CRITICAL SUCCESS FACTORS FOR PROJECT PERFORMANCE: A STUDY FROM FRONT-END ASSESSMENTS OF LARGE PUBLIC PROJECTS IN NORWAY

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1 CRITICAL SUCCESS FACTORS FOR PROJECT PERFORMANCE: A STUDY FROM FRONT-END ASSESSMENTS OF LARGE PUBLIC PROJECTS IN NORWAY OLAV TORP, KJELL AUSTENG AND WUBISHET JEKALE MENGESHA (NORWEGIAN UNIVERSITY OF SCIENCE AND TECHNOLOGY, NTNU) 0. ABSTRACT As a response to frequent cost overruns in large Public Investments Projects, the Norwegian Ministry of Finance initiated in 2000 a quality assurance scheme to ensure quality-at-entry of major Government funded projects before funding is appropriated. One part of this quality assurance scheme is identifying Critical Success Factors (CSF) and Potential Pitfalls (PP) early during the Front-End Assessment. This paper reviews the conceptual framework and theory of CSFs and PP, presents what have been learned so far from the data collected through the quality assurance scheme and looks into how the theoretical background relates to the findings. In some cases it was found that what was declared as CSFs were associated to PPs when they are lacking. It was also found that what was considered CSF in some projects was, in opposite words, considered as PP in other projects. That is, evidences from the case studies largely showed that lack of Critical Success Factors are considered Potential Pitfall and vice versa. Besides, Project Organization, Contract Management, Project Planning and Controlling, and Stakeholder Management, were found highly associated to these CSFs and PPs, both in literature and in the case studies. However Top Management Support, External conditions such as market & politics were given less importance in the case studies than in literature. When comparing building projects to road and railway projects we see two differences. Design management and objective management appear to be a success factor in building project, but they are not so visible in construction projects. This might be caused by more visible and stronger user groups in building projects. Keywords: - Critical Success Factors, Potential Pitfalls, Front-End Assessment and Quality Assurance. 1. INTRODUCTION As a result of the quality assurance scheme of the largest projects are annually subjected to a thorough external review of anticipated costs, time schedule and major uncertainties that might affect the project s outcome, before the budget is submitted to the parliament. This is mainly transport (road and railway), building and defense projects, all exceeding 500 MNOK. The external review is performed by consultants with framework agreement with Ministry of Finance. The external reviewer is among other things expected to point out the most important Critical Success Factors and Potential Pitfalls of the project. The Concept research programme (Concept, 2004) was started in 2002 with the long-term objectives to improve initial concept selection, better usage of resources and ultimately to achieve higher value-added in major government funded projects. It is designed to conduct trailing research on the quality assurance scheme. The trailing research has so far among other things resulted in development of a database (Trailbase), where data from quality assured projects are collected. For now, this database contain data from the external review, among other things on CSFs and PPs. Identifying CSFs and PPs early enough before project formulation is vital to minimize surprising variations during project implementation. This paper addressed the use of such factors on Civil Engineering projects of Norway in comparison to their recent conceptual developments. We found it interesting to study similarities and differences between different projects and different types of projects, regarding what Critical Success Factors and Potential Pitfalls the consultants have identified as the most important. Those findings are compared to what the literature states to be most important. 1

2 2. PUBLIC PROJECTS IN NORWAY AND USE OF QUALITY ASSURANCE SCHEMES This paper considered 14 Public Civil Engineering projects of which, ten, three and one were Road, Building and Railway projects respectively, se table 1. The expected costs of the projects were from among 500 MNOK up to 3500 MNOK. An external review is performed for these projects, and the projects are recently given funding. The projects are now in the detail design or early in the implementation phase. These projects were considered as cases to see into the Critical Success Factors and Potential Pitfalls identified for their fit with recent conceptual developments. Table 1: Number of projects of different types and their cost range. Project type Number of projects Costs (Mill NOK) 1 Road Projects Railway Projects Building Projects CRITICAL SUCCESS FACTORS (CSFs) AND POTENTIAL PITFALLS (PPs) CONCEPTUAL REVIEW Identifying Critical Success Factors and Potential Pitfalls early enough during the Front-End Assessment of projects is a vital start for ensuring successful project completions. This is with a belief that there are certain major factors whose influences are considerable to project performances such that they during basic planning will enhance the successful completion of projects. Identifying CSFs and PPs will help project teams to minimize firefighting, intuitive and adhoc approach in managing uncertainties and changes encountered during project implementation, (Pinto and Kharbanda, 1996). That is, they acknowledged that the measure of successful project implementation is not the avoidance of problems but knowing (beforehand as much as possible) how to respond to when problem develops. Accordingly Pinto and Slevin (Pinto & Slevin, 1987 and 1988) and Pinto and Kharbanda (Pinto and Kharbanda, 1995) vigorously dealt with CSFs and PPs as applicable to projects (having acknowledged the concept of success and failure as ambiguously defined terms) reiterated that a more refined effort to reveal these factors together with their interrelationships is important. Pinto and Slevin (Pinto & Slevin, 1988) further developed the notion of success and presented three key factors for successful project completion. These are Technical validity, Organizational Validity and Organizational effectiveness. The search for CSFs has been dealt since Table 2 showed that CSFs to projects moved from a mechanistic approach to success determination which was relying on purely technical system and the traditional Cost Time - Quality constraints to a combination of social and technical systems. Table 2: Development of Success Factors over time (Mengesha, 2004) Source (Ruben and Seeling, 1967); Empirical (Sayles & Chandler, 1971) (Martin, 1976) Critical Success Factors Technical performance as a measure of success. Project manager's experience has minimal impact but the size of previously managed project does affect the manager's performance Project manager's competence; Scheduling; Control systems and responsibilities; Monitoring and feedback; and Continuous involvement in the project Clear goals; Selection of project organizational philosophy; General management support; Organize and delegate authority; and Selection of project team. 1 Expected costs of each project, results from the consultants uncertainty analysis. 2

3 Source (Baker, Murphy and fisher, 1983); Empirical (Cleland and King, 1983) (Morris and Hughes, 1987); Empirical (Pinto and Slevin, 1987) (Tukel & Rom, 1995); Empirical (Walid & Oya, 1996); Empirical (Pinto and Kharbanda, 1995) Critical Success Factors Clear goals; Goal commitment of project team; On-site project manager; Adequate funding to completion; Adequate project team capability; Accurate initial cost estimates; Minimum start-up difficulties; Planning and control techniques; Task - social orientation; and Absence of bureaucracy. Project summary; Operational concept; Top management support; Financial support; Logistic requirements; Facility support; Market intelligence; Project schedule; Executive development and training; Manpower and organisation; Acquisition; Information and communication channels; and Project review. Project objectives; Technical innovation uncertainty; Politics; Community involvement; Schedule duration urgency; Financial contract legal problems; and Implementation problems. Project objectives, Top management support, project planning, communication with client, human relations, technical tasks, client acceptance, project control, communication and problem handling Top management support; Client consultation; Preliminary estimates; Availability of resources and Project managers performance. Factors related to the project; the project manager and the team members; the organisation; and the external environment. Mission at the forefront; Early & Continual Client Consultation; Technology; Scheduling system; Project team; Top Management Support and Continual What if? Approach. Belout (Adnane Belout, 1998) has also revealed the domination of technical system and indicated lack of consideration with regard to behavioral system. This is associated with the dominance of Analytical principle that Project Management has developed so far and its fragmented theoretical developments with regard to organizational and behavioral principles (Mengesha, 2004). As a result, he suggested that CSFs recent development need to integrate Analytical and Organizational factors to enhance the successful completion of projects. On the other hand, Potential Pitfalls have also received attention because learning from mistakes is vital. Accordingly Rosenau (Rosenau, 1998); Harrison (Harrison, 1997) and Frame (Frame, 1987) identified the PPs as related to Organizational factors, Planning and Control factors and Human factors. They further argued that inability to deal with Critical Success Factors explained contributory to Potential Pitfalls. In addition research in Project Management so far focus largely on the planning and controlling aspect of Potential Pitfalls. Summing up what the literature says about CSFs and PPs, we see a shift in focus over time from purely Technical issues towards Organizational and Management issues. The Technical issues are still important, but there are other issues stated as well as important. This is issues like Top management support, Organizational issues, Stakeholder management, coordination and Human relations. 4. FINDINGS: CSFs & PPs CONSIDERED IN LARGE PUBLIC PROJECTS In some cases it was found that what was declared as Critical Success Factors were associated to Potential Pitfalls when they are lacking. It was also found that what was considered CSF in some projects was, in opposite words, considered as PP in other projects. That is, evidences from the case studies largely showed that lack of CSFs are considered PPs and vice versa. Therefore, when presenting the results from the case studies, we do not separate between Critival Success Factors and Potential Pitfalls. Accordingly, Table 3 lists the findings together with their importance considered as CSFs and PPs. The results tell in how many of the 14 projects the item is considered as CSF or PP. As a result, Project Organization and Management; Contract Strategy and Project Planning and Control were found highly associated to CSFs and PPs. These were followed by Stable Framework conditions and Stakeholder management. However, Technical factors, Nature and Market conditions, Objective management, and Top Management Support were given less importance. These evidences indicated a focus on organic approach which was found in line with recent conceptual developments and theory covered in section 3 of this paper. 3

4 Human aspects are not that visible in the observations, however they are an important part of item 1, 2, 3 and 5. Subsequently, the following analysis and discussions were forwarded. Table 3: CSFs & PPs based on Empirical findings Item CSFs & Potential Pitfalls 1 Project Organization 11 2 Contract Strategy 9 3 Project Planning & Controlling 9 4 Stable Framework Conditions 8 5 Stakeholder management 8 6 Technical Factors 4 7 Nature and Market conditions 4 8 Objective Management 3 9 Top Management Support 2 10 Interface towards surrounding projects 1 11 Management of Design 1 Project Organization factors (suitability and adequacy of its structure such that authority and responsibility matches, how clear its relationship with its parent organization is, continuity and capacity in the organization and efficient decision making) is pointed out as important in 11 of the 14 projects. Two of the projects that did not have the Project organization among the most important success factors were road projects run as Private Public Partnership. There the Project Organization (Project Owner s Organization) might be of less importance in the overall picture. Those projects have to look much longer than to the project completion. Theory states that Project Organization is an important success factor. Stakeholder management and Contract strategies were identified as separate factors which are conceptually considered part of organizational issues. Contract strategy (number of and size of the contracts, interface between the different contracts, and management of the contracts) is picked out as an important item in 9 of the 14 projects. Among the identified literature, it is only Morris and Hughes, (1987) that has identified contract issues as an important success factor, but it is often considered a part of the organizational issues. Project planning and controlling include cost and time control, change management, risk management and quality of the planning. Literature brings this up as success factors in project performance in different ways. Pinto and Slevin (Pinto and Slevin, 1987) identify both planning and control as important. Others identify schedule control and preliminary estimates as important. According to the case study, stabile Framework conditions are important for a project to succeed. A constant change in Framework conditions will have negative impact on the project process, and the project performance. The literature does not confirm this directly, but items like adequate funding and realistic cost frames could be recognized in the literature. Stakeholder management is an item identified as important in the case study. In the literature we can find items like client consultations, Community involvement and communication and information that could imply that stakeholder handling is important. This study revealed Technical factors and External conditions (market, political etc) as less important. This is in line with trends in the theory. On the other hand, it might also be indicative that technology has received unprecedented importance which can be looked into as further research. Furthermore this study has identified Top Management Support as less important than the literature states. This could be associated with the social relationship and their cultural values that focus on collaboration. When comparing building projects and road/railway projects, there were two items that only occurred as success factors in building projects; Design and Objective management. This might imply that it is easier to identify well defined and anchored objectives in road/railway projects than in building projects. Design management also seems to be of greater importance when performing a building project. This might imply that it is easier to design construction projects, and to identify the objectives in road/railway projects than in 4

5 building projects. User groups are also more visible and stronger in building projects. Regarding the other CSF and PP, we could not see any differences between building and road/railway projects. 5. CONCLUSIONS Archival records from the database (Trailbase) served as data sources in this study. We have studied 14 projects and compared them to findings in the literature concerning Critical Success Factors and Potential Pitfalls. This paper concludes that findings from the case studies are inline with recent theory and conceptual developments, except for some areas. Top management support and Objective definition and understanding are factors the literature identifies as important, but that is not visible in the findings from the case studies. We have identified differences between building and road/railway projects when regarding Design management and Objective definition/anchoring. These items seem to be of greater importance in building projects than in road/railway projects. This might be caused by more visible and stronger user groups in building projects than in road/railway projects. The number of projects in Trailbase is increasing, and it would be interesting to see if we got the same results when including a higher number of projects. The database gives data from one stage in the project life-cycle; at the time of external review. It would be interesting to expand this study with data from other stages of the projects, when they become accessible in Trailbase. It would be interesting to study the projects, regarding what the Success Factors and what the Pitfalls were during detail planning and implementation. 6. REFERENCES Adnane Belout, Effects of Human resource management on project effectiveness and success: toward a new conceptual framework International Journal of Project Management Vol. 16 No. 1, pp Baker, Murphy and Fisher, Project Management Handbook: Factors affecting project success New York: Van Nostrand Reinhold Cleland, D.I. & King, W.R., Systems Analysis and Project Management New York: McGraw-Hill Concept, 2004, Frame, Davidson J., Managing Projects in organizations: How to make the best use of Time, Techniques and People San Francisco & London: Josey-Bass Publishers Harrison, F.L., Advanced Project Management: A Structured Approach England: Gower Publishing Limited Company Martin, C.C., Project Management New York: Amaco Mengesha, Wubishet Jekale, Performances for Public Construction Projects in Developing Countries: Federal Road & Educational Building Projects in Ethiopia Norwegian University of Science and Technology: Doctoral Thesis 2004:45 Morris and Hughs, The anatomy of major projects: a study of the reality of project management Chichester: John Wiley & Sons pp & Pinto, J. & Kharbanda, O.P., Successful Project Managers: Leading your team to success New York: Van Nostrand Reinhold Pinto og Slevin, Critical Factors in successful project implementation. IEE Transactiones on Engineering Management, EM-34. Pinto and Slevin Critical Success Factors across the project life cycle Project Management Journal Vol. 19, No. 3, pp Rosenau, Milton D, Successful Project Management: A step-by-step approach with practical examples New York: John Wiley and Sons, Inc. Rubin, I M & Seeling, W., Experience as a factor in the selection and performance of Project Managers, IEEE Trans Eng Management 14 (3) pp Sayles, L.R. & Chandler, M.K., Managing Large Systems: Organization for the future New York: Harper & Row Tukel, O.I. & Rom, W.O., Analysis of the Characteristics of projects in Diverse Industries Working Paper, Cleveland State University, Cleveland, Ohio Walid Belassi & Oya Icmeli Tukul, A New Framework for determining critical success/failure factors in project International Journal of Project Management, Vol. 14, No. 3 pp

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