phases

Application specifics in the form of best practices and standards are most easily discussed and visualized relative to project life phases and documentation flow. It is stressed that project life phases are used to simplify, categorize, and portray the processes, best practices, and standards rather than to be approached as rigid, sequential processes. Project initiation and selection embrace the techniques of portfolio management (Fig. 5.2). The initiation effort results in the development of the project charter. From this, the project is evaluated and selected by ranking it related to other projects according to financial

Project-Specific Competency Standards

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FIGURE 5.1

return, amount of risk, and subjective factors. After the project is selected, the planning phase includes preparation of the project plan. Included are the details from the project charter as well as an expanded project schedule, budget, and risk evaluation and other supporting documents appropriate for the project. During project implementation and control, the project plan is monitored to ascertain project status and variances from the project plan. Scope changes are

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FIGURE 5.2

managed as a formal process. Termination of the project includes a project checklist and communication of project benefits to others in the organization. 5.1.2.

Flexible and Simple Approach

The judgment of the forum is that the broad variety of projects necessitates flexibility in the management approach, and that the superior project manager applies the simplest methodology necessary to achieve project goals.

Standard:

The best practice project manager applies a predictable methodology to manage the project.

Sun Tzu recognized and emphasized the value of simple but flexible approaches and tools. He summarized, ‘‘The musical notes are only five in number but their melodies are so numerous that one cannot hear them all. The primary colors are only five in number but their


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combinations are so infinite that one cannot visualize them all.’’ Sun Tzu was set apart from his contemporaries and even many in the field of project management with his views that flexibility is a key element of the superior leader. Although he stressed the need for detailed plans, careful timing, risk and evaluation, he also faced the reality that fast-moving, complex, ever-changing scenarios require flexibility and hands on leadership. Benchmarking participants stress that successful project management goal achievement includes uncountable variables and human and environmental factors. As a result, several best practice project organizations report that they do not use a single methodology. They suggest that methodologies are like technical languages or vocabularies. Different ones apply to different situations but all of the effective ones are simple and flexible.

Standard:

The best practice project manager applies the most simple and flexible methodology appropriate to achieve successfully the project goals.

The importance of applying the least complicated methodology also applies to the organization’s inventory of project management tools. Included are scheduling, communications, and project-specific software, templates, and standardized procedures. The tendency is for the inventory to grow. As the tools inventory grows, it becomes a larger and larger maintenance burden. Benchmarking participants suggest that a simple, standardized set of tools should be used across the organization. Standardization minimizes overlap of tools and reduces training time. New people to the project come up to speed faster. Use of third party vendors and off-the-shelf software is recommended. 5.1.3.

Standardized Methodology Advantages

The employment of a standardized set of project-specific best practices and methodology enhances project speed, efficiency, and effectiveness. In addition, it makes the management approach to projects predictable, it increases stakeholder confidence, and it paints an image of professionalism.

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5.1.3.1. Speed The structured approach to managing projects (as compared to a random or ad hoc approach) historically has been found to be the fastest way to achieve goals, particularly on large projects as addressed by the best practices in this chapter. Cordero’s research determined that exercising a predictable approach to project management tended to simplify the team effort and increased project speed. A predictable and structured approach reduces training time. Inexperienced project managers became proficient faster than if they learned the mechanics of team leadership in a random manner. 5.1.3.2. Efficiency The project team is more efficient when utilizing a repeatable and predictable approach. Team members do not need to reinvent the methodology wheel every time they lead and manage a project. The best practices, standards, and documentation for each project phase are easy to understand and implement. They provide a common terminology that results in faster and more accurate communication. The common frame of reference ensures that projects and project management performance can be evaluated, compared, and contrasted between dissimilar projects in various geographical, technical, and organizational environments. 5.1.3.3. Effectiveness Increased is the probability of goal achievement. The procedural approach ensures that all steps are taken to attain project success. In cases where projects are marginal or fail to live up to their initial expectations, the best practices mean that they will be promptly evaluated and either fixed or terminated. In addition to improvements in speed, efficiency, and effectiveness, the methodological approach to project management is evidenced by other benefits. 5.1.3.4. Improved project management predictability It makes the management of projects more predictable. It provides certainty that the large variety of projects even within the same organization will be approached in a similar manner. If the manager of the project is replaced, the new project manager understands the process and can quickly adapt to the project specifics. 5.1.3.5. Stakeholder confidence It gives stakeholders a measure of confidence about project leadership and the manner in which the project will be run.


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5.1.3.6. Professionalism It presents a professional image. It lends itself to structured presentations and proposals. It aids managers in easily presenting the concepts and status of the organization to stakeholders. 5.1.4.

Structured Methodology Caveats

It is stressed that the phases and document flow described in this chapter are presented primarily to simplify and make the approach to managing projects easier to understand. Benchmarking forum attendees report that there is danger in overemphasizing the structured or methodological approach to managing projects. The tendency of many organizations is to add increasing amounts of mandated methods, templates, procedures and required tool usage. Several best practice organizations said that their methodology had become so detailed, rigid, and bureaucratic that it hindered the management of the project. 5.1.4.1. Rigid Methodologies May Reduce Project Speed It is generally agreed that overreliance on rigid methodologies including phase gates and go–no go decision points can reduce the speed of any project; but is particularly harmful for multifunctional projects, projects with overlapping phases, and large projects with numerous subprojects. There is also danger in even categorizing projects by the phases of initiation and selection, planning, execution and control, and termination. The temptation reported by benchmarking participants is to convert the phases to sequential phase gates and go–no go decision points. The negative impact of the resultant rigidity is particularly evident when using speed-based approaches to structuring and managing projects. For example, overlapping project and design phases are utilized to reduce total time to project completion. The approach was pioneered in companies striving to accelerate new product development process speed. The concept calls for commencing each new phase before the last is concluded. Conforming to rigid project phases can also reduce the speed and efficiency of multifunctional teams. When employing the multi functional team approach, each functional element often progresses at a different rate of speed. Requiring the faster functional elements to wait for the others to catch up at each project phase is counterproductive. Lastly, on huge projects with hundreds of subprojects, it is improbable that all will be progressing at the same pace or even in the same project phase.

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In each of these cases specific project phases are less clearly identifiable. The vagueness of phase gates on large multi functional projects with overlapping phases and varying sub project speeds makes the task of the project manager more difficult. Benchmarking participants relate the management process requires more constant monitoring and attention. The methodologies are more abstract and lack the strictness of the sequential project life phase approach. More emphasis is placed on subproject milestones and deliverables. The key is to orchestrate all the components to come together at the termination of the project. One company commented that they make a distinction between emphasis on the process and the management of the project. After struggling to determine the degree of detail needed, most superior project organizations evolve to using a few fundamental methodology ‘‘guidelines’’ and best practices rather than rigid sets of procedures and templates. 5.1.4.2. Progressive Project Phases Management Project phases become less clear when projects are bid in progressive stages. Progressive bidding occurs when organizations are planning or conducting projects with rapidly changing technologies, the customer wants the latest technology incorporated as the project is progressing and/or when the project approach to future stages is unknown, vague, or evolving. Both the bidding company and the customer face the dilemma that for other than the current stage, the manner in which future stages will be performed is uncertain. In many such situations, the approach is to commit to a fixed price for the immediate stage, for the bidder to give a definitive estimate for the next stage, and then to give rougher estimates for stages farther in the future. In a sense, each successive phase then becomes a subproject with its own series of miniphases and activities. Note that the process requires a high degree of trust on the part of the customer. Benchmarking participants using the approach report that customers like the process, because it removes much of the uncertainty related to the financial impact of scope changes. From the viewpoint of the bidder it makes cost estimating more critical, because profit must be built in to the project rather than expecting it from scope changes.

References: For a detailed discussion about the mechanics of each phase of project management see A Guide to the Project Management Body of Knowledge published by the Project Management Institute and Project Management: A Managerial Approach by Jack R. Meredith and Samuel J. Mantel and


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published by John Wiley & Sons. See also Hise, O’Neal, Parsuraman, and McNeal, 1989.

5.2. PROJECT PHASES AND ASSOCIATED BEST PRACTICES With the preceding cautionary statements to guide the way, benchmarking participants agree that there are a few fundamental standards, best practices, and documents that optimize the probability of goal achievement on nearly all large projects. They are broad and flexible in application, yet provide a predictable approach. Following is a discussion of these standards, best practices, and documentation as they apply to each of the phases or process stages of a typical large project. 5.2.1.

Project Initiation and Selection

Project initiation and selection include all the activities associated with generating a new project concept and then ranking its organizational value related to the portfolio of existing and other proposed projects. From this process the project is selected (or rejected) and initiated. The primary document in the project initiation and selection phase is the project charter. Benchmark forum participants agree that the earlier the involvement of the project manager in the initiation and selection process, the higher the probability of project goal achievement. The concept is termed end-to-end project involvement. In most best practice project organizations, the project organization is involved in project selection and project portfolio management. Some organizations report that the project manager even accompanies the sales person when finalizing details on large technical and complicated information systems and software projects. The involvement of the project manager in the initiation and selection process ensures that the project can be performed and the customer has a better understanding of the manner in which the project will proceed. Research by Gupta and Wilemon supports the benchmarker’s experiences with hard scientific data. In the Gupta and Wilemon study, 42% of respondents stated that early involvement of the multifunctional team was a key element in attaining project success. Cooperation of the functional groups was improved. The research data concluded that early involvement helped define the project before large amounts of money were spent and stakeholder positions became entrenched. There was better understanding of customer re-

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quirements, technical feasibility, manufacturing, and marketability of the product. Trust and commitment of stakeholders was gained early on and false starts were avoided. 5.2.1.1. Project Idea Germination The best practice project host organization has a process for ensuring that all significant business opportunities are evaluated. The process recognizes new projects generated from such sources as response to customer and market demand, internal business needs (i.e., training, services for other departments), research-based concepts, and legal and mandated projects (i.e., the government or other source require it). For projects generated from within an organization, a point stressed by benchmarking participants is that the process must be open to all people in the organization who desire to propose new ideas and projects. Once the idea is proposed, then a formal process ensures that it is reviewed in an arm’s length, independent, and objective manner. 5.2.1.2. Defining the Project Need Whether the project is internally or externally generated, benchmarking forum participants stress the importance of clearly defining the project need and requirements. In some cases, particularly when bidding projects external to the organization, this part of the process can be quite detailed. The benchmarking participants report that there is a tendency for the quotation for project services to lack specifics and occasionally for promises to be made that the project team cannot keep. One participant stated that if there is sufficient information available to develop a price quote, there should be sufficient and clear enough information to develop a set of detailed project specifications. Another made the point that once the project is underway, it is too late to define project need and requirements. There is general agreement from benchmark participants that the ultimate measure of project performance is customer satisfaction. At the initiation stage of the process, the satisfaction building effort starts by motivating and assisting the client or stakeholder to define and specifically identify what they want from a project. Emphasis is placed on having the customer involved on the project development team. Assumptions should be identified early on and a determination made about where changes will likely occur. Some benchmarking participants work with customers to help them write the project needs and requirements. They have experi-


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enced facilitators whose role is to assist customers in writing the details of the project to be performed. After the rough details are compiled with the customer, then a meeting is held with technical experts to refine and finalize the details. Another company sent their facilitators through a ‘‘requirements writing’’ course. The facilitators tend to be nontechnical with a broad base of knowledge about the business, legal, and performance aspects of the proposal. Technical people are used in an advisory role during the rough draft phase. 5.2.1.3. Project Selection When project management is involved with portfolio management and selection, organizational financial return is increased, because a pragmatic decision process ensures that each project serves to optimize the overall portfolio financial and strategic value. In addition, the management of specific projects is more focused, because the project team is aware of the relative importance of each project and how it helps achieve the company’s strategic objectives. To achieve the benefits, the project selection activities must be performed with professionalism. Dwyer and Mellor studied new product development projects and found a clear positive relationship between proficiency in analyzing and selecting projects and ultimate new product success. In companies with the highest records of new product success, they found superior up front and predevelopment activities, initial screening, extensive preliminary market assessments, thorough business and financial analysis, and preliminary technical assessment Similar research by Cooper determined that superior project results were associated with comprehensive evaluation and analysis of pertinent success factors such as market demand and competition, understanding of project activities and deliverables, clear definition of the customer’s needs, wants and behavior, definition of buyer price sensitivity, and expected involvement from associated functional areas. A follow-up study by Cooper in association with Kleinschmidt added detail to Cooper’s earlier conclusions. They determined that efforts prior to project initiation had high correlation with subsequent project success. Included was determination of a clear understanding of what the project-related product or service would be and do. When the project involved new product development, success was linked to detailed market studies and marketing research. Determination of the fit of the project with the portfolio of projects and corporate areas of expertise was also a key factor. Cooper and Kleinschmidt recorded that the most successful project groups had a high degree of techno-

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logical synergy between the project’s product or service and the host organization. The selection team ensured that there was a good fit between the needs of the project and the host organization’s skills and resources. 5.2.1.4. The Project Charter The document that confers rights and authority to the project team is the project charter. Its antecedents are ancient. Its use dates at least to the Magna Charta (‘‘The Great Charter’’) of 1215, a document that continues to serve as a constitutional cornerstone of the United Kingdom. The project charter is the key document associated with the initiation and selection phase. It provides information needed to make a decision about the feasibility of the project and authorizes further action. It is the project-based counterpart to the business plan in organizational strategic management. It serves as the primary tool used to compare one project with another when analyzing and optimizing the project portfolio. Once the project is accepted, signature approval of the project charter launches the planning phase of the project. The project charter then becomes the foundation or starting point for development of the more detailed project plan. This sidebar shows a summary of a generic project charter. For more information the Appendix contains a detailed project charter checklist. Note that the specifics addressed by the project charter information vary from organization to organization and project to project. The project charter gives background information about the project that is pertinent to the decision-making process. It also reviews the need that generated the project request and discusses the project goals and objectives related to the host organization’s strategy and goals. The project charter evaluates the project based upon estimated financial return (how much money is it expected to), risk related to other projects in the portfolio, and subjective factors. The analytical discipline is the same as found in the management of any portfolio of valuable assets (stocks, bonds, properties, etc.). Each project is evaluated related to the overall portfolio of projects and organizational objectives. Defined is the scope of the project; which in a simplified sense is a description of the activities and deliverables that involve money and other resources. The project charter presents a graphical overview of project activities and deliverables in the form of a work breakdown structure. Also included are appropriate levels of detail regard-


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Project Charter Project Selection Decision-Making Information Background Need for the project Alternatives investigated Compatibility with the host organization’s strategic plan Project goals and strategies Selection and Evaluation: Ranking criteria Financial Return and Portfolio Ranking. Net present value, internal rate of return, payback. Risk analysis. Risk related to the portfolio of projects Subjective Factors: Fit with existing services or product lines, constraints, assumptions, market and strategic positioning, public image Scope: Overview and details pertinent to the decision process Initial work breakdown structure Deliverables Functional requirements Technical requirements Time schedule for project completion Budget and cash flow Risk analysis. Project specific Quality plan Communications plan Key success factors Performance measurement metrics Scope management and control: project control, variance reporting structure and procedures, measurement metrics Information systems Supporting documents Signature page

ing the schedule, budget, project-specific risks, quality targets, and important stakeholder communications issues. Depending upon the degree of detail considered important to the decision-making process, the project charter discusses project control in the form of variance analysis, scope management, and available information systems. The project charter is a formal document. Any project where more than incidental expenditures of resources are budgeted demands a signature to authorize and activate the project planning phase.

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Standard:

The best practice project manager prepares a project charter that contains all material information needed to make a decision whether to approve the project.

5.2.1.5. Project Selection Ranking Criteria Project portfolio management falls under the general financial body of knowledge termed capital management and budgeting. It is closely tied to and integrated with the overall strategic initiatives of the organization. Strategic and capital management of large projects involves (a) significant amounts of money, (b) decisions whose direct and indirect impact will affect the organization for long periods of time, and (c) the constant constraint that rarely, if ever, are sufficient money and resources available to initiate every worthy project. To upper management in many large organizations, a project represents a single financial investment and tactical opportunity among a portfolio of investment and tactical activities. Consequently, some form of selection process must be implemented. The objective of the selection process is to maximize the strategic effectiveness and financial return of the portfolio of projects, whereas minimizing portfolio risk and optimizing subjective factors such as the attainment of organizational goals.

Standard:

The best practice project manager selects projects by evaluating and ranking financial benefits, risks, and subjective factors.

To attain the objectives, each prospective project is analyzed and ranked with other opportunities according to financial return, risks, and subjective factors. 5.2.1.5.1. Financial Return. People tend intuitively to rank investment opportunities by how much money each opportunity is expected to earn. The validity of the intuition is well founded. Numerous researchers have shown a clear positive correlation between the financial analysis of project opportunities and project goal achieve-


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ment. Financial return analysis involves calculating how much money (i.e., revenue, cash flow) the project will generate compared to its cost. Techniques used commonly involve the calculation of net present value (NPV), internal rate of return (IRR), and payback period. From these calculations, projects can be ranked according to those expected to generate the most revenue down to those expected to generate the least. As shown in Figure 5.3, project selection by analyzing potential financial returns is the first step in a series of financial activities and documentation that flows from beginning to the end of the project. Before the potential financial return for the project can be calculated, most project organizations put together an initial budget and cash flow projection. The cash flow projection shows all cash coming into the project as well as flowing out. It can be calculated for any period of time deemed suitable but usually is monthly for the near term and

FIGURE 5.3

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yearly for periods farther into the future. From the cash flow or tentative budget can be calculated net present values, internal rates of return, and payback periods for the project. Some companies also use a variety of other financial measures such as return, on equity and benefit cost ratios. After the project is selected and approved, the planning phase includes the development of the detailed budget. The detailed budget contains an appropriate level of detail for the project at hand, often including estimated cost for each work package in the project plan. When the project is underway and being executed, the estimated costs and revenues are compared with actuals. The variances are periodically reviewed and analyzed. Project control is maintained through an appropriate response to abnormal variances. Any changes to the scope of the project could affect project cost. The impact of the change is calculated. Project baselines are adjusted and customers are charged for the change. During the project termination phase, a financial termination checklist ensures that all financial activities and documentation are addressed. Project Cash Flows and Budgets. The project charter contains the initial cash flows and budgets in appropriate detail needed to make a selection decision. The purpose of the cash flow projection is to show the revenue and expense streams over the life of the project. Generally the initial cash flow analysis is less detailed than the budget developed during the planning phase of the project. It is typically cash flow based with few if any accrual accounting related modifications to the cash flows. This information can be used through the present value process to compare the prospective project with others being considered. Present Value, NPV, IRR. Understanding the time value of money is crucial for the superior project manager. Rarely do any two projects have the same timing of cash flows. Money flows in and out of projects in different amounts and at varying periods of time. To be comparable it is necessary to use present value analysis to revalue all the cash flows at a current amount. It enables projects to be ranked using a common standard of money measurement. In addition to project selection, it is used in all forms of debt and equity project financing. The three project opportunities shown in the table below serve as an example. All three projects require a $1000 investment. In return, project A receives relatively small amounts of return in the early years but expects a large payoff later in its life. In total dollars, it forecasts $1700 or the largest return of any of the three prospects. Project B has sizable funds coming early in the project life but its


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total return at $1500 is the least of any option. Project C forecasts a steady flow of funds over its life and records the second best lifetime return in actual dollars at $1625. From the standpoint of financial return of actual dollars, Project A would appear to offer the greatest potential.

Year

Project A

Project B

Project C

0 (Investment) 1 2 3 4 5 Total

($1000) 300 300 300 300 1500 $1700

($1000) 1500 250 250 250 250 $1500

($1000) 525 525 525 525 525 $1625

Intuitively, most business people express uneasiness with the timing of returns associated with Project A. The returns are minimal until year five at which point a sizeable payoff is forecasted. Many things can go wrong in five years and risk is higher than for Option B where the payoff is faster. The intuitive concerns can be quantified and the field of evaluation leveled using present value calculations. Although many people fear that time value of money calculations are difficult to master and understand, the availability of inexpensive and easy to use financial calculators has resolved these learning dilemmas. Using one to calculate the value of the alternatives above results in the following data assuming a minimum 10% return is required.

Ranking method NPV IRR Payback

Project A

Project B

Project C

$882.34 20% 3 years 4 months

$1084.06 79% 8 months

$990.16 44% 2 years

By adjusting all the cash flows to current values results in a different view of the project alternatives. Now Project B would appear to be the most financially favorable project. Its net present value is highest at $1084. 06. Net present value is interpreted as the profit the project will earn over and above its 10% minimum rate of return. The internal rate of return for Project B is a whopping 79% per year.

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Project A now becomes the least favorable project with the lowest net present value at $882.34 and lowest internal rate of return at 20%. Payback. The payback row in the table above is not a present value-based technique. The payback method simply measures the period of time it takes to recover the initial investment of the project. In the case above, Project B is again the clear favorite with a payback period of 8 months compared to 2 years for project C and 3 years and 4 months for Project A. Another example would be that if a truck is required for moving dirt on the project its cost might be $50,000 and it is projected to save $5000 per month. The payback would be 10 months. Until the advent of computers the payback method was the most popular method used to evaluate the financial return of investments. It is simple to calculate and easy to understand. It reflects conventional investment wisdom, because it encourages fast returns. It’s disadvantages compared to present value calculations are that no cash flows are considered after the initial payback period and it fails to consider the time value of money. Benchmarking participants also report that emphasis on fast payback tends to encourage investment in smaller projects of short duration. Sometimes longer term projects that are strategically important to the organization are not initiated because of the payback calculations bias. 5.2.1.5.2. Risk Analysis. The superior project manager identifies, analyzes and manages risk throughout the project. As shown in Figure 5.4, the selection and initiation stage of project management involves two fundamental types of risk analysis. The first is portfolio risk. It involves the overall risk associated with one project when compared to another. The second is the initial analysis of risk specific to the project itself. The planning phase of the project involves detailed risk analysis of the specific project. It includes identification of each potential risk event, its estimated probability of occurrence, potential financial consequences as a result of the risk occurrence, and planned response, if any, to each risk. The execution and control phases find the project manager monitoring the project for the development of risk events and then adjusting accordingly. At project termination any significant risk events are analyzed and their impact on the project is determined. Recommendations are made to help future project managers develop appropriate risk responses. Project Portfolio Risk Analysis. It could be tempting simply to select the projects with the highest financial return. Unfortunately, high financial return projects are often saddled with corresponding


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FIGURE 5.4

high rates of risk. Consequently, the superior project manager evaluates the risk elements associated with each project compared to the portfolio of projects or other projects being considered. The resultant ranking is then compared and contrasted with expected financial returns. Risk analysis is more difficult than the process of financially ranking projects because there are few well accepted, simple, and easy to understand project risk ranking tools. Various methods of portfolio risk ranking methods used by benchmarking participants are listed below. High-Medium-Low. The most common and easily understood method of risk ranking consists of estimating whether overall the project is high risk, medium risk, or low risk. Projects can then be grouped into categories. Weighted Risk Factors. Various key project portfolio risk elements can be listed and given a numerical value. For example, the projects might require new, unproven technology, the market for the

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project’s product or service might be new, or the organization’s share is low. There could be stringent delivery time constraints and capital investment could be large and stretch the company’s resource base. Each of these factors can be listed on the matrix as shown below.

Risk Evaluation Ranking Matrix

Project A Project B Project C

Technology Changes

Financial Leverage

Delivery Constraints

TOTAL

5 4 3

5 4 3

5 5 3

15 13 9

5 is highest risk, 1 is lowest risk

In the example above, project ‘‘C’’ would have the lowest number of risk points. This information would be compared with the amount of potential financial return as well as the subjective factors in making the decision whether to select the project. Company Project Portfolio Beta. The mathematical average risk for all the projects in the organization’s portfolio is labeled the ‘‘project portfolio beta.’’ The beta is used as a baseline to evaluate the risk of new projects and to diversify the risk of the overall portfolio. For example, if a company has the majority of its project investments focused on the domestic market, it could chose to diversify and reduce overall portfolio risk by focusing project investments on the foreign market. Combined Financial Return/Risk Ranking Tool. Benchmarking organizations report the use of various tools that simplify the process of comparing complex projects with a multitude of financial and risk factors. A calculation can be performed to simply the ranking process. The one below compares expected sales, profit and risk with cost. Sales ⫻ profit per sale ⫻ % probability of success ⫽ Cost Ratio of Return vs Cost For example, if a company expected to sell 500 units of a product with an expected profit of $250 per unit, an estimated 80% probability of success and a cost of $50,000, the ratio of return versus cost would be calculated as follows:


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500 ⫻ $250 ⫻ 0.80 ⫽2 $50,000 The interpretation of the ratio of 2 in the calculation is that the project is expected to bring in twice as much risk adjusted revenue as cost expended. The formula does not account for the time value of money and other subjective factors. 5.2.1.5.3. Subjective Factors. Even after financial return and risk have been evaluated, the highest ranked project could be rejected due to any number of subjective factors. Inversely, other projects might be accepted even through their financial return is low and risk is high. For example, the project might be needed to keep competition at bay or it could be mandated by the government. Researchers have disclosed numerous subjective factors that have positive correlation with project success. Rothwell found that understanding user needs was important. Dwyer and Mellor showed that numerous factors at the selection stage affected project success at later stages. Among them were quality of the preliminary market and technical assessment and proficiency of the overall initial screening process. Benchmarking participants indicate the importance of determining the fit of each project with the strategy of the organization and existing services and product lines, evaluating constraints and assumptions, and ensuring that there is a champion or sponsor to assure success. Benchmarking participants also report that often subjective factors are more important to the decision to initiate work on the project than are financial and risk related variables. For example, one individual managed an asset portfolio for a large conglomerate consisting of 80 different companies. The individual’s job was to determine which companies to sell and which new companies to purchase. When asked which types of tools were used to make the determination, he responded that all the conventional ranking methods were used including NPV, IRR, payback, and asset return calculations. However, he also stressed that often none of the mathematical methods was used. He said that the companies within the portfolio that were extremely bad and extremely good were so obvious that little ranking analysis was needed to support a decision. To justify the logic, he used an example in a person’s personal life. If the individual were driving home from work and the transmission went out of their car they would intuitively know without the benefit of analysis that an investment was immediately required to fix the transmission. In the same decision-making vein, employees in large organizations are often of-

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fered opportunities to purchase company stock at greatly discounted prices. In these cases, it takes little or no analysis to determine that it is an attractive offer. Included in the analysis of subjective factors are project constraints. Constraints may be arbitrary in nature. For example, many new product development projects work under a ‘‘no new technology’’ constraint. The constraint reduces scope changes and emphasizes reaching the market in the shortest time. Often the no new technology constraint is a decision that must be made by senior management. 5.2.1.5.4. Combining All Major Factors. Some decisionmaking tools simplify the complex scenarios in the selection process. Combined Weighted Ranking Matrix. A numerical ranking can be performed using the same technique as discussed in the risk section. The investigators rank the portfolio of projects according to financial return, risk, and any subjective factors felt appropriate. If some factors are felt to be more important than others, they can be weighted accordingly. For example, in Figure 5.5, a maximum of five points each can be applied to financial return and the lowest amount of risk. Only a maximum of three points each are given to each of the subjective factors. Grids. The graphic presentation of the relationship of projects with each other is effective when there are a few factors that dominate the selection process. As demonstrated in Figure 5.6, this particular selection team judges that market and product variables are most important. Each project is plotted and can then be visually compared. As many grids can be used as felt necessary to depict all impor-

FIGURE 5.5


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FIGURE 5.6 Key project considerations.

tant selection variables. Once a pattern is determined, several grids can be combined into one summary grid that has several factors on each scale. The grids are less effective when there are numerous projects and many factors that impact success. Pairwise Comparison. When projects or alternatives being compared are broad based, nebulous, and have numerous dissimilar characteristics, it can be difficult to rank and compare them as a group. Often in such cases, it is easier and simpler to compare each individual project with each other project. Thus the variables are limited. The pairwise comparison chart (Fig. 5.7) provides a ranking of the resultant conclusions. For example, in the side graphic project A is preferred overall to project B. Therefore a ‘‘1’’ is placed in the ‘‘A’’ row and a ‘‘0’’ is placed in the ‘‘B’’ row. Next, project ‘‘A’’ is less favor-

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FIGURE 5.7 Pairwise comparisons.

able than project ‘‘C’’ so a ‘‘0’’ is placed in the ‘‘A’’ row and a ‘‘1’’ is placed in the ‘‘C’’ row. The process continues until all the projects have been compared individually with each other. 5.2.1.6. Scope The scope of the project is discussed in the project charter from the viewpoint of its relationship to the initiation and selection decisionmaking process. Generally included is an overview of the process and discussion of salient details in pertinent areas listed below. 5.2.1.6.1. Initial Work Breakdown Structure. A graphical depiction of the major activities and deliverables of the project can be presented. The objective of the initial work breakdown structure is to help decision makers visualize the project. It is an effective way to show the size and complexity of the project. It also serves as the platform to discuss other elements of the project affecting the decision process such as the schedule, risks, quality, and communications plans. 5.2.1.6.2. Deliverables. The specific services and products that are to be delivered to the customer focus the selection discussion. Included could be subdeliverables that the customer might receive as the project is progressing. Some benchmarking organizations working with intangibles such as software have guidelines that the customer is delivered some form of visible outcome at each milestone or even periodically such as each 6 weeks. Deliverables could also include subdeliverables if the project has many subprojects. For exam-


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ple, if the project were the construction of a prototype aircraft, there would be numerous subdeliverables for the cockpit instrumentation project. 5.2.1.6.3. Key Success Factors. The project charter will likely discuss the key factors upon which the customer and other stakeholders will judge project success. 5.2.1.6.4. Performance Measurement Metrics. After establishment of the key success factors, the project charter may contain details about the manner in which the success will be measured. The performance measurement metrics are clear, easy to understand, observable, and measurable. 5.2.1.6.5. Functional Specifications. The expectations of the customer are described by the functional specifications of the product or service. The functional specifications describe what the product or service will do. For example, if the project were the development of a new telephone, the functional specifications would describe the features such as wireless capability, call waiting, and the other features desired by the customer. 5.2.1.6.6. Technical Specifications. The manner in which the functional specifications will be achieved is described by the technical specifications. If the project is developing a product, the technical specifications describe the approach to constructing the product. In the case of the telephone, the technical specifications would describe the design of the telephone. 5.2.1.6.7. Schedule. For selection and initiation generally the time schedule portion of the project charter includes critical dates, constraints, milestones, go–no go decision points, and delivery dates. 5.2.1.6.8. Budget and Cash Flow. To have adequate information to develop the net present value and internal rate of return calculations, it is necessary to prepare a cash flow forecast. This cash flow forecast will become the foundation of the detailed budget that is prepared in the planning phase of the project. 5.2.1.6.9. Risk Analysis: Project Specific. The portfolio ranking process has investigated the risk of the individual project compared to the portfolio of projects. The decision-making process might also necessitate investigating risks specific to the project itself.

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5.2.1.6.10. Quality Plan. Any pertinent details, targets, constraints, or customer requirements regarding the quality of the project service or product are introduced in the selection and initiation phase. 5.2.1.6.11. Communications Plan. Critical stakeholder communications variables are introduced. Communications factors that affect the selection decision are discussed. 5.2.1.6.12. Scope Management and Control: Project Control, Variance Reporting Structure and Procedures, Measurement Metrics. Particularly on projects where scope change represents additional revenue and where scope changes represent serious financial consequences, the project charter will discuss scope management and control. 5.2.1.6.13. Information Systems. New project tools are introduced periodically and existing tools are evolving constantly. Where pertinent to the decision making process, the project charter will discuss the tools to be used and their expected impact on project goal achievement. References: Dwyer and Mellor, 1991; Gupta and Wilemon, 1990; Cooper and Kleinschmidt, 1987; Cooper, 1979; Rothwell et. al., 1974.

5.2.2.

Planning Phase

Planning defines the approach taken to execute the project. It is the expansion and detailing of the project charter into the project plan. The project plan includes a definition of scope with emphasis placed on development of the project schedule and critical path, detailing of the budget and analysis of project specific risk. Other activities included in the project plan include appropriate amounts of quality planning, stakeholder communications planning, staff, and resources scheduling. Organizations and leadership for millenniums have recognized the importance of planning. The Old Testament of the Bible devotes several pages to describing the plan to build the Jewish Temple of David in approximately 1000 BC. Sun Tzu in about 500 BC exhibited a preoccupation with the importance of planning. He stressed that, ‘‘Thus a victorious army wins its victories before seeking battle.’’ All of chapter 1 of The Art of War describes effective and efficient planning. Typical subjects covered are cost of supplies, numbers and competencies of personnel required, equipment required, and estimates of


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losses that will require replacement during the campaign. About planning, Sun Tzu asserted, ‘‘The general who wins a battle makes many calculations in his temple before the battle is fought. The general who loses a battle makes but few calculations beforehand.’’ A study by Cooper and Kleinschmidt determined that planning had high correlation with subsequent project success. Included should be a definition of the customer’s needs, wants, and preferences; determination of a clear understanding of what the projectrelated product or service will be and do; and detailing of the project’s product or service functional and technical specifications and requirements. The research team found that the steps that occur before a project gets underway are critical and that management and the project team should be prepared to devote time, resources, and money to ensure that the planning phase is accomplished in a superior manner. Researcher Pfeffer found that development teams that spent more time planning had an edge in gaining resources. Maideque and Zirger determined that good planning has a positive correlation with project goal achievement. Extensive planning serves as a signal of project quality judged Feldman and team. Eisenhardt and Tabrizi determined that detailed planning had a positive correlation with project success. More complete planning lets project developers better understand and refine the process said Gupta and Wilemon. Note that Eisenhart also found that in fast-moving projects with rapidly changing technologies that excessive planning slows down the project. Excessive planning added rigidity and inability to adjust to changing scenarios, alternatives and opportunities. In those cases, the key element was the superior project manager who could manage the many variables and plan the near future as the project unfolded. Although planning should be conducted to an appropriate degree, Zangwill found that the natural tendency was to plan insufficiently. Speed-based project teams and management focus discouraged time-consuming planning. Zangwill observed situations where extensive planning was constrained by the accounting people and budget restrictions. Other organizations removed personnel from projects that were just starting and assigned them to projects behind schedule. The logic was that the people were not needed as badly on the new projects. The process fed upon itself, because a major reason the other projects were behind schedule was because they were insufficiently planned. Zangwill concluded that it is better to add 5 planners early in the process than to add 50 people to solve problems farther downstream.

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The Project Plan Information Needed to Achieve the Project Goals 1. Background: Pertinent items from the project charter Strategy and goals Need Other: assumptions, unresolved issues, etc. 2. Project Scope: More detailed than the project charter Work breakdown structure Deliverables Critical success factors Schedule Budget Risk analysis Functional specifications Technical specifications Quality plan Communications plan 3. Management and Control Measurement metrics Variance reports Audits 4. Scope Change Management 5. Signatures

5.2.2.1. The Project Plan After the project charter is evaluated and approved attention shifts to the development of the project plan. It may be thought of as an expanded and detailed version of the project charter. It is the fundamental document that guides the project and serves as the mechanism to establish control and measure performance. It is the basic reference document that defines core topics as deliverables and milestones for performance evaluation. As summarized in the side bar, most project plans are comprised of sections dealing with the background of the project, a detailed description of the scope, mangement and control of the project during the execution phase, and the manner in which scope changes will be managed. The background section of the project plan is generally taken


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from the project charter and often is unchanged. It typically includes discussion of the project strategy and its relationship to organizational strategy, a definition of the project need, deliverables, and other pertinent assumptions and issues. Background information is an important element of the project plan because it focuses the scope and control sections on the project and organizational goals. The project scope section details all of the areas that involve the expenditure of money and other resources. On nearly all large projects the scope section will cover as a minimum, the work breakdown structure, a schedule, budget, project specific risk analysis, and the functional and technical specifications. Depending upon the project and information considered appropriate the scope section could include discussion about resource allocations, quality plan, and the communications plan. The management and control section of the project plan discusses the execution phase of the project. It details critical success factors the customer will use to judge the project. Variance reports detail the methods of measuring and controlling project metrics such as the schedule and cost tracking. For most projects audits are scheduled to provide an independent and objective evaluation of project progress. The execution phase will define various milestone and other decision points and the material to be reviewed and action taken at each step of the way. The final area of the project plan is the signature page. All details of the project plan should be agreed upon and signed off before proceeding with the project. Once signed, the specifications are frozen and any changes can be made only via a formalized scope change control process. Freezing the specifications has the added advantage that it forces people to more adequately plan the project. 5.2.2.2. Work Breakdown Structure The work breakdown structure reduces project complexity and nebulous goals into a graphical outline or picture of the project. It is a reflection of the common understanding of the team and stakeholders about the scope of the project. It serves as the starting point for other project activities including the development of the project schedule, budget, risk analysis, communications, and quality plan. It is used to show other people the overall view of the project. Benchmarking forum participants suggest that the work breakdown structure is best presented in a visual format. Although it can be shown as a listing of major deliverables and/or activities the visual format is easier to view and understand by users and stakeholders.

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Standard:

The best practice project manager prepares a work breakdown structure for the project.

Benchmarking forum participants report that people new to the profession often skip the work breakdown structure. The temptation is to proceed directly to the project scheduling software and begin entering activities. When the process is ended the individual has numerous pages of lines depicting the Gantt chart. When asked to describe the project, the only way it can shown or discussed is to present the multipage listing of the Gantt chart. Benchmarkers agree that a better way is to show the project in the form of a work breakdown structure. The work breakdown structure shows the major project elements decomposed at each descending level into smaller components. The lowest element is the work package. In common usage the work package is the smallest element that could be contracted out. It usually is less than 80 hours’ duration. For example, Figure 5.8 depicts a home-building project. It consists of preconstruction activities such as selecting the site, model, and builder. Finances are a separate sub project. The home building schedule involves construction of the foundation, frame, roof, and myriad of associated activities. Shown in a box under the foundation is the work package consisting of having people dig the footings for the foundation. A common numbering system is used in the example to serve as a reference. References: Pfeffer, 1992; Zangwill, 1992; Maidique and Zirger, 1990; Gupta and Wilemon, 1990. Eisenhardt, 1989; Cooper and Kleinschmidt, 1987; Feldman and March, 1981.

5.2.2.3. Deliverables The project plan details the specific services or products that are delivered to the customer. In the case of building a house, the final deliverable would be the house itself. Many projects have numerous subdeliverables. Software projects might include the delivery of various visual products as the software is developed. The deliverables represent a tangible and visible component that the customer uses to judge project success. On the house building project the sub deliverables


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FIGURE 5.8

could include the delivery of the foundation, the framing, the roof, etc. 5.2.2.4. Critical Success Factors Best practice project managers define the factors against which the performance of the project team will be evaluated. Usually the focus is on customer requirements but other stakeholders could have significant influence on the perception of project success or failure as well. To determine critical success factors the project manager might ask, ‘‘What are the standards that we will be measured against?’’ Often an organization will have performance records from similar projects executed in prior years. Once the critical success factors are determined the next step is to define the measurement metrics that will be used to measure project performance.

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5.2.2.5. The Schedule The schedule for the project is completed in an appropriate level of detail. Normally shown in the project schedule are sequences of activities, durations, and the critical path. Typically the work breakdown structure serves as the foundation upon which the project schedule is derived. All benchmarking organizations use off-theshelf software packages to list schedule activities and visually depict the schedule in the format of a Gantt chart, PERT diagram, or flow diagram.

Standard:

The best practice project manager prepares a schedule showing all appropriate activities, sequences, durations, and the critical path.

5.2.2.5.1. Resource Plan. A projection of the use of resources is generally a part of the project schedule. Critical resources are usually cash and people although other factors such as specialized machines and services are common. Usually project managers compile the schedule and budget appropriate costs and resource usage for each work package. The result is clear picture of the under or over application of resources over the expected life of the project. These resources are then adjusted to fit the constraints and timing of specific project activities. 5.2.2.5.2. Milestone Emphasis. Every organization in the benchmarking forum emphasizes the use of milestones to define targets and provide schedule control. Milestones set specific dates for completion of activities or project phases. On complex projects with multifunctional approaches, overlapping design phases and long spans of time between phases, milestones are applied to subprojects and the activities of individual areas of action. Often a milestone is accompanied by a review or audit. Eisenhart and Tabrizi’s investigation determined that highest performing project teams used milestones as measures of project time, cost and scope performance. They found that milestones have the intangible benefit of giving the perception of order and routine. Milestones can also increase project speed. The conclusion of researcher Gersick was that frequent milestones reduce project cycle


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time because they are motivating. Their immediacy creates a sense of urgency and deadline that discourages procrastination. Frequent milestones were found to accelerate project processes because they forced people to review the project often. If the project was found to be off course it could be corrected early in the process. Milestones compel performance reviews at periodic intervals and are easy to use and understand. Rewarding project teams for achieving clear deadlines and milestones synchronizes team energies. Gersick also found that milestones are particularly important in unstable situations. The use of milestones for time management, control, and performance measurement is clearly preferred by benchmarkers over using earned value calculations. Of approximately 60 companies in the benchmarking forum, all preferred milestones in preference to earned value. The major reason given was that earned value uses dollars to measure time and milestones use time to measure time. For example, consider a couple building a home with a delivery date or milestone of December 1. On December 5, using the milestone concept, the house delivery is 5 days behind schedule. If the contractor followed the earned value approach, when asked about the lateness they might respond with statements such as, ‘‘I am only working at 80% efficiency’’ or ‘‘At this point, I had expected to spend $100,000 but have only spent $80,000, therefore I am behind schedule.’’ Intuitively most project managers prefer using time to measure time rather than money because it is easy to understand and measure. Note that on projects where performance must be evaluated at a point between milestones, then earned value is the most appropriate method to be used.

Standard:

The best practice project manager uses frequent milestones to measure schedule performance.

References: Eisenhardt and Tabrizi, 1990; Gersick, 1988.

5.2.2.6. The Budget Budgeting and cash flow projections are accounting and financial activities shared by most project managers. The manner and accuracy in which budgeting is performed can have a significant impact on

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the project. If the budget is biased, it will cloud stakeholder’s views of the project leader’s integrity as well as the overall knowledge base. For the project organization, it can alter the selection of projects. For the host organization, it could impact the bottom line as well as the attainment of organizational goals. Budgeting and cash flow forecasting should reflect the external environment and expected changes if the highest probability of project success is to be attained. The most common discussion of benchmarking participants related to budgeting concerns the issue of budget ‘‘padding.’’ When developing a detailed bottom up budget, most project managers estimate the cost of each work package. The tendency is to add a cushion or to ‘‘pad’’ each work package. The endproduct is a budget that is higher than a nonpadded estimate. Many organizational cultures tacitly encourage budget padding. Some organizational cultures have negative views of projects and come in over budget and penalize the associated project manager. The usual response is to make sure that every project comes in under budget. Budget padding is also prevalent in organizational cultures where the budget is inflexible and slow to adjust to emergencies or rapidly changing conditions. The generally agreed best practice approach to budgeting is for the superior project manager to develop the most accurate budget estimate possible. A contingency factor or percentage is then added to the overall project to compensate for risk, emergencies, and other unknowns. As an example, one benchmarking participant uses the contingency fund to ensure that projects never appear to be over budget; while at the same, providing ability for precise project performance measurement. The project group constructs large complex facilities and judges project performance by measuring accuracy in attaining budget goals. Coming in 5% over budget is viewed the same as coming in 5% under budget. However, the extenuating circumstance is that the organizational culture is such that coming in over budget is considered to be bad. Consequently, the project group has a ‘‘floating contingency factor’’ that is arbitrarily placed at 15% of the estimated construction cost. If the contingency is not used on one project, it carries over to the next. Since half the projects are under budget and half are over, the contingency is never used up. Stakeholders are happy, because all projects come in under budget and the project performance evaluators are pleased, because they can precisely measure accuracy of performance.


Standard:

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The best practice project manager prepares a project budget (or cash flow) that is the most accurate that is appropriate to the project.

5.2.2.7. Risk Analysis: Project Specific In the most ancient book dedicated to project management, Sun Tzu addressed risk analysis. He said, ‘‘It is the highest responsibility of the general to examine the conditions that lead an army on the road to defeat.’’ He then elaborated; ‘‘The wise general in his deliberations must consider both favorable and unfavorable factors. By taking into account the favorable factors, he makes his plan feasible; by taking into account the unfavorable, he may resolve the difficulties.’’ Sun Tzu’s advice is still valid for modern project managers. The project initiation and selection phase evaluated the risk of the individual project compared to the portfolio of projects. It also investigated major risks associated with the project itself. The project plan looks more thoroughly at the project specific risk. In particular it investigates and details each significant risk event, its likelihood of occurrence, magnitude of its consequences, and the response plan. Incorrect estimation of project risk can be devastating. The research of Ingram focused on failed projects and the impact on the host organization. Ingram found that often large functional organizations assume their expertise in their industry will carry over to the management of large projects. They assume success and ignore or minimize the estimation of the risk and associated cost of total project failure. Ingram found that the failure of large publicly reported projects negatively impacted stock prices of the host organization as much as 40%. His conclusion was that the risk of total project failure should be estimated as well and the public relations impact of the failure and effect on other company areas. 5.2.2.7.1. Risk Responsibility. Benchmark participants report that a common problem encountered by project managers is uncertainty about risk ownership or the determination of who is responsible for the negative impact of risk occurrences. The problem is particularly acute on high technology projects where the customer has limited knowledge of the technology. The general consensus of the benchmarkers is that the customer has ultimate responsibility for project related risks. It is the role of

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the project manager to identify the risks and communicate them to the customer. It is also agreed that it is necessary clearly to specify and define with the customer their ownership of the risk. For example, consider the situation where a couple desires to build a new home on the flood plain of a river. If the river should flood, it is the homeowner’s responsibility and not that of the contractor constructing the house. The selected response to the risk is the burden of the customer or homeowner, not the contractor. It is the homeowner who should decide upon a course of action such as mitigating the risk by building a dike around the house, deflecting the risk by obtaining insurance, or avoiding the risk by building on a hill. The role of the best practice project manager is to communicate significant potential risks to the project owner along with their probability of occurrence, magnitude, and suggested response. 5.2.2.7.2. Risk Analysis. Benchmarking forum participants agree that there is a need to improve the analytical approach to risk assessment and evaluation. During the planning stage, effort should be made to define, ‘‘What can go wrong?’’ and ‘‘What is the probability and effect of the risk?’’ If these actions can be identified, quantified, and combined into a predictive model, a response can be developed and the probability of achieving project goals can be measurably improved. To assist the project manager’s efforts, there is a growing research base of specific actions that affect projects and increase the probability of project success; or inversely, increase the risk of failure. In the Appendix is a generic risk evaluation template. Every factor on the template can be scientifically correlated with project success or failure. A user of the risk evaluation template would complete the chart and fill in risk categories and checklist items. The endproduct spotlights high-risk categories and items. A risk mitigation, diversion, or minimization plan would be developed for items in the checklist that represent significant risk to the project. The risk analysis evaluation should be a periodic and ongoing process and should be reviewed at each project milestone. At each review, the relative risk of various factors should be evaluated and updated.

Standard:

The best practice project manager identifies and analyzes project specific risk events, determines their likelihood of occurrence and significance, and plans appropriate responses.


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5.2.2.7.3. Risk Quantification. As discussed in the project initiation and selection section, most organizations evaluate project portfolio risk by estimating ‘‘high-medium-low.’’ It is also the most popular method for classifying project specific risks. Other risk quantification and evaluation methods are: •

•

Probability. It is also possible to apply probabilities of success to various alternatives and subalternatives. An example in the world of project management would be to develop a probability decision tree with each branch of the tree showing the expected probability of occurrence and the expenses or gains associated with the occurrence. The method is particularly appropriate for complex projects with numerous options unfolding at various project phases. Simulation. Typically simulation analysis refers to the use of spreadsheets to ‘‘change one thing at a time’’ and then to analyze the effects of the change. For example, an income statement or cash flow might be developed for a new product. If the impact of a pending recession were to be evaluated, the team could estimate the impact (say a 20% reduction in sales), plug that into the spreadsheet, and then observe and evaluate the results.

5.2.2.7.4. Risk Reduction and Mitigation. Once risk is identified, it is necessary to make plans to accept, avoid, deflect, or mitigate the risk. A few guidelines are listed below. • • • • • • • • •

Include several decision points, milestones, or go–no go points. Include capability plans to shut down, terminate, spin off, or find alternative uses if the project gets into trouble. Keep fixed costs minimal and minimize financial leverage. Diversify. Evaluate project success at arm’s length; e.g., do not get emotionally involved. Emphasize fast payback. Pull out seed money early. Have an audit plan. Define problems early, remedy them, and avoid them in the future. Preidentify major risk factors in the project. Monitor closely. Modularize—break the project into independent components or modules. This can take the form of components of the product or service being developed or can even be time modules such as milestone go–no go decision gates. When working on a complex project, the benefit of modularity is that if one ele-

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ment of the project turns sour, the remaining project modules are unaffected. Transfer risk to others, i.e., insurance, use outside contractors, have partners to share the risk. References: Ingram, 1998; Zangwill, 1992.

5.2.2.8. Functional Specifications The portion of the project plan that describes customer expectations for the product or service is the functional specifications. Using the example of a telephone, the functional specifications would define features such as wireless communication, ability to be used globally, call waiting, voicemail, and internet access. Also included would be specifications about other customer expectations including product life, serviceability, maintenance, durability (resistance to damage), size, weight, colors, and appearance. 5.2.2.9. Technical Specifications Details about the technical design, construction, and approach of the product or service are identified by the technical specifications. The technical specifications describe how the functional specifications will be achieved. For the telephone used as an example in the preceding paragraph, included would be factors such as materials and components expected to be used, circuit board design, national and international standards to be followed, and technology applied.

Standard:

The best practice project manager prepares an appropriately detailed set of functional and technical specifications for the project product or service.

5.2.2.10. The Quality Plan Usually, the technical specifications will include an appropriately detailed quality plan. The plan will describe quality assurance elements for which the project team assumes responsibility and quality manages itself. Also covered are quality control subject areas that embrace the manner in which nonproject personnel will audit and measure project quality performance.


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5.2.2.11. Stakeholder Communications The discussion earlier in the book about project manager professionalism emphasized the linkage between effective communications and project goal achievement. The case was made that the ability to communicate an appropriate amount with project stakeholders is a major factor that differentiates the superior project manager from all others. The research is also clear that the communications process is originated, defined, and stimulated by the project manager.

Standard:

The best practice project manager prepares a communications plan that provides appropriate frequency and detail for the needs of each stakeholder group.

Benchmarking forum attendees agree that a communications plan should always be developed for large projects being conducted in functional organizations. Included are such topics as the type and frequency of communications with each stakeholder group and whether it is formal or informal. The communications plan might also describe conflict resolution procedures and approaches. 5.2.2.11.1. Political Factors. Development of the communications plan often includes an analysis of the political factors impacting the probability of project success. A tool for analyzing such political issues is the Sayre wheel. Wallace Sayre dedicated himself to the development of a method to graphically show and quantify the factors impacting an issue and its resolution in the U.S. government. He determined that multiple groups impact the process and that it is necessary to separate and define each group, quantify the probability of the group changing its views, and then to plan a strategy for each group. His approach is particularly appropriate for political issues involving many stakeholder points of view. Note that the Sayre wheel might not be a part of the communications plan itself but could be an internal confidential planning tool. Figure 5.9 is the Sayre wheel applied to the political aspects of initiating a project office in a large functional organization. The project is shown in the center of the wheel and various stakeholder groups are identified on the ends of the spokes. In this example, the CEO is judged to represent about 30% of the determination whether the proj-

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FIGURE 5.9

ect will be successful. Executives and managers of the impacted functional areas are also felt to be key stakeholders who will be working with the project management office and impacting its success. The same approach is followed with other perceived stakeholders. In each case, a judgment is made about the likelihood of changing the views of the stakeholders and the type and amount of communications or actions necessary. By estimating the impact of each group on the expected success of the project it is possible to quantify the probability of success for the project, as related to political factors. References: Gupta and Wilemon, 1990; Allen, 1970.


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5.2.2.12. Management and Control The project plan will typically include a description of the management and control of the project once it is underway. Covered are topics such as measurement metrics, type of variance reporting and responses, audit plan, and a description of major and submilestones and decision points. 5.2.2.12.1. Measurement Metrics. Benchmarking participants voice agreement that critical success factors should be identified in the planning stage of the project. The factors originate in the original discussions with the project customer about their needs and the project deliverables. The team can also review other similar projects or benchmark with other groups to determine measurement methodology. Once the project is underway, measurement metrics should be in place to determine progress against the critical success factors. Benchmarkers state that sometimes the measurement of project performance is subjective, nebulous and difficult to define but still necessary. Where possible, such as when measuring cost and time, conformance to functional and technical specifications, and resource usage, the variances can be more precise.

Standard:

The best practice project manager identifies customer requirements and measures project performance against those requirements.

Benchmarkers also emphasize that measurement methodology adds time and cost to the project. Often there is a tendency to focus too much on measurement metrics and tools and to forget to lead and manage the project. Consequently, amount of detail should be appropriate to the original statement of customer needs and requirements. 5.2.2.12.2. Variance Reports. The manner in which the cost budget and schedule are monitored is through the use of variance reports. The project plan will describe in appropriate detail how variance reporting is to be conducted. Most variance reports are detailed in nature. For example, when looking at the cost variances, the report will show the original budget and actual amounts spent. Negative or

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unfavorable numbers are shown in brackets. Particularly large deviations from plan may be highlighted to make the scanning of multiple pages of variances more easy. 5.2.2.12.3. Audits. The arm’s length, independent, and objective evaluation of the project is the audit. The project plan will describe when audits are to be performed and areas to be investigated. Generally, the audit will seek to determine if the project is on cost and schedule and if the technical and functional specifications are being attained. 5.2.2.12.4. Milestones, Decision Points. The 60 companies participating in the benchmarking forum place high reliance upon the use of milestones and decision points as triggers to evaluate project performance. The project plan will identify the project wide milestones as well as milestones for subprojects. Where go–no go decisions are required, they will be detailed as well. 5.2.2.12.5. Scope Change Management. The procedures for managing changes to the project scope are detailed in the project plan. Often scope changes represent additional revenue and the primary source of profit on external projects. They also tend to make project performance difficult to measure, change the nature of the project, and result in cost and schedule overruns. Invariably, scope changes will be formal in nature and require formal approval in the form of signatures. 5.2.2.13. Signatures When the project plan is complete, signatures are required to authorize the execution phase of the project. Generally, the signatures of the customer or project sponsor are included. Often, particularly for internal projects, the signatures of other stakeholder groups are included as well. 5.2.3.

Execution and Control Phase

During the project execution and control phase, the superior project manager implements the project plan and engages in the day-to-day management of the project. Emphasis shifts from plan development to getting the work done through people-focused leadership and management. The project plan and its associated components become the tools used to monitor, measure, and control project performance as reflected by the schedule, budget, and functional and technical specifications. Included are monitoring of the project scope, managing project changes, and responding to risk events as well as opportunities.


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Progress toward achieving goals and meeting deliverable objectives receives constant attention. All prior efforts expended on project initiation, selection, and planning are for nothing unless the project is executed speedily, efficiently, and effectively. Schedule targets and milestones are met only if the project is executed speedily. Budget and cost targets fall by the wayside unless project execution is efficient. Effectiveness is attained when all the elements of the execution phase result in the presentation of project deliverables to the satisfaction of the customer and stakeholders. In the final analysis, accolades (or blame) are awarded to the project manager who successfully executes the project, not to the project plan, the charter, or tools and templates used. 5.2.3.1. Kickoff Meeting Participants in the benchmarking forum believe the kickoff meeting has high positive correlation with project goal achievement. At least two major international companies consider it so important that they bring globally dispersed project team members to a central location for the kickoff meeting. They avow that it is the one time in the life of the project when all the team members should be physically together. Many kickoff meetings include project stakeholders as well as team members. The importance of the kickoff meeting is supported by the research. Those who study the impact of formal ceremonies say that they play an important part in redirecting people’s lives. They shift team members’ thinking to a new mindset and mental track. An example given is the impact of the wedding ceremony. People who have engaged in long-term courtships generally agree that the nature of their relationship changes as a result of the wedding ceremony. The same is true of the kickoff meeting. The kickoff meeting emphasizes team building by gaining commitment to project goals and deliverables, reviewing the project charter, discussing individual assignments, and addressing any of the other myriad elements of the project considered important.

Standard:

The best practice project manager administers a kickoff meeting.

Participants also observe that the attendance at the kickoff meeting is a gauge to determine stakeholders’ and the organization’s view of

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the project. If it is poorly attended, it could be an indicator that the project has been incorrectly promoted or that people fail to see its importance. One group rescheduled the kick off meeting to start the new project management office four times. They were faced with the conclusion that there was a need for more promotion of the value of project management to other functional areas of the company before the project could project a high probability of success. 5.2.3.2. Importance of Project Control The quality of project control is a factor that distinguishes the superior project manager from others. It also represents potential for sizable savings for organizations that use professional project managers. For example, Ingram’s investigation of 60 failed projects determined that 70% came in materially late, overbudget, or failed to meet the client’s expectations. The direct and associated costs of failure averaged 8 to 10 times the original project budget. Research of projects investigated by the Standish Group concludes that 86% of software projects come in late and/or over cost. Further, almost all projects in the study incurred significant scope changes. Success rates varied by company size. In large companies, only 9% of projects came in on time and budget. Smaller companies recorded better results. Seventyeight percent of their software projects were deployed on time and budget while maintaining approximately 75% of their original features and functions.

Standard:

The best practice project manager uses variance analysis as a tool to control deviations from the project plan.

5.2.3.3. Priority of Time, Cost, Specifications Benchmarking participants were surveyed to determine the relative amount of emphasis placed by customers on attaining time, cost, and specification goals. Respondents agreed that meeting time targets was consistently most important although they were closely followed in perceived importance by meeting cost targets. Functional, technical, and quality targets were a distant third. To demonstrate the reasoning of respondents, consider the construction of a new home with a forecasted completion date of Decem-


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ber 15. Assume the new homeowners are excited to be planning the Christmas holidays in their new home. They even invite their families to join them. On December 1 imagine that the contractor informs the homeowners that the house will be 1 week late. After the initial distress, a typical reaction of the homeowners would be to investigate options available to let them move into the home on time. Likely the contractor would need extra funds to pay workers overtime and perhaps hire a couple of additional laborers. In many cases, the homeowner would be willing to pay extra (i.e., compromise the cost target) to satisfy their time schedule desires. Now consider the perceived importance of meeting technical and functional specification targets. In the new home situation, assume that the contractor has committed to meeting the delivery targets as a result of receiving the additional funding. But now, the contractor introduces the additional problems that the ornamental trim in the third bedroom will not be finished nor will the back fence or the landscaping in the yard. In response, most homebuyers would agree to compromise or delay these items in order to move in on time. 5.2.3.4. Time Control and Monitoring The world of the superior project manager is dominated by time; including starting meetings and keeping appointments precisely as scheduled, completing work packages when due, and remembering that achieving time targets is considered the generally most important measure of performance by project customers. Time management is clearly an area where the best practices of the superior project manager have potential to generate positive results. In support of this assertion, the Standish Group studied the success of projects meeting time targets. They determined that only 14% of projects came in on time or recorded less than a 10% time overrun. Approximately 46% experienced time overruns of 100 to 400%. The average overrun was 222% of the original time estimate. 5.2.3.5. Time Variance Measurement The superior project manager monitors and controls the project schedule through observation, use of milestones, percentage complete, and earned value calculations. •

Observation. Benchmarking participants emphasize that the best way to measure project progress is to physically observe and verify. All other methods involve unsubstantiated reports and delayed communications. Observation generally

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results in immediate feedback of project status. Deviations from the plan are quickly identified and action taken to correct the variance. Without observation, benchmarkers report that there is a tendency for team members to overestimate the degree of completion of individual work packages. Hence the phrase, ‘‘We are 80% complete with 80% left to perform.’’ •

Milestones. One of the most important control methods in project management is to insert frequent milestones in the schedule. Every for-profit organization in the benchmarking forum uses milestones as the primary method for monitoring and controlling schedules and project time performance. Milestones are convenient points that encourage the team to evaluate the project and measure its performance before proceeding to the next step and incurring additional expenses. Upon arriving at the milestone, it is a simple matter to observe whether the project is ahead or behind schedule. For example, assume that a new home is scheduled for completion on December 1. If December 5 has been reached and the house is not complete, it is intuitively logical that it is 5 days late.

•

Percentage Complete. Sometimes milestones are too infrequent or inappropriate to use for schedule evaluation. On projects with overlapping project phases there may be few convenient places where milestones can be placed. The same is true when taking a multifunctional approach or when there are numerous subprojects and the various elements progress at different rates. Sometimes an evaluation of project status is required between milestones. In all these situations, using percentage complete or ‘‘earned value’’ progress calculations represent more understandable measurement devices. Benchmarking participants report the use of two types of percentage complete calculations. Both are simple to calculate and easy to understand. One is the compare the number of work packages completed with the total amount planned for the project. The other is to compare funds expended with those scheduled to be spent for the entire project. For example, assume the project is the construction of a new product prototype. Scheduled time to the prototype completion milestone is 6 months. The number of work packages in the total project is 600 and budgeted funds are $1,200,000. If a status report is requested at the end of month 3 (1/2 way through


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the project), it is a simple matter to count work packages complete and add up the money spent. In this example, if 300 work packages are complete (50% of the total) and $600,000 has been spent (50% of funds budgeted), the project is on schedule. •

Earned Value. A somewhat more complicated form of percentage complete calculation is ‘‘earned value.’’ It compares the budgeted cost of work performed to date (BCWP) with the budgeted cost of work scheduled to date (BCWS). The formula is BCWP–BCWS to obtain a dollar amount, or BCWP/BCWS to provide an index or percentage. It is different conceptually from the more simple percentage complete formula, because it works only with budgeted amounts rather than actual amounts. Earned value is primarily used by the U.S. government and associated contractors. A survey of 60 participants in the Top 500 Benchmarking Forum concludes that none uses earned value for schedule management. The major complaint is that earned value is complicated and difficult to understand. Note that earned value consists of two basic elements. The first is to evaluate schedule variance and the second determines cost performance. The costing portion compares budgeted with actual work package costs. The costing portion reflects the conventional cost accounting approach and is widely used and accepted within for-profit organizations. It is discussed in the following section.

5.2.3.4.2. Team Emphasis on Time. Motivational techniques are applied to maintain team focus on the schedule. Included are peer pressure, status reviews, and the posting of team and individual performance. References: Ingram, 1998.

5.2.3.5. Project Financial Control The second area where the superior project management has major impact on project performance is control of the budget. It is the financial bottom line for the project and is comparable to executive efforts made to attain a profit for an entire company. Research indicates that project financial control is an area with major potential to benefit from project management best practices. The average cost overrun

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for projects studied by the Standish Group was approximately 190% of the original cost estimate. Conventional costing concepts from the world of accounting are directly applicable to project management. The procedure is as simple as comparing the amount budgeted with the amount actually spent. The result is the variance. There are two types of variances commonly used; the amount of any resource used (e.g., the number of people) and the unit cost of each resource (e.g., the estimated cost per hour of a person). The difference between each of the costing systems is the type measurement performed. A summary of each is listed below. 5.2.3.6. Earned Value The costing portion of earned value compares estimated total work package costs with total actual work package costs. No distinction is made between number of resources used or unit costs for each resource. The formula to determine earned value costing variance is budgeted cost of work performed minus actual cost of work performed (CV ⫽ BCWP–ACWP) to find a dollar amount, and budgeted cost of work performed divided by actual cost of work performed (CPI ⫽ BCWP/ACWP) to determine a percentage or index of cost variance. The simplified nature of the earned value cost calculation lends itself to estimating completed costs and efficiencies required to meet targets. The estimate of the cost of the completed project, assuming that current cost overruns will continue, is determined by dividing the cost index by the original total budgeted amount for the project (EAC ⫽ CPI/BAC). The degree of efficiency needed to bring the project in on the original cost target is determined with the formula TCPI ⫽ (BAC–BCWP)/(BAC-ACWP). 5.2.3.5.2. Activity-Based Costing. Most large projects lend themselves to activity-based costing. The cost of an entire activity is measured over the period that the activity is in progress. It is particularly appropriate if a project spans multiple accounting periods. Traditional accounting is geared toward closing the books at the end of major periods such as year-end. With activity-based costing, the costs and revenues continue to be recorded over the life of the project. 5.2.3.5.3. Life Cycle Costing. The entire life of a product is the measurement standard for life cycle costing. It is often encountered in the project management environment, particularly in association with new product evaluations. Life cycle costing differs from other costing methods, because it generally includes revenue as well as material and labor costs. When evaluating the life cycle of capital


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goods, machinery, and many consumer products, there are sizable cash flows after the sale of the product. Included are such items as repair and service components, maintenance, potential to move up to larger models, added features, trade-in potential, and salvage value. Numerous products have greater cash flows after the product has been sold than before. Life cycle costing can have dramatic impact on new product selection and strategy. For example, some computer printers are sold at low prices with little if any profit made from the product sale. The marketing strategy is to generate lifetime profit from the sale of toner. 5.2.3.5.4. Job Order Costing. Job order costing applies costing concepts to jobs that have a specific beginning, ending, and include clearly definable units of production. In a project environment, it could pertain to the activities or segments between each milestone, individual work packages, or even the total project. Job order costing measures the cost to produce a group of products or services. For example, a ‘‘batch’’ in a sporting goods factory might be 50 baseball bats. Total material and labor costs to build the batch of bats would be recorded. To determine the cost of one bat would entail dividing the total cost recorded by 50. 5.2.3.5.5. Process Costing. The difference between job order and process costing is that job order costing measures the cost of a group of units of production and process costing measures units produced in a specific period of time. Process costing is used in operations such as mining and petroleum production. Some observers judge that process costing has little application to projects. However, if a project has few milestones, over a period of time it begins to take on the attributes of a process flow operation. Further, if one considers earned value calculations, it will be noted that the calculations apply more to projects with continuous flows rather than those with many small, segmented milestones. In a way, the calculations associated with earned value could be considered an attempt to measure progress in a process flow environment. 5.2.3.5.6. Standard Costs and Variance Analysis. During the project planning process, the costs for each of the tasks comprising project work packages are estimated. These estimated costs become the ‘‘standard’’ costs of the project. They have counterparts in nearly every industry. In the auto service business they are termed flat rates. The primary reason they are used is because it is easier to use an estimate than to calculate actual rates, and actual costs are

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not known. Once the project is underway, actual costs begin to be accumulated. Comparing the actual costs with the estimated or standard costs results in ‘‘variances.’’ 5.2.3.6. Scope Management and Control Alterations to the project that affect the schedule, budget, functional and technical specifications, or any other aspect that involves the expenditure of funds or resources are labeled ‘‘scope changes.’’ Benchmarking forum participants report that the project manager is under constant pressure to change the project. Sources of the change requests are numerous: they can be oral or written; from project managers themselves, team members or external stakeholders; legally mandated; or could be corrections for errors and oversights. The process is always approached in a formalized manner. Even so, there is a tendency to make informal changes even when formal procedures are in place. Scope changes are a double-edged sword for the superior project manager. On the one hand, scope changes negatively impact project speed, efficiency, and effectiveness. They generate alterations to the budgeted cost of work scheduled, the budget at completion, the dayto-day schedule including periodic milestones, the technical and functional specifications, and even deliverables and project goals. In all cases, scope change makes it more difficult to measure performance, monitor progress related to the original project plan, and to compare current progress with prior efforts and milestones. Projects become more nebulous, ever changing, and harder to define. A problem stated by benchmarking participants is that often the project manager allows and even encourages scope creep and project changes. Usually the project manager is making an effort to be cooperative and to keep the customer happy. In other cases, the scope changes may be self-serving in nature. Ingram’s research identified numerous examples where project managers used uncontrolled scope changes to reduce accountability or to continue projects indefinitely when they should have been terminated. On the other hand, scope changes represent opportunities to generate incremental revenue and profit, to add value, to adjust the project to changing conditions, to incorporate improvements, and to correct oversights. Scope change is a key component of the sales strategy in many organizations. The companies bid projects at low prices to obtain the contract with the intention of making the profit from the predictable scope changes. One thing is certain, scope changes will occur. Zangwill’s research found constant pressure from stakeholders to change the scope


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of the product. He determined that the most successful project teams applied discipline and formal procedures to control such cost-increasing modifications. Project managers were trained to manage change in a formalized fashion and to enforce the formal scope change procedure. The process of ensuring that the project is meeting the scope objectives and conforming to the project plan requires constant monitoring by the project manager. For example, to prevent the tendency of team members to make unauthorized changes, the project manager might ask at each periodic status meeting, ‘‘Have any changes been made?’’ This procedure serves to bring the impact and consideration of the effects of changes down to the individual project team members.

Standard:

The best practice project manager manages project scope changes as a formal process.

5.2.3.6.1. Scope Change Process. The scope change control process is defined during the planning stage and communicated to project customers and other stakeholders. In contractual project relationships, the scope change process should be spelled out in the contract. Described is the paperwork that initiates the change and description of the approval process. The scope change process always involves obtaining customer signatures. The management of scope change involves analyzing the change to determine its impact on the project plan. Often the process incorporates other stakeholders and team member evaluations. Many organizations have change control committees composed of members from the various functional groups affected by the project. The committees approve changes as well as ensure that all stakeholders understand the effects of the change. On large projects authorization may be required by as many as five change control boards. One board might review market impact, another manufacturing implications, another serviceability, and another price and cost effects. 5.2.3.6.2. Changes Subject to Scope Change Control. Benchmarking participants report different approaches to deciding the type changes that require formal approval. Most allow incidental changes to be made on-the-spot that have no material impact on the project. Others require formal board approval of changes that impact

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cost over a certain percentage, such as 10%. Some project groups require customer signatures on even the smallest of changes. Particularly in the early stages of the project, they say that it is important to enforce project change discipline. Stakeholders are essentially trained to know that when they request changes, a formal process is initiated and that the change will probably require more money and schedule changes. 5.2.3.6.3. Encourage Changes Early. Benchmarking participants stress the importance of emphasizing to customers that changes made early in the project life cycle are generally easier than making the same changes after the details become set in concrete and project execution commences. It will become progressively more difficult to make scope changes as the project progresses. Most elements of the product or service are locked in early in the process. The basic functional and performance characteristics, resources to be used, and expected outcomes are typical foundation decisions. Once these fundamental decisions have been made, any change affects the entire project. At later stages, all the elements of the project are so interrelated that even a small change can affect several aspects of the project. At some point, there is almost nothing that would be described as a small change. Zangwill concluded from his research that delaying changes through each subsequent phase multiplies the cost of the change by a factor of 10. His calculation was as follows: During During During During During

design design testing process testing test productions final production

$1,000 $10,000 $100,000 $1,000,000 $10,000,000

Zangwill justified his logic by quoting projects where changes in testing cost 13 times more than similar changes made in early design. He found that changes after customer installation increased cost 92 times. In the projects researched, the concept development stage accounted for 1% of total project cost but determined 70 to 80% of total life cycle cost. 5.2.3.6.4. Evaluating Project Performance Where Numerous Scope Changes Have Been Made. The sunk cost approach is suggested for projects that have become vague and nebulous as a result of numerous scope changes. Previous scope changes make


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the evaluation of future actions so confusing and difficult that the prior work is best treated as sunk costs and ignored. The project is then evaluated in reference to the expected future benefits compared to the additional cost and investment required. References: Ingram, 1998; Zangwill, 1992.

5.2.3.7. Project Value Analysis Value analysis refers to the formal process of eliminating cost from the project or the project’s product and service. The objective of value analysis is to accomplish the goals of the project, product, or service at the minimal cost. This process is necessary because often cost is not the major consideration during the project planning process. Generally planners focus on including every element, work package, and activity. The emphasis is on establishing time and budget definitions. If a new product is being designed, the perspective is usually on performance and meeting specifications. During all these activities, cost is a secondary element. If the project is of long duration, say several years, the constant influence of external economic factors encourages higher labor rates, more expensive materials and increases in the overall cost of doing business. There is a tendency for costs to increase even more as unforeseen events occur and schedules change. Often in the haste to get underway or to design a product against a deadline, quality features and activities may be added that do not contribute to the product or overall project suitability. From this view, the extra quality, detail, and features represent wasted expenditures. More so, the cause of the cost may result in continuation of the problem. The value analysis is a formal process to review the project and/or its associated product or service with the objective of reducing costs without impairing efficiency, effectiveness, or suitability of the product or service. 5.2.3.8. Asset Stewardship Project managers are entrusted with sizable amounts of assets and funds. The concept of stewardship recognizes the fiduciary responsibility of the project manager to protect those assets. Most commonly in the world of finance and accounting asset stewardship includes protecting the projects assets against theft. Applied are the numerous accounting controls that serve notice that the assets are being monitored and protected.

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5.2.3.9. Communications As discussed in prior chapters, the communications process is an important component of project success. All benchmarking participants use a combination of formal and informal communications procedures. For reporting project status to stakeholders, best practice project managers use the simplest template that meets the information needs of stakeholders. Templates summarize important project information on a single page. Some benchmarking participants simplify the template even more. The street light format presents critical reporting activities (e.g., schedule, cost, specifications) in a ‘‘red, yellow, green’’ visual format. Other companies use a visual ‘‘project control panel’’ where the important tracking activities are presented as gauges. All participants encourage periodic meetings to discuss project status. Frequency varies according to the nature of the project. On critical and politically sensitive projects, some report as many as three status meetings every day. Others have as few as one meeting per month. 5.2.3.10. Formal Reviews and Audits Formal project reviews take many forms. Examples are milestone, phase gate, and go–no go reviews and project audits. All involve a detailed analysis of the product or service being developed as well as the project group’s performance and progress. Review teams vary from executive groups to specialized audit teams composed of experts from critical areas important to project success. Normally outsiders perform the review but project teams apply structured internal reviews as well. An audit is normally performed at least once, although large projects will have multiple audits scheduled. An audit provides project teams as well as stakeholders an independent and objective evaluation and information about the project. Its objective is to investigate the project’s performance in meeting the schedule, cost, specification as well as being on track in achieving objectives and deliverable targets. Captured are both the good and the bad aspects of project performance. The audit or review provides a safety valve for identifying and communicating project problems to stakeholders. The audit or review also serves to validate the original decision made to initiate the project. Often the project environment has changed, risk events have occurred that have altered the nature of the project, and scope changes may have modified the schedule, bud-


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get, and specifications significantly. All of these are evaluated to determine if the project should even be continued and in what form.

Standard:

The best practice project manager encourages critical evaluation of project performance by scheduling audits and reviews.

5.2.3.10.1. Perform Reviews Early. A review or audit should be performed early in the life of the project before large amounts of funds are expended. Progress measurement early in the project process was recommended by 25% of the more successful project teams surveyed by Gupta and Wilemon. Stakeholders such as the functional groups and customers should be participants in the reviews and associated decisions made. 5.2.3.10.2. The Audit or Review Team. Most benchmarking organizations use nonproject team auditors and reviewers, although project teams can successfully conduct internal reviews themselves. Ideally, the auditing or review team is composed of stakeholders and representatives from senior management and critical areas such as engineering, quality, service, marketing, production, and accounting/finance. In general, the project audit or review team is composed of independent and objective reviewers from outside the project team. Researcher Tom Ingram found numerous examples where the image presented by project leadership was different from the reality found by auditors. Use of outsiders makes it easier to determine the true status of the project. Outsiders can also communicate information that would be awkward or politically sensitive for the project team. For example, Ingram’s research of failed projects found that it is often not politically correct for the project manager to take a stand that a project is in trouble, was poorly conceived, or impractical. In some cases, the organization labeled such project managers as negative and not team players. He found incidents where the ‘‘complaining’’ project manager was removed from the job and reassigned. In these situations, a solution would have been to utilize an outside auditor as the messenger of doom.

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Some benchmarking participants also include a few audit team members who know little or nothing about the specifics of the project. Some even incorporate reviewers from outside the company. The reasoning is that an outsider is less susceptible to cultural constraints such as, ‘‘It’s the way we have always done it.’’ Use of outsiders to conduct the audit also increases the credibility of the audit. For internal review purposes, the project team can conduct its own audit. Most use a structured approach such as a SWOT analysis that reviews strengths, weaknesses, opportunities, and threats. When combined with a review of the plan, most teams can successfully develop a realistic appraisal of their efforts. 5.2.3.10.3. Accountants as Project Auditors. Since auditing originated in the accounting profession, Ingram’s research found that some companies were inclined to rely upon accounting personnel to perform the project audit. One benchmarking participant hired a major accounting firm to conduct project performance audits. Ingram’s investigation concluded that accounting auditors often fail to see structural and people problems. They are trained to evaluate problems related to record keeping and to determine that money is being spent according to the budget and accounting rules and procedures. Accounting auditors often fail to spot a project that is encountering serious nonfinancial troubles. Even when the accounting professional is aware of the problems, they may be hesitant to disclose the problem, because it falls outside the scope of their traditional numbers focus. In particular, if the problem does not conform to clear rule violations, the accounting auditor may be reluctant to raise a red flag. Ingram concluded that unless the audit is focused strictly on financial aspects, most would recommend the audit be performed with a broader spectrum of functional representation. Other companies in the benchmarking forum report using only senior management for the auditing team. Problems were encountered when the executives lacked understanding of the technical aspects of the project and stakeholders desired to be participants as well. 5.2.3.10.4. The Audit Approach. The views of benchmarking participants vary about the approach to be taken by the audit or review team. Most feel that in normal situations the audit objective is to provide the project team useful information to help manage the project. In other cases, the objective of the audit is to find out why a project is deviating from the project plan and whether it should be terminated. Some benchmarking participants attempt to make the


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audit and review process less intimidating. One organization calls it a ‘‘project review health check.’’ In every case, for audits to be successful, everyone must know the rules of the game and the focus of the exercise. When conducted properly, stakeholders and the project team recognize the value of audits and feel the process improves the project. Normally, the project team is given a chance to respond in case the audit team missed or misinterpreted something. 5.2.3.10.5. Identifying Projects to Terminate. One advantage of audits and reviews of project performance is that marginal projects are identified and culled earlier. Auditors and reviewers should always ask two questions: ‘‘Should this project be terminated?’’ and ‘‘Will the benefits gained from continuing the project exceed the additional costs?’’ Ingram’s research found that once a project is underway, stakeholders are reluctant to step forward and declare the project a failure or in trouble. They are usually even hesitant to interfere with the day-to-day management of the project. Consequently, projects sometimes continue down the path of failure long after everyone is aware that they are a terminal issue. The benchmarkers’ experience agrees with Ingram’s conclusions. In one benchmarking forum meeting of 21 large corporations, none of the participants reported ever terminating information systems projects. As a result, several organizations participating in the forum initiated auditing programs to find and terminate failing projects. One group determined that 5% of the company’s resources (financial and people) were allocated to projects that provided no material benefits to attaining organizational strategy and had no clear termination point. Another found that it was taking 52 months to even recognize that a project was a failure. After implementing the audit process, the time to identify and terminate projects was reduced to 6 months. Funds and personnel made available for other uses were estimated to be in the hundreds of millions of dollars. Some benchmarking organizations use thresholds to trigger a termination audit. For example, one participant looks critically at projects that have schedule delays or exceed the budget by over 10%. They audit the reasons for the excesses, scope changes, and whether the project is meeting its deliverable targets. 5.2.3.10.6. Measure the Value of the Audit. Like all aspects of professional project management, there should be clear benefits resulting from the audit or review process. Improvements to project processes and identification of problems should be estimated in

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terms of savings and/or incremental revenue generated. Each successive audit should uncover areas of improvement that can be quantified. Savings can be recorded as percentage of total budget. When failing projects are identified early and terminated, savings to the company from not continuing the project can be calculated. This information serves to validate the value of the review or audit. References: Ingram, 1998; Gupta and Wilemon, 1990.

5.2.4.

Project Closing and Termination Phase

Project termination includes the critical activities of presenting the final deliverables to the customer, preparing and executing the project termination checklist, placing historical information in a knowledge library (i.e., lessons learned, project journals, project charter, and plans), communicating the benefits of the project to stakeholders and the host organization, and conducting the termination celebration. In some cases, project follow-up activities include warranty and service provision and monitoring of project results. Many seasoned project executives judge the termination process one of the most critical elements of successful project leadership. The manner in which it is performed directly impacts the residual attitudes of stakeholders about the project and the project team. It is also the phase where numerous pressures encourage the project manager to be hasty in its execution. Benchmarking participants report that it is common to review project plans that fail to include termination costs or the steps necessary to terminate the project. When long-term projects are concluding, and particularly when team members are unsure of their futures, stress is high. Researchers suggest that the impact on participant’s emotions is on a level with that associated with other life crisis such as divorce, suffering the death of a loved one, or getting fired from one’s job. For example, the project manager for an Olympic Committee told an Academy of Management group that approximately 5000 volunteers worked up to 5 years preparing for the Olympics. After their years of effort, the Olympics reached its conclusion in a crescendo of activities. According to the project manager, the reported emotional problems and even suicide rate among participants was dramatically higher in the ‘‘letdown’’ months following termination. Benchmarking participants report that emotions are manifested in other ways. For projects that are less than successful, finger pointing and accusations can be expected. For those that are wildly successful, jealousy and resistance from entrenched functional areas of


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the organization often temper the elation of the project team members. In every case, the astute project manager can expect nontypical reactions and responses. Another problem reported by the benchmarking participants is that as termination nears, project team members, including the project manager, become subject to a ‘‘termination’’ state of mind. It is similar to the emotions that are arise during a 5-day course or training meeting. On the last day, most people are preoccupied with thoughts about what will happen as soon as the meeting is over. Almost everyone is wishing there could be a way to accelerate the termination process and end the meeting early. Someone will usually even encourage the leader to do so. In these cases, the superior project manager and team members will force themselves to be professionals and to complete all the scheduled activities. 5.2.4.1. Presenting the Deliverables to the Customer All the previous phases of the project culminate at one point: the presentation of the deliverables to the customer. Benchmarking participants agree that the final presentation of deliverables should take the form of a formal ceremony. Even for projects where deliverables are presented to the customer over the entire project life, there should be a ceremony for the final delivery. Often the final delivery is symbolic, since the actual product or service might already be in use by the customer. Examples are the final walk through for new buildings and the cutting of a ribbon for highways. The formality of the final delivery signifies to the customer, and team members that the project is over, its responsibility is being conveyed to the customer and a new direction in the relationship is commencing.

Standard:

The best practice project manager formally presents the final deliverable to the customer.

5.2.4.2. Preparing and Executing the Project Termination Checklist The termination of many projects is a sizable undertaking. To aid in the process, most project managers list activities to be accomplished in a checklist format. The checklist ensures that all activities are performed in a rofessional manner and no shortcuts are taken.

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Standard:

The best practice project manager uses a termination checklist to ensure all termination activities are performed.

The checklist is a reflection of the original project plan. It ensures that all activities are completed and closed. The sidebar graphic shows a sample checklist for the accounting and finance elements of a typical project. Resources and assets are inventoried and returned to their proper destinations. Accounts are closed, all moneys are accounted for, and property and equipment are inventoried. Many project organizations require an audit of the accounting and financial records.

Project Termination Financial and Accounting Check List 1. Financial and accounting documents have been closed and recorded. 2. Final charges and costs have been audited. 3. Audit has been completed of all the financial and accounting records. 4. Final project financial report has been completed. 5. Receivables have been collected. 6. Payables have been paid. 7. Vendor contracts have been reviewed to ensure all terms have been satisfied. 8. All contractual deliverables and completion dates have been met. 9. Work orders and contracts closed out. 10. Financial reporting procedures terminated. 11. Financial reports submitted to pertinent stakeholders. 12. Pertinent licenses and permits terminated. 13. Nonessential project records destroyed. 14. Essential project records stored. 15. Electricity turned off, doors closed and locked, say ‘‘goodbye.’’


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Other checklist topics include recognition and closure of scope changes and the review of functional and technical specifications. All commitments made to the customer are reviewed to ensure that they have been fulfilled. Contracts and agreements with vendors are terminated. Purchasing and other functional areas are notified of the project’s termination. 5.2.4.3. Place Project Documents in a Knowledge Library (i.e., Lessons Learned, Journals, Project Charter and Plans) The superior project manager contributes to the organization’s body of knowledge. Information that could benefit and improve the performance of future projects is filed in an appropriate library. Future project managers can refer to the library of project charters and detailed plans, tools used, lessons learned, and project journals to serve as templates and assist in developing new projects. Some benchmarking participants have such extensive libraries that new project managers can pick similar completed projects and model the new project after the old. Whether one is reviewing the work breakdown structure, the project schedule, prior budgets, specifications, journals, and lessons learned, using an existing project as a template increases the new project’s speed, efficiency, and effectiveness. Future schedules and costs become more accurate, risks and pitfalls are more readily identified, and all project phases become more efficient, because the project manager has access to and builds upon prior experiences.

Standard:

The best practice project manager contributes to the organization’s project knowledge base by placing appropriate project documentation (lessons learned, journals, the charter, and plans) in a library or depository.

5.2.4.4. Lessons Learned and Project Journals The superior project manager evaluates the project’s successes and failures. This is done through the process of maintaining a project journal throughout the life of the project or compiling lessons learned

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at the end of the project. From these, future project managers gain access to knowledge acquired during the transmission of each successive project. Benchmarkers advise that the critical self-analysis associated with lessons learned and project journals is a sensitive issue in many organizational cultures. Any tendency toward finger pointing or critical evaluation of the performance of specific groups can be unpopular. In some organizations, public acknowledgment of one’s failings in leading the project can have negative career consequences. Consequently, the superior project manager will carefully select appropriate wording before distributing or preserving lessons learned and project journals. 5.2.4.4.1. Lessons Learned. At the end of the project, the project team develops a list of lessons learned. A few benchmarking organizations wait 4 or 5 months after completion to ensure the availability of information. The logic is that at that the project team can be more independent, objective, and more accurately identify things that went wrong or were executed in a superior fashion. Benchmarkers recommend that lessons learned be reviewed at the kickoff meeting or during the planning stages of new projects. Some project groups use a generalized ‘‘Lessons Learned’’ template to guide a structured review of the project. Schedule, cost, and specification changes are examined. Risks encountered are recorded. Major variances from the project plan are discussed and noted. Personnel, political, stakeholder, and environmental issues are reviewed as are incorrect assumptions made during the planning stage. Benchmarkers state that the tendency of lessons learned is to focus on problems. However, they stress the need to emphasize the positive aspects of the project, since the greatest returns result when people understand successes and why they occur. Best practice project organizations recommend that, where possible, lessons learned should be quantified. Identification of the cost of errors and problems provides more precise weighting for future risk items. Variances are sometimes ranked according to the amount of financial impact on the project. 5.2.4.4.2. Project Journal. Some best practice project managers maintain a journal or diary during the project’s life. A typical journal would contain a short summary of knowledge acquired on a daily basis and is comparable to the captain’s log on a ship. It is written as though the project manager were communicating with a close friend or relative who is to be the next project manager. On


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some project teams, each team member is encouraged to keep a journal. An abbreviated form of a journal results when the project team develops interim lessons learned for each project assessment review, milestone or audit. These are then compiled into a final project journal or lessons learned document. Users of journals profess that they offer advantages when compared to lessons learned. They often are more compatible with the organizational culture. They tend to relate events and show the chronology of situations. They are less inclined to make sweeping conclusions and generalizations. 5.2.4.5. Communicating the Benefits of the Project to Stakeholders and the Host Organization Measurement and communication of the project group’s performance is crucial. To the project manager and team members, the benefits and positive results of the project effort seem clear; but the portrait is often opaque to senior executives, stakeholders, and others in the organization. Benchmarking participants unanimously agree that for project management to continue to be recognized as a profession of value to organizations, there must be a clear linkage between its application and improved organizational project goal achievement. To accomplish this, it is necessary to measure and communicate project results and performance. The need for communication of benefits is stressed, because historically project management groups have been slow to quantify and measure the importance of professional project management in their organizations. Benchmarking pioneers have learned that measuring the results of project management is easy to talk about but hard to do. In the early days of executing projects in large functional organizations, benchmarkers felt that they knew and everyone else recognized the value of project management. This rarely proved to be entirely true. When pressed for specific positive bottom line results, few, and in most cases none, were available. Ibbs’ recent research of projects concluded that the same problem continues to exist. He determined that few project groups measure the benefits of the project to the organization. As a result of these experiences, there is conviction among forum participants that the bottom line as well as subjective and generalized benefits of the project management must be identified, quantified where possible, and communicated to stakeholders, senior management, and other functional areas of the organization.

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Standard:

The best practice project manager measures and communicates project contributions to stakeholders and the organization.

As always, there are political and cultural problems related to measuring and communicating project success. It is a fine line between the appearance of egoistic bragging and the need to publicize positive results and contributions to the organization. Most would suggest emphasizing the contributions of stakeholders, vendors, team members, and associated functional areas. Benchmarkers also stress that sometimes the results attained that are the most valuable to the organization are the subjects that cannot be talked about; i.e., saving the losing projects of other groups. Best practice project organizations have developed measurement methods, metrics and standard performance evaluations. The appraisal process usually starts with critical success factors identified during the project charter and planning stages. Analysis of stakeholders also provides guidance about subjects of interest. From these sources, measurement metrics are developed. For example, one best practice company utilizes 18 different ways of measuring project performance. Their primary evaluation tool is a ‘‘value measurement model.’’ The project leader starts with a problem and then asks, ‘‘What is the standard that we measure against?’’ From this the measurement model is developed. Listed below are various approaches companies take to measure project benefits. Any or all of these measurement methods can be tailored to articulate project benefits with the host organization’s goals. 5.2.4.5.1. Measure the Value of Professional Project Management. The use of professional project managers should improve project performance well in excess of its cost. This issue is of particular importance, because the professional project manager is generally more expensive than the nonprofessional. Consequently, best practice project groups measure the cost of professional project management. The cost is then compared with project output. One measurement tool is to simulate what would have happened if the project had not been managed in a professional manner. Several project organizations have a line item ‘‘cost for project management’’ or ‘‘construction management.’’ They measure the percentage amount of the project that is management. Project management groups quote that the cost


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of professional project management ranges from 1.5 to 7% of total project cost. On some government-managed projects, it is common to observe costs of project management as high as 40% of total project cost. 5.2.4.5.2. Compare with Prior Projects or Approaches. The performance of the project team can be compared with historical events. Where measurements over time are recorded, improvement over prior projects can be shown. If sufficient historical examples are available, cost and performance trend lines can be developed and compared with the results of the current project. Where specific metrics are not available, the current project can be subjectively compared with the way projects were managed historically. 5.2.4.5.3. Impact on Profits. Most organizations are bottom line oriented. The question is almost always asked, ‘‘What did the project contribute to the organization’s profit, goals and strategies?’’ Specific metrics might be increased sales and revenues, reductions in cost, improvement in organizational efficiency, and return on investment. 5.2.4.5.4. Measure Accuracy in Achieving Time and Budget Goals. Several best practice organizations evaluate projects on the basis of accuracy in meeting goals. For example, a project might be under or over budget by 5%. Either result is equally acceptable and would receive the same management response. 5.2.4.5.5. Efficient Use of Resources. Projects consume resources. One objective of the superior project manager is to minimize wasted labor, materials, and other resources and to maximize output. On some projects it is possible to measure productivity and efficiency by comparing work output and resources used. Project work output can be compared with cost and/or resources used such as labor. One danger of this method is that it encourages cutting costs to the point that output is reduced as well. 5.2.4.5.6. Success in Meeting Commitments. The question can be asked, ‘‘Did we meet the commitments we made?’’ The project team can review the promises made during the planning stage and throughout the project. These can be evaluated in relation to scope changes to determine the degree of success in keeping the commitments. 5.2.4.5.7. Customer Satisfaction. There is general agreement that one dominant measure of project performance is customer satisfaction. The superior project manager identifies customer re-

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quirements and measures project performance against those requirements as determined by customer satisfaction. Measurement tools usually consist of informal meetings or formal surveys. Note that benchmarking participants stress that customer satisfaction should be measured continually as well as at project termination. 5.2.4.5.8. Client Retention. The proof of customer satisfaction is retention as evidenced by repeat business and a strengthening of the relationship. 5.2.4.5.9. Stakeholder Satisfaction. When taking a stakeholder view of team performance, team success becomes a multi dimensional issue. Issues in addition to the project’s success need to be taken into account. Different constituencies have varying degrees and definitions of superior performance. Interest groups or individuals that can impact the perception of project success can be evaluated. Where there is evidenced of satisfaction, this should be communicated. 5.2.4.5.10. Reduction in Time to Market or Completion Time. One measurement of project performance is to compare the former time to complete projects or ‘‘lead time to market’’ with those achieved by the current project. Generally, one of the most dramatic results of professional project management is the reduction in time to complete projects. When a new product is involved, the practical benefit of reducing project time is that the product enters the market sooner. Generally, the historical time to develop new products is well known within an organization. It is probably never precisely quantified, but experienced managers and executives will have a general idea of traditional ‘‘lead time to market.’’ For example, one company in the Top 500 Project Management Benchmarking Forum judged that before the project group was started, new product development time to market was 52 months. The projects being managed by professional project managers reduced lead time to market to an average of 18 months. Benchmarkers report that the value of reducing time to market by 1 day is phenomenal. Each day time to market is reduced adds 1 more day of sales. In the preceding example, by shortening lead time from 52 to 18 months, sales occurred nearly 3 years earlier than they would have without the project approach. Benefits accrue to the company in other ways. By generating sales sooner, money is made available for other investments. Furthermore, shortened time to market means that market position is estab-


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lished earlier. Incremental sales are obtained and higher profits occur by applying pricing techniques to capitalize on the market niche, limited competition, and initial high-demand product for the new product. Finally, marginal products are identified earlier in the design process. If one considers solely the impact of the time value of money, the results are dramatic. The money generated by the product sales can be invested in other income-producing opportunities. Reducing lead time to market offers other, more subtle benefits. Its effects are similar to increasing inventory turnover. A high inventory turnover means that the investment in inventory is small compared to the amount of resultant sales. By reducing time to market, the same number of people can complete more projects. Where previously a person might be involved in a project for say a year or so, now they will complete one in a few months and then move on to another. The cash investment in each project is reduced. Savings occur from (a) making project managers and team members available for other, higher potential projects, and (b) eliminating the investment associated with the project development expenses for the extra months of development time. Reducing lead time to market gives the company capability to react faster to market changes. The organization has the confidence of knowing they can respond to market changes faster than competition and consistently be first in the market. The first products to be introduced enjoy the benefits of high demand and low supply or scarcity of the product. Consequently, an astute pricing policy will capitalize on this set of circumstances and maximize profits. As the market matures and competition begins to enter, then pricing becomes more competitive and profit margins decline. Products that are early in the market also have potential to carve out a niche and establish a stronger competitive position. Latecomers are relegated to the reduced and declining profits reflective of the maturity and obsolescence stages of the product life cycle. 5.2.4.5.11. Measure the Impact of Problem Identification and Corrective Action. One advantage of continuous measurement and monitoring of project performance is that marginal projects are identified and culled earlier in the development process. One project management group indicates that they identify and terminate projects on an average of 3 months after execution commences. At the inception of their performance measurement efforts, it took approximately 1 year to terminate a clearly losing project. Other groups

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report that they measure the time to identify problems and the number of project problems corrected. 5.2.4.5.12. Measure Value of Quality. Benchmark participants report that measuring the cost of quality is a noble goal but difficult to do. A few best practice companies have anecdotal estimates of its value. One company formally queries customers about the degree of satisfaction with project quality. Benchmarkers agree that even with the measurement problems the value of quality should remain a subject that receives discussion and is a part of the measurement component. 5.2.4.5.13. Portfolio Benefits. Some project organizations attempt to show the value of the individual project as it relates to the entire portfolio of projects. Most use a baseline of project return versus risk delineated at the point professional portfolio management commenced. They then compare the baseline with the current portfolio of projects. 5.2.4.5.14. Aggregate Benefits of Projects. All of the measurement methods used by a project organization can be aggregated over a period of time and numerous projects. The totaling of measurements gives the project organization capability to measure improvement and to set goals for future projects. Some participating organizations roll up the aggregates of all their projects for the year. They show the results of each specific project as well as all projects in total. Status and performance measurements are graphically portrayed for all stakeholders to evaluate. References: Ingram, 1998; Ibbs, 1997; Ancona and Caldwell, 1990.

5.2.4.6. The Termination Celebration Usually at the conclusion of the project is a termination celebration. It is often combined with the presentation of deliverables. For large projects it may include only team members and stakeholders. The termination celebration serves a similar purpose to that of the kickoff meeting. It mentally redirects people from a project execution mode to termination and moving on to a new endeavor. The termination celebration usually includes formal or informal recognition for services performed, a review of events where bonding occurred, overview of lessons learned, and humorous incidents. In cases where the project has been a failure, the termination celebration may be skipped.


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5.2.4.7. Project Follow-Up After the ‘‘official termination’’ of the project, occasionally activities remain to be performed. Product market performance, service, and durability experience and warranty costs may be tracked and compared with estimates. 5.2.4.7.1. Warranty. Many projects produce a product or service. Often companies agree to provide free service on units that are defective or fail to perform properly. When the these costs or ‘‘warranties’’ are expected to be minor in nature, the project team usually turns over their responsibility to a functional area of the organization. However, if the warranty costs are expected to be sizable, they may have an impact on the perception of stakeholders and customers about the overall success of the project. In these cases, their responsibility may remain for a short time with the technical staff (i.e., the project team) that was responsible for the product’s design. Warranty costs are usually estimated during the project development stage and are based on past experience. In situations involving a totally new product or service, the warranty estimate can be based on an analysis of individual components and testing experience. The preplanning for warranty cost gives the company time to develop a mitigation strategy for expected and unexpected problems. Customers can be sold a service contract, which results in shifting some of the financial burden. In effect, the service contract is an insurance contract executed with the customer. Education programs can be developed to prepare customers for the expected results and maintenance procedures. Finally, warranty preplanning provides information needed to budget the cost into future financial statements. 5.3 CONCLUSIONS AND MEASUREMENT OF PROJECT-SPECIFIC COMPETENCIES An evaluation of one’s skills in activities specific to managing projects can be numerically quantified using the Project Specifics Competencies Subwheel. The numerical results from this wheel are rolled-up or transferred to the Master Project Manager Competency wheel described previously. The Project-Specific Subwheel in Figure 5.10 shows the major competency areas of structured methodology and the project phases of: initiation and selection, planning, execution and control, and termination. All are equally weighted at three points each. The total of 15 points corresponds with the weighting allocated from the master

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FIGURE 5.10

project management wheel (i.e., the master wheel allocates 15 points for professionalism, 15 points for project specific skills and 20 points for character. Note that the weighting can be altered to fit various situations. Each of the spokes of the professionalism wheel is further broken down into a weighting for the specific best practices detailed in the chapter. The questions below are presented in the format of a self-


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evaluation. They can be modified to analyze the performance of others by changing the word ‘‘I’’ to ‘‘He or she.’’


Fairly often

Sometimes

Once in awhile

Not at all

5

4

3

2

1

Structured Approach: 5 4 3 2 1 5 4 3 2 1

1. I apply a predictable methodology to manage the project. 2. I apply the most simple and flexible methodology appropriate to successfully achieve the project goals.

Initiation and Selection 5 4 3 2 1 3. I prepare a project charter that contains all material information needed to make a decision whether to approve the project. 5 4 3 2 1 4. I select projects by evaluating and ranking financial benefits, risk and subjective factors. Planning 5 4 3 2 1 5 4 3 2 1

5 4 3 2 1 5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5. I prepare a work breakdown structure for the project. 6. I prepare a schedule showing all appropriate activities, sequences, durations, and the critical path. 7. I use frequent milestones to measure schedule performance. 8. I prepare a project budget (or cash flow) that is the most accurate that is appropriate to the project. 9. I identify and analyze project-specific risk events, determine their likelihood of occurrence and significance, and plan appropriate responses. 10. I prepare an appropriately detailed set of functional and technical specifications for the project product or service. 11. I prepare a communications plan that provides appropriate frequency and detail for the needs of each stakeholder group. 12. I identify customer requirements and measure project performance against those requirements.

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Execution and Control 5 4 3 2 1 13. I administer a kickoff meeting. 5 4 3 2 1 14. I use variance analysis as a tool to control deviations from the project plan. 5 4 3 2 1 15. I manage project scope changes as a formal process. 5 4 3 2 1 16. I encourage critical review of project performance by scheduling audits and reviews. Termination 5 4 3 2 1

17.

5 4 3 2 1

18.

5 4 3 2 1

19.

5 4 3 2 1

20.

I formally present the final deliverable to the customer. I use a termination checklist to ensure all termination activities are performed. I contribute to the organization’s project knowledge base by placing appropriate project documentation (lessons learned and journals, and the charter and plans) in a library or depository. I measure and communicate project contributions to stakeholders and the organization.

To determine the number of points to apply to the Project-Specific Competencies Subwheel, score the questions as follows: Total self-rating Questions 1–2 (Structured Approach): add the points and multiply by 0.3 Questions 3–4 (Initiation): add the points and multiply by 0.3 Questions 5–12 (Planning): add the points and multiply by .075 Questions 13–16 (Execution): add the points and multiply by 0.15 Questions 7–20 (Planning): add the points and multiply by 0.15 Total points to apply to the master PM wheel

Maximum 3 3 3 3 3 15

6 Background Information

6.1. THE TOP 500 PROJECT MANAGEMENT BENCHMARKING FORUM This work would not be possible without the involvement and support of the Top 500 Project Management Benchmarking Forum. The Forum is administered by the nonprofit Executive Initiative Institute and is composed of project management executives from approximately 60 large, for-profit and governmental organizations. The objectives of the group are twofold: first to identify best practices associated with superior project managers and project groups in large functional organizations; and second, to encourage participants and industry in general to implement the best practices and attain the associated benefits. Benchmark forum meetings are held approximately every 3 to 6 months. The forums are designed to encourage participants to interact freely, find answers for immediate problems, share new ideas, concepts, and concerns, and to return to their respective organizations with a wealth of information that can be immediately applied to improve project performance. 213

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The forums follow a scientific benchmarking approach. Each participant is asked to list ‘‘problems relating to the implementation of project management in their organization that they wish to benchmark with their peers from other organizations.’’ From this, a list of generalized subject areas is developed. Round table discussions, (a) define, compare, and contrast how each participant’s organization addresses the specific problems; (b) identify and agree upon key success factors and best practices to resolve the problems; and then (c) discuss ways of applying the findings to one’s own workplace. Participants also present ways their specific organizations excel at project management related processes and functions as well as bring examples of new and effective project management tools. The conclusions reached in the forum are treated as hypotheses and supported with literature searches, surveys, questionnaires, and in-depth interviews with members and their associates. At follow-up forums, participants report their degree of success in applying the best practices. From all this, a list of generally agreed upon competencies, best practices, and standards, along with a description of the supporting research, is generated and distributed. Numerous articles have been written about the research. In 1996, the group published a book entitled Best Practices of Project Management Groups in Large Functional Organizations. The book was well received by industry and the project management profession and helped guide many organizations to improved efficiency. This document builds upon that foundation and adds the details of the expanded and more intensive and detailed research results of the last three years. 6.2. LEADERSHIP COMPETENCY MEASUREMENT PROBLEMS When one examines the body of knowledge and historical research pertaining to leadership competence, fundamental problems are apparent. •

The number of projects that fail to meet their targets suggests that there are people who become project leaders but have limited leadership skills and competencies. Many are in leadership positions for reasons that have little to do with the application of leadership skills. They might have acquired the leadership position through organizational convenience, networking, personality, or ownership. As a result, many of the leaders of unsuccessful and failing organizations have been

Background Information

•

•

•

• •

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included in leadership studies and even quoted as good examples of leadership qualities. Some surveys have mixed incompetent with competent leaders. The findings of the studies are often presented as reflective of leadership in general. The overall inference of many is that the findings identify the characteristics of ‘‘good’’ leaders. In this respect, the studies are flawed. They simply identify the average person in a leadership position; not the ‘‘superior’’ project leader so ardently hunted by organizations. • Project manager selection is particularly difficult in cases where the individual has little experience, their work history is different from the job being considered, experience cannot be verified, employees are in the process of personal development, and/or it is desired to evaluate candidates for promotion. In these cases, it is necessary to evaluate potential candidates on the basis of factors other than prior success in achieving project goals. A standardized method for measuring, evaluating, and quantitatively comparing project leaders in differing environmental settings and over varying periods of historical time is nonexistent. The specific actions, traits, and skills that result in project goal achievement are not adequately addressed nor agreed upon. There is no easily comprehended picture or portrait of project leadership competence nor is there an accepted explanation for the phenomenon of leadership competency. A method of predicting project leadership competence is not available. There is neither a generally accepted conceptual framework nor body of knowledge to pass on to future project leaders regarding training and development of actions, traits, and skills that improve leadership results.

The standards and best practices detailed in this book are a response to all of these problems. 6.3. DEFINITIONS To establish standards and define best practices of superior project managers, it is necessary to have a clear understanding of the terms that describe the project manager’s attributes. There is confusion

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about terms such as ‘‘competencies,’’ ‘‘best practices,’’ and ‘‘standards’’. Listed below are definitions of the terms as used by the Top 500 Benchmarking Forum. 6.3.1.

Competencies

Competencies are defined as a generalized category of actions, traits, and skills applied by superior project managers. For example, a key competency is ‘‘honesty.’’ 6.3.2.

Best Practices

Best Practices are the specific, observable, and measurable actions taken that result in the achievement of project goals. They are statements or guidelines that apply to a theoretical ‘‘best practice’’ or ‘‘superior’’ project manager. A best practice associated with the competency of honesty is: ‘‘The best practice project manager is truthful in all dealings and relationships.’’ The term best practice is often used interchangeably with the term competency. 6.3.3.

Standards

As used in this book, standards are the overarching rules, principles, practices, models, and measures established by the Top 500 Project Management Benchmarking Forum. They reflect the authority of the Top 500 Project Management Benchmarking Forum as a recognized industry standards setting body. Standards are regularly and widely used, available, and familiar in the project management field. They are substantially uniform and well established by usage in the speech and writing of the educated within the field. They establish benchmarks of performance. 6.3.4.

Leadership

The study of project managers and their impact on project success falls under the broad theoretical field of leadership and its impact on goal achievement. For the purposes of this book, the broad definition of leadership will be used. It is defined in terms of its impact on the achievement of a group’s goals. Specifically, leadership consists of the actions, traits, and skills applied by the leader to motivate a group to goal achievement. It is built upon Cowley’s 1928 foundation statement that, ‘‘A leader is a person who has a program and is moving toward an objective with his group in a definite manner.’’ R. C. Davis in 1942 further defined leadership as ‘‘the principle dynamic force that motivates and coordinates the organization in the accomplish-


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ment of its objectives.’’ Bellows in 1959 reinforced the definition by stating, ‘‘The process of arranging the situation so that the group can achieve common goals with a minimum of work and effort.’’ K. Davis in 1962 stated that leadership is the ‘‘human factor which binds a group together and motivates it toward goals.’’ The discussion of leadership invariably raises the issue of the differences between leadership and management. A large body of research supports the premise that leadership goal attainment skills are broad in scope. There is a great deal of overlap between the actions, traits, and skills attributed to leaders, and those ascribed to managers. In fact, many researchers agree that the most competent managers have the same characteristics as the most capable leaders; that is, to plan, organize, and control the group’s activities. The effective manager must have the clarity of purpose and motivation of the effective leader. First class managers are leaders and most visionary leaders are faced with management problems. 6.4. CHARACTERISTICS OF COMPETENCIES Competencies have several distinguishing characteristics. They tend to define what a person should do rather than what they should know. They characterize the manner in which the individual performs the job rather that being reflective of the success of the project. Competencies are observable and measurable and drive superior rather than average performance. They have been scientifically validated and are weighted in terms of their importance in increasing the probability of project goal achievement. 6.4.1.

Relationship of Competencies to the PMBOK Guide

Questions are asked about the difference between the Project Management Body of Knowledge Guide (PMBOK) and project manager standards and competencies. The difference is that the PMBOK Guide describes a body of knowledge about a subject area (e.g., project management) and competencies describe actions, practices, traits, and skills of individuals. Simply stated, the PMBOK details what a project manager should know; competencies define what they should do. 6.4.2.

Impact on Goal Achievement

Some researchers have associated competency with successful goal achievement. For the purpose of defining project manager compe-

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tency, a broader definition is necessitated. It is possible for a person to perform the project manager’s role in a highly competent fashion, yet, not achieve the group’s goal. Tying competence to goal achievement limits the definition to projects that have been completed and a determination made whether the goal was achieved. In many organizational environments, there is a need to evaluate the leadership competence of people who have yet to attain goals, are in training programs, or are arbitrarily assigned to leadership roles in projects that are subject to outside forces and constraints. For example, often leaders are assigned or forced into projects that could be categorized as losers from the beginning. If the leader applies goal-achieving methodology in a skillful manner, their performance is not necessarily a reflection of the project’s success. For all these reasons, project manager competency is not tied to successful project goal achievement. In the preceding cases, and any other time the goal is in the future, it is necessary to evaluate the leader’s application of best practices and overall competencies. 6.4.3.

Observable and Measurable

Competencies are a collection of observable and measurable factors that require no inference, assumption, or interpretation. 6.4.4.

Drive Superior, Not Average Performance

Competencies should consistently predict and distinguish superior from average performance. 6.4.5.

Are Scientifically Validated

From an ethical, moral, scientific, and legal view, competencies must be validated. They are used for hiring, promotion, training, performance appraisal, and testing—all activities that have major impact on individuals and organizations. The validation process is as follows. 6.4.5.1. Hypothesis Competency validation is an application of the scientific process. It assumes that there is a theoretical ‘‘one best way’’ to attain objectives. Its hypothesis is that there is a methodology for leadership success consisting of measurable competencies, which when applied in varying degrees of intensity, increase the probability of organizational goal achievement.


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6.4.5.2. Competency Identification It is necessary to find and identify specific competencies to evaluate. Conducting exploratory research, interviewing superior project managers and experts in the field, and executing a literature search and in-depth review of prior research accomplishes the task. 6.4.5.2.1. Exploratory Panel of Participants. Some organizations use a panel of participants or ‘‘experts’’ in the exploratory stage of their competency investigation. The panel members list the competencies that they ‘‘think’’ are important. Examples of the panel of participants of project manager professionals are the Top 500 Project Management Benchmarking Forum or a committee of managers from within the company. The exploratory panel is the first step in the competency identification process. It must be followed by the remaining steps of the validation process for the competencies to be considered scientifically valid. Benchmarkers report that a tendency is for organizations to conduct the competency identification process in a brain storming or committee atmosphere and then to consider their efforts complete. There are dangers associated with such an approach. Many organizations develop a list of competencies from a group process and then proceed to the development of a questionnaire or other evaluation tool. As a result, the competencies are little more than the opinions of a group of executives or managers. Usually, the perceived competencies are unweighted. Project manager’s performance in nonmaterial areas is given equal weight with material areas. In other cases, important competencies are overlooked or ignored. Another criticism of the approach is that the committee tends to establish competencies and associated tests that replicate the characteristics of the committee members. Project managers who mirror the characteristics of the selection committee are then promoted. The subsequent perception of success of the process becomes a selffulfilling prophecy. In addition to the moral implications of negatively impacting people’s lives, the unvalidated competencies open the companies to criticism and possible legal action. Development of validated competencies provides companies and researchers a solid research based foundation upon which to base their evaluations. 6.4.5.2.2. Exploratory Interviews of Project Leaders. Exploratory interviews attempt to determine the views of successful project managers. This method has the advantage that the results of

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several interviews can be quantified and various factors can be ranked. The major problem with the approach is that often leaders describe only actions taken and rarely address their personal characteristics such as truthfulness. In other words, the leader querying process determines what they ‘‘think’’ they do and may not accurately reflect what they actually do. To determine this, a literature search and questionnaire are required. 6.4.5.2.3. Literature Search. The literature search gives emphasis to scientific studies that develop empirical relationships between specific competencies and goal achievement. 6.4.5.3. Questionnaires The information gathered from the literature search, panel discussions, and interviews of project managers and project manager experts is compiled into a series of test questions. The questionnaire replicates, expands, and builds upon prior research and information gleaned from the panels of participants and leaders. Its ultimate objective is to obtain quantifiable results and rankings that describe what the project manager does to achieve goals, the differences between superior project managers and everyone else, and to provide a numerical weighting of each factor in terms of its impact on goal achievement. 6.4.5.4. Workplace Testing Finally, the findings of the research are tested in the workplace and validated by the test of time. This historical workplace validation and experience can be initially accumulated with workplace testing. However, general leadership and managerial practices may require years of usage before they become generally accepted. 6.4.6.

Are Weighted for Impact on Project Goal Achievement

Competencies have varying degrees of influence on project goal achievement; hence, they should have different weights or values. For example, the practice of being absolutely truthful in all dealings and relationships has one of the highest correlations with project goal achievement. Many consider honesty to be a mandatory characteristic of superior project managers. On the other hand, competencies such as using computerized scheduling tools and software have been shown to improve project goal achievement but are not mandatory. Projects were conducted quite successfully for millenniums before


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personal computers and sophisticated project scheduling software were invented. 6.5. LEVELS OF COMPETENCY There is a spectrum of leadership competence that ranges from superior to dysfunctional. As early as 1911, Taylor recognized there were differing skill levels of management. He stated that ‘‘ordinary’’ management consisted of workmen giving their best initiative in return for some special incentive from management. Taylor designated the higher level of management as ‘‘Scientific Management.’’ Fayol supported Taylor’s supposition of varying degrees of leadership competence by stating, ‘‘The lack of a plan or a bad plan is a sign of managerial incompetence.’’ Current theorists have expanded and amplified the various levels of competence. Studies have isolated groups of leaders according to their ability to apply leadership skills to the achievement of a specific objective. At the upper end of the scale are superior leaders. Superior leaders motivate followers to achieve results that exceed expected levels of performance and far surpass the performance of the group that would occur without the leaders presence. At the other end of the scale are dysfunctionally incompetent leaders. The result of their efforts is organizational failure, bankruptcy, and/or liquidation. Between the transformational leaders and dysfunctionally incompetent leaders, are the more structured, analytic, moderately competent and skilled ‘‘transactional’’ leaders who achieve expected levels of performance. Rather than inspire or motivate followers to achieve lofty goals, the transactional leader tends to negotiate and apply management concepts. It could be expected that this would comprise the majority of project leaders. Spectrum of leader competence: Superior or transformational competence Moderate competence Inept competence Dysfunctional incompetence References: Avolio and Howell, 1994; Bass, 1985; Argenti, 1976; Fayol, 1916; Taylor, 1911.

6.5.1.

Superior or Transformational Competence

Superior competence is the result of leadership that consistently exceeds expected goals. Bass labeled superior competence as transfor-

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mational leadership and asserted that it results in followers performing beyond expected levels of performance, as a consequence of the leader’s influence. His research disclosed a strong linkage between transformational leadership and individual and organizational performance. References: Avolio and Howell, 1994; Avolio, Atwater, and Lau, 1993; Bass, 1990.

6.5.2.

Moderate Competence

Leadership that always or nearly always attains goals is labeled moderate competence. In some literature, it is termed transactional leadership. Transactional leadership results in followers achieving the negotiated level of performance. As long as the leader and follower find the exchange mutually rewarding, the relationship is likely to continue and expected performance can be achieved. Transactional leadership-follower relationships are based on a series of exchanges or bargains between leaders and followers. Followers are rewarded or recognized for accomplishing agreed upon objectives. Rewards may involve recognition from the leader for work accomplished, bonuses, and/or merit increases. References: Avolio and Howell, 1994.

6.5.3.

Inept Competence

Inept competence is leadership that usually fails to attain goals but the failure is not great enough to irreparably harm the team. The marginally incompetent leader is probably effective but not highly efficient. McCall and Lombardo attributed the failure of executives when they were promoted to a higher level of management, to limited task competencies. They found that the managers had competence that was suitable for one level but not for the next higher one. Leaders can also transact with followers by focusing on mistakes, delaying decisions, or avoiding intervention until something has gone wrong. This is referred to as management by exception. Overall, the preponderance of empirical evidence generated by Bass and Avolio suggested that leaders who rely on management by exception would obtain lower levels of follower performance. References: Bass and Avolio, 1992; McCall and Lombardo, 1983.


6.5.4.

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Dysfunctional Incompetence

Leadership that has a negative impact on group performance is dysfunctional incompetence. Performance is poorer than if there were no leadership. The leadership is destructive to the team in the attainment of goals. The result of dysfunctional incompetence is often team failure. Fayol was the first researcher to address the problem of incompetence. In 1921, he wrote an article entitled, ‘‘The State’s Administrative Ineptitude.’’ Later researchers Argenti and Bibeault agreed that the prime cause of failure is bad management. Argenti stated, ‘‘If the management is good, only sheer bad luck can cause the collapse of the company. Good managers will seldom make the same mistakes as poor managers, or if they do make them, their managerial ability will protect the company from the worse consequences.’’ The executives in Bibeault’s survey indicated that management was the principal cause for decline 85% of the time. The main reason why organizations get into trouble is failure to recognize the signs when things are starting to rot at the core. References: Bibeault, 1982; Argenti, 1976; Fayol, 1916.

6.6. IMPORTANT COMPETENCY CONSIDERATIONS 6.6.1.

Might Not Pertain to You

In discussions about the results of the research with project managers, the most common response is, ‘‘Your findings don’t apply to me. I am in a different situation or use a different management and leadership style.’’ From the standpoint of statistical accuracy, their responses are correct. The study and other findings in this book deal with averages—each reader is an individual. Consequently, this book does not specifically pertain to each individual reader by definition. 6.6.2.

Focus on Winners

It is the nature of researchers to study winners rather than losers. The result is that the emphasis of most articles and books is on the actions necessary to become a winner. However, discussions with successful leaders indicate that losing is an important part of the nurturing process. They are quick to describe major failures in their pasts and invariably assert that their failures served an important part of their learning process.

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6.7. HISTORICAL RESEARCH SUPPORT FOR COMPETENCIES Researchers, observers of human nature, and writers have long been fascinated with the subject of leadership best practices and management competencies and their application to the attainment of goals. It is intriguing why some leaders consistently seem to be successful in achieving goals and others fail. The search for answers as they relate to project management usually settles on three broad categories of research: (a) general leadership studies, (b) new product development research, and (c) investigations related purely to project management. The study of leadership is by far the most comprehensive, spanning over 3000 years and represented by over 7500 empirically based studies. Project management research is nearly as old if one includes the study of military and political conquests. 6.7.1.

Ancient Competency Literature

Competencies and best practices related to leadership results have been sought for thousands of years. The ancient Egyptians attributed three qualities of governance to their king. They said of him, ‘‘Authoritative utterness is in thy mouth, perception is thy ear, and thy tongue is the shrine of justice’’. In other words, the Egyptian king should act with authority, discrimination, and just behavior. The Old Testament of the Bible includes detailed descriptions of ancient projects such as the Temple of David constructed in approximately 1000 BC . The book The Art of War was written in approximately 500 BC by Sun Tzu and effectively marks the first research effort that addresses the elements of successful military projects. In approximately AD 520, St. Benedict of Nursia wrote The Rule of St. Benedict. He discussed the authority (spiritual) and responsibility (fatherly and autocratic) of the abbot or leader of a monastery. His writings described in detail the day-to-day, practical approach to leadership and administration in a monastery. A typical guideline was as follows: To be qualified to govern a monastery an abbot should always remember that he is called Abba which means father—and should carry out his high calling in his everyday life. St. Benedict of Nursia (ca. AD 520) The Rule of St. Benedict

6.7.2.

Renaissance Competency Research

The Italian Renaissance represents the first recorded efforts to ‘‘scientifically’’ analyze leadership competency. A scholarly highlight of


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the Renaissance was Machiavelli’s The Prince. Machiavelli felt that the way to identify successful leadership attributes was to study successful leaders. Machiavelli wrote his treatise about the qualities of top-performing princes and analyzed several historical examples of outstanding leadership in an effort to identify common characteristics. It was his premise that human nature has changed little over the centuries and remains constant. Machiavelli addressed the results of his findings in a pragmatic fashion, as compared simply to writing his own opinions. Castiglione’s 1528 treatise The Book of the Courtier approached the subject by identifying the qualities of an ideal manager. Castiglione’s approach to leadership was based on promotion by birth, social background, education, physical appearance, and personality. Measurable performance did not seem to be a factor. The leadership concepts proposed by the Renaissance writers were based on much older writings. The Italian writers saw themselves as participating in the ‘‘rebirth’’ (i.e., Renaissance) of the ancient writings and philosophies of the Romans and Greeks. A large body of popular leadership books reflected the interest in leadership. During Machiavelli’s time in the 1500s, there were reportedly over 1000 books describing the attributes on leadership. Machiavelli felt the popular leadership books of the time were flawed, because they simply represented the opinion of the authors. He suggested that most were more suitable for a monk in a monastery than the practical arena of political leadership. 6.7.3.

Von Clausewitz’s Military Strategy

In 1827, Carl Von Clausewitz’s On War analyzed leadership in the context of military strategic planning. Like Sun Tzu’s Art of War written 2300 years before, Von Clausewitz’s approach to fighting battles was a treatise of project goal achievement strategy. He recognized that leadership was a key element in the achievement of project goals. He also emphasized that superior leadership results from a specific set of attributes. Every special calling in life, if it is followed with success, requires peculiar qualifications of understanding and soul. Where these are of a high order, and manifest themselves by extraordinary achievements, the mind to which they belong is termed genius. and genius . . . is a harmonious association of powers, in which one or the other may predominate, but none must be in opposition. Carl Von Clausewitz (ca. 1820) On War

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The theories of pre-1900 evolved predominately into trait theories. Trait theories made no assumptions about whether leadership traits are inherited or learned. They simply asserted that leaders have different characteristics from nonleaders. In the 19th and early 20th centuries, ‘‘great man’’ leadership theories were popular. These theorists believed that leadership qualities were inherited, especially from the upper classes. Specifically, that leaders were natural born, not trained. In the early 1900s, there was a division into those individuals whose theories were based on scientific investigation and those who theorized on the basis of their anecdotal experience in the workplace or interaction with others. Fred Taylor and Henri Fayol published the first literature that addressed leadership as a science and learned skill. 6.7.4.

Taylor’s Scientific Approach

In 1911, Frederick Taylor’s Principles of Scientific Management proposed that specific actions of management result in activities being conducted in the ‘‘best and cheapest way.’’ Taylor’s work represents a cornerstone, because it shows that specific management actions result in improved efficiency. Taylor states that, ‘‘The best management is a true science, resting upon clearly defined laws, rules, and principles.’’ Taylor argued that scientific management consists of certain broad principles, and that the mechanics for applying the principles are different from the principles themselves. Taylor emphasized the need for accurate studies of the motives that influence workers. He maintained that motivational laws when clearly defined, are of great value in dealing with the workforce. Taylor also believed that the differing skill, or competency, levels of management were the result of the application of management theories. 6.7.5.

Fayol and Organizational Leadership

The book General and Industrial Management published by Henri Fayol in 1916 approached the subject of management from the viewpoint of the leader of the organization. Fayol’s ‘‘management’’ consisted of the principles and theories that helped him as the leader take a French mining company from bankruptcy to one of the largest in the world. Fayol made reference to leadership as ‘‘governance’’ and ‘‘command’’ of the organization. He believed that the manager or leader’s activities consist of detailed actions in the broad categories of, planning, organizing, commanding, coordinating, and control.


227

Fayol recognized the importance of leadership or ‘‘governance and command.’’ He regarded leadership as a part of and complementary to general management. He stated that the role of leadership is to optimize employee return and achieve the interests (goals) of the concern. Henri Fayol’s writings address leadership as a science and learned skill. He stated that the role of leadership is to optimize employee return and achieve the interests (goals) of the concern. Fayol said that the specific responsibility of the executive authority is to draw up plans of action, select personnel, establish performance standards, and control the execution of all activities. The leader provides a unity of direction and focusing of effort. Fayol established that the goal is an important part of leadership. Subsequently, the path-goal theory stated that workers would tend to be high producers who see high productivity as a path to the attainment of their personal goals. 6.7.6.

Nothing New in Project Leadership Science

The historical students of military campaigns and observers of leadership attributes combined with the scientific approach of Taylor to lay the foundation and construct the framework of leadership theory as it applies to the management of projects. All the historical students of project and organizational performance recognized that leadership and management must be competent and performance or goal oriented. Subsequent theorists and researchers have filled in the structure of general and project management theories on a piecemeal and trial by error basis. Even so, there have been few, if any, major changes or modifications to the pre-1925 work, conclusions, and theories. As management historian Ronald Greenwood stated to a group of Academy of Management researchers, ‘‘There have been no major advancements in the field of management in the last seventy five years. We are still waiting for our Isaac Newton of management theory.’’ Nevertheless, the theories and empirical investigations developed after Taylor, add many worthwhile details and refinements to the body of knowledge as it applies to the investigation of leadership competence. 6.7.7.

The Gilbreths’ One Best Way

Frank and Lillian Gilbreth introduced laboratory analysis into the leadership process. The Gilbreths considered themselves disciples of the time and motion work heralded by Taylor’s scientific management theories. They published research from about 1924 to 1955. Frank

228

Chapter 6

and Lillian Gilbreth advocated that there is one best way to do work. They stated that management is a science, and must be conducted as a science, and that there must be intensive study of its minutest details. Their focus was toward increasing efficiency by ‘‘eliminating waste and reducing costs.’’ Specifically, their research supported the establishment of cost reduction departments, people scheduling, and planning departments. 6.7.8.

Likert’s Leadership Competency Predictions

Rensis Likert developed survey analysis techniques to evaluate leadership traits and actions. In 1961, Likert published his book New Patterns of Management. As had Taylor and Gilbreth, Likert stressed the validity of the scientific approach to management and leadership and expressed belief in the ‘‘one best way.’’ He expanded the research base of Taylor and Gilbreth by developing the survey method to gather and evaluate data about management and leadership actions and traits as they relate to performance. Likert’s graphical method of portraying leadership competence levels is a cornerstone of competence measurement. The Likert chart was beneficial because it (a) listed and visually compared different leadership attributes that resulted in goal achievement, (b) showed the difference between the actions of different leadership groups, (c) displayed the relative importance of each attribute in achieving goals, and (d) inferred that there is a methodology of leadership that results in goal achievement. Likert’s work supported a cause and effect relationship of leadership actions and goal achievement; and hence, established an empirical basis for a leadership methodology. It recognized the importance to leadership competence of elements other than leader/subordinate relationships. Actions such as goal setting, establishment of control processes, review of performance, organizational formality, and quality control and inspection are addressed. After Likert, many empirical researchers studied various elements of leadership competency. On the anecdotal side, there were numerous theorists who followed in the footsteps of Fayol. Many, such as Barnard, became well known in the popular press. 6.7.9.

Barnard and Leadership Behavior

Barnard’s Functions of the Executive of 1938 heralded the advent of behavioral studies of management and organization. Barnard showed how the ‘‘executive function’’ is of importance in maintaining any cooperative system. The primary tasks of the executive are to


229

develop an effective fit between the purpose of the organization and its environment and to create an efficient adjustment between the formal structure of the organization and the characteristics of its personnel. 6.7.10. Mintzberg and Leadership Best Practices Much historical research directed toward executives simply tries to define and identify their distinguishing attributes and to document what they do on a day-to-day basis. In 1975, Mintzberg set out to discover what constitutes the jobs of leaders. Mintzberg followed five leaders and recorded their activities. He defined their roles as (a) figurehead, (b) leader, (c) informational, (d) monitor, (e) spokesperson, (f) entrepreneur, (g) disturbance handler, and (h) negotiator. 6.7.11. The Bass Catalogue of Leadership Research There is currently a massive amount of prior research about leadership and leadership competency. Bernard Bass cites over 7500 leadership research documents in his book Bass & Stogdill’s Handbook of Leadership. Much of the research cited deals with identification of leadership traits, attributes, and characteristics. Some research focuses on the application of leadership skills. Other studies differentiate good leaders from bad in terms of competence. Most studies attempt to characterize and define the type person who will eventually end up in a leadership position, or are currently in the position. Bass segments leadership competence into (a) leadership task competence, and (b) interpersonal leadership competence. 6.7.12. Current Leadership Research Emphasis Over the last 15 years, several organizational leadership theories variously labeled ‘‘transformational’’ and ‘‘inspirational’’ have been proposed. The central thesis of the transformational leadership theorists is that superior leadership goes beyond exchanging inducements for desired performance by intellectually stimulating and inspiring followers to transcend their own self-interests for a higher collective purpose, mission, or vision. Such behaviors broaden the range of leadership beyond simply focusing on corrective or constructive transactions. Transformational leadership is a higher order construct comprised of three conceptually distinct factors: goal focus, intellectual stimulation, and individualized consideration. Leaders described as transformational concentrate their efforts on longer term goals, place value and emphasis on developing a vision and inspiring followers to

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pursue the vision. They change or align systems to accommodate their vision rather than work within existing systems. They develop followers to take on greater responsibility for their own development, as well as the development of others. These leaders are often described by followers as inspirational.

Appendix A Project Manager Competencies Ranked by Research Source

Table A1 presents competencies and best practices listed according to the researchers who analyzed them. Where available weighted values are also provided.

231

232

TABLE A.1 Project Manager Competencies Ranked by Research Source Rank

Competency Project manager, confidence Project manager, gatekeeper

Project manager, gatekeeper Project manager, gatekeeper Project manager, gatekeeper

Project manager, scan environment Project manager, gatekeeper Project manager, procure assets

Are confident about success. Absorb outside pressures for the team so it can work free of interference. Resolve design problems with external groups. Protect the team from outside interference. Prevent outsiders from overloading the team with too much information or too many requests. Scan the environment for marketing ideas and expertise. Coordinate activities with external groups. Procure things with the team needs from other groups or individuals in the company. Persuade other individuals that the team’s activities are important. Collect technical information and ideas from individuals outside the team.

Value 20/44 0.425 2/21 0.785

3/21

0.776

4/21

0.740

5/21

0.719

6/21

0.719

7/21

0.660

8/21

0.657

9/21

0.654

10/21

0.645

Source Cooper, 1979 Ancona and Caldwell, 1990

Appendix A

Project manager, promote project manager value Project manager, gather information

Best practice

protect the negotiate for promote the build support acquire rescan envipromote the promote the

Project manager, promote the team Project manager, promote the team Project manager, stakeholder commun Project organization, teams

Persuade others to support the team. Acquire resources (e.g., money, members, equipment) for the team. Scan the environment for technical ideas and expertise. Report the progress of the team to a higher organizational level. Find out whether others in the company support or oppose the team’s activities. Find out information on the company’s strategy or political situation that may affect the project. Keep other groups in the company informed of the team’s activities. Review product design with outsiders.

11/21

0.636

12/21

0.618

13/21

0.602

14/21 15/21

0.592 0.587

16/21

0.587

17/21

0.553

18/21

0.551

19/21

0.549

20/21

0.519

21/21

0.551

Multifunctional teams.

1/10

⫹.87|⫹.15

Overlapping development. Powerful project leader. Frequent testing.

2/10 3/10 4/10

⫹.38|⫺.14 ⫹.26|⫹.12 ⫹.26|⫹.11

Eisenhardt and Tabrizi, 1990

233

Project organization Project manager Project manager, methodology

Scan the environment inside the organization for threats to the team. Negotiate with others for delivery deadlines. ‘‘Talk up’’ the team to outsiders.

Project Manager Competencies Ranked by Research Source

Project manager, team Project manager, the team Project manager, team Project manager, Project manager, sources Project manager, ronment Project manager, team Project manager, team

234

TABLE A.1 Continued Rank

Competency Project manager, methodology

Value 5/10

⫹.18|⫹.15

Experimental or improvisional approach with frequent iterations. Supplier involvement. Schedule rewards. Detailed planning. Frequent milestones. Utilize software (CAD). Monitoring feedback. Project mission. Communication.

6/10 ⫹.08|⫺.19 7/10 ⫺.01|⫺.69 8/10 ⫺.22|⫺.28 9/10 ⫺23|⫺.34 10/10 ⫺41 ⫺.33 1/10 .5210 2/10 .4836 3/10 .4469

Troubleshooting. Client acceptance. Technical tasks. Project schedule. Personnel. Client consultation. User involvement. Executive management support.

4/10 .4659 5/10 .4101 6/10 .3898 7/10 .3735 8/10 .3593 10/10 .2346 1/10 15.9% 2/10 13.9%

Clear statement of requirements. Proper planning. Realistic expectations. Smaller project milestones.

3/10 4/10 5/10 6/10

Source

13.0 9.6% 8.2% 7.7%

Lewis, 1995

Standish Group, 1995 Appendix A

Project organization, supplier Project organization Project manager, methodology Project manager, methodology Project manager, tools Project manager, control Project manager, strategy Project manager, communicate Project manager, monitor Project organization Project manager, technical Project manager, scheduling Project organization Project manager Project manager Host organization, senior support Project organization Project manager Project organization Project manager

Best practice

Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager

Competent staff. Ownership. Clear vision and objectives. Hard-working, focused staff. I focus attention on production of our product and/or performance of our service. I maintain focus on profits. I maintain focus on building an effective and efficient team. I delegate authority. I know how to run a profitable company. I react to events as they occur rather than make detailed plans. I spend time teaching and coaching those I lead. I treat those I lead as individuals rather than members of a group. I suggest new ways of looking at how we do our jobs. I am honest in all dealings. I determine the behavior and performance in my company. I am actively involved in market analysis.

7/10 7.2% 8/10 5.3% 9/10 2.9% 10/10 2.4% .293

1/32 2/32

.261 .235

3/32 4/32

.228 .228

5/32

.206

6/32

.200

7/32

.183

8/32

.171

9/32 .151 10/32 .137 11/32

Toney NASDAQ, 1996


Project organization Host organization, ownership Project manager, strategy Project organization Project manager

.135

235

236


Competency Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager

Project manager

I project a high degree of selfconfidence. I perform unusually well in turbulent, unstable business situations. I develop supportive employees. I successfully select people. I use accounting and finance skills for analysis. I make judgments on the basis of intuition and experience. I minimize close social relationships with subordinates. I act as a role model to communicate my values to subordinates. I promote change and innovation. I encourage addressing problems by using reasoning and evidence rather than unsupported opinion. I emphasize company growth. I articulate a compelling vision of the future for those I lead. I use informal communications to obtain information about internal activities of the company.

Value 12/32

.134

13/32

.132

14/32 15/32 16/32

.131 .137 .124

17/32

.121

18/32

.105

19/32

.087

20/32 21/32

.064 .057

22/32 22/32

.048 .048

24/32

.045

Source

Appendix A

Project manager Project manager

Best practice

Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project Project Project Project Project Project Project Project Project Project Project

manager manager manager manager manager manager manager manager manager manager manager

I have the courage to make commitments that would be considered risky by others. I exhibit a high degree of technical proficiency in my field. I monitor, interpret, and respond to external events. I have determination to accomplish what I set out to do. I motivate those I lead to do more than they thought they could do. I remain calm during crisis situations. I generate enthusiasm and commitment among my subordinates. I rely on detailed planning to chart the organization’s future. Integrity. Monitor involvement. Training. Analysis. Goal-achievement skill. Behavior response. Goal focus. Intuition. Selection. Organizational strategy. Interaction.

25/32

.0354

26/32

.031

27/32

.029

28/32

.024

29/32

.022

30/32 31/32

.020 .008

32/33

.006

1/17 19.88 2/17 12.90 3/17 12.61 4/17 4.56 5/17 6.81 6/17 5.89 7/17 3.68 8/17 1.88 9/17 1.72 10/17 1.71 11/17 1.21


Project manager

237

238

TABLE A.1 Continued Competency

Rank Project Project Project Project Project Project Project Project

manager manager manager manager manager manager manager manager

Project manager Project manager Project manager Project manager


Value

Inspiration. Informal communications. Role model. Role model. Functional skills. Motivation. Goal portrait. Satisfaction with soul (intellect, mind, will) goals achieved.

12/17 13/17 14/17 14/17 15/17 16/17 17/17 1/25

1.00 .53 .42 .42 .37 .37 .17 .34

Know how to run a profitable company. Successfully select people. Satisfaction with business goals achieved. Satisfaction with spiritual goals achieved. Spend time teaching and coaching. Satisfaction with marriage goals achieved. Make judgments on the basis of intuition and experience. Focus attention on production of product and performance of service.

2/25

.34

3/25 4/25

.22 .18

5/25

.18

6/25 7/25

.16 .12

8/25

.11

9/25

.11

Source

Toney and Powers 1998, YProj Org and Profit

Appendix A


Best practice

Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager Project manager

Determine the behavior and performance of the company. Suggest new ways of looking at how we do our jobs. Maintain focus on profits. Total satisfaction 10a–10g ⫹ 12b. Truthful in all dealings and relationships. Satisfaction with family goals achieved. Satisfaction with personal growth goals achieved. Project a high degree of confidence. Focus on building an effective and efficient team. Consciously build and maintain long term relationships. Treat people as individuals rather than as members of the group. Satisfaction with community goals achieved. React to events as they occur rather than make detailed plans. Satisfaction with physical health goals achieved. Perform well in turbulent, unstable business situations.

10/25

.11

11/25

.11

12/25 13/25 14/25

.09 .08 .07

15/25

.07

16/25

.05

17/25 18/25

.05 .05

19/25

.05

20/25

.04

21/25

.04

22/25

.03

23/25

.01

24/25

.01


Project manager

239

240


Competency Project manager Project organization

Project manager

Project organization

Project manager

Best practice 25/25

Source

.01 Alderfer, 1976

Allen, 1970

Allen, 1977

Appendix A

Act as a role model to communicate my values to subordinates. Too much focus on the team. Groups can become overbound or internally focused to the point there is high internal loyalty and strong inner dynamics but are unable to reach out to the external world. Project performance is related to communication both within the team and throughout the host organization. This communication process must be stimulated by the project leader. Physical proximity. Physical proximity as measured by desk distance in engineering groups is directly related to positive communication to scientific and technical knowledge. Project vs functional conflict. The role of the project manager is to diplomatically balance between project and functional two roles in terms of project completion and quality of technical expertise.

Value

Project manager

Project manager, Gatekeeper

Project manager

Allen and Cohen, 1969

Allen et al., 1980

241

Interpersonal communcations vs formal reports. Research supports that consistent and high-quality interpersonal communications rather than technical reports, detailed schedules, and other written documentation are the major way that team members collect and disseminate new ideas and information pertinent to the project being performed. Leadership vs technical skills. These findings tend to support the need for a project manager with leadership and managerial skills in preference to technical skills. Project manager gatekeepers are extremely valuable in increasing the probability of project goal achievement. Different project approaches. Studies suggest that project teams function differently and have alternative means of communications. The type work being performed makes the difference. Projects that are high risk and involve unproven technical concepts are different from projects that have a product or service that have been completed numerous times.


Project manager

242


Competency Project manager

Project manager

Host organization

Best practice

Source

Ancona and Caldwell, 1992a

Ancona and Caldwell, 1992b

Appendix A

Communications. Product development projects seem to require higher levels of internal and external communications. Technical service teams that are superior performers emphasize internal communications among team members. Teams with better internal communications define goals better, have improved and more workable plans, priorities work better, and generally have superior project. Cross-functional teams. More functions result in better communications. Team members tend to communicate more with outsiders who have similar functional backgrounds. Consequently, the more functions on the team, the broader and more comprehensive the external communications. As a result external management rates the performance of the team higher.

Value

Project manager Project organization

Project manager Project Project Project Project Project

manager manager manager manager manager

Project manager

Ambassador. Perform ambassador activities such as lobbying for support and resources, attaining taskrelated information, and buffering the team from outside pressures and engage in PR activities. Scanning. Generally scout or scan for useful information. Strategy. The most successful teams engage in comprehensive external strategy. Engage in multiple types of communications. Performs political activities. Lobbies for resources. Engages in impression management. Seeks senior management support. Project manager must be senior level. Obtain resources. Scanning and awareness of the environment represent the primary link in the way a team adapts to its environment. Feedback is rapid, content is rich, and weak signals are more readily detected.

Ansoff, 1975


Project manager

243

TABLE A.1 Continued Competency Project manager

Best practice

Source Bass, 1961

Appendix A

Self-esteem, confidence, faith. It concluded that leader success is related to the self-esteem (confidence, faith) by others in the group. The correlation between esteem held by the most successful teams toward the leader and effectiveness was 0.42 but was 0.22 for the least successful teams. Self-esteem increases the likelihood of attempting leadership. If self-esteem is combined with esteem by the group, the more successful will be the leadership. A leader’s self-esteem may also be much higher than that accorded by the group (inflated ego). In that cases, leadership attempts are more likely to be rejected. There was a significant positive relationship of 0.42 between self-esteem and attempted leadership. Selfesteem correlated 0.36 with successful leadership. The less modest the leader, the less the potential for team success with the least modest recording relative success of ⫺.037.

Value

244

Rank

Project manager


Project manager

Brown and Eisenhardt, 1995


Project manager

245

Problem-solving ability. For groups to be effective, successful leadership must occur. The most successful leader is ‘‘he who has the ability to solve the group’s problems.’’ Maintain focus on goals. Superior leaders improve a project cycle times by maintaining focus on the goals. They maintain a disciplined vision that keeps the disorder of the project under control. Cross-functional teams. The project team is a critical element in achieving project objectives. Cross functional teams are critical to success. The functional diversity of the cross functional team increases the amount and variety of information available to the team. Downstream problems are identified sooner. Problems identified early on are smaller, less expensive and easier to fix. Gatekeeper. The project manager’s gatekeeper function is an important facet of project success. They impact project performance by increasing the amount and variety of information available to the team. The gatekeeper attains more diverse information for the team.

TABLE A.1 Continued Competency Project organization

Project manager

Project manager

Project manager

Best practice

Source

Appendix A

Team tenure. Team tenure plays a role in project success. Teams with long tenure (over three years) tend to become inward focused and neglect external communications. Importance of communications. Communications processes affect project success. Information is essential to superior teams. Communications breaks down barriers, enhances shared group experiences, and nonroutine rule breaking. Misunderstandings are minimized. The end result is that project team speed and productivity is increased. Frequent communications with outsiders opens the team to new and diverse information. The project leader is the link pin between the project team and senior management. The project leader should have power to make decisions, have organization wide authority, and have high organizational standing. Leaders of power are more effective at obtaining resources.

Value

246

Rank

Project manager

Project manager

Host organization

247

They are outstanding politicans. They lobby for resources. Protect the group from outside interference. Vision. The project leader exhibits vision. They have the ability to integrate a large variety of factors into a creative portrait that can be easily communicated to others. Specifically, they mesh together firm competencies and strategies with the needs of the market. The project leader in combination with senior management shape the project concept and communicate it to the team. Senior management. Senior management plays an important role in attaining project success. Senior management support includes provision of financial, political, and material resources to the team. Senior management gains project approval to go ahead. Subtle control is important to assure superior project performance. Senior management and project leadership work closely together to communicate vision.


Project manager Project manager Project manager

248


Competency Project organization

Host organization

Project organization Project organization Project organization Project manager

Suppliers and customers are key players in the project process. Supplier involvement can alert the team to potential down stream problems early on when they are easier to fix. Market analysis. Describes failed new products as better mousetraps that no one wants. Typically they are products conceived and developed in the absence of market information and with no clearly defined market need. Early involvement of suppliers in the design process. Multifunctional teams. Development phases are overlapped. Intensive stake holder dialogue through the entire development process. Overlapping product development phases such as integrating die design and die making significantly reduce product development cycle time.

Value

Source

Calantine and Cooper, 1977

Clark et al., 1977

Clark and Fujimoto, 1991

Appendix A


Best practice

Project organization Project manager

Project manager

Project manager Project manager Project manager Project manager Project manager

Communication. Frequent external communications opens up the team to new information. Cross-functional groups. Heavyweight team leaders. They report to high levels in the organization, have high status, and have direct responsibility for most aspects of the project. Achieve a 9-month advantage over projects run by lower level managers. Project managers serve as linking pins who coordinate project activities and work with senior management. Project managers create overarching product concept. Project managers gain resources. Project managers command respect. Project managers build strong product visions. Attract better team members.



249

250



Host organization Host organization, market


Delegate project steps to suppliers. Supplier involvement during development reduces the workload on the primary team. Supplier involvement lets the primary team focus on the tasks and skills that maximize their core competencies and skills. Suppliers can apply their own skills to result in the maximization of synergy. Suppliers also serve as an outside source of critique and elimination of future problems as well as suggestions to improve process and product. Product must be consistent with the organizational image. Having strong market knowledge and market inputs. Performing the market research skillfully. Managing human resources for speed. Reduce time to market by shortening each step in the development process.

Value

Source

Cooper, 1980

Cordero, 1991

Appendix A


Best practice

Project organization Project organization


Project manager

Daft and Sormunen, 1988

251

Better planning lets the developers eliminate unnecessary steps and sequence activities in an efficient order. Cross-functional teams. Project planning and control techniques. One objective is to use the most simple methodology necessary to get the job done. Good planning and control simplifies the management of the product development process. Resource intensive techniques. On resource-intensive projects, time can be saved by adding cost. If the project is labor intensive, overtime utilization or personnel additions can reduce time to market. One problem with this approach is that often cost increases much more rapidly than time is reduced. Importance of knowledge of the environment. More than any other single factor, the environment impacts organizational structure and the mode of internal processes. Knowledge of the environment is a key element affecting leader success.


Project manager



Project manager

Project manager

External communications. Research projects achieved higher performance by emphasizing communications with external professionals, clients, and members of other organizational divisions. Cross-functional teams. On the most successful projects, cross-functional personal combine their views in a more highly interactive fashion. Information contents is increased. Frequent external communications opens up the team to new information. Communication and performance. Research focusing on interpersonal communications in R&D organizations convincingly supports that proejct performance is related to communication both within the team and throughout the host organization. Frequent milestones reduce project cycle time because they are motivating. Their immediacy creates a sense of urgency and deadline that discourages procrastination.

Value

Source Dewhist et al., 1978

Dougherty, 1992

Feldmand and March, 1981

Gersick, 1988, 1994

Appendix A

Project manager

Best practice

252

Rank



Project manager


Gold, 1987

Grinyer and Norburn, 1975

Gupta and Wileman, 1990

253

Buying, licensing, and contracting technology obtained from external sources. Delegate project steps to suppliers. Supplier involvement during development reduces the workload on the primary team. Downstream problems specific to functional areas are observed earlier when multifunctional teams are used. Informal communications. Grinyer and Norburn’s 1975 study of 21 UK companies supports the conclusion that higher financial performance is strongly associated with the use of informal channels of communication but only modestly correlated with the number of information items used. Early involvement of functional groups. 42% of respondents stated that early involvement of the crossfunctional teams is required. Cooperation of the functional groups is improved. Early involvement helps define product requirement before large amounts of money has been spent.



254


Competency Project organization Host organization

Project manager



Best practice

Source

Hise et al., 1989

Ingram, 1998

Katz and Tushman, 1981

Appendix A

Cross-functional project teams. Early market/technical testing (milestone). 25% emphasized the need for testing and evaluation early in the project process. Evaluations should be made early in the process before large amounts of funds are expended. More complete planning lets project developers better understand and refine the process. Methodology impact. Performing all the design activities compared to engaging in few, correlated positively with a higher new product success rate. Ethical behavior. Analytical decision making. Measure and communicate project performance. External communications. Research projects achieved higher performance by emphasizing communications with external professionals, clients, and members of other organizational divisions.

Value

Project manager

Project manager

Project manager

Gatekeeper. Bring information into the organization and dispel it to team members. Frequent internal communications increase the amount of information and builds team cohesion and breaks down barriers to communication. It cuts misunderstandings and barriers to interchange. Interpersonal communications. Research supports (Menzel, 1965; Allen, 1977) that consistent and high quality interpersonal communications rather than technical reports, detailed schedules and other written documentation are the major way that team members collect and disseminate new ideas and information pertinent to the project being performed. Accountable project leader. Team performance is highest when the project manager has responsibility for project success.

Katz, 1982

Katz and Allen, 1985


Project manager

255


Project manager

Project manager

Leadership vs technical skills. Performance is highest when the project manager influences administrative matters and the functional team members provide specific technical expertise. A balance between technical and project leadership skills is associated with superior team performance. Influence over salaries and promotions. Project performance improves significantly when the project manager has primary influence over salaries and promotions. Influence over personnel assignments. In general, project performance is maximized when the project manager is perceived as having relatively more influence within the organization and the functional managers have more influence over the technical details of the project. Physical proximity as measured by desk distance in engineering groups, is directly related to positive communication of scientific and technical knowledge.

Value

Source

Keller and Holland, 1983

Appendix A

Project manager

Best practice

256

Rank

Project manager

Project manager vs functional manager. Their approach is that of the general manager or entrepreneurial leader rather than that of a functional expert. Emphasize multifunctional training. Cross-functional teams. Overlap of project phases. Communicate a clear vision of objectives to the team. Frequent external communications opens up the team to new information. Make extensive use of supplier networks. Multifunctional teams. The fastest moving projects actively involve suppliers in the process. In-depth knowledge of the market, customers. Introduces a product with a high performance to cost ratio. The product results in a high profit contribution to the organization.

Project Project Project Project

organization organization organization manager

Project manager

Project organization Project organization Project organization Host organization Host organization Host organization

Kouzes and Posner, 1993 Lawrence and Lorsch, 1967

Lorenz, 1990

Mabert et al., 1992 Maidique and Zirger, 1984/1985

257

Group cohesiveness. Innovative orientation. Credibility.



258


Competency Project manager Project organization

Host organization

Host organization Project manager

Host organization

The project is well planned and executed. Multifunctional teams, i.e., smooth execution of all phases of the development process by well-coordinated functional teams. Product factors. Enhanced technical performance, low cost, reliability, quality, and uniqueness. Build projects on existing corporate strengths. Scanning and awareness of the environment represent the primary link in the way a team adapts to its environment. Market vs technical. Project success if largely dependent upon market issues rather than purely technical ones. Only 21% of successful innovations studied are the result of technology push. Identifying and understanding user needs was more important than pushing a new technology.

Value

Source

Meyer, 1979

Myers and Marquis, 1969

Appendix A

Host organization

Best practice

Project Project Project Project Project

manager manager manager manager organization


Project manager

External environment

Project manager

Project manager

Millison et al., 1995

Nonaka, 1990

Pelz and Andrews, 1966

Pfeffer and Salancik, 1978 Pfeffer, 1992

Rhyne, 1985

259

Cross-functional views are a key component of project success. Simplify the project. Eliminate project delays. Eliminate steps in the project. Parallel processes. Overlapping every phase of the development process Bringing in representatives in the early stages of the project improves understanding of goals and objectives. Project performance is related to communication both within the team and throughout the host organization. Knowledge of the environment is a key element affecting leader success. Development teams that spend more time planning have an edge in gaining resources because the planning enhances the perception of competence. Scanning and awareness of the environment represent the primary link in the way a team adapts to its environment.



TABLE A.1 Continued Competency Project manager Project manager Host organization Project manager

Project manager Project organization Project organization

Project manager

Reduces development time by shortening each step in the process. Understanding user needs. Senior leadership. Clear goals typically create team alignment. Time consuming bickering is limited; in particular in reference to the agenda and goals of the group. Reduce development time by shortening each step in the process. Overlap development steps. Involving multifunctional representatives early in the process reduces wait time between steps. Analytical approached each success factor as a quantifiable element affecting goal achievement. He applied his theories as quantifiable means to evaluate the performance of his army as well as individual officers and soldiers. Technical skills. Sun Tzu felt that the general must be skilled in the weapons and other tools of military conflict as well as the methodology and specific activities of the troops engaged in battle.

Value

Source Roseanau, 1988 Rothwell et al., 1974 Sherif, 1961

Stalk and Hout, 1990

Tzu, ca. 500

BC

Appendix A

Project manager

Best practice

260

Rank

Project manager

Project manager

Project manager

Project manager

Project manager

261

Project manager


Project manager

Autocratic leadership style. Sun Tzu said, ‘‘Speed is the essence of war.’’ Flexibility. Sun Tzu is set apart from his contemporaries and even many in the field of project management with his views that flexibility is a key element of the superior general. Planning. Sun Tzu exhibits a preoccupation with the importance of planning. Inspiration. One task of the effective leader is to stimulate, excite, and motivate the team. Sun Tzu says, ‘‘Now gongs and drums, banners, and flags are used to focus the attention of the troops.’’ The scientific method. Ho-lu said, ‘‘I have read your thirteen chapters, sir, in their entirety. Can you conduct a minor experiment in control of the movement of the troops.’’ Accountability. The book repeatedly emphasizes Sun Tzu’s conviction that autonomy and accountability via the sovereign’s delegation of decision making should be absolute. Competencies. Sun Tzu’s advice is presented as straightforward directives.


Project manager


Project manager

Best practice

Source

Appendix A

Importance of projects in functional organizations. ‘‘War (projects) is a matter of vital importance to the State: the province of life or death; the road to survival or ruin. It is mandatory that it be thoroughly studied.’’ Moral influence/leadership/motivation. ‘‘The first of these factors is moral influence. By moral influence I mean that which causes the people to be in harmony with their leaders, so that they will accompany them in life and unto death without fear of mortal peril.’’ Analysis of external variables. ‘‘The second weather; the third terrain.’’ Command/leadership. ‘‘The fourth command. By command I mean the general’s qualities of wisdom, sincerity, humanity, courage and strictness.’’ Doctrine/methodology. ‘‘And the fifth doctrine. By doctrine I mean organization, control, assignment of appropriate ranks to officers, regulation of supply routes, and the provision of principal items used by the army.’’

Value

262

Rank



Project manager

Project manager

Project manager

263

Values of competencies. ‘‘Those who value therm (i.e., competencies) win; those who do not are defeated.’’ Critical analysis of alternatives and competitor’s competencies The project plan Strategy and goals. Victory. [i.e., successful project termination] is the main object of war.’’ Meeting time objectives Outcome-based compensation. ‘‘For the men to perceive the advantage of defeating the enemy, they must also have its rewards.’’ Achieving objectives at lowest cost. ‘‘To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemey’s resistance without fighting.’’ Knowledge. ‘‘If you know the enemy and know yourself, you need not fear the result of a hundred battles.’’ Finess and humility. ‘‘What the ancients called a clever fighter is one who not only wins, but excels in winning with ease.’’


Project manager

264




Project manager

Project manager

Best practice

Source

Appendix A

Morality. ‘‘The consummate leader cultivates the moral law and strictly adheres to method and discipline; thus it is in his power to control success.’’ Efficient goal achievement Measure results. Measures results. Sun Tzu’s entire approach is to measure specific performance attributes and factors against the project’s goal which is military victory. He repeatedly links specific activities with their impact on the attainment of victory. External and internal analysis. ‘‘Know the enemy and know yourself; in a hundred battles you will never be in peril.’’ Finesse. ‘‘To triumph in battle and be universally acclaimed ‘expert’ is not the acme of skill. The victories won by a master of war gain him neither reputation for wisdom nor merit for valor.’’

Value

Project manager

Project manager

Project manager

Project manager

Project manager

265

Project manager


Project manager

Simple and flexible methodologies. ‘‘The musical notes are only five in number but their melodies are so numerous that one cannot hear them all.’’ External environment. ‘‘Those who do not know the conditions of mountains and forests, hazardous defiles, marshes and swamps, cannot conduct the march of an army.’’ Analyze risk. ‘‘The wise general in his deliberations must consider both favorable and unfavorable factors.’’ Trust. ‘‘When orders are consistently trustworthy and observed, the relationship of a commander with his troops is satisfactory.’’ Servant leadership and humility. ‘‘The general who in advancing does not seek personal fame, and in withdrawing is not concerned with avoiding punishment, but whose only purpose is to protect the people and promote the best interests of his sovereign, is the precious jewel of the state.’’ Meeting time schedules. ‘‘Speed is the essence of war.’’ Planning. ‘‘Know the enemy, know yourself; your victory will never be endangered.’’

266

TABLE A.1 Continued Competency

Rank


Project Project Project Project Project Project Project

manager manager manager manager manager manager manager


Critical analysis of decisions. ‘‘Weigh the situation, then move.’’ Expert knowledge Strategy and planning Importance of support and resources. ‘‘An army without its baggage train is lost; without provisions it is lost; without bases of supply it is lost.’’ Importance of communications Value of training Love Value of discipline Servant leadership Smoker jumpers and failing projects Create structure and motivate the pace of the project. Otherwise, the uncertainty can create anxiety about the future that slows the pace of the project. Milestones also provide a perception of order and routine. Describes cross functional teams as ‘‘concurrent engineering.’’

Value

Source

Weick, 1993

Zangwill, 1992

Appendix A

Project manager

Best practice



Project manager

Host organization Project organization

Project manager


267

Making changes early in the project life cycle is generally easier than making the same changes after the design and details become cast in bronze. Overlapping generations of the project or product development. Basically before all the work on one phase of the project is complete, the next phase is underway. Cross-functional teams Project manager. The project leader is the most crucial person on the team. Close proximity. Communication is maximized when the entire team is located in one room. Senior management support Methodologies. Project teams rely on formalized methods, procedures, and documents. Modularity. A risk management tool is to organize the project into the form of modules. Audits Goal setting. The formalized methodology includes specification of the goals for the project’s product or service.


Project manager

Appendix B Project Manager Competency Questionnaire

Character Related Best Practices Ranking Scale Frequently, if not always

Fairly often

Sometimes

Once in awhile

Not at all

5

4

3

2

1

5 5 5 5

4 4 4 4

3 3 3 3

2 2 2 2

1 1 1 1

5 4 3 2 1 5 4 3 2 1

5 4 3 2 1

1. 2. 3. 4.

I am truthful in all dealings and relationships. I am emotionally stable (Traits). My intelligence is above average (Traits). I am motivated by and strive to achieve goals (i.e., degrees, certificates, ranks and other goals achieved) (Traits). 5. I am the first to volunteer to organize and lead groups (Traits). 6. I have faith that the future will have a positive outcome even when that view is not supported by the facts (Traits). 7. I have confidence that my personal performance will result in a positive outcome even when not supported by the facts (Traits). 269

270

Appendix B

FIGURE B.1

5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 Yes

No

Yes

No

8. I am even tempered (Traits). 9. My work and functional experience is directly related to my current role (Background). 10. Failures represent a key learning aspect of my experience (Background). 11. I have a minimum of a 4-year college degree (Background 5 pts for yes, 0 for no). 12. I am a certified PMP (Project Management Professional) (Background, 5 pts for yes, 0 for no).

To determine the number of points to apply to the Character Sub-wheel, score the questions as follows:

Project Manager Competency Questionnaire

271

Total selfrating

Maximum

Question 1: multiply the points selected by 2 Questions 2–8: add the points and multiply by 0.14 Questions 9—12: add the points and multiply by 0.25

10 5 5

Total points to apply to the master PM wheel

20

Professionalism Best Practices Ranking Scale Frequently, if not always

Fairly often

Sometimes

Once in awhile

Not at all

5

4

3

2

1

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1 5 4 3 2 1 5 4 3 2 1

5 4 3 2 1 5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

1. I am professionally skilled at leading and managing goal-achieving project teams (Goal skills). 2. I have project specific skills appropriate to the size and complexity of the project being managed (Goal skills). 3. I am recognized as the entrepreneurial chief executive officer (leader) of the project (Goal skills). 4. I am responsible and accountable for project success and failure (Goal skills). 5. I adapt the application of best practices and competencies to different cultures (Goal skills). 6. I manage projects for goal achieving speed while maintaining efficiency and effectiveness (Speed, efficiency, effectiveness). 7. I structure the team for speed, efficiency, and effectiveness (Speed, efficiency, effectiveness). 8. I build the team with representatives from all the functional areas the project impacts (Speed, efficiency, effectiveness). 9. I place the project team members in close proximity to each other. Where diverse team member work sites are necessary, proximity is emphasized through maximizing communications (Speed, efficiency, effectiveness). 10. I am actively involved in the project management process from inception to termination (Speed, efficiency, effectiveness).

272

Appendix B

5 4 3 2 1

11.

5 4 3 2 1

12.

5 4 3 2 1

13.

5 4 3 2 1

14.

5 4 3 2 1

15.

5 4 3 2 1

16.

5 4 3 2 1

17.

5 4 3 2 1

18.

5 4 3 2 1

19.

5 4 3 2 1

20.

5 4 3 2 1

21.

5 4 3 2 1

22.

5 4 3 2 1

23.

5 4 3 2 1

24.

5 4 3 2 1

25.

5 4 3 2 1

26.

5 4 3 2 1

27.

5 4 3 2 1

28.

I align and integrate the project vision, goals and plan with those of the host organization (Speed, efficiency, effectiveness). I articulate a compelling vision of the future, direction, and goals for those I lead (Speed, efficiency, effectiveness). I maintain constant focus on the project goals (Speed, efficiency, effectiveness). I develop a project plan appropriate for the complexity and risk of the project (Speed, efficiency, effectiveness). I am an effective ambassador who represents, protects and advances the interests of the team with outside political groups (People skills). I buffer the team from external pressures, demands, and politics (People skills). I lobby for resources and project needs (People skills). I address conflicts early and at lower levels in the organization (People skills). I motivate team members to do more than they thought they could do (People skills). I develop and implement a plan for consistent, quality oriented and appropriate project communications (People skills). I emphasize informal communications supported by appropriate formal and multimedia communications tools (People skills). I communicate an appropriate amount externally to the team (People skills). I act as a role model to communicate positive values and guide the behavior and performance of the team (People skills). I build an effective and efficient team (People skills). I delegate authority to the lowest level where the task can be performed effectively (People skills). I emphasize project and people management over ‘‘tools’’ (People skills). I place high priority on teaching and coaching team members in skills that directly translate to improved project performance (People skills). I have a personal development program based on identification of skills and competencies (People skills).


5 4 3 2 1

29.

5 4 3 2 1

30.

5 4 3 2 1

31.

5 4 3 2 1

32.

5 4 3 2 1

33.

5 4 3 2 1

34.

5 4 3 2 1

35.

5 4 3 2 1

36.

5 4 3 2 1

37.

5 4 3 2 1

38.

273

I treat team members as individuals rather than members of a group (People skills). I consciously build and maintain long-term friendships and relationships, networks and help others even when nothing is expected in return (People skills). I use a pragmatic analytical approach to make the correct decision rather than building support for preconceived opinions (Analytical). I gather information from others before making important decisions (Analytical). I solicit critical suggestions to improve decisions (Analytical). I benchmark and implement best practices from other individuals, teams and organizations (Analytical). I audit project performance by conducting independent and objective evaluation (Analytical). I define team performance related success factors in advance, revalidate them periodically, and use them to evaluate project team success (Analytical). I make judgments on the basis of intuition and experience (Analytical). I engage in frequent and broad monitoring of the environment to the point I am not caught by surprise by unfolding events (Environmental awareness).

To determine the number of points to apply to the Professionalism Competency Subwheel, score the questions as follows: Total selfrating Maximum Questions 1–5: multiply the points selected by 0.12 Questions 6–14: add the points and multiply by 0.066 Questions 15—30: add the points and multiply by 0.036 Questions 31—37: add the points and multiply by 0.085 Question 38: Multiply the point by 0.6

3.0 3.0 3.0 3.0 3.0

Total points to apply

15.0

274

Appendix B

Project Specific Best Practices Ranking Scale Frequently, if not always

Fairly often

Sometimes

Once in awhile

Not at all

5

4

3

2

1

Structured Approach 5 4 3 2 1 5 4 3 2 1

1. I apply a predictable methodology to manage the project. 2. I apply the most simple and flexible methodology appropriate to successfully achieve the project goals.

Initiation and Selection 5 4 3 2 1

5 4 3 2 1

3. I prepare a project charter that contains all material information needed to make a decision whether to approve the project. 4. I select projects by evaluating and ranking financial benefits, risk and subjective factors.

Planning 5 4 3 2 1 5 4 3 2 1

5 4 3 2 1 5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5 4 3 2 1

5. I prepare a work breakdown structure for the project. 6. I prepare a schedule showing all appropriate activities, sequences, durations and the critical path. 7. I use frequent milestones to measure schedule performance. 8. I prepare a project budget (or cash flow) that is the most accurate that is appropriate to the project. 9. I identify and analyze project specific risk events, determines their likelihood of occurrence and significance, and plans appropriate responses. 10. I prepare an appropriately detailed set of functional and technical specifications for the project product or service. 11. I prepare a communications plan that provides appropriate frequency and detail for the needs of each stakeholder group. 12. I identify customer requirements and measures project performance against those requirements.


275

Execution and Control 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1

13. 14.

I administer a kickoff meeting. I use variance analysis as a tool to control deviations from the project plan. 15. I manage project scope changes as a formal process. 16. I encourage critical review of project performance by scheduling audits and reviews.

Termination 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1

5 4 3 2 1

17.

I formally present the final deliverable to the customer. 18. I use a termination checklist to ensure all termination activities are performed. 19. I contribute to the organization’s project knowledge base by placing appropriate project documentation (lessons learned and journals, and the charter and plans) in a library or depository. 20. I measure and communicate project contributions to stakeholders and the organization.

To determine the number of points to apply to the Project-Specific Competencies Subwheel, score the questions as follows: Total selfrating Maximum Questions 1–2 (Structured Approach): add the points and multiply by 0.3 Questions 3–4 (Initiation): add the points and multiply by 0.3 Questions 5—12 (Planning): add the points and multiply by 0.075 Questions 13—16 (Execution): add the points and multiply by 0.15 Questions 17—20 (Planning): add the points and multiply by 0.15 Total points to apply to the master PM wheel

3 3 3 3 3 15

Appendix C Project Charter Checklist

The project charter checklist is a listing of topics necessary to make a decision regarding the selection and initiation of projects. The subjects listed are generic to many large projects. It usually isn’t necessary to expand and explain every topic area listed. The project manager can use the list to selectively develop topics appropriate to the project at hand, by detailing those items that apply to your proposed project. 1. Signature page. List all stakeholders required to approve the project. Include a one-paragraph description of the project and statement about the action being approved. 2. Executive summary (one page or less). 3. Overview and description. 3.1. Project product or service. 3.1.1. Deliverables. 3.1.2. Initial work breakdown structure. 3.1.3. Project scope: summarize the elements of the project that involve the expenditure of funds. 3.1.4. Functional requirements of the project. What does the customer want it to do? 277

278

Appendix C

3.1.5.

Technical requirements of the project: How will it be done? 3.1.6. Uniqueness of the project’s product service. 3.1.7. Factors that differentiate the product or service from competition. 3.1.8. Breadth of the product or service line. 3.1.9. Price competitiveness. 3.1.10. Substitute products. 3.1.11. Product service image, reputation, quality. 3.2. Need for the project. 3.3. History. 3.3.1. Founders, initiators or owners of the project. 3.3.2. History of the project. 3.3.3. Nature of the project. Has the nature of the project changed or evolved since inception? Is it intended to place emphasis on different areas? 3.4. Plans for future expansion or change. 3.5. Alternatives investigated. 3.6. Compatibility with the host organization’s strategic plan. 3.6.1. Mission and vision of the project. How does it support the host organization strategy. 3.6.2. SWOT (strengths, weaknesses, opportunities, threats) analysis of the project related to the host organization. 3.7. Project goals and strategies. 3.7.1. Long and short term goals. 3.7.2. Functional goals, deliverables, measurements of success and critical success factors. 3.8. Key success factors. 3.9. Performance measurement metrics. 3.10. Stakeholders involved in and affected by the project. Description of stakeholder issues. 3.11. Technology. 3.11.1. Patents, trade names, intellectual property aspects of the product or service. 3.11.2. Research and development activities associated with the project. 3.11.3. Technology trends. On which technologies does the project focus? State-of-the-art necessary for products in each project? 4. Selection and Evaluation. 4.1. Financial return and portfolio ranking. Expected product or service financial performance.

Project Charter Checklist

4.1.1. 4.1.2.

4.1.3. 4.1.4.

4.1.5. 4.1.6. 4.1.7. 4.1.8.

4.1.9. 4.1.10.

4.1.11. 4.1.12. 4.1.13. 4.1.14. 4.1.15.

4.1.16.

4.1.17. 4.1.18.

279

Ranking methods used: net present value, internal rate of return, payback? Cash flow projections. 4.1.2.1. Detail by month for first year. 4.1.2.2. Detail by quarter for second and third years. 4.1.2.3. Notes of explanation. Sources and applications of funding. Historical financial reports for projects already in existence. 4.1.4.1. Balance sheets, income statements, cash flows for past 3 years. 4.1.4.2. Explanation and notes explaining the statements. Abnormal, nonrecurring, or unusual items in the financials. Guarantees, warranties, litigation, etc. Inventory calculation method. Control systems. Depreciation methods, depletion, amortization. Which items are capitalized. and which expensed? Any deferred write-offs? Accounting methods similar to the rest of the industry? Debt description. Does the project have any longterm or short-term debt, secured or unsecured, or has the project guaranteed such debt on the behalf of others? Cost of capital relative to the industry. Leverage position. Borrowed money and fixed assets vs. expected return. Cost control effectiveness. Describe all bank relationships and credit lines. Has the project made (a) any private placements of its equity or debt securities, or (b) any public sale of its equity or debt securities? If so, please furnish complete details. Claims and litigation. Identify parties, amount involved, the names of the involved, and copies of all documents with respect thereto. Describe insurance coverage, plant, equipment, properties, work interruption, key employees, other. Any unusual contracts relating to the project, products or services.

280

Appendix C

4.1.19. Resource requirements. Resources needed from the host organization functional areas. 4.1.19.1. Use of sub contractors and vendors. 4.1.19.2. Major equipment requirements. 4.1.20. Facilities. 4.1.20.1. Location and age. 4.1.20.2. Capabilities. Capacities? 4.1.20.3. Plans for expansion and growth. 4.1.20.4. Capital equipment list. 4.1.20.5. Excess capacity? 4.1.20.6. Facilities layout. 4.1.20.7. Description of all offices, plants, laboratories, warehouses, stores, outlets, or other facilities including size of plot, square footage of enclosed space, etc. 4.1.21. Personnel resources. 4.1.21.1. Management and leadership resources. Describe characteristics of management, including any of the following that are pertinent: age, education, compensation, past project experience, special distinctions, employment contracts, bonus and profit sharing plans, other employee fringe benefits, pension plans. 4.1.21.2. Team personnel. 4.1.21.2.1. Number of team members needed. 4.1.21.2.2. If dependent upon technology, give details of specialists, i.e., number of doctorates, engineers, specialists, technicians, etc. 4.1.21.2.3. Description of labor relations, complaints, and costs. Any problems in obtaining personnel? Any turnover problems? 4.1.21.2.4. Employee skill levels. 4.1.21.2.5. Incentives used to motivate employees. 4.1.21.2.6. Ability to level peaks and valleys of personnel usage on the project. 4.1.21.2.7. Specialized skills.

Project Charter Checklist

281

4.1.21.2.8. Employee experience. 4.1.22. Suppliers and vendors. Names and addresses. Volume of purchases. Are other sources readily available? Dependent upon any one supplier? Any long-term contracts? 4.1.23. Subcontractors? Describe work done and availability of alternative contractors. Any contracts? 4.2. Risk analysis. 4.2.1. Risk related to the portfolio of projects. 4.2.2. Project specific risks (covered under project planning, implementation, and control). 4.3. Subjective factors to consider. 4.3.1. Fit with existing services or product lines. 4.3.2. Constraints. 4.3.3. Assumptions. 4.3.4. Additional project or investigation required. 4.3.5. Market and strategic positioning. 4.3.5.1. What geographical area does the project serve? Are there any limitations on what markets can be reached? i.e., freight, duties, service, maintenance, tariffs, government regulations, etc.? 4.3.5.2. Major competitors. Nature and area of competition. Direct or indirect? What is the degree of competition? Can new companies easily enter the field? Do the project’s competitors have greater resources? Are they longer established and better recognized? Ease of competitive entry? 4.3.5.3. Describe your project’s projection of sales and earnings for the next 3 years, including explanations with respect to any increase or decrease. 4.3.5.4. Market share expected. Is it a new technology. Is market positioning already established? 4.3.5.5. Effectiveness of sales distribution. 4.3.5.6. Advertising and promotion effectiveness. 4.3.5.7. Are sales concentrated in a few products or to a few customers?

282

Appendix C

4.3.5.8. Sales organization effectiveness. Knowledge of customer needs. 4.3.5.9. Pricing strategy and pricing flexibility. 4.3.6. Public image. 4.3.6.1. Articles, press releases, employee interviews. 4.3.6.2. Project self-image and personality. 4.3.6.3. Claims and litigation. Identify parties, amount involved, the names of the involved, and copies of all documents with respect thereto. 4.3.6.4. Any unusual contracts relating to the project, its products or services. 5. The project plan. 5.1. Time schedule for project completion. 5.1.1. Time measurement metrics. Milestones, decision points, total project completion time. 5.1.2. Critical path identified. 5.2. Budget and cash flow. 5.3. Risk analysis. Project specific. 5.4. Quality plan. 5.5. Communications plan. 5.6. Project control, variance reporting structure and procedures, measurement metrics. 5.7. Scope management and control. 5.8. Relationship with suppliers and customers. 5.9. Information systems. 5.9.1. Timeliness and accuracy of variance information. 5.9.2. Relevance of information for tactical decisions. 5.9.3. Ability to use information that is provided. 6. Supporting documents. 6.1. Personal resumes, letters of reference, job descriptions, employment agreements, letters of intent, copies of leases, contracts, legal documents. 6.2. Brochures, catalogues, mailers, publicity releases, newspaper or magazine articles, literature and the like distributed by the project or concerning the project, its products, personnel, or services. 6.3. Copies of pertinent contracts. 6.4. Other information and materials necessary for a complete presentation.

Appendix D Risk Analysis Matrix: Key Risk Factors Affecting Project Success

Listed herein are a series of statements about the project. Research has shown that these are the critical variables that represent project risk. Read each statement and evaluate the degree or probability of occurrence of the risk associated with the statement using a ranking of high risk, medium risk, or low risk. Then assess the impact if the risk event occurs using a ranking of high impact, medium impact, or low impact. For statements that you feel represent significant risk and impact, describe the response planned (e.g., avoidance, mitigation, deflection). OVERALL RISK FACTORS Probability (H, M, L)

Impact (H, M, L)

Risk strategy

The overall evaluation of the project is that there is a high potential for failure The size of the risk is such that project failure could cripple or destroy the organization 283

284

Appendix D

PROJECT OUTPUT (PRODUCT OR SERVICE) RISK FACTORS Probability (H, M, L)

Impact (H, M, L)

Risk strategy

The project product or service: Is the same as competition. Differs from the company’s core competence. Concept is unclear and hard to understand. Offers no intrinsic value to the customer. Offers no innovative features. Solves no customer problems. Is commonplace. Is inconsistent with the project image. Compared to competition, the project product or service: Is clearly inferior. Has inferior technical performance. Has higher cost. Is less reliable. Has poorer quality. MARKET RISK FACTORS Probability (H, M, L) The market for the project product or service: Is unattractive. Is highly competitive. Is declining. Has satisfied customer demand. The project output represents late entry into the market. Customers are not involved. Suppliers are not involved.

Impact (H, M, L)

Risk strategy

Risk Analysis Matrix

285

Users needs are not identified nor understood. INTERNAL ORGANIZATION RISK FACTORS Probability (H, M, L)

Impact (H, M, L)

Risk strategy

Probability (H, M, L)

Impact (H, M, L)

Risk strategy

Project has visible, top management lack of support. Project is not built on existing project strengths. Project has inadequate resources (time, labor, materials, or money) available. Senior management is not working closely with project leadership to develop the project concept. Project is incompatible with project culture. TEAM RISK FACTORS

Members do not represent all functional areas affected by the project. The project team: Execution is disorganized. Does not work as a team to define goals, develop workable plans, prioritize work. Infrequently communicates with outsiders. Lacks adequate training in multifunctional areas pertinent to the project. Does not resolve conflicts. Does not resolve conflicts at lower levels. Have a limited degree of internal communication.

286

Appendix D

PROJECT LEADER RISK FACTORS Probability (H, M, L)

Impact (H, M, L)

Risk strategy

Probability (H, M, L)

Impact (H, M, L)

Risk strategy

The project leader: Has a history of poor performance on projects. Has limited decision making accountability. Is a poor politician who fails to lobby for product support, does not ensure resources, and does not buffer the team from outside pressure. Discourages team communications with outsiders. Gives team members little freedom to work autonomously within the constraints of the project vision. Is a poor manager of the group. Is a lower level manager with little authority. Fails to attract top team members to the group. Inadequately communicates a clear vision of the project objectives and goals to the team. Ineffectually gathers, facilitates, and translates external information for team members. PLANNING RISK FACTORS

The project: Is expected to lose money. Has infrequent or no milestones. Has an insufficient degree of planning.

Risk Analysis Matrix

Target market is un defined. Risks have been unsatisfactorily identified, quantified and developed responses for. Critical success variables that correlate with the success of this project have not been identified. Supplier network is not integrated into the development process. Specifications are not thorough, complete nor clearly reflect customer needs. The project concept is unclear and difficult to understand. Project technology is changing as the project is underway and the customer wants the latest technology. Customer does not understand the project technology. CONCLUSION Proceed Proceed with reservations Resolve problems before proceeding Abandon Explanation of Conclusion

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Index

Accountability avoiding, through change of project, 32 entrepreneurial, 63–64 Accountants, as project auditors, 196 Accounting, 124–125, 133 Accuracy, in achieving time, budget goals, measurement of, 205 Achievement manager’s desire for, 50–51 Activity-based costing, 188 Age, competency and, 39 Alternatives, project manager’s ability to analyze, 19 Ambassadorial skills, 91–93 Ambition, self-confidence and, 49– 51 Analytical decision making techniques, 121–127

Analytical skill, of project manager, 19 Anxiety, reduction of with truthfulness, 30 Art of War, 22, 224, 225 Asset stewardship, 193 Asset turnover, 88–89 Assets, treating people as, 113– 114 Audit, 182, 194–198 team, 195–196 value of, 197–198 Auditors, 26 Authority, delegation of, 28, 107– 108 Awareness, environmental global environment, 131–136 information sources, tools, 130– 131 knowledge, 128–129 inadequate, 129–130

303

304

Background of manager, 17, 35– 39 competencies subwheel, 55 educational, 36 failure, learning from, 37–39 nonvalidated competencies, 39 age, 39 childhood, 39 project leadership, 36–37 subject area, training in, 37 Barnard, on leadership behavior, 228–229 Bass, Bernard, 229 Bass & Stogdill’s Handbook of Leadership, 229 Behavioral consistency, 25 Benchmarking, 122–123 forum, 213–230 Benefit, personal, at expense of project, 32 Best practices, measurement of, 9–13 Best Practices of Project Management Groups in Large Functional Organizations, 214 Blaming, of scapegoats, 32 The Book of the Courtier, 225 Budget, 156, 173–175 risk analysis and, 165 Business environment, of government, 132 Cash flow, 165 financial return and, 156 Castiglione, The Book of the Courtier, 225 Celebration, of termination, 208 Center of excellence, office, 6. See also Office CEO skills, entrepreneurial, 61– 64 Change of project, to avoid accountability, 32 Changes in technology, 116

Index

Character of project manager, 21– 56 background, 17, 35–39 educational background, 36 failure, learning from, 37–39 management experience, 36– 37 nonvalidated competencies, 39 subject area, functional training in, 37 competencies subwheel, 55 measurement of, 54–56 traits, 39–54 ambition, 49–51 emotional stability, 51–52 intelligence, 51 nonvalidated competency, 52– 54 self-confidence, 40–49 truthfulness, 21–35 benefits of, 24–30 dangers of being too trustful, 30–31 definition of, 22 dishonesty, 31–32 motives behind, 32–34 honesty, definition of, 22 project leadership and, 23 team, building trust on, 34– 35 unethical behavior, 31–32 Charisma, 52–54 dark side of, 53–54 ethical charismatic, 54 of manager, 52–54 Charter checklist, 277–282 project, 152–154 Chief executive officer. See CEO Childhood experience, competency and, 39 Client retention, 206 Closing phase of project, 198– 209 Coaching, 110–112

Index

Collectivism, versus individualism, leadership and, 65 Combined financial return/risk ranking tool, 160–161 Communications, 97–102, 134, 194 benefits of project, 203–208 effect on trust, 35 external, 100–102 negative aspects of, 102 flexibility, 100 informality in, 99–100 internal, 100 nonverbal language, 118 openness in, 27 plan, 166 of project benefits, 94 quality of, 98–99 stake holder, 179–180 Company project portfolio beta, 160 Competencies. See also Competency standards characteristics of, 217–221 levels of, 221–223 measurement of, 9–13, 17, 19 research, 224–230 spectrum of, 221 Competency standards global, project manager, 15–20 leadership, 17–18 project skills, 18 project-specific, 141–212 measurement of, 209–212 project phases, 149–209 asset stewardship, 193 closing, 198–209 control, 182–198 execution, 182–198 initiation, 149–166 planning, 166–182 selection, 149–166 termination, 198–209 structured approach, 141–149 flexible, simple approach, 144–145

305

[Competency standards] project phases, 142–144 standardized methodology, advantages, 145–147 structured methodology, caveats, 147–149 Competency wheel background, 55 character, 55 goal achievement, 10 host organization, 12 professionalism, 137 project goal achievement, 10 project organization, 11 project-specific, 210 relative competencies, measurement of, 17, 270 Competition, 91 Competitive product, service, 9 Completion time, reduction in, 206–207 Confidence of stakeholder, with standardized methodology, 146 Confidentiality, 27 Conflict resolution, 94–96 Consistency, behavioral, 25 predictability and, 25 Contracts, 25–26 Control, 182–198 delegation of, 28 establishment of, for trust, 34 Control mechanisms, reduced need for, 25–27 Core competencies, manager, 18– 19. See also Competencies Core success factors, project management, 8–9 competitive product, service, 9 economic demand, 9 multifunctional teams, 8 senior level support, 8 structured project approach, 9 Corporate strategy, 132 Corrective action, measuring impact of, 207–208

306

Cost lower, trust and, 25–28 priority of, 184–185 variance analysis, standard, 189–190 Costing, 188–190 Credit, for successes, with dishonesty, 32 Critical success factors, 171–172 Critiques, solicitation of, 122 Customer satisfaction, measurement, 205–206 Decision making analytical techniques, 121–127 flawed, 120–121 tools, 133 Decision points, 182 Delegation of authority, 28, 107– 108 Deliverables, 165, 170–171 presenting to customer, 199 Delivery constraints, risk analysis and, 160 Demand, economic, 9 Dependency, related to risk, 28– 29 Disclosure, threat of, 26–27 Dishonesty, 31–32 motives behind, 32–34 punishment of, 35 Documents flow of financial analysis, 155 project management, 144 risk analysis, 159 in knowledge library, 201 Due diligence investigations, 26 Duration of team, 105–107 Dysfunctional incompetence, 223 Earned value, 187, 188–190 activity-based costing, 188 job order costing, 189 life cycle costing, 188–189 process costing, 189

Index

[Earned value] standard costs and variance analysis, 189–190 Economic demand, 9 Economic system, of government, 131 Educational background of manager, 36 Effectiveness professionalism and, 71 with standardized methodology, 146 Efficiency increase in, 25 professionalism and, 68–70 with standardized methodology, 146 trust and, 25–28 Ego feeding of, 32 self-confidence and, 42–49 support for, need for, 54 Egotistical behavior, team duration and, 107 Emotional stability of manager, 51–52 Empire building, 32 Empowerment, trust and, 28 End-to-end project team involvement, 80–81 Entrepreneurial accountability, 63–64 Entrepreneurial CEO skills, 61– 64 Entrepreneurial risk taking, 41– 42 Environment external, 7–8 global, 131–136 Environmental awareness, 127– 136 information sources, tools, 130– 131 knowledge, environmental, 128–129 inadequate, 129–130

Index

Ethical charismatic, 54 European Union, 135 Evidence of other values, truthfulness as, 29 Execution phase of project, 182– 198 Experience, impact on decision making, 126–127 Exploratory interviews, project leaders, 219–220 External communications, 100– 102 negative aspects of, 102 Factors impacting goal achievement, 1–8 external environment, 7–8 host organization, 7 manager, 4–6 office organization, 6–7 center of excellence, 6 management office, 7 support office, 6–7 Failure capitalizing on, 47–49 learning from, 37–39 Fairness, truthfulness and, 27 Faith in positive outcome, 40–49 groups, desire to lead, 50 humility and, 42–49 research, 40 Fast tracking, of project, 78–80 Fayol, Henri, 226 Femininity, versus masculinity, global leadership and, 66 Financial, accounting check list, project termination, 200 Financial analysis document flow, 155 tools, 124–125 Financial leverage, delivery constraints, risk analysis and, 160 Financial management, 133 Financial return, 154–158 cash flows, 156

307

[Financial return] payback, 158 present value, 156–158 risk ranking, combined, 160–161 Financial risk, project ranking and, 162 Finesse, in management, 49 Flattery, believing, humility as antidote to, 47 Flawed decision making, 120–121 Flaws, psychological, recognition of, 46–47 Flexible approach to project, 144– 145 Focus, of manager, 19 Follow-up, project, 209 Formal reviews, audits, 194–198 Functional specifications, risk analysis, 178 Functions of Executive, 228 Gap, between rich, poor, 135 General and Industrial Management, 16, 226 Geometrical value of truthfulness, 30 Germination, of idea, for project, 150 Gilbreth, Frank and Lillian, contribution of, 227–228 Global competency standards manager, 15–20 overview, 1–14 Global environment, 131–136 business conduct, 132–133 distance factors, 133–134 global trends, 134–136 governments, 131–132 Globalization, 134–135 Global leadership, 64–66 individualism versus collectivism, 65 issues in, 64–66 masculinity versus femininity, 66 power distance, 65 uncertainty avoidance, 65–66

308

Global trends, 134–136 Goal achievement competency wheel, 10 factors impacting, 1–8 external environment, 7–8 host organization, 7 manager, 4–6 office organization, 6–7 center of excellence, 6 management office, 7 support office, 6–7 impact, 217–218 research, 40–41 Goal-achieving practices, 57–66 CEO skills, entrepreneurial, 61–64 global leadership issues, 64–66 leadership, 59–60 management skills, 59–60 project-specific technical skills, 60–61 Goal focus, of manager, 19 Governments, 131–132 business environment of, 132 economic system of, 131 legal system of, 132 political environment of, 131 trade policy of, 132 Grandiose goals, with charisma, 53 Grids, in project ranking, 162– 163 Group think, team duration and, 106–107 Guarantees, 26 Help-seeking behavior, encouragement for, 27 High-technology projects, 115–117 Higher values, using dishonesty to serve, 33 Honesty, 19 definition of, 22 Host organization, 7 communicating benefits of project to, 203–208

Index

Human resource management, 118 Humility, 44–49 defined, 43 faith in positive outcome and, 42–49 flattery and, 47 as legal requirement, for professional, 46 self-confidence and, 42–49 in servant approach to leadership, 44–45 Idea germination, for project, 150 Identification of problem, measuring impact of, 207–208 Individual expertise, with multifunctional teams, 76–77 Individualism, versus collectivism, leadership and, 65 Inept competence, 222 Information restrictions, 26 sources, environment, 130–131 systems, risk analysis and, 166 Initiation phase of project, 149– 166 Input from others, gathering, 121–122 Intelligence, of manager, 51 Internal communications, 100 Internal focus, team duration and, 106 Internal rate of return, 156–158 Internet, 135 Interviews, exploratory, project leaders, 219–220 Intuition, impact on decision making, 126–127 Investigations, due diligence, 26 Isolation, team duration and, 106 Job order costing, 189 Journal of project, 202–203

Index

Kickoff meeting, 183–184 Knowledge, environmental, 128– 129 inadequate, 129–130 Knowledge library, documents in, 201 Language. See also Communication nonverbal, 118 Leadership competency measurement problems, 214– 215 standards, 17–18 experience in, 36–37 management skills, 17–18 propensity for, with selfconfidence, 41 skills, 108 supportive, 108–110 truth and, 23 Learning curve, 115–116 Learning from failure, 37–39 Legal fees, 28 Legal system, of government, 132 Lessons learned, 202 Levels of competency, 221–223 Library, knowledge, documents in, 201 Life cycle costing, 188–189 Likert, Rensis, 227 Literature search, competencies, 220 Lobbying, for team, 93 Logistics, 134 Machiavelli, analysis of leadership, 5, 225 Manager background, 35–39 educational, 36 failure, learning from, 37–39 management experience, 36– 37

309

[Manager] nonvalidated competencies, 39 age, 39 childhood, 39 project leadership, 36–37 subject area, training in, 37 competency standards background, 15–16 management skills, 17–18 traits, 15–16 core competencies, 18–19 measurement of competency, 19 traits, 39–54 ambition, 49–51 benefits of, 41–42 charisma, 52–54 definitions, 40 ego and, 42–49 emotional stability, 51–52 faith in positive outcome, 40– 49 achievement, desire for, 50–51 desire to organize, 50 groups, desire to lead, 50 humility and, 42–49 intelligence, 51 nonvalidated competency, 52– 54 research support, 40–41 self-confidence, 40–49 goal achievement, impact on, 40 Market growth, strategic fit, project ranking and, 162 Marketing, 134 Masculinity, versus femininity, global leadership and, 66 Matrix project ranking, 162–163 risk analysis, 160, 283–288 Measurement problems, leadership competency, 214– 215

310

Methodology standardized, advantages, 145– 147 structured, caveats, 147–149 Metrics, measurement, 181 Milestones, 182, 186 emphasis on, 172–173 Mintzberg, on leadership best practices, 229 Misrepresentation of progress, 32 Mitigation of risk, 177–178 Moderate competence, 222 Motivation, 96–97 behind dishonesty, 32–34 MTV culture, impact of, 134–135 Multifunctional teams, 8, 72–77 dangers of, 75–77 Multinational companies, 135– 136 NAFTA, 135 Narcissism, with charisma, 53 Net present value, internal rate of return, 156–158 Networking, 112–113 Nonvalidated competencies, manager, 39, 52–54 age, 39 childhood, 39 Nonverbal language, 118 Not invented here syndrome, 106 Office organization, 6–7 center of excellence, 6 management office, 7 support office, 6–7 Openness in communications, 27 Opportunities, manager’s ability to analyze, 19 Organization structure, 132–133 Organizational skills, faith in positive outcome and, 50 Overlapping design phases, 75 Overlapping project phases, 79 Overloads, in multifunctional teams, 76

Index

Pairwise comparison, in risk analysis, 163–164 Payback dishonesty for, 33 financial return, 158 Peer reviews, 79 People, emphasis on, over tools, 108 People management, 90–108 People skills, 89–119 Percentage complete, 186–187 Performance measurement metrics, 165 Personal benefit, at expense of project, 32 Personal ego support, need for, 54 Planning phase of project, 166– 182 Political analysis, project management, Sayre wheel, 180 Political environment, 131 Political skills, 91–94 Power distance, global leadership and, 65 Power motivation, 50 Predictability with standardized methodology, 146 trust and, 25 Present value, financial return, 156–158 The Prince, 5, 225 Principles of Scientific Management, 45, 226 Problem identification, measuring impact of, 207–208 Process costing, 189 Product benefits, market growth, strategic fit, project ranking and, 162 Professionalism, 19, 57–140 alternatives, analytical analysis of, 119–127 analytical analysis, 119–127 analytical decision making techniques, 121–127

Index

[Professionalism] best practices of manager, 58 competencies subwheel, 137 decision making, flawed, 120– 121 effectiveness, 71 efficiency, 68–70 environmental awareness, 127– 136 global environment, 131–136 information sources, tools, 130–131 knowledge, environmental, 128–129 inadequate, 129–130 global leadership issues, 64–66 goal-achieving practices, 57–66 CEO skills, entrepreneurial, 61–64 leadership, 59–60, 108 management skills, 59–60 measurement of, 136–140 people management, 90–108 people skills, 89–119 project skills, measurement of, 17 project-specific technical skills, 60–61 speed, 67–68 with standardized methodology, 147 Progress, misrepresenting, 32 Progressive project phases management, 148–149 Project Management Body of Knowledge Guide, relationship of competencies to, 217 Project manager. See Manager Project ranking matrix, 162–163 Project-specific competency standards, 141–212 measurement of, 209–212 project phases, 149–209 asset stewardship, 193 closing, 198–209

311

[Project-specific competency standards] control, 182–198 execution, 182–198 initiation, 149–166 planning, 166–182 selection, 149–166 termination, 198–209 structured approach, 141–149 flexible, simple approach, 144–145 project phases, 142–144 standardized methodology, advantages, 145–147 structured methodology, caveats, 147–149 Project-specific technical skills, 60–61 Psychological flaws, recognition of, 46–47 Quality plan, 166 Quantification, of risk, 177 Questionnaire, project manager competency, 220, 269– 276 Ranking criteria, project selection, 154–164 Regional trading blocks, 135 Regulations, 26 Relationships, building, with truth, 30 Religion, 118 Renaissance competency research, 224–225 Research, 40–41 Bass catalogue of, 229 competencies, 224–230 ranked by source, 231–268 for faith in positive future, 40 goal achievement, 40–41 self-confidence, 40–41 Resource plan, 172 Resources, efficient use of, measurement, 205

312

Responsibility entrepreneurial, 63–64 for risk, 175–176 Retention of client, manager and, 206 Review team, 195–196 Reviews audits, 194–198 timing of, 195 Rich-poor gap, 135 Risk, of project, trust and, 28– 29 Risk analysis, 158–161, 175–178 document flow, 159 financial return, combined, 160–161 high-medium-low, 159 matrix, 160, 283–288 project portfolio, 158–159 weighted risk factors, 159 Risk taking, entrepreneurial, selfconfidence and, 41–42 Role models, 102–103, 122–123 Rule of St. Benedict, 224 Sales, trust and, 24 Satisfaction of customer, measurement, 205–206 Sayre wheel, project management political analysis, 180 Scapegoats, 32 Schedule, 165, 172–173 analysis of, 79 Scope change management of, 182 process of, 191 Selection of project, 149–166 Self-confidence, 40–49 impact on goal achievement, 40 research, 40–41 Self-serving goals, charisma and, 53 Senior level support, 8 Servant approach to leadership, 44–45 Signatures, 182

Index

Simulation, risk quantification, 177 Size, of team, 78 Skepticism, 125–126 Skills, manager, competency standards, 17–18 Specifications functional, 165 technical, 165 Speed leadership styles and, 90 professionalism and, 67–68 rewarding, 90–91 with standardized methodology, 146 Spirit, of team, 104–105 Stability emotional, 51–52 self-confidence and, 42 Stakeholders communications, 203–208 political factors, 179–180 confidence, with standardized methodology, 146 satisfaction, 206 Standardized methodology, advantages of, 145–147 Standards, 21–56 background, manager, measurement of, 54–56 character, 21–35 benefits of, 24–30 dangers of being too trustful, 30–31 dishonesty, 31–32 motives behind, 32–34 honesty, definition of, 22 team, building trust on, 34– 35 truth, 22–23 project leadership and, 23 competency global, 15–20 project-specific, 141–212 measurement of, 209–212 project phases, 149–209:

Index

[Standards] asset stewardship, 193; closing, 198–209; control, 182–198; execution, 182– 198; initiation, 149–166; planning, 166–182; selection, 149–166; termination, 198–209 structured approach, 141–149: flexible, simple approach, 144–145; project phases, 142–144; standardized methodology, advantages, 145–147; structured methodology, caveats, 147–149 definition of, 22 faith in positive outcome, 40– 49 measurement of traits, manager, 54–56 professionalism, 57–140 unethical behavior, 31–32 Stewardship, 193 Strategic fit, project ranking and, 162 Stress, reduction of with self-confidence, 42 with truthfulness, 30 Structure of organization, encouraging trust through, 34– 35 Structure of project team, 72–78 Structured methodology, caveats, 147–149 Structured project approach, 9 Subject area, manager training in, 37 Success factors, project management, 8–9 competitive product, service, 9 economic demand, 9 identification of, 124 multifunctional teams, 8 senior level support, 8 structured project approach, 9

313

Successes, taking credit for, dishonesty, 32 Sun Tzu, 4, 22, 225 Superior project manager competency standards, 15–18 background, 15–16 character, 15–16 leadership, 17–18 management skills, 17–18 project skills, 18 traits, 15–16 Suppliers, 73–74, 80 Support office, 6–7 Taxation, 133 Taylor, Frederick, 226 Teaching, 110–112 Team audit, 195–196 building, 103–107 duration of, 105–107 emphasis on time, 187 lobbying for, 93 member selection, 104 multifunctional, 8, 72–77 dangers of, 75–77 output of, increase in, 25 perception, manager self-confidence and, 42 size, 78 spirit of, 104–105 structure of, 72–78 trust building, 34–35 Technical specifications, 165 risk analysis, 178 Technological discipline, 88 Technology, 135 changing, 116 risk analysis and, 160 Termination of project, 198– 209 celebration, 208 checklist, 199–201 financial, accounting check list, 200 identifying projects for, 197

314

Threat of disclosure, 26–27 Time priority of, 184–185 team emphasis on, 187 Time control, monitoring, 185 Time to market, reduction in, 206–207 Time variance measurement, 185–187 earned value, 187 milestones, 186 percentage complete, 186–187 Topography, 134 Tracking, of project, 78–80 Trade policy, of government, 132 Training, 110–112 in subject area, manager’s, 37 Traits, project manager, 39–54 ambition, 49–51 competencies subwheel, 55 emotional stability, 51–52 intelligence, 51 nonvalidated competency, 52– 54 self-confidence, 40–49 Traits of Three Hundred Geniuses, 49 Transformational competence, 221–222 Trust benefits of, 24–30 on project team, 34–35 rewarding, 35 self-confidence and, 42 Truth, project leadership and, 23

Index

Truthfulness benefits of, 24–30 definition of, 22 as evidence of other values, 29 rewarding, 35 Uncertainty avoidance, global leadership and, 65–66 Unethical behavior, 31–32 Value analysis, project, 193 Variance reporting, 181–182 procedures, 166 Vendors, 133 inclusion in team, 73–74 Vision, 83–85 Von Clausewitz, Carl, On War, 225 Vulnerability, related to risk, 28– 29 On War, 225 Warranties, 26, 209 Weighted risk factors, 159 Wheel, competency background, 55 character, 55 host organization, 12 manager, 17, 270 professionalism, 137 project goal achievement, 10 project organization, 11 project-specific, 210 Winners, focusing on, 223 Work breakdown structure, 164, 169–170 Workplace testing, 220

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