Failure Factors in Business Organizations - Literature review Example

Table of Contents Literature Review 2 Introduction 2 Evaluation Methods to Assess the Project Success or Failure 3 Selected Models Used for Evaluation 7 Project Management Success/Failure Factors in Business Organizations 9 Conclusion 11 References 13 Literature Review Introduction It has been the phenomenon of the last decades that project management was seen as an activity outside the organization, while in a contemporary, dynamic business environment (Caniëls & Bakens, 2011), there is an upsurge in of project management inside the organizations in order to realize their strategic objectives. It is reasoned that it delivers some important methods and tools to the organization for better planning, scheduling and measuring the organization specific processes for strategically allocating resources and workforce (Meredith & Mantel, 2012). The literature much debated over the project management issues, and among these the most important issue is the project success or failure. But there is a divergence in the opinion regarding the success criteria and also the factors affecting the project success or failure. The literature has provided a number of critical factors impacting the project success or failure, but all of their studies were different in terms of their objectives and scale. These factors were outlined based on the generalization of success/failure factors or particularization of these factors with respect to any particular project, organization, or industry. But there is need to develop an evaluation method or a model that can provide solution in measuring the project success or failure. The purpose of this paper is to review the existing literature regarding the evaluation model to determine whether project management is success or failure factor in business organization. Evaluation Methods to Assess the Project Success or Failure Though there are a number of studies which have provided with different criteria and evaluation methods, but there is little convergence in literature in this regard. Previously, it was argued that the project is said to be a successful one if it has fulfilled its three main objectives, which are cost, quality and time. The theories emerged as if the projects fulfil all of its requirements or deliver the quality outcomes, within the estimated cost and time, then it is thought to be a successful one (Kerzner, 2013). On contrary to this, de Bakker et al. (2010) have questioned over this criteria, as they contended that by employing this criteria, it can simply be said that the project has failed, because it can never be achieved (de Bakker, et al., 2010). This evaluation criteria of three objectives have been criticized for its limited scope and different interpretations of these objectives (Ika, 2009). But in recent years, the Mir and Pinnington (2014) have reviewed a number of evaluation models for the project success or failure, where a detailed evaluation framework of project performance is discussed and includes. “…competitive advantage, efficiency (meeting schedule and budget goals), impact on customers (customer benefits in performance of end products and their needs), business success (project benefits in commercial value and market share), and preparing for the future (creating new technological and operational infrastructure and market opportunities)…” (Mir & Pinnington, 2014, p. 204). This framework was contingent upon two elements; time and technological risk. It is argued that the project team performance and leader’s effectiveness were ignored in this framework. Another suggestion for evaluation of project performance is considered as the stakeholder’s approach, where the fulfillment of stakeholders’ expectations and requirements are the key to project success. But the issue here is that these expectations are hard to measure and evaluate (Mir & Pinnington, 2014). Furthermore, for business organization, the researchers have suggested that as the project management is considered as a way to realize the organizational strategic objectives in business organization (Kerzner, 2013), so EFQM (European Foundation for Quality Management) model can be linked to the project management for evaluating the project performance (Mir & Pinnington, 2014). After making this linkage, a model emerged that is known as “Project Management Performance Assessment”. This model is comprised over five enablers of excellent project management performance, which are PM policy and strategy, PM leadership, PM workforce, PM life cycle management, and PM partnerships and resources. These five enablers lead towards the practices that are used to assess the real performance with respect to the stakeholders’ expectations, and known as Key Performance Indicators (KPIs) (Mir & Pinnington, 2014). Following figure shows the graphical representation of this model. Figure 1. Project Management Performance Assessment Model. Source: (Mir & Pinnington, 2014, p. 205). In this model, PM Leadership stresses over the effective change management, team orientation towards common goal, and managing the culture. PM staff construct includes the optimization of the human skills and offering of rewards. PM policy and strategy focuses on the linkage of the project objectives with the overall corporate objectives, while PM partnerships emphasize on the win-win situations for both parties. Project life cycle management deals with the overall processes in whole life cycle, and these all enablers are evaluated through KPIs and also improve performance (Mir & Pinnington, 2014). The project performance assessment model can be used for all the projects in business organization, but every project does have some specific factors that are unrelated to others. For example, the evaluation model for hospital projects can be of different nature due to the specific nature of the hospital projects, as Buelow, et al., (2010) have suggested that the cost-benefit analysis is performed for assessing the hospital projects’ performance. While there is another model suggested by the (Ngacho & Das, 2014), where the performance measure framework is provided in relation to the construction projects. The project performance is measured through a number of KPIs, which are considered to be specific to the nature of the projects (construction). In this model, apart from the cost, time, and quality, there are some other KPIs, which are very important to assess in any construction project, such as safety performance, site disputes performance, and environmental performance. It entailed that the construction project can be successful, if there is no workforce injury (safety performance), all the site disputes were managed effectively (site disputes performance), and also the environment-friendly technology is used with no harm to the project’s surrounding (environmental performance) (Ngacho & Das, 2014). Following figure shows the graphical representation of this model. Figure 2. Performance evaluation framework of development projects. Source: (Ngacho & Das, 2014, p. 502) These KPIs have been used by a number of researches as a means to evaluate the performance. While (Kerzner, 2013) has provided a process to develop these KPIs, where the process includes a number of steps that can be demonstrated as in following figure. Figure 3. Typical steps in the Performance Metrics Process. Source: (Todorovié, et al., 2013, p. 44) However, regarding this model, (Todorovié, et al., 2013) have stated that “…at the very start of the performance measurement process on the project, there has to exist a consent of all involved stakeholders about the way of using measures as the projects success indicators. Selected measures have to reflect the entire project, which can be achieved by selecting key measures combined with value measures…” (Todorovié, et al., 2013, p. 44). While another approach is to set the project performance metrics based on the project life cycle and then measure them, as it is suggested that project performance metrics are specific in different project life cycle stages. Thus, to measure the performance of the business organization, the Project Management Performance Assessment Model as provided by (Mir & Pinnington, 2014) can be used. And in case of any specific project, KPIs can be developed for the performance evaluation using the Krenzer (2013) process of developing key performance indicators. But it should be taken into account that the project performance indicators should be selected by considering the whole project life cycle and stakeholders, so that client’s requirements and stakeholders’ interests can be considered while realizing the organizational strategic objectives. Selected Models Used for Evaluation Here, the two models are used to evaluate the performance, Project Management Performance Assessment Model used in an IT organization, while the use of Key Performance Indicators in assessing the performance in another IT organization. The first example is about the DirecTV Company, which has developed a project management office in different regions, where the projects’ performance metrics are developed in every region, based on the company’s goals. One of the IT project of developing a software to automate the main jobs executed by CSRs (customer service representatives), in order to enhance the customer satisfaction. The company uses a number of key performance indicators to ensure that the business value is being created and the project is achieving the strategic goal. For that purpose, the team developed the performance indicators on the basis of project life cycle, where they set KPIs from exploration stage towards the planning and then for execution stage. This indicates the approach of developing KPIs in accordance with every stage of the project life, as based on the project life cycle approach. In second example, the PMPA Model is used to evaluate the project performance in Oracle Corporation. The Oracle Corporation, based in the US has performed a project performance measurement for its successful project of enhancing customer experience. In order to measure the performance of their project, the company has developed metrics related to following enablers. Here, the Project Management Performance Assessment Model given by the (Mir & Pinnington, 2014) can be employed. According to this model, there are some enablers that resulted in the project success as measured by the project key performance indicators, which can be shown as following figure specific to the Oracle Corporation. Figure 4. Enablers and KPIs for the customer experience success. Source: Oracle Corporation As suggested above, these are three main objectives, Acquisition, Retention, and Efficiency that has further yielded nine KPIs. The objectives here are the acquisition, retention and efficiency. The acquisition means the increase in the sales, which is measured by the opportunities, brand equity and market share. The second objective is the retention that means monetizing the relationships, where it can be successful if there is an increase in share of wallet, increase in loyalty, and more advocacy. These indicators measured the success or failure of second objective. While the third objective is retention, means leveraging the investments, where the KPIs used to evaluate the achievement of this objective are; return on investment, productivity and cost of operations. The oracle corporation used these measures to assess the performance of the customer experience CX project. Project Management Success/Failure Factors in Business Organizations There are a number of studies that can be reviewed for the purpose of highlighting the project management success/failure factors, but these studies have conducted in the context of any specific organization or type of projects. However, the business organizations can carry out projects of different types, thus these factors can be assessed for all of the business organizations. In the most general terms, Ika (2009) has suggested with ten key success factors regardless of the type of project and organization, but based of scientific evaluation of project success, as in this paper, Ika (2009) has reviewed a number of studies published in Project Management Journal. He recommended ten basic success factors for projects, such as “…project mission, top management support, project schedules/plan, client consultation, personnel, technical tasks, client acceptance, monitoring and feedback, troubleshooting, and communication…” (Ika, 2009, p. 8). Ika (2009) has further argued that these ten factors can be handled by the team, but not all factors, such as the project manager or leader’s attributes, the phenomenon of power and politics, the circumstances regarding the external environment, and the firmness of team. Moreover, in later times, some important elements were also included, where the life cycle of the projects was regarded, as every project is unique and of a temporary nature, and the above fourteen success factors were categorized on the project life cycle including planning, execution, and measurement stages (Ika, 2009). Now coming towards the more specific studies, a research conducted by (Ihuah, et al., 2014) in context of sustainable social housing in Nigeria, has found a number of perilous project management success factors that are categorized in four constructs, such as the project managers’ attributes, the type of the organization carrying out the project, the participants’ attributes of the team, and the outside environment of the project. In addition, the research also found that the external environmental, economic, and social factors also impact the project performance (Ihuah, et al., 2014). Another study conducted to find the key success factors for investment projects was performed by (Pandremmenou, et al., 2013), where they found that in practical sense, the investment projects’ key success factors include the extent of urgency, project’s objectives’ orientation with the corporate objectives, extent of fulfillment of customer’s demands, resource availability information, project mission, top management commitment, measurement and control systems used, appropriate flow of information, effective communication, the employment of PM tools, extent of consideration of outside environment, and extent of end-user’s satisfaction from project deliverables (Pandremmenou, et al., 2013). Apart from these, there has also seen an upsurge in the IT projects, where a number of studies have highlighted the critical success factors related to IT projects. As Almajed and Mayhew (2013) have provided a conceptual framework of the project’s success factor for IT projects in Saudi Arabia, where eight factors were highlighted, such as top management support, project management, project team capabilities, strategic planning, communication management, stakeholders’ management, training and development, and vendor management (Almajed & Mayhew, 2013). After reviewing the literature and analysis performed for evaluation of project management in IT organizations, it can be suggested that the project management can be a success factor or also a failure factor in a business organization. It highly depends on the evaluation method or criteria used to evaluate the performance and how it can manage three main factors in implementation of the project; power and politics, project manager and team attributes, and external environment factors. The evaluation criteria used for the assessment must be realistic, as if the organization use the three objectives as criteria, then it is straightly considered as a failure project. The key performance indicators must be developed for evaluation, where the indicators should be chosen by considering all the stakeholder’s interests, the project lifecycle, and also project main objectives. But it should also be kept in mind that for business organization, the project objectives should be in line with the overall corporate strategy, as the success of project management in business organization is inherent in the extent of attainment of corporate objectives of the organization. So, here, two main points can be highlighted, which can make the project management a success factor for business organization, that is choosing right evaluation model or KPIs, and alignment of the project objectives with the corporate strategy. For evaluation purpose, the PMPA Model can be regarded as the best mode, as this model considers all the project stakeholders and enablers in developing KPIs. Conclusion This paper has reviewed a pool of literature on three important issues, which are explained in three sections. The first section has reviewed the evaluation methods or models to determine that how these models decide about project success/failure. Then real-life organizations, experiencing success or failure, are used to demonstrate the use of project management evaluation methods and determining the project success or failure. Lastly, the paper provides the literature review of the project management success/failure factors in business organizations and author’s opinion regarding the question that is the project management a success or failure factor for the business organization. It is concluded that two important considerations can make the project management a success factor for business organization; the selection of right evaluation model or KPIs, and the alignment of the project objectives with the corporate strategy. References Almajed, A. I. & Mayhew, P., 2013. An Investigation of the Critical Success Factors of IT Projects in Saudi Arabian Public Organizations. IBIMA Business Review, 1(1), pp. 1-10. Buelow, J. R., Zuckweiler, K. M. & Rosacker, K. M., 2010. Evaluation Methods for Hospital Projects. Hospital Topics, 88(1), p. 10–17. Caniëls, M. C. J. & Bakens, R. J. J. M., 2011. The effects of Project Management Information Systems on decision making in a multi project environment. International Journal of Project Management, 30(2), pp. 1-14. de Bakker, K., Boonstra, A. & Wortmann, H., 2010. Does risk management contribute to IT project success? A meta-analysis of empirical evidence. International Journal of Project Management, 28 (5), p. 493–503. Ihuah, P. W., Kakulu, I. I. & Eaton, D., 2014. A review of Critical Project Management Success Factors (CPMSF) for sustainable social housing in Nigeria. International Journal of Sustainable Built Environment, 3(1), p. 62–71. Ika, L. A., 2009. Project Success as a Topic in Project Managment Journals. Project Management Journal, 40(4), p. 6–19. Kerzner, H. R., 2013. Project Management: A Systems Approach to Planning, Scheduling, and Controlling. 11th ed. New Jersey: John Wiley & Sons Inc.. Meredith, J. R. & Mantel, S. J., 2012. Project Management: A Managerial Approach. 8th ed. New Jersey: John Wiley & Sons Inc.. Mir, F. A. & Pinnington, A. H., 2014. Exploring the value of project management: Linking Project Management Performance and Project Success. International Journal of Project Management, 32(1), p. 202–217. Ngacho, C. & Das, D., 2014. A performance evaluation framework of development projects: An empirical study of Constituency Development Fund (CDF) construction projects in Kenya. International Journal of Project Management, 32(1), p. 492–507. Pandremmenou, H., Sirakoulis, K. & Blanas, N., 2013. Success Factors in the Management of Investment Projects: A Case Study in the Region of Thessaly. Procedia - Social and Behavioral Sciences, 74(1), p. 438 – 447. Todorovié, M., Mitrovié, Z. & Bjelica, D., 2013. Measuring Project Success in Project-Oriented Organizations. Management Joumal for Theory and Practice Management, 68(1), pp. 41-48. Read More