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INTERNATIONAL JOURNAL OF

PROJECT
MANAGEMENT
International Journal of Project Management 23 (2005) 283–295
www.elsevier.com/locate/ijproman

Factors affecting cost performance: evidence


from Indian construction projects
a,* b
K.C. Iyer , K.N. Jha
a
Department of Management Studies, Indian Institute of Technology, Hauz Khas, New Delhi 110016, India
b
Department of Civil Engineering, Indian Institute of Technology, Kanpur, Uttar Pradesh 208016, India

Received 2 December 2003; received in revised form 30 March 2004; accepted 8 October 2004

Abstract

This paper presents the findings of a questionnaire survey conducted on the factors affecting cost performance of Indian construc-
tion projects. Factor analysis of the response on the 55 success and failure ÔattributesÕ identified through literature review and per-
sonal interview extracted seven factors. Critical success factors obtained by the analyses are: project managerÕs competence; top
management support; project managerÕs coordinating and leadership skill; monitoring and feedback by the participants; coordination
among project participants; and owners competence and favourable climatic condition. However factors adversely affecting the cost
performances of projects, are: conflict among project participants; ignorance and lack of knowledge; presence of poor project specific
attributes and non existence of cooperation; hostile socio economic and climatic condition; reluctance in timely decision; aggressive com-
petition at tender stage; and short bid preparation time. Further analysis indicates coordination among project participants as the
most significant of all the factors having maximum positive influence on cost performance.
Ó 2004 Elsevier Ltd and IPMA. All rights reserved.

Keywords: Cost; Managing projects; Success; Coordination; Factor analysis

1. Introduction for judging the performance holds no meaning. Success


for one participant may be a failure for the other partic-
Measuring the performance of any construction pro- ipant depending on the perspective with which each one
ject in terms of success or failure though looks simple, is is looking at the outcome. Incidentally, past researchers
in fact a very complex process. Modern construction have employed different criteria, such as compliance to
projects even moderate in size are generally multidisci- schedule, cost and quality to judge the project perfor-
plinary in nature and they involve participation of mance. However, in the present paper only the factors
designers, contractors, subcontractors, specialists, con- affecting Ôcost complianceÕ criteria have been discussed.
struction managers, and consultants. With the increas- Researchers in the past have identified various causes
ing size of the project, number of participants in the or reasons (called ‘‘attributes’’ in this paper) for project
project also increases. The objectives or goals of all par- success. Their works are area specific or project specific
ticipants need not be same even in a given project. Hence and are mostly from the developed countries and based
to define the success or failure of a project without spec- on researchersÕ experience on completed projects. Fur-
ifying the participant and without specifying the criteria ther these researchers have identified the critical attri-
butes that are responsible for success of the projects
*
Corresponding author. Tel.: +91 11 2659 1209; fax: +91 11 2686
and they advise that these attributes should be carefully
2620. handled and if possible be further exploited to achieve
E-mail address: kciyer@dms.iitd.ac.in (K.C. Iyer). greater success. There are also certain other attributes

0263-7863/$30.00 Ó 2004 Elsevier Ltd and IPMA. All rights reserved.


doi:10.1016/j.ijproman.2004.10.003
284 K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295

responsible for failure of a project. These attributes, if 4. Identification of attributes affecting project
not handled properly may be detrimental for the success performance
of the project. This study tries to identify all such success
and failure attributes for the construction projects in a Literature review reveals a number of critical attri-
developing country like India. Thus the objectives set butes for different types of projects viz., construction
for the study are given below. projects, research and development projects, defence
projects, etc. It can be seen from Table 1 that most of
these studies have focused on specific success measuring
2. Objectives and methodology parameters, and the critical success factors derived are
either applicable to a particular industry or contract
The objectives of the study set are as follows: type. It can be also observed from Table 1 that almost
all the studies have been carried out in the developed
 To identify the relative importance of success and countriesÕ context and their findings may not be relevant
failure attributes in Indian construction projects as to the developing countries. However, taking lead from
perceived by the professionals including owners and above studies and through personal interviews with con-
contractors of the construction industry. struction professionals of India, 55 project success/pro-
 To understand the latent properties of these success ject failure attributes were identified. Though the list
and failure attributes. of 55 attributes may not be called exhaustive due to
the vast magnitude and fragmented nature of construc-
The study is however restricted to construction stage tion industry, the list covered attributes pertaining to a
of projects and the study required a huge amount of large variety of construction projects. A survey was then
documented data on completed projects. Due to non- framed to get respondentsÕ views on impact of these
availability of documented data of completed projects attributes on project outcome (success or failure). The
for study in India, a questionnaire survey approach is performance evaluation parameters considered to mea-
considered to establish the impact of various attributes sure the impacts of these attributes were restricted to
on project performance. Attributes affecting project suc- ÔscheduleÕ, ÔcostÕ, ÔqualityÕ and Ôoccurrence of disputeÕ
cess and failure are listed out through literature survey to limit the size of the questionnaire. However impact
and interviews with select professionals from construc- of these attributes on ÔcostÕ parameter is only discussed
tion industry. Pilot survey is then undertaken and neces- in this paper and only the relevant portion of the ques-
sary modifications in the questionnaire are carried out. tionnaire is given in Appendix A. A five-point scale was
Questions are framed to ascertain the impact of these used to measure the attributesÕ influence on cost perfor-
attributes individually on project performance evaluat- mance. In this scale, 1 represents Ôadversely affecting the
ing parameters such as completion schedule, project cost of the projectÕ, 2 represents Ôsignificantly affecting
cost, project quality and project disputes. the costÕ, 3 represents Ômarginally affecting the costÕ, 4
represents Ôno effect on the costÕ, and 5 represents Ôhelps
in saving in the cost of the projectÕ.
3. Literature review A total of 450 questionnaires were mailed to top In-
dian construction industry professionals covering about
ÔProject success is repeatable and it is possible to find 50 top and medium size organizations, selected randomly
certain success attributesÕ has been the genesis of many re- from across the country. A total of 112 completed re-
search studies in this area since 1960s. These studies range sponses were received giving a response rate of 25%.
from theoretical work based on experience of researcher The responses are stored and analysed using SPSS soft-
on one end to structured research work on the other ware. The respondents included the owners, contractors
end. Some of the past researchers have adopted question- and consultants. Since the consultants were employed by
naire survey approach for data collection and employed the owners to take care of the ownersÕ interests, and that
mathematical tools like AHP, Neural networks and sta- the consultantsÕ responses were not significantly different
tistical techniques like factor analysis and multivariate from that of owners, they were merged with ownersÕ re-
regression, etc., for analysis and drawing conclusions. sponses. The next step was to rank the attributes in the
But these researchers seem to use their own performance order of their criticality. From the five point scale used
criteria for measuring success and not much commonality in the questionnaire, the mean scores of responses (l)
appears among various performance criteria adopted by for different project attributes are interpreted in the man-
these researchers. The criteria included the conventional ner as given in Table 2. Depending upon the mean scores
ones like schedule, cost, quality to recent criteria like of responses for various attributes, the attributes were
perceived performance, client satisfaction, etc. Summa- then segregated in three groups: the first group (with
ries of important conclusions of previous studies [1–13] l P 4.5) that showed positive contribution; the second
are given in Table 1 to provide an overview. group (with 4.5 < l < 3.5) which was neutral and passive
K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295 285

Table 1
Summary of studies in the field of project success/failure factors
Author Summary of the past works
Rubin and Seeling [1] Authors assess the impact of project managerÕs experience on the projectÕs success/failure. They use technical
performance of the project as a measure of success and conclude the following
(a) Project managerÕs previous experience has minimal impact on the projectÕs performance
(b) Size of the previously managed project does affect the managerÕs performance

Avots [2] This is a theoretical study to understand the reasons for project failure. The author concludes that choice of wrong
project manager, the unplanned project termination, and unsupportive top management are the main reasons of
failure

Sayles and Chandler [3] Authors conclude the following factors as critical for success of a project
Project managerÕs competence, scheduling, control systems and responsibilities, monitoring and feedback and
continuing involvement in the project

Martin [4] Author concludes the following factors as critical for success of a project
Define goals, select project organizational philosophy, general management support, organize and delegate authority,
select project team, allocate sufficient resources, provide for control and information mechanics, require planning and
review

Baker et al. [5] The authors suggest that instead of time, cost and performance as the project success criteria, perceived performance
should be used as the success criteria. They observe the following 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 (vs. social orientation), absence of bureaucracy

Cleland and King [6] Authors identify the following success factors
Project summary, operational concept, top management support, financial support, logistic requirements, facility
support, market intelligence (who is the client), project schedule, executive development and training, manpower and
organization, acquisition, information and communication channels and project review

Locke [7] Author identifies the following success factors


Make project commitments known, project authority from the top, appoint competent project manager, set up
control mechanisms (schedules, etc.), progress meetings

Hughes [8] The author identifies that the projects fail because of improper basic managerial principles, such as the improper focus
of the management system, by rewarding the wrong actions, and the lack of communication of goals

Morris and Hough [9] Authors identify the following success factors through a study of eight large and complex projects having great
potential economic impact but poorly managed and generally failed
Project objectives, technical uncertainty innovation, politics, community involvement, schedule duration urgency,
financial contract legal problems and implementation problems

Schultz et al. [10] Authors classify critical success factors in two groups as given below and conclude that these groups affect project
performances at different phases of implementation
(a) The Strategic Group consisting of factors like project mission, top management support and project scheduling
(b) Tactical group consisting of factors like client consultation and personnel selection and training

Pinto and Slevin [11] Continuing the previous work authors evaluate the relative importance of tactical group and strategic group of factors
over the project life cycle. They conclude that when external success measures are employed, planning factors
dominate tactical factors throughout the project life cycle

Chua et al. [12] Budget performance is given the primary importance in the study. Through an application of neural network
approach authors identify the eight important project management attributes associated with achieving successful
budget performance: (1) number of organisational levels between the project manager and craft workers; (2) amount
of detailed design completed ate the start of construction; (3) number of control meetings during the construction
phase; (4) number of budget updates; (5) implementation of a constructability program; (6) team turnover; (7) amount
of money expended on controlling the project; (8) the project managerÕs technical experience
They also claim that their model can be used as a predictive tool to forecast budget performance of a construction
project

Chan et al. [13] They identify a set of project success factors for design and build (D&B) projects and examine the relative importance
of these factors on project outcome. Using factor analysis from the response of 53 participants on 31 variables they
extracted six project success factors. These are project team commitment, contractorÕs competencies, risk and liability
assessment, clientÕs competencies, end-usersÕ needs, and constraints imposed by end-users. Further Project team
commitment, clientÕs competencies, and contractorÕs competencies were found to be important to bring successful
project outcome from multiple regression findings
286 K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295

Table 2
Interpretation of various ranges of mean values of responses pertaining to project attributes
Project performance evaluation parameter Range of mean values
Group 1 Group 2 Group 3
l P 4.5 4.5 < l < 3.5 l 6 3.5
Cost Helps in saving Neither positively contributing nor adversely affecting Adversely affecting

having no significant impact on the project outcome and agement, monitoring and feedback by project team mem-
the third group (with l 6 3.5) indicating negative im- bers positive attitude, and technical capabilities of PM as
pact. A total of 30 attributes emerged in first group indicated by their decreasing RIIÕs. Here the PM (pro-
(l P 4.5), only 3 attributes in group 2 (4.5 < l < 3.5), ject manager) refers to contractorÕs project manager.
and remaining 23 attributes fell in group3 (l 6 3.5). So The owners view (columns 4 and 5 in Table 3) the
it was decided to drop the project attributes of the second coordination ability and rapport of PM with top man-
group (with 4.5 < l < 3.5). agement as the most important attribute (RII = 0.979)
Chan and Kumaraswamy [14] are of the opinion that followed by the monitoring and feedback by team mem-
the mean and standard deviation of each individual bers and monitoring and feedback by PM. Also owners
attribute is not suitable statistics to assess the overall realise the importance of their own timely decision either
rankings because they do not reflect any relationship be- directly or through their engineer as fourth most suc-
tween them and accordingly they have used the Ôrelative cessful attribute.
importance indexÕ (RII) method to determine the rela- The most important attribute in contractorÕs view
tive ranking of the attributes. The RII is evaluated using (columns 6 and 7 in Table 3) is found to be the project
the following expression: managerÕs technical capability (RII = 0.957) followed
P
w by his authority to take financial decision and select key
Relative importance indexðRIIÞ ¼ ; ð1Þ team members, and positive attitude of PM and partici-
AxN
pants and effective monitoring and feedback.
where w is the weight given to each attribute by the
The importance of the attribute monitoring and feed-
respondents and ranges from 1 to 5, A is the highest
back can also be gauged from the fact that almost all the
weight (i.e., 5 in this case), and N is the total number
surveyed companies have their MIS (Management
of respondents.
Information System) in place.The companies do insist
The attributes of the first group (with l P 4.5) were
on getting the feedback from site management at regular
arranged on their descending order of RII values and
interval.
ranked. The highest RII indicates the most critical suc-
The reason of attribute, coordinating ability and rap-
cess attributes with rank 1 and the next indicating the
port of PM with top management being given the impor-
next most critical success attribute with rank 2 and so
tance is due to the fact that most of the times timely help
on. On the other hand, attributes of the third group
from top management in getting the resources or getting
(with l 6 3.5) were arranged in the ascending order of
critical decision can have far reaching implications on
the RII and ranked. The lowest RII indicates the most
cost performance. This is especially true for short dura-
critical failure attribute with rank 1, the next indicating
tion projects where each day of delay can have large det-
the next most critical failure factor 2 and so on. Separate
rimental effect on cost.
lists of the success attributes and the failure attributes
The emergence of positive attitude of PM and project
are given along with their RII and ranks in Tables 3
participants among top five attributes substantiates the
and 4, respectively.
widely held view that many difficult things can be made
simple and workable with a positive attitude. Subse-
5. Success attributes quent to analysis of responses during validation stage
of research findings, it has been observed that the sur-
Using the RII, the rank orders of attributes were ob- veyed companies organise regular training programmes
tained for all responses as well as separately for owner to generate a sense of belongingness and create positive
and contractor responses. The high ranked attributes attitude in their project managers. Project managerÕs
(top 5 in Table 3) that are observed in three categories technical ability getting high rank (in top 5 in all re-
of responses: all reponse, owner, and contractor are dis- sponses and in contractorÕs response) implies the realisa-
cussed below. The all response column (columns 2 and 3 tion of high importance of this activity by organisation.
in Table 3) shows the most important factor to be mon- High technical skill of project manager indicated by
itoring and feedback by PM with RII = 0.958, followed PMÕs academic record is ensured during the selection
by coordinating ability and rapport of PM with top man- process itself in most of the surveyed companies.
K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295 287

Table 3
Critical success attributes of projects (l P 4.5)
Project attributes All response Owner Contractor
RII Rank RII Rank RII Rank
1 Effective monitoring and feedback by PM 0.958 1 0.969 3 0.943 4
2 Coordinating ability and rapport of PM with top management 0.958 2 0.979 1 0.929 7
3 Effective monitoring and feedback by the project team members 0.955 3 0.974 2 0.929 8
4 Positive attitude of PM, and project participants 0.947 4 0.950 6 0.943 3
5 Project managerÕs technical capability 0.938 5 0.925 11 0.957 1
6 Understanding operational difficulties by the owner engineer 0.934 6 0.928 10 0.943 4
thereby taking appropriate decisions
7 Timely decision by the owner or his engineer (reluctance or otherwise) 0.931 7 0.964 4 0.886 23
8 Selection of PM with proven track record at an early stage by top management 0.925 8 0.938 7 0.907 19
9 Authority to take day to day decisions by the PMÕs team at site 0.924 9 0.925 11 0.923 10
10 Scope and nature of work well defined in the tender 0.922 10 0.925 11 0.919 12
11 Monitoring and feedback by top management 0.921 11 0.958 5 0.871 26
12 Understanding of responsibilities by various project participants 0.921 12 0.930 8 0.907 16
13 Leadership quality of PM 0.917 13 0.911 16 0.926 9
14 Top managementÕs enthusiastic support to the project manager (PM) and project team at site 0.916 14 0.918 15 0.914 13
15 Coordinating ability and rapport of PM with his team members and sub-contractor 0.916 15 0.923 14 0.907 16
16 Project managerÕs authority to take financial decision, selecting key team members, etc. 0.910 16 0.882 26 0.950 2
17 Commitment of all parties to the project 0.906 17 0.895 20 0.921 11
18 Coordinating ability and rapport of PM with owner representatives 0.903 18 0.900 17 0.907 16
19 Coordinating ability and rapport of PM with other contractors at site 0.903 19 0.880 27 0.936 6
20 Top managementÕs backing up the plans and identify critical activities 0.902 20 0.900 17 0.904 20
21 Regular budget update 0.899 21 0.887 22 0.914 13
22 Delegating authority to project manager by top management 0.897 22 0.884 24 0.914 13
23 Training the human resources in the skill demanded by the project 0.885 23 0.885 23 0.886 22
24 Ability to delegate authority to various members of his team by PM 0.884 24 0.882 25 0.886 24
25 Construction control meetings 0.882 25 0.875 29 0.893 21
26 Favourable political & economic environment 0.882 26 0.930 8 0.808 30
27 Favourable climatic condition at the site 0.881 27 0.897 19 0.859 27
28 Availability of resources (funds, machinery, material, etc.) 0.879 28 0.880 27 0.879 25
as planned throughout the project duration
29 Monitoring and feedback by client 0.870 29 0.892 21 0.837 29
30 Developing & maintaining a short and informal line of communication among project team 0.853 30 0.850 30 0.857 28

6. Failure attributes owners also tend to accept this fact by placing this attri-
bute among top five critical failure attributes.
Table 4 lists the group 3 attributes having (l 6 3.5), Some of the other failure attributes ranking high in
i.e., attributes causing adverse effect on cost perfor- the list are conflicts between PM and top management,
mance of project. It can be seen from the scale of ques- the project ailments like ignorance and lack of knowledge,
tionnaire, lesser the value of mean value of responses on and indecisiveness.
any attribute, more severe will it be. Hence the rank or- Subsequent to the finding of ranks of all success and
der is decided based on increasing (ascending) values of failure attributes, their ranks under owner and contrac-
RIIÕs of attributes. The table actually lists the failure tor respondents are compared and SpearmanÕs rank cor-
attributes. It can be seen from the table that there is a relation coefficient Rs is found. It is observed that while
clear consensus between the two groups representing there is a strong agreement between owner and contrac-
contractors and owners in the ranking of most critical tor for failure attributes (Rs = 0.910), they seem to differ
failure attribute. They all have rated Poor human re- in success attributes (Rs = 0.271). It means that while
source management and labour strike as the most criti- there is an agreement between the two sets of respon-
cal failure attribute. The next top ranked failure dents about the causes of the failure, there is difference
attributes are negative attitude of PM and project partic- in opinion towards the reasons for the successful cost
ipants (0.329), inadequate project formulation in the performance of the project.
beginning (0.333).
In addition the contractors have also ranked vested
interest of client representative in not getting the project 7. Critical success and failure factors
completed in time as the most critical attribute. The
interviewees narrated a number of projects that faced se- In the present study, factor analysis is performed sep-
vere cost and schedule overrun due to this reason. The arately on group of 30 success attributes and 23 failure
288 K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295

Table 4
Critical failure attributes of projects (l 6 3.5)
Project attributes All response Owner Contractor
RII Rank RII Rank RII Rank
1 Poor human resource management and labour strike 0.309 1 0.295 1 0.329 1
2 Negative attitude of PM, and project participants 0.341 2 0.350 3 0.329 3
3 Inadequate project formulation in the beginning 0.346 3 0.355 4 0.333 4
4 Vested interest of client representative in not getting the project completed in time 0.350 4 0.365 5 0.329 1
5 Conflicts between PM and top management 0.355 5 0.345 2 0.370 8
6 Mismatch in capabilities of client and architect 0.367 6 0.374 6 0.357 7
7 Conflicts between PM and other outside agency such as owner, 0.368 7 0.380 8 0.350 5
sub-contractor or other contractors
8 Reluctance in timely decision by PM 0.376 8 0.390 9 0.356 6
9 Lack of understanding of operating procedure by the PM 0.391 9 0.379 7 0.407 13
10 Conflicts among team members 0.391 10 0.390 10 0.393 11
11 Ignorance of appropriate planning tools and techniques by PM 0.397 11 0.395 11 0.400 12
12 Holding key decisions in abeyance 0.400 12 0.411 13 0.385 10
13 Reluctance in timely decision by top management 0.406 13 0.431 14 0.371 9
14 Harsh climatic condition at the site 0.415 14 0.395 12 0.444 16
15 Hostile political & economic environment 0.430 15 0.445 16 0.408 14
16 Tendency to pass on the blame to others 0.441 16 0.445 16 0.436 15
17 Hostile social environment 0.455 17 0.442 15 0.471 18
18 Project completion date specified but not yet planned by the owner 0.478 18 0.495 18 0.454 17
19 Uniqueness of the project activities requiring high technical know-how 0.559 19 0.589 20 0.515 19
20 Urgency emphasized by the owner while issuing tender 0.588 20 0.575 19 0.608 20
21 Size and value of the project being large 0.672 21 0.630 21 0.733 22
22 Aggressive competition at tender stage 0.724 22 0.774 23 0.652 21
23 Presence of crisis management skill of PM 0.771 23 0.730 22 0.829 23

attributes. Factor analysis is a powerful method of sta- 7.1. Critical success factors
tistical analysis that aims at providing greater insight
of relationship among numerous correlated, but seem- The description of success factors is given in the fol-
ingly unrelated, variables in terms of a relatively few lowing sections.
underlying factor variate [15,16]. Many researchers from
other areas including politics, sociology, economics, hu- 7.1.1. Project managerÕs competence
man–machine systems, accident research, taxonomy, This has four aspects associated with it. The first is
biology, medicine, geology, and construction manage- the inherent traits that the project manager has such
ment have also applied this technique [13,17–19]. Factor as his technical capability, leadership quality, and his
analysis is performed for responses of all respondents as positive attitude. The second aspect is the empowerment
well as separately for owner and contractor responses. of his team through delegation of authority to take day
While the all response set has given some meaningful to day decisions, making his team understand their
interpretations, the variables emerging in various factors responsibilities and generating a sense of commitment
under isolated response sets of contractor and owner in them, developing and maintaining a short and infor-
have been found out to be jumbled and not leading to mal line of communication among his team, and train-
any meaningful interpretation. Hence the analysis and ing the human resources in the skill demanded by the
subsequent discussion is restricted to factor analysis of project. The third aspect is to get empowered himself
all responses. Since the factors extracted using principle though demanding authority to take financial decision,
component analysis are orthogonal and contain a large and selecting key team members, etc., and getting the re-
number of overlapping attributes across various factors quired resources (funds, machinery, material, etc.) as
it is not amenable to understand. So oblique rotation planned throughout the project duration from his higher
using varimax rotation is employed. Altogether seven ups. It is not enough to possess the skills mentioned
success factors are extracted for each group of success above unless the Project manager exerts himself for
attributes and failure attributes. In the case of success the project by getting involved in the project through
attributes group, these factors explain a total of about regular budget update and taking active part in con-
75% of the variance whereas for the failure attributes struction control meetings. All these four characteristics:
group, factors extracted explain about 70% of the vari- inherent or personal traits; empowering team; getting
ance. Details of the critical success factors and critical empowered; and getting involved with the project are
failure factors are presented in Tables 5 and 6, typical characteristics of a competent project manger.
respectively. Several attributes emerging in this factor (Table 5) also
K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295 289

Table 5
Factor profile of project success attributes (critical success factors)
Details of factor and the attributes Factor loading Variance explained
Project managerÕs competence
Authority to take day to day decisions by the PMÕs team at site 0.800 22.151%
Construction control meetings 0.795
Regular budget update 0.795
Availability of resources (funds, machinery, material, etc.) as planned throughout the project duration 0.776
Project managerÕs authority to take financial decision, selecting key team members, etc. 0.749
Understanding of responsibilities by various project participants 0.740
Project managerÕs technical capability 0.701
Commitment of all parties to the project 0.665
Developing and maintaining a short and informal line of communication among project team 0.644
Training the human resources in the skill demanded by the project 0.632
Leadership quality of PM 0.574
Positive attitude of PM, and project participants 0.408
Top managementÕs support
Understanding operational difficulties by the owner engineer thereby taking appropriate decisions 0.786 11.410%
Top managementÕs enthusiastic support to the project manager (PM) and project team at site 0.751
Top managementÕs backing up the plans and identify critical activities 0.666
Delegating authority to project manager by top management 0.592
Selection of PM with proven track record at an early stage by top management 0.500
Timely decision by the owner or his engineer (reluctance or otherwise) 0.424
Developing and maintaining a short and informal line of communication among project team 0.407
Project managerÕs coordinating and leadership skilla
Coordinating ability and rapport of PM with other contractors at site 0.880 10.279%
Coordinating ability and rapport of PM with owner representatives 0.780
Training the human resources in the skill demanded by the project 0.515
Leadership quality of PM 0.505
Project managerÕs authority to take financial decision, selecting key team members, etc. 0.453
Monitoring and feedback
Monitoring and feedback by top management 0.761 9.284%
Timely decision by the owner or his engineer (reluctance or otherwise) 0.752
Selection of PM with proven track record at an early stage by top management 0.686
Favourable political & economic environment 0.672
Monitoring and feedback by client 0.576
Coordination between project participants
Coordinating ability and rapport of PM with top management 0.851 8.257%
Coordinating ability and rapport of PM with his team members and sub-contractor 0.678
Effective monitoring and feedback by PM 0.451
Committed project participants
Ability to delegate authority to various members of his team by PM 0.639 8.128%
Positive attitude of PM, and project participants 0.607
Effective monitoring and feedback by the project team members 0.572
Effective monitoring and feedback by PM 0.471
Commitment of all parties to the project 0.432
Owners competence and favourable climatic condition
Favourable climatic condition at the site 0.832 6.162%
Monitoring and feedback by client 0.655
Scope and nature of work well defined in the tender 0.580
a
Taken with the first factor for subsequent discussion.

address these characteristics only hence the name of the taking appropriate decisions, and timely decision by
factor. the owner or his engineer. From the contractorsÕ side
the attributes are: top managementÕs enthusiastic sup-
7.1.2. Top management support port to the project manager (PM) and project team at
The top management means both the contractorsÕ site, top managementÕs backing up the plans and iden-
and ownersÕ top management here. From the ownersÕ tify critical activities, delegating authority to project
side the attributes under this factor are: understanding manager by top management, selection of PM with pro-
operational difficulties by the owner engineer thereby ven track record at an early stage by top management,
290 K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295

Table 6
Factor profile of project failure attributes (critical failure factors)
Details of factor and the attributes Factor loading Variance explained
Conflict among project participants
Poor human resource management and labour Strike 0.779 19.951%
Mismatch in capabilities of client and architect 0.752
Negative attitude of PM, and project participants 0.720
Vested interest of client representative in not getting the project completed in time 0.694
Project completion date specified but not yet planned by the owner 0.639
Conflicts among team members 0.617
Conflicts between PM and top management 0.595
Conflicts between PM and other outside agency such as owner, sub-contractor or other contractors 0.541
Lack of understanding of operating procedure by the PM 0.486
Tendency to pass on the blame to others 0.470
Reluctance in timely decision by top management 0.443
Ignorance & lack of knowledge
Ignorance of appropriate planning tools and techniques by PM 0.839 10.786%
Reluctance in timely decision by PM 0.746
Lack of understanding of operating procedure by the PM 0.650
Conflicts among team members 0.402
Presence of poor project specific attributes and non existence of cooperation
Inadequate project formulation in the beginning 0.786 9.551%
Conflicts between PM and other outside agency such as owner, sub-contractor or other contractors 0.604
Tendency to pass on the blame to others 0.581
Conflicts between PM and top management 0.35
Holding key decisions in abeyance 0.445
Uniqueness of the project activities requiring high technical know-how 0.428
Hostile socio economic and climatic condition
Hostile political & economic environment 0.894 8.251%
Hostile social environment 0.591
Harsh climatic condition at the site 0.440
Reluctance in timely decision
Reluctance in timely decision by top management 0.704 8.1765%
Size and value of the project being large 0.631
Presence of crisis management skill of PM 0.630
Aggressive competition at tender stage
Aggressive competition at tender stage 0.824 6.672%
Harsh climatic condition at the site 0.420
Holding key decisions in abeyance 0.540
Short bid preparation time
Urgency emphasized by the owner while issuing tender 0.783 5.650%

developing and maintaining a short and informal line of 7.1.4. Monitoring and feedback
communication among project team. These attributes The attributes under this factor mainly focus on mon-
are seen emerged in the second factor (Table 5) and itoring and feedback by the project participants. The first
hence the name. and last attributes under this factor directly mention this
whereas second and third attribute under this factor
7.1.3. Project managerÕs coordinating and leadership skill indicate action by a watchful owner and top manage-
The third factor shares three common attributes ment, which is possible only when these participants
with the first factor out of five attributes emerged. are monitoring the projects. As can be seen from the sec-
Although the first two attributes (Table 5) predomi- tion on literature review (Table 1), monitoring and feed-
nantly describe the coordinating and leadership skill back is given importance by most of the studies for the
of Project manager, they cannot be taken as different successful outcome of a project and identified as key fac-
from the first factor which covers the overall aspects tor responsible for success of many projects. This factor
of project managerÕs traits or competence. Hence this explains a variance of 9.28%.
factor along with the first factor can be said to explain
the common latent property and together explain 7.1.5. Coordination between project participants
33.43% variance (22.151% from factor 1 and 10.279% The high loading attributes here are coordinating
from factor 3). ability and rapport of PM with top management, team
K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295 291

members, and subcontractors. Effective monitoring and are: ignorance of appropriate planning tools and tech-
feedback by PM also makes it in this factor. These attri- niques by PM; reluctance in timely decision by PM; lack
butes mainly point toward the interaction or personal of understanding of operating procedure by the PM;
rapport with the participants. Often personal rapport and conflicts among team members. This factor is in line
with different project participant can save lot of cost. with one of the established facts in literature and the
Individual rapport can lead to each other providing findings of this study given in previous section. While
helping hand and thereby sometimes reducing the neces- a competent PM becomes responsible for success of
sary paper work or action and paper work, going simul- the project, ignorance and lack of knowledge of PM
taneously thereby reducing considerable time and hence can cause failure as seen from this factor. Contracting
cost finally. organisations are well advised not to compromise on
the competence of project manager. The top manage-
7.1.6. Committed project participants ment can devise means to supplement the knowledge
The positive attitude as well as monitoring and feed- needs of project participants by providing training at
back by project manager and the participants show the regular intervals.
commitment. Project manager also shows his commit-
ment by delegating the authority to other members of 7.2.3. Presence of poor project specific attributes and non
the team and not sticking with all the powers granted existence of cooperation
to him by top management. This way PM ensures This factor points to two broad categories of attri-
commitment. butes. The first category has project specific attributes
viz. Inadequate project formulation in the beginning;
7.1.7. OwnerÕs competence and favourable climatic uniqueness of the project activities requiring high techni-
condition cal know-how; holding key decisions in abeyance and
This factor explains the lowest variance (6.16%) the other category has attributes related to non existence
among all the factors through two broad aspects: own- of cooperation among project participants in the form of
erÕs competence and climatic conditions. A competent conflicts and passing blame. Accordingly the name of
owner would have his scope of work well outlined and the factor has been suggested. The factor accounts for
presented to the contractor and he would closely moni- 9.55% variance explanation.
tor his project regarding its progress, budget, quality,
and other aspects. Providing favourable climatic condi- 7.2.4. Hostile socio economic and climatic condition
tion is beyond the control of owner or contractor until This factor affects the cost performance adversely in
one is given the choice to select his project location. the form of frequent stoppage of work, labour unrest,
As this factor explains two diverse aspects, the name and reduced productivity. Respondents have narrated
of this factor has been kept as ownerÕs competence many projects like the famous Enron power project (In-
and favourable climatic condition. OwnerÕs competence dia) and other projects where political views against the
has been recognised as the most important factor for project have led either to inflate the schedule/cost man-
Design and Build (D&B) Projects [13]. ifold or has led to shelving of the project itself. Respon-
dents also mention the current status of Tehri dam
7.2. Critical failure factors project and Sardar Sarovar Project (India), which have
also suffered on account of opposition by a section of
The seven factors generated from the studies are de- people resulting into severe cost and time overrun. These
scribed below. two cases are internationally known for hostile socio
economic conditions.
7.2.1. Conflict among project participants
As can be seen from Table 6 this factor explains 7.2.5. Reluctance in timely decision
19.95% of variance, the highest of all factors and this The name of this factor is evident, as it has been di-
contains eleven attributes with high factor loadings rectly taken from the only attribute under this factor
(P0.4). The attributes under this factor mainly explain that has positive factor loading. No meanings could be
either the difference of opinion or lack of coherence in assigned to parameters with negative factor loading
some way barring one or two attributes. The top man- nor could this factor be clubbed with any other failure
agement must devise suitable means to avoid conflict factors explained in this section. This is an important
among participants. and evident factor, which are generally talked by profes-
sionals based on their experience.
7.2.2. Ignorance and lack of knowledge of project
manager 7.2.6. Aggressive competition at tender stage
This factor accounts for 10.78% of variances ex- Although aggressive competition at the tender stage
plained. The attributes having high loading in this factor should enhance the chances for improving the cost
292 K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295

performance of the project however it is not true in prac- formance of a project that is influenced by various attri-
tice. Since most of the times such projects land up in dis- butes, findings on other project performances are not
putes arising out of petty things and claims/ discussed.
counterclaims extend the duration of the project result- A total of 90 responses are received as against 300
ing into large cost overrun. This is why probably respon- questionnaires sent to randomly selected professionals
dents rate this as failure factor rather than a success from top contracting organisations of the country. The
factor. mean score of cost performance is found to be 8.011,
which indicates that respondents have chosen only those
7.2.7. Short bid preparation time projects that have fared well on cost account. The rea-
The project duration generally includes the time from son respondents are given the choice of self-selection
conception/approval stage till execution and handing of projects is due to lack of availability of the docu-
over. In order to gain time for execution or unforeseen mented data on performance of Indian construction
events, owners or their representatives tend to squeeze projects. It is also recognized that there could be bias
the bid preparation time itself. In an attempt to get in the self-selection of the choice project by the respon-
the job, contractors are unable to force the owners to dents as many of them have chosen to share their suc-
provide a reasonable time to quote for the project. Ide- cessful experiences only. Lim and Ling [20] point out
ally reasonable time should be allowed for proper site the leniency bias in self-selection while Somers and Birn-
investigation, and collection of relevant details required baum [21] assert that self-selection is generally accurate.
for estimation purpose, etc. The short bid preparation To find the most important factor among the critical
time leads to a number of errors/omissions on contrac- success and failure factors stepwise regression technique
torÕs part which they try to settle later through claims. has been used with the factors as causal variables and
This raises disputes and finally the project lands up with the cost performance as the dependent variable. The
schedule and cost overruns. This factor with one attri- regression results are summarized in Table 7. The regres-
bute alone explains a variance of 5.65%. sion analysis results are generally used helps to develop
predicting or forecasting models provided the R2 value is
reasonably high and the model helps in assessing the or-
8. Most critical factor der of importance of each of the criterion variables. In
the present case since the R2 value is not too high, the
The factor analysis discussed in the previous sections relationship obtained from the regression equations
has only grouped the like attributes in various factors are not being used to develop a predicting model but re-
depending upon the level of correlation among them. stricted to ascertain the most important factor through
It does not indicate as to which factor is most influential the b coefficient. It can be seen from the Table 7 that
in the success or failure of the projects. Accordingly the Ôcoordination between project participantsÕ is the most
next objective had been to identify the most important important factor that has maximum influence in success-
among these factors. As explained earlier due to non- ful cost performance. The research concludes that
availability of documented data for study, a need to take although other factors obtained from the study are also
up second stage questionnaire was felt. This question- important, the major contribution comes from coordi-
naire was aimed to get responses on the influence of var- nation. Similar conclusion has also been drawn by
ious factors on the actual outcome of the project. Thus Rad [22] on the case study of construction of a nuclear
using the above success and failure factors as influencing power plant. It can be seen that with proper coordina-
variables, questions were developed to know their actual tion among project participants many avenues of cost
impact on 5, . . . ,0, . . . ,+5 (11 point scale, with 5 indi- savings are opened up. Respondents, in the open-ended
cating most negative effect and +5 indicating most posi- question of the questionnaire also point out that lack of
tive effect) on each of the project performance criteria coordination among participants results in the duplicity
such as schedule, cost, quality, and no-dispute. The of work and resources are also underutilized resulting
respondents are however asked to select only one project into wasteful expenditures.
of their choice where they have in-depth knowledge of While the technical skills and some human skills can
the particular project and base all their responses on be improved by designing the suitable course content at
that project. This project is named as Choice project undergraduate and post graduate levels, training to im-
of the respondent. The respondents are also asked to prove other skills like proper interaction and coordina-
rate the actual achievement of project performance in tion may be difficult to impart in the college level
terms of schedule, cost, quality, and no-dispute in the when one does not have adequate exposure of project
choice project in a scale of 1–10 where 1 represents work. Hence such training should be taken up at work-
highly failure with minimum score and 10 represents ing level. Having regular meetings among the project
most successful with maximum score. Since the scope participants and developing a rapport among themselves
of this paper is restricted only to discussion on cost per- can also improve these skills. With the increasing project
K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295 293

Table 7
Summary of stepwise regression results
Unstandardized Standardized coefficients t a R2
coefficients
B Standard error b
Constant 6.372 0.380 16.773 0.000 0.210
Coordination between project participants 0.463 0.100 0.459 4.616 0.000

size and increase in number of project participants this tence and favourable climatic condition are the seven
particular factor becomes all the more important. critical success factors. Similarly critical failure factors
extracted are: conflict among project participants; igno-
rance and lack of knowledge; indecisiveness; hostile so-
9. Summary and conclusions cio economic and climatic condition; reluctance in
timely decision; aggressive competition at tender stage;
Questionnaire survey on an extensive project attri- short bid preparation time.
butes that affect the cost performance of project has re- Identification of critical success as well as failure
vealed the important success and failure attributes. The attributes and factors by this study also leads one to rea-
important success attributes are: effective monitoring lise that it is not sufficient to only maximise the results of
and feedback by the project manager and project team the critical success factors but it is also necessary to min-
members; coordinating ability and rapport of PM with imise the negative impact of failure factors.
top management; positive attitude of PM, and project The most important factor among all success and
participants; and Project managerÕs technical capability. failure factors turns out to be Ôcoordination among pro-
The important failure attributes are poor human resource ject participantsÕ which is obtained from the results of
management and labour strike; negative attitude of PM regression analysis. Skills like proper interaction and
and project participants; inadequate project formulation coordination need to be taken up through suitable train-
in the beginning; vested interest of client representative in ing programmes of project participants. Having regular
not getting the project completed in time; and conflicts meetings among the project participants and developing
between PM and top management. There is high agree- a rapport among themselves can also improve these
ment in the ranking of critical failure attributes by the skills. With the increasing project size and increase in
two groups of respondents viz. contractors and owners. number of project participants this particular factor be-
Factor analysis of responses on the project attributes comes all the more important.
has extracted critical success and failure factors. Project As can be seen the success factors obtained from the
managerÕs competence; top management support; pro- present analyses are consistent with the findings in the
ject managerÕs coordinating and leadership skill; top context of developed countries, a summary of which is
management and owner involvement in the project; presented in Table 1. Thus the study concludes that
interaction between project participants, monitoring the critical success factor remains the same irrespective
and feedback by project participants; owners compe- of geographical boundaries.

Appendix A. Questionnaire on project attributes

Listed below are some of the attributes responsible for advantages/hindrances to project success; please indicate the
effects of these attributes on various project success evaluation criteria given alongside the attributes
S. No. Project success attributes Effect on project cost
1 Size and value of the project being large 1 2 3 4 5
2 Scope and nature of work well defined in the tender 1 2 3 4 5
3 Aggressive competition at tender stage 1 2 3 4 5
4 Urgency emphasized by the owner while issuing tender 1 2 3 4 5
5 Inadequate project formulation in the beginning 1 2 3 4 5
6 Uniqueness of the project activities requiring high technical know-how 1 2 3 4 5
7 Favourable political & economic environment 1 2 3 4 5
8 Hostile political & economic environment 1 2 3 4 5
9 Hostile social environment 1 2 3 4 5
10 Favourable social environment 1 2 3 4 5
11 Harsh climatic condition at the site 1 2 3 4 5
(continued on next page)
294 K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295

Appendix A (continued)
S. No. Project success attributes Effect on project cost
12 Favourable climatic condition at the site 1 2 3 4 5
13 Project completion date specified but not yet planned by the owner 1 2 3 4 5
14 Monitoring and feedback by client 1 2 3 4
15 Timely decision by the owner or his engineer (reluctance or otherwise) 1 2 3 4 5
16 Understanding operational difficulties by the owner engineer thereby taking 1 2 3 4 5
appropriate decisions
17 Top managementÕs enthusiastic support to the project manager (PM) and project 1 2 3 4 5
team at site
18 Top managementÕs backing up the plans and identify critical activities 1 2 3 4 5
19 Selection of PM with proven track record at an early stage by top management 1 2 3 4 5
20 Delegating authority to project manager by top management 1 2 3 4 5
21 Monitoring and feedback by top management 1 2 3 4 5
22 Reluctance in timely decision by top management 1 2 3 4 5
23 Effective monitoring and feedback by PM 1 2 3 4 5
24 Effective monitoring and feedback by the project team members 1 2 3 4 5
25 Lack of understanding of operating procedure by the PM 1 2 3 4 5
26 Ignorance of appropriate planning tools and techniques by PM 1 2 3 4 5
27 Reluctance in timely decision by PM 1 2 3 4 5
28 Ability to delegate authority to various members of his team by PM 1 2 3 4 5
29 Coordinating ability and rapport of PM with his team members and sub-contractor 1 2 3 4 5
30 Coordinating ability and rapport of PM with top management 1 2 3 4 5
31 Coordinating ability and rapport of PM with owner representatives 1 2 3 4 5
32 Coordinating ability and rapport of PM with other contractors at site 1 2 3 4 5
33 Leadership quality of PM 1 2 3 4 5
34 Project managerÕs authority to take financial decision, selecting key team members, 1 2 3 4 5
etc.
35 Project managerÕs technical capability 1 2 3 4 5
36 Construction control meetings 1 2 3 4 5
37 Regular budget update 1 2 3 4 5
38 Commitment of all parties to the project 1 2 3 4 5
39 Understanding of responsibilities by various project participants 1 2 3 4 5
40 Authority to take day to day decisions by the PMÕs team at site 1 2 3 4 5
41 Conflicts among team members 1 2 3 4 5
42 Conflicts between PM and top management 1 2 3 4 5
43 Conflicts between PM and other outside agency such as owner, sub-contractor or 1 2 3 4 5
other contractors
44 Tendency to pass on the blame to others 1 2 3 4 5
45 Availability of resources (funds, machinery, material, etc.) as planned throughout 1 2 3 4 5
the project duration
46 Developing and maintaining a short and informal line of communication among 1 2 3 4 5
project team
47 Poor human resource management and labour strike 1 2 3 4 5
48 Presence of crisis management skill of PM 1 2 3 4 5
49 Vested interest of client representative in not getting the project completed in time 1 2 3 4 5
50 Training the human resources in the skill demanded by the project 1 2 3 4 5
51 Mismatch in capabilities of client and architect 1 2 3 4 5
52 The capability of project participants to market the end product to the intended 1 2 3 4 5
users
53 Positive attitude of PM, and project participants 1 2 3 4 5
54 Negative attitude of PM, and project participants 1 2 3 4 5
55 Holding key decisions in abeyance 1 2 3 4 5
1, Adversely affect; 2, significantly affect; 3, marginally affect; 4, no effect; 5, helps in saving.
K.C. Iyer, K.N. Jha / International Journal of Project Management 23 (2005) 283–295 295

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