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6:

Project Management Evaluation

Learning outcomes from this unit

At the end of this unit you should be able to fully appreciate the development of the project management discipline and understand better why it has evolved the way that it has.

You should understand that project management is a mature discipline and that it is one that has been applied successfully in many industries across a wide range of project types, however, you should understand that in the case of UK construction and construction generally, the discipline is failing to deliver the outcomes that can be reasonably accepted of it by clients.

At the end of this unit you will not be able to answer categorically why PM appears to fail in this context, however, you should be able to formulate justifiable hypotheses for why PM may not be delivering in construction as successfully as it ought and you should be aware of what may be missing from the practice of PM in the field that may be contributing towards this failure.

At the end of this unit you should be fully able to debate these issues.

Recommended reading for Unit 6

Morris, P W G. The Management of Projects, Thomas Telford Ltd. 1994, ISBN: 0 7277 1693 X

6.1

Summary

Project management as a discipline can now be considered mature. Its origins lie with the Manhatten project in the 1940’s which had the aim of delivering an atomic weapon. It was recognised that the conventional management organisation structures could not be expected to deliver this project and the defined ‘performance’ outcomes successfully within the available time. From these beginnings the project management profession and the tools and techniques embodied therein have taken hold in a wide range of industries from biotechnology to aviation and an extensive body of knowledge has developed to support the theoretical advancement of the subject and its practical implementation.

The first use of project management practices in construction came by way of Du Pont Engineering in the USA in the mid- 1950’s. While other US organisations, most notably the US Navy were continuing the development of early project management tools, Du Pont were looking to find a method to predict the optimum time in which construction projects could be delivered. This led to the development of an early form of the Critical Path Method (CPM). At roughly the same time the Project Evaluation and Review Technique (PERT) was developed by the US Navy within the Polaris Missile programme.

Project management thus has two main intentions. First to address the need for new management structures to organise individuals and contractors towards the delivery of a specific project rather than towards the

conventional achievement of an organisations profit

the matrix organisational structure. Second, project management addresses

the need for operational tools to quantify, control and deliver various specific project tasks. You have studied a number of these tools and systems in some detail in the previous two project management modules. These components, strategic organisational design and systems management tools form the two key foundation stones of contemporary project management. To be effective, project management must incorporate both organisational design (strategic management) and systems management (operational project management) techniques.

This is the origin of

Despite project management’s emergence as a major discipline, both in construction and as a whole, and despite all the tools and systems developed within it to allow successful project delivery, the record of project management performance is actually dismal.

Morris undertook a study in the early 1980’s in which he examined 1449 projects. Of these, only 12 were completed below or within budget. He repeated this study some time later with 3000 projects and obtained similar results (Morris 1994). More recently a study undertaken by the World Bank demonstrated that 90% of all construction projects on a world-wide basis encountered significant time or cost overruns (World Bank 1987).

This is not encouraging for a discipline that makes extensive use of systems and tools that are designed to permit the successful delivery of project outcomes with specific emphasis upon time and cost delivery.

6.2

Introduction

For the large, knowledgeable construction client, the ability of the construction industry, and in particular, the ability of the consultant project manager to deliver capital building projects in accordance with defined objectives specified in relation to time, cost and quality, is viewed with increasing uncertainty.

Mounting evidence tends to suggest that the client frequently acquires an asset that is compromised in terms of its ability to contribute to their core business function either because its capital cost is greater than planned or it is delivered behind schedule or because it fails to fully meet the performance criteria which were specified at project initiation.

Clearly, the procurement phase of a new capital building asset represents only a relatively small proportion of the total life cycle of that asset, however, the ability of that asset to fully and successfully realise a clients core business activities over its complete life cycle can be significantly influenced by the success or failure of that relatively short procurement process. Since project management, whether internal or external, attaches additional costs to projects there is a need, given the perception that project delivery remains highly problematic, to understand what value is added to the building procurement process by the application of the project management techniques that have been presented in the previous modules.

This is a complex area of study because a plethora of variables are known to significantly influence the propensity for successful construction project outcomes, not least the clients own subjectivity. Project management techniques have the capability of influencing a large number of these variables if the techniques are properly implemented, however, many variables have little or nothing to do with the project management techniques regardless of whether these are implemented extremely well or extremely badly. Therefore, to achieve our aim to understand whether or not project management techniques as presently implemented in construction are effective, we must cover much ground.

We begin by investigating the origins of the project management profession and the various performance attributes that can be appraised in deciding whether or not a project has been delivered successfully. This is necessary to gain an understanding the reasonable expectations that we (and clients) can make of project management. Frequently clients may deem something to have no added value despite the fact that the item in question could not be reasonably be expected to deliver what was asked. Therefore, the material

presented in this unit will be a useful starting point to establish evaluation parameters and it is prerequisite to our study of project management effectiveness.

6.3 What is PM?

The contemporary building project presents a complex set of highly differentiated skills, tasks and technologies which are both specialised and interdependent. These skills, tasks and technologies must be co-ordinated, controlled and integrated in such a way as to realise what is typically an uncertain product successfully in an environment which rarely remains stable throughout the duration of the project. Realising a building project successfully, from a management perspective, is generally accepted to relate to ensuring that the project is delivered in accordance with its agreed objectives, typically those which concern time, cost and quality [Morris, P W; 1994]. There are other important criteria against which project success can be measured [Thomas, R H; 1988].

For immediate discussion we will assume that time, cost and quality are the most important project attributes that project management must deliver (we will consider the validity of this assumption shortly). If this is the case then the primary responsibility of management in the modern building project must be to ensure that the mobilisation, integration and utilisation of the resources required to execute the project are organised in the most appropriate manner such that the project fully satisfies the specified and agreed objectives with respect to time, cost and quality. In the simplest analysis this is all project management is concerned with.

Therefore, modern building project management has two main functions. First, it is concerned with the establishment of an appropriate organisational structure which allows a project to be managed by its objectives with respect to its technology, its contributors and the environment in which it takes place [Walker, A; 1988][Bennett, J; 1991][Morris, P W; 1994]. This organisational structure must allow for the integration of a large number of highly differentiated contributors. Moreover, it must allow contributors the ability to meet their own individual needs but must also emphasise that the delivery of the project’s objectives is their common purpose. Once the project organisation is established project management can address its second main function. This is concerned with the identification of the most appropriate project objectives having taken due cognisance of the project’s intended purpose, its client and its environment [Bennett, J; 1991]. Within this second function lies the need for planning tools and systems to control and monitor these objectives in order that they are successfully delivered.

These functions lie at the heart of the project management profession. They are its raison d’etre. All of the material that has previously been presented to you in past project management modules relates directly to these functions at some level.

6.4

Organisational design

Much has been published within general management literature which addresses issues surrounding the development of appropriate organisational structures with respect to products, their technology and their environments.

Considered significant in the management of building projects [Bennett, J; 1992][Morris, P W; 1994] are the contingency theories developed by Woodward [Woodward, J; 1965] and Lawrence and Lorsch [Lawrence and Lorsch; 1967]. Woodward deals with organisational structure in relation to technical complexity whereas Lawrence and Lorsch investigate organisational structure in relation to differing degrees of differentiation and integration. Also relevant is the work of Burns and Stalker [Burns and Stalker; 1961] who examine mechanistic and organic organisational structures with respect to the nature of the product and its environment. Pugh, Hickson et al [Pugh, Hickson et al (‘Aston Group’); 1968] consider technical complexity and company size in relation to the adopted organisational approach. Additionally, Drucker’s work on ‘Management by Objectives’ (MbO) [Drucker, P; 1950] is of relevance to building project management.

Whilst of substantial importance to the management of building projects and mentioned in much project management literature, the principal emphasis of the work cited above relates to achieving the most appropriate organisational structure within the firm, business or private company, with the intention of realising the commercial objectives of that business. The usefulness of these theories is clear when a project is itself is viewed as a business, however, there are added complexities in building project management.

6.5 Project organisation and project management

The specialised and differentiated nature of the modern building project is such that there are few individual businesses which possess all of the skills necessary to complete it. As the degree of specialisation and differentiation increases within the building project, so the number of separate independent businesses contributing in order to complete it increases, ceteris paribus. Each of these contributing businesses has its own organisational structure. Each individual contributor’s organisational structure is designed to achieve their own business’ commercial objectives as opposed to the overall objectives of the project to which it is contributing.

Clearly as all of the contributors will be organised towards profit maximisation, the commercial objectives of the contributing businesses will conflict with the objectives of the project.

Since this is the case, there is a need for the organisational structure that is applied to a building project to secure the priority of the project’s objectives over and above those of the individual, independent businesses which are contributing to it. This is traditionally achieved by way of various contractual mechanisms, many of which you will be familiar with through the study of other modules in the course. However, by themselves, contractual mechanisms will not organise project contributors towards optimum project outcomes. Indeed, a controversial argument suggests that if project managers get the project organisation right, contracts do not require to be used at any point by any party. They can be forgotten and become largely redundant, only needed when something goes wrong as a result of a failure in the project organisation at some level.

Beyond the contractual devices, there is the need to integrate, control and co-ordinate the activities of the separate independent businesses with the intention of motivating them to work together in order that the project’s objectives will be realised whilst simultaneously allowing each individual contributing business to organise itself towards realising its own commercial objectives through participating in the project. This can only be accomplished by successful project organisational design.

The organisational and integration aspect that has been described is a very strong antecedent to the modern building project management discipline, although this was first formally recognised in project based industries other than construction.

The Manhattan project to develop the first atomic bomb (1942- 1945) is now generally accepted as the first project to successfully implement the organisational and integration techniques which are presently typified in modern project management thinking. The approach taken to the management of this project was necessitated by the level of integration required as a result of the inherent technical complexity and the uncertainty surrounding ‘product’ development. Also important was the urgency of achieving completion and the perceived importance of success. A traditional approach to the provision of management to this project was considered inappropriate [Meredith & Mantel; 1988]. The secrecy surrounding this project meant that the methods used to manage it were not widely publicised at that time [Morris, P W; 1994].

Morris argues that later uses of project management practices by the US Air Force Joint Project Offices and the US Navy Special Projects Office (1953- 1954) had as their precursor a paper by Gulick on matrix organisation [Gulick, L; 1937]. Therefore, it is clear that project management’s initial intention was to address the integration and organisational aspects of complex projects which involved a large number of contributors such that the project attained the maximum chance of realising successful outcomes in relation to its objectives.

This was attempted by the appointment of a single person or a team of people who carried full responsibility for the overall organisation and integration of the contributors to the project and who were furnished with the appropriate authority to disregard the conventional vertical management structures of that time in favour of a matrix style of organisation.

Why are we labouring this point? It is because organisational design is absolute within the project management concept. Without this, project management becomes simply nothing more than a planning and monitoring activity. If project management is to be a worthwhile activity, organisational design is perhaps more important than any of the systems or planning tools that are readily recognised to be key components of the discipline.

We will return to the organisational design theme later in the module when we examine the implementation of project management in practice.

6.6 Systems, planning, and control tools

The initial concentration of project management practice upon organisation and integration was followed by an interest in systems management practices which addressed the second principal intention of the modern project management discipline, namely, the need to identify the most appropriate project objectives and subsequently to monitor and control the delivery of those objectives.

Morris defines the early attitude towards systems management thinking in the management of projects as follows:

“specify performance requirements; carefully preplan to prevent future changes; appoint a prime contractor to be responsible for development and delivery”

Morris, P W; 1994 pg. 213

Consequently, the late 1950’s saw those involved in the early project management discipline focus upon the development of specialist tools and techniques designed to control specific project processes. The particular processes examined were those inextricably linked to the identification of appropriate project objectives and those linked to ensuring that those objectives were realised. Initially processes which were related to the objectives of time and cost assumed principal importance. Quality objectives were tackled later.

Over the period 1957- 1958 specialised risk analysis and scheduling tools were developed. The Project Evaluation and Review Technique (PERT) [Raborn; 1959] and Critical Path Management (CPM) [Kelley, J C and Walker, M R; 1959] methods were developed before 1960. Systems management approaches within project management were formally

endorsed by the Anderson Committee in 1959; additionally the first academic paper specifically on the subject of project management was published [Gaddis, P. O;1959]. The 1960’s produced a continued emphasis upon the development of tools and procedures which were intended to ensure that projects could be delivered in accordance with their stated objectives. These tools and procedures included the introduction of Work Breakdown Structures (WBS) [1962]; the Planning, Programming, Budgeting System (PPBS) [1963]; Earned Value Analysis (EVA) [1964]; Quality Assurance (QA); Value Engineering (VE); Technical Data Management (TDM); systems analysis; resource allocation; Integrated Logistic Support (ILS); Graphical Evaluation and Review Technique (GERT). You will be familiar with many (though not all) of these systems and the mechanics of their operation from PM1 and PM2.

The organisation and integration aspect of project management was not completely neglected during this period and this was strengthened by the work of Lawrence and Lorsch (cited earlier) and Galbraith [Galbraith, J, R; 1968]. The late 1960’s and the early 1970’s witnessed practices of project management and academic investigation of the subject increase dramatically, in part driven by the Organisation of Petroleum Exporting Countries (OPEC) crisis of 1973. It is clear that during this time the emphasis of project management was placed upon the utilisation of the tools and techniques of the 1960’s. The importance of the integration and organisational aspects of project management’s implementation was under- estimated during this period [Morris, P W; 1994]. The 1980’s produced a resurgence of interest in the integration and organisational issues whilst the use of practices such as simultaneous engineering, fast build, lean production and Just- in- Time (JIT) became accepted components of project management practice. This theme continued in the 1990’s with attention being focussed on Total Quality Management (TQM), configuration management, concurrent Engineering, scope creep control while risk management and analysis techniques became core project management responsibilities. Figure 1.1 illustrates the development of the project management discipline.

The evolution of the project management discipline, as very briefly related above, reveals that it is a discipline which requires to be implemented at both the strategic level and the operational level.

At the strategic level project management is concerned with the provision of the organisational and integration structures which are appropriate to projects and with the provision of appropriate mechanisms for the overall control of project contributors such that project objectives can be attained.

At the operational level, project management is concerned with the application of a clearly defined body of knowledge which relates specifically to how particular processes common to all projects should be executed and controlled in order to appropriately define the project objectives and subsequently deliver those objectives successfully.

1930’s

1940’s

1950’s

1960’s

1970’s

1980’s

1990’s

1940’s 1950’s 1960’s 1970’s 1980’s 1990’s Figure discipline 6.1: Integration & Organisational

Figure

discipline

6.1:

Integration & Organisational aspects

US Air Corps & Exxon’s Project Engineering and

CoordinatingFunction

Gulick paper on Matrix

Organisation Manhatten P roject (1942-

45)

US Air Force Joint Project

Office Weapons systems project

offices

Navy Special Projects

Navy Special Projects

Office

Lawrence and

Lorsch

Galbraith

Woodward

Burns & Stalker

The

evolution

of

Systems and Tools

Critical Path

Management Programme Evaluation Review Technique

Work Breakdown Structure

Planning Programming

Budgeting System

Earned Value

Analysis

Quality Assurance

Value

Engineering

Technical Data

Management

Configuration

Management

Systems Analysis

Resource Allocation

Integrated Logistic

Support Graphical Evaluation Review Technique

Logistic Support Graphical Evaluation Review Technique Simultaneous Engineering Fast Build Techniques

Simultaneous

Engineering

Fast Build

Techniques

Lean

Production

Just in Time

Total Quality Management

Configuration

Management

Risk Management

Concurrent

the

modern

project

Use in Construction

Tishman Company project manage World Trade Centre in New York

Wood Report formally endorses the use of

management project in construction

New procurement path s such as management contracting are devised but d o notimprove performance

Widespread emergence of construction the consultant projectmanager

CIOB Endorsement

RICS Endorsement

Ibbs Report

Use of consultant p roject managers mandatory on all public sector capital building projects valued in excess of £1 million

management

6.7

The application of project management in the UK

construction industry

In the UK construction industry, project management practices were

implemented unsuccessfully during the 1970’s [Hughes, W P:1990][Morris,

P W: 1994]. It now seems clear that the tools and systems developed to

implement project management at the operational level were applied without a corresponding implementation of practices at the strategic level concerning the integration and organisational aspects of projects. This situation produced a confusion surrounding the use of the term ‘project

management’ in UK construction which remains [Rougvie, A; 1988]. It is possible to implement project management practices at the operational level without necessarily implementing them at the strategic level. The confusion

is centred upon whether or not a project can be ‘project managed’ purely by

the application of the tools and procedures developed at the operational level. In consequence, the early to mid 1980’s saw contractors and various professional practitioners market ‘project management’ as an approach to win contracts, however, it is now reasonably clear that whilst certain of the operational project management tools and processes were implemented, project management at the strategic level could not be properly implemented due to the restrictive nature of the established professional roles already present within the UK construction industry, reflected by the traditional procurement methods adopted [Hughes, W P: 1990].

6.8 The private sector

The UK property boom in the late 1980’s coupled with the increasing recognition of poor performance and inefficiency within the UK construction industry caused major UK client institutions to attempt to implement building project management at the strategic level thereby adding the organisational dimension to the tools and systems at the operational level which were already applied. This was done primarily in an attempt to reduce the time and cost overruns which had become stereotypical of the projects at that time [HMSO: 1993].

As a result the professional project manager emerged as a recognised UK building discipline and was added to an already large team of consultants employed to deliver building projects. In 1988 the Chartered Institute of Building (CIOB) published its interpretation of the building project management function which was described as:-

“The overall planning and coordination of a project from inception to completion aimed at meeting a clients requirements and ensuring completion on time, within cost and to required quality standards.”

[CIOB: 1988: Page 3]

The Royal Institute of Chartered Surveyors (RICS) published their standard conditions for the engagement of project managers some time later in 1992 [RICS, 1992] These also emphasise the duties and responsibilities of the consultant project manager in relation to the coordination of contributors and the delivery of a project’s objectives with respect to time, cost and quality.

6.9 The public sector

In 1985 an investigation was carried out into the efficiency of the UK Government’s capital building project expenditure programme by a central government efficiency unit. This investigation, which was led by Sir Robin Ibbs, concluded that the management of public sector capital building projects should be decentralised and placed within the direct control of individual public sector client organisations and departments [Ibbs, R, 19852]. In practice many of the public sector client organisations in question possessed little or no building project procurement expertise. As a result it was recommended that consultant project managers should be appointed to control all public sector capital building projects which were valued in excess of £1 million. This recommendation was implemented, having the effect that the use of professional project management on all public sector capital building projects valued in excess of £1 million became mandatory as part of HM Treasury policy. This policy had as its primary objective the minimisation of the time and cost overruns frequently encountered on public sector capital building projects, however, expectations were also held with regard to the delivery of quality [SOBD; 1993]. Antecedent to this policy were projects such as the Thames Barrier which was started in 1971 and eventually delivered in 1982 some 3.5 to 4 years late and an estimated £329.3 million over budget [Morris, P W: 1994].

6.10 The present situation

Construction project management can now be considered a mature discipline. The project management discipline in a wider context is internationally recognised across numerous project based industries and it used successfully to manage project delivery in the sectors of its original development such as the military, space exploration, aviation, oil, and the built environment and it is now used by sectors conceived since its original development, most notably in information technology fields.

The complete body of knowledge which relates to project management, which has in part been referred to in the preceding discussion; ie. the planning, scheduling and control tools, the systems theories and the organisational theories (many of which you have studied in detail in the first two project management modules), when applied by professional project managers to the modern complex and differentiated construction project,

should, on an a priori basis, result in the delivery of a completed building which fully meets its defined schedule, budgetary and technical objectives.

However, in practice, the true situation is somewhat uncertain. The value added by project management in the specific context of the UK construction sector is considered dubious and is often viewed with suspicion by the private clients that pay for the services offered (whether the costs are incurred internally for in- house project managers or externally for external consultant project managers).

Moreover, continuous failures in public sector projects have produced almost continuous change. In September 1994 John Major ordered a full enquiry into the management of public sector capital building projects which were then either “seriously late” or “seriously over budget”. Notable examples included the Faslane Trident complex which was reported as being £800 million (72%) over budget and the British Library project in St. Pancras which, 12 years after its initiation, remained without an estimate of its likely final cost [Scotsman; Sept. 1994]. Since that time, Latham and Egan have reported their conclusions on the state of the construction industry in the UK and building procurement and the public sector have once again altered their approach to the provision of the management of project delivery with emphasis upon prime contractors and facilities or investment managers. This is coupled with a sustained move towards shifting the procurement of public facilities to the private sector via Public Private Partnerships (PPP) in an attempt to shift project risks away from public sector organisations where public accountability must remain foremost. This trend, in part, can be attributed to the past performance of project management in this sector. The scenery changes but the key ‘players’ remain unchanged.

The titles and the mechanisms which allow for the implementation of project management change, however, the project management concepts themselves (ie. organisational design and systems control) remain in tact, but questionable in terms of efficacy. We can look to other industries, such as aerospace, and see that project management seems to enjoy success, yet there is a general perception that project management in construction stands out as much for its singular failure to consistently deliver as it does for any benefit.

The construction industry in the UK is presently in the midst of fundamental change in relation to its management processes as a result of 50 years of under-performance. Although it is generally considered that Latham and Egan sparked the current change (Latham, 1994, Egan, 1998), these authors, in many respects, simply reiterated what had previously been said by Emmerson and Banwell (Emmerson, 1962, Banwell, 1963). Latham and Egan’s recommendations have taken hold not because what they said was new or or radical or fundamental, but rather because they represent the Industries leading clientele, because globalisation means that the UK’s relative under- performance can no longer be tolerated and because there

has finally been recognition that construction projects consists of a series of common, repeatable processes; the old argument that construction projects were each individual and unique, from a management perspective, is (at last) quiet. The present situation in UK construction is vastly altered from that when project management processes were first introduced. Management thinking, practices and processes are evolving rapidly. The position of the ‘traditional’ project manager is constantly challenged, project management practices are fast changing and other professional consultants compete to provide project management services. Terminology such as critical path management, contract management, concurrent engineering, value engineering and their counterparts have been replaced by business process mapping, partnering the supply chain, logistics control, prime contracting, public private partnerships amongst others. We will address these new ideas and practices in Unit 5, however, in the meantime we will focus on understanding the effectiveness of project management as applied in the conventional models.

Given the above scenario, we must ask; how effective is project management in construction?, Does it offer any of the benefits we may expect and which are suggested in PM 1 and 2?, What, in fact, should we expect? Can project management deliver in the future or do we need to look to a new method for the management of projects?

The general record of projects in meeting their defined schedule, budgetary and technical objectives suggests generally poor performance over a wide range of building types which have utilised a variety of procurement systems and management strategies [Morris, P W: 1994].

This is the case despite the extensive body of knowledge which exists on the subject of project management referred to in earlier in this unit and in PM1 and PM2.

Clearly, with respect to performance difficulties such as these and the poor record of projects generally in relation to realising, an objective and quantitative evaluation project management’s effectiveness will be of much value. The results of such an evaluation would give us a clear indication of how successful project management is together with a clear indication of the actions that should be followed to allow continuous performance enhancement for those engaged in the techniques of construction and project management. Undertaking such an evaluation and interpreting the results towards improving the future implementation of project management in construction are our aims in this module.

6.11

Does PM work? How do we assess PM

performance?

Before reading further, how do think the effectiveness of project management should be measured?

As mentioned at the start of the unit, up until now we have assumed that time, cost and quality are the key performance attributes that we should use to measure project management’s success or failure. However, there are a number of recognised alternative criteria in appraising building project performance, and there is much debate as to which of these are most appropriate in the evaluation of contemporary building projects [Morris, P W: 1994][Walker, A: 1989]. Therefore, we will now spend time examining the available criteria and establish whether or not time, cost and quality data are the sole attributes that we can use to reasonably judge project management effectiveness.

It is worthwhile noting that the building project performance analysis method adopted significantly effects the scope, limitation, and usefulness of an evaluation that intends to test the relationship between variables such as project management, and building project performance.

The principal difficulty in evaluating the effectiveness of professional project management is that the success or the failure of the approach can only be measured in relation to the success or failure of the delivered project [Walker, A: 1989]. In order to be reliable, objective or quantitative measurements of the success or failure of a building project ie. its performance, must be obtained.

However, the intrinsic nature of building activity, together with the range of characteristics which can be presented by, or expected from a building project, make the quantification of building project performance an intractable task.

Bennett argues that the input: output ratio represents the only practical comprehensive measure of the success or failure of a building project. He suggests that the only practical common measure for all of the outputs and inputs in building projects is money. Therefore, the success or failure of projects is most comprehensively measured in terms of the Value: Cost ratio [Bennett, J: 1992: pg 48]. However, it is also argued that a comprehensive evaluation of building project performance must examine both quantitative and qualitative data which are obtained by analyses of both the building process and the building product; an argument supported by the work of Meredith and Mantel [Meredith and Mantel; 1988].

The exclusive analysis of either wholly quantitative or wholly qualitative data obtained from only the building process, or from only the building product, is unlikely to yield a ubiquitous or true assessment of the overall performance of a building project. This is a view supported by the Building Investigation Centre (BIC) [BIC: 1992], Nahapiet [Nahapiet, 1988], and Walker [Walker, A; 1989].

The BIC argue that a project having realised all of its predicted time and cost estimates (ie. having satisfied the principal expectations which relate to the building process) cannot be viewed to have performed satisfactorily if a high number of user complaints were evident upon occupation of the completed building by its Client organisation. In other words it is argued that it is possible to perform successfully in terms of the building process whilst simultaneously failing in terms of the product.

Therefore if a true evaluation of performance is to be obtained it is necessary, in theory, to combine the quantitative measures of the building process with those of the product, and furthermore to combine these with the qualitative measures of both the process and the product (examples of qualitative performance measures which relate to the process and the product are ‘Quality of work life’ and ‘Aesthetic Quality’ respectively.

There is a strong theoretical argument, therefore, which suggests that, in order to be meaningful, any evaluation of building project performance, having as its purpose the comparison of differing organisational or managerial strategies, must attempt to arrive at a single measure of the project performance outcomes. This measure should incorporate an appraisal of all of the qualitative and quantitative performance criteria which are readily appreciable within the concept of building project performance.

However, despite having acknowledged this theoretical prerequisite, the BIC fail to propose a framework or method which provides for the true measurement of building project performance which they argue is required.

Similarly Nahapiet acknowledges that the evaluation of building project performance must include an examination of qualitative data in addition to the analysis of quantitative data in order to gain a true picture of building project performance. However, again, no attempt is made to arrive at a single measure of performance which embraces both qualitative and quantitative data which relate to both the building process and the building product [Nahapiet, 1988]. Brensen [Brensen, M J. et al, 1987] considers that the evaluation of building project performance requires the input of what he terms soft data (ie. qualitative data) to supplement the traditionally accepted hard building performance data (Brensen applies the term hard data to the quantitative criteria relating to time and cost).

Again, he does not propose a method such that a single measurement of building project performance, which embraces all of the qualitative and quantitative criteria within the performance concept is obtained. Instead, the framework he proposes comprises two separate and wholly independent

evaluations, one based upon quantitative data and the other based upon qualitative data. In Brensen’s rationale, overall or true performance must therefore be assessed via the evaluator’s judgement upon how the two separate evaluation results should be combined.

The difficulty surrounding the combination of qualitative and quantitative data from both process and product in building project performance evaluation and the range of performance criteria which may be included within such an evaluation is extended in studies by Sink [Sink, 1983], [Thomas, R H. et al, 1988] and Maloney [Maloney. et al., 1990].

Sink argues that there are seven building performance criteria, each of which is crucial if an assessment of the overall performance of a building project is to be obtained. Sink’s seven criteria are as follows:-

Criteria

Product/Process

Type

ο Effectiveness

Quantitative

Process

ο Efficiency

Quantitative

Process

ο Productivity

Quantitative

Process

ο Profitability

Quantitative

Process

ο Innovation Process/Product

Qualitative

ο Quality of Work Life

Qualitative

Process

ο Quality of Product

Qualitative/ Quantitative Product

Thomas and Maloney agree with Sink’s analysis. In the discussion forwarded by Sink, Effectiveness is considered to be the degree to which a project succeeds in realising its initial agreed objectives. In this performance dimension quantitative performance data, such as time and cost information, are analysed; the effectiveness being quantified through the expression of the expected result and the actual result as a ratio. Efficiency concerns the measurement of the productive utilisation of machines, equipment and materials. This is expressed as a percentage of total available time and is therefore, again, interested in only the building process. Labour utilisation is excluded from the efficiency criteria as Sink considers that the labour intensive nature of building activity requires that the productive efficiency of labour be examined within the productivity criteria, which is likewise a quantitative, process orientated building performance measure. Profitability represents the expected return or value and the achieved return on the project as a ratio, thus adding a further quantitative, process based measure to the performance evaluation method. However, Sink also recognises the need for qualitative measures related to the building product as well as to the process.

These are reflected in the criteria: Innovation, Quality of Work Life and Quality of Product. Innovation is a qualitative measure which can be used to examine data from both the building process and the building product;

Quality of Work Life addresses the perceptions of those involved in the delivery of the project and is therefore entirely qualitative and process orientated.

Finally, Sink considers the Quality of the Product. Here he analyses the qualitative aspects of product quality, however, it should be noted that certain aspects of the product quality may be evaluated quantitatively (as in the case of the number of user complaints proposed as a measure of product quality by the BIC); this feature of product quality will be discussed and developed further in Unit 2.

Significantly, despite having extensively discussed the individual variables which contribute towards building project performance, neither Sink, Maloney or Thomas propose a method which facilitates the synthesis of the seven partial performance criteria such that a single measure of true project performance is obtained. In Sink’s method a project is appraised discretely in terms of each of the seven partial criteria. Therefore, seven separate performance measurements are made for each project. The interdependencies between these partial measures are not appraised and the overall evaluation of performance remains a value judgement based upon the separate information provided by each of the seven measures.

Oglesby considers that there are four principal performance criteria which require to be measured in order to evaluate ‘on- site’ building project performance [Oglesby, 1989]. These are:-

Criteria

Type

Process/Product

ο Productivity

Quantitative

Process

ο Safety

Qualitative/ Quantitative

Process

ο Timeliness

Quantitative

Process

ο Quality

Qualitative/ Quantitative

Product

Again, this proposition recognises that the analyses of both quantitative and qualitative data which are acquired from both the building process and the product are necessary to appraise building project performance at the site level. However, Oglesby (like BIC, Nahapiet, Brensen, Sink, Thomas and Maloney) does not forward a framework to combine his partial performance criteria such that a single overall assessment of building project performance is obtained.

Examining building project performance from the Clients perspective

Penderson [Penderson,1975] and Walker [Walker, A., 1988] consider that evaluations may be appraised upon investigation of the following partial

measures:-

Criteria

Type

Process/

 

Product

ο Quality:-

(a)

Technical Standards

Quantitative

Product

(b)

Aesthetic Standards

Qualitative

Product

(c)

Functional Standards

Quantitative/ Qualitative Product

ο Price:-

(a)

Capital Cost

Quantitative

Product/

 

Process

(b)

Running Costs

Quantitative

Product

ο Time

Quantitative

Process

Walker suggests that measurements of these may be obtained and subsequently weighted in accordance with the relative importance attached to each by the Client organisation. In this way it is possible to arrive at a single measure of building performance. However, this attaches a subjective dimension to the evaluation which presents validity problems should such an approach be used as a basis to compare alternative building policies or systems as we are trying to do in measuring project management effectiveness.

Alercon Gardenes proposed a predictive building project performance measurement methodology [Alercon Gardenes, F., 1992]. His methodology had as its aim the comparison of differing managerial strategies in terms of the predicted effect that each have upon a combined performance measure. In Gardenes’ approach the combined performance measure is based upon the partial performance measures of schedule, budget, value and productivity. The combined performance measurement is produced by a statistical analysis which requires the client to weight the importance of each partial performance measure and which requires that a set of baseline values for each partial measure be arbitrarily specified. The combined performance measurement is then made by analysis of the sum of the deviations between the models predicted value for each partial measure and the corresponding pre-specified baseline value for the partial measure. Each of the partial measures produces a weighted deviation from a baseline predetermined value for combined performance.

Thus, it is argued, the influence of alternative managerial strategies may be assessed on the basis of the observed variance in the combined performance measure for each strategy (Gardenes assessment of the influence of each strategy is based upon probabilistic inference). It should be noted that the combined performance measure used in this approach is a mathematical prediction which is dependent upon the arbitrary selection of weights and baseline values for each of the partial measures and is therefore open to the same criticisms made of Penderson and Walkers approaches described earlier. Gardenes stresses that the combined performance measure developed in his approach can only act as an aid and does not, by itself, represent an adequate basis for decision making or evaluation.

There is an apparent general recognition, in theory at least, of the need for a comprehensive building project performance evaluation method which appraises both quantitative and qualitative data relevant to the many aspects

of building project performance. However, it is evident that (with the

exception of Alercon- Gardenes) contemporary building project performance evaluation literature focuses upon the almost exclusive examination of partial, single attribute performance criteria in order to evaluate discrete aspects of building project performance as opposed to

evaluating true or complete building project performance.

It is apparent, within project performance evaluation literature, that a pragmatic approach to the evaluation of building project performance is generally acceptable. The theoretical argument concerning the need to conduct a multi- attribute evaluation of building project performance is generally undisputed. Moreover, it is acknowledged that the isolated analysis of partial performance criteria will not produce a true picture of building project performance.

However, the logistical and practical difficulties we encounter in attempting to produce a single measure for building project performance, that embraces

all of the quantitative and qualitative aspects within building projects,

clearly dictate that a realistic, perhaps severely limited approach to building

project performance evaluation should be taken in most cases. Bennett expresses the view that:-

there “

are often good reasons for adopting a less than

comprehensive measure [of performance]

[Bennett, J; 1992; pg 48]

Similarly, Walker clearly indicates his belief that the attempt to arrive at a single multi- attribute measure of building project performance incorporating all of the attributes inherent within building may be inappropriate [Walker, A; 1989; pg 231].

This acknowledgement, whilst greatly simplifying the performance measurement problems expounded above, means that performance evaluations which have as their purpose the objective comparison of differing project execution strategies must be approached diligently. The

literature indicates that building project performance evaluations making use

of single- attribute performance criteria must be carefully planned and

designed in order to ensure that the single attribute criteria which are examined relate specifically to the purpose of the evaluation (Walker, A; 1989, pg 231; Price Waterhouse, 1992).

A thorough examination of the available literature on performance

evaluation reveals that by far the most common performance criteria used in the evaluation of building project performance are those which may be classified within Sink’s definitions of the criteria relating to Productivity

and Efficiency (although the clear distinction that Sink identified between them is not always observed). A large number of studies have been published that focus upon these performance criteria in order to conduct evaluations of the influence of particular variables, approaches or strategies upon building project performance per se.

Therefore, it is clear that the practical measurement of building project performance requires a pragmatic and constrained approach. This is the case despite a clear recognition that, in theory, evaluations of building project performance should examine all of the quantitative and qualitative data which is presented by all of the various aspects of building projects if a true picture of performance is to be obtained. It is apparent that a general method to achieve such a ‘true’ evaluation has not yet been established.

The literature suggests that provided the performance criteria selected are pertinent to the objective of the evaluation, and that the limitations of the use of partial performance measures are clearly stated, then an appraisal of the influence of a particular technique or approach (for example project management) upon building project performance through the examination of partial, single- attribute performance measures, is valid. Therefore, the tasks to be addressed in deciding how to evaluate the influence of a particular technique upon building project performance are; First to determine the perspective of the evaluation together with the intended purpose of the evaluations output, and; second, to identify the particular performance criteria that the particular policy or system has the capacity to influence [Walker, 1989][Price Waterhouse 1992].

Question

Based on what you have read, have you changed your opinion on what should be measured in order to quantify project management effectiveness. If so, what do feel should now be included in an evaluation and do you believe you could determine practical ways of measuring them?

6.12 What are we going to determine PM success

against?

Given the range of criteria available as discussed above, how do we decide which performance criteria we should use to measure success. We must consider this problem from three perspectives as follows:

(a) What does the construction client expect by appointing a project manager.

Project Management can be considered in terms of the utility which it offers the client organisation. Therefore the performance criteria included within the a performance evaluation method must be those which are meaningful to public sector clients. This immediately limits the performance criteria which require to be investigated. Criteria such as safety [Oglesby; 1988] and quality of work life [Sink; 1983][Maloney; 1988][Thomas, R H; 1988] may be disregarded. In contrast, criteria such as time, cost and quality [Walker, A; 1988][Penderson; 1975] (also advocated by BIC, Brensen, Nahapiet, Sink, Maloney, Thomas, Bennett, Morris; refer to earlier citations) assume principal importance. These performance criteria are collectively referred to by the colloquialism ‘the deliverables’ and are cited by Meredith and Mantel to be the prime objectives of project management. The use of time, cost and quality as principal building project performance criteria or indicators, and the importance of their delivery in the modern project management discipline is confirmed by much contemporary literature.

In addition to the deliverables (and directly dependent upon them), since project management services whether internal or external are always transaction costs we must be concerned with the concept of value (the principal performance criteria cited by Bennett; refer back to 1.11) and perhaps more importantly value for money (VFM).

The criteria time, cost and value, broadly speaking, all fall into Sink’s definition of the criteria labelled effectiveness, whilst quality fits into his definition of the Quality of the Product.

More difficulty is encountered in determining whether or not the analysis of Sink’s criteria Efficiency and Productivity is meaningful whilst conducting a building project performance analysis from the clients perspective. These criteria do not in themselves represent project deliverables, in other words they are aspects of building projects which are not usually specified by clients.

Provided that a project is delivered in accordance with its specified time, cost and quality objectives a client will not normally require information pertaining to the efficiency and productivity of the project. However, the project deliverables; time, cost, quality, value and value for money are of course reciprocally interdependent upon efficiency and productivity.

Inefficient and unproductive projects do not represent value for money. Therefore, efficiency and productivity despite not being classed as deliverables, are of importance and meaning to client organisations in the evaluation of building project performance. This is verified by the work of private sector clients such as the British Airports Authority (BAA) Plc [BAA Plc; 1993] and Lynton Plc [Lynton Plc; 1993]. Therefore, to use Sink’s terminology, the literature reviewed reveals that the performance criteria effectiveness, quality of product, efficiency and productivity are those which are of principal importance to client organisations when conducting evaluations of building project performance.

There is increasing demand from building clients for improved project performance specifically in relation to the delivery of time, cost and quality objectives. Forums such as the Construction Productivity Network, set up in 1996 by the Building Research Establishment (BRE), The Business Roundtable and the Construction Industry Research and Information Association (CIRIA), have allowed large clients to express demands concerning what they require from the construction industry. In the case of leading clients, the demand is for building project delivery to be 100% predictable (Matthews, 1997). Their aim is to procure a high quality product at a low cost which will be reliable and which will be delivered on the date that it is required. Clearly, time, cost and quality assume principal importance.

(b) What is the project management discipline equipped to deliver.

Having established the principal performance criteria from the Clients perspective, it is necessary, following the recommendations of Walker [Walker, A; 1989] and Price Waterhouse [1992], to identify which criteria project management has the scope to influence. Thus it is necessary to conduct a review of project management literature in order to determine the duties and responsibilities which the consultant project manager may be expected to discharge.

To a large extent it is clear that the tools, systems and organisational theories which have been developed specifically for the execution of the project management function accurately reflect the duties, responsibilities and expectations which are made of the contemporary building project manager.

Having conducted a thorough review of the available literature, it is clear that, as Meredith and Mantel put it, the prime objectives of project management are to deliver a project on time, within budget and in accordance with its required technical specifications (quality). The requirement to achieve these three goals represents a principal feature of most of the principal publications in the discipline (refer to Walker [Walker; 1989], Morris [Morris, P W; 1994], Lock [Lock, D; 1988], Bennett [Bennett, J; 1988 & 1992] Meredith & Mantel [Meredith and Mantel; 1988], Kerzner [Kerzner, P; 1957], Chartered Institute of Building [CIOB, 1988] and the Royal Institute of Chartered Surveyors [RICS, 1992] amongst others).

The literature repeatedly states that the project managers prime responsibilities, beginning at project inception and continuing until project handover, are to ensure that the project is delivered on time, on cost and in accordance with the specification (for example, refer to the Chartered Institute of Building [CIOB; 1988] and the Royal Institute of Chartered Surveyors’ Standard conditions for the appointment of project managers [RICS; 1992]. It is also clear that these duties and responsibilities have

remained constant and essentially unaltered from the early uses of the project management discipline to the present day.

The processes, tools, systems and organisational designs which are specific to the contemporary project management discipline amply demonstrate the concentration of project management effort upon the realisation of these three criteria. An investigation of these processes, tools, systems and organisational designs clarifies the expectations which may be reasonably held in relation to the influence that project management has when applied within the context of building projects.

Tools used for options appraisal, such as the comparative benefit model, payback analysis, average rate of return, discounted cash flow, internal rate of return, profitability indices, scoring models (including the unweighted 0- 1 factor model, the unweighted factor scoring model, the constrained factor model, Dean and Nishry’s model and goal programming with multiple objectives), risk analyses and general simulation analysis techniques are designed to ensure that a pursued project represents the best available value and value for money to the client organisation and to ensure that it will be a profitable investment.

Budgeting tools and systems such as the work breakdown structure (WBS), the planning and programming budgeting system (PPBS), Resource based cost estimating tools, activity/ task based estimating tools, Gozinto charts, learning curve analyses and risk analysis all have their application in ensuring that costs are properly estimated, planned and subsequently controlled.

Tools and systems designed to schedule tasks and thus to plan and control time include work study analysis, Gozinto charts, Gnatt Charts, the programme evaluation and review technique (PERT), the critical path method (CPM), the graphical evaluation and review technique (GERT) and computer analysis packages such as ‘Microsoft Project’, ‘Microplanner Expert’, ‘Pertmaster’, ‘Primavera’ and ‘SuperProject’ amongst others.

Processes such as interface management (eg. TREND analysis and Linear Responsibility Analysis (LRA)) and knowledge management techniques are designed to ensure that processes, tasks, information and personnel are coordinated and controlled such that the schedule and budget plans are realised. Advanced PERT and CPM procedures facilitate resource levelling and resource optimisation which enable time and cost tradeoffs such that a clients objectives may be realised efficiently and productively.

Finally, processes and concepts such as total quality management (TQM), quality assurance (QA), value engineering (VE), zero defects and configuration management have as their intention the guarantee that product quality will be adequately delivered to the client organisation.

Thus, upon examining the principal contemporary project management tools, systems and processes it is clear that the discipline’s is equipped to

realise value for money projects which are delivered on time, within budget and in accordance with the required product quality.

The resource allocation and analyses features provided by PERT, CPM and the contemporary project management software packages demonstrate project management’s concern in ensuring that resources (including time and money) are utilised in the most efficient and productive manner, however, it is apparent that project management’s concern for these issues is developed from the prime objective that a clients objectives in terms of time, cost and quality should be delivered.

You should note that there is almost perfect correlation between the performance criteria which are important to client and the performance criteria which the project management discipline has the tools, knowledge and thus the scope to influence and control. This correlation is, of course, expected since the contemporary project management discipline was originally developed and utilised by leading client organisations.

Therefore, combining the performance criteria relevant to clients in building project performance evaluation and the performance criteria which project management may be expected to, and has the scope to influence, the evaluation of the influence of project management upon building project performance must focus upon the criteria: time delivery, cost delivery, quality delivery, value for money, efficiency and productivity.

(c) Specific contractual requirements and obligations demanded of professional project managers.

Having determined the relevant performance criteria from both the clients perspective and from the point of view of the performance criteria project management may be expected to influence, it is necessary to consider the contractual conditions that we would normally expect to find between clients and project managers, although we must acknowledge that this only properly applies in the case of external project management arrangements. The situation in the case of internal project managers in terms of what the client (ie. their employer) may expect could be somewhat altered. Normally, the contractual requirements are based upon the standard conditions of engagement issued by the RICS and the Project Manager Diploma Association of the RICS (RICS, 1992).

In short, these conditions broadly stipulate that project managers are responsible for the administration, management and coordination of a project. The project manager should not issue any instruction which would act to materially alter the projects agreed objectives in relation to either time or cost. In addition the project manager has a duty to notify the client of any reason why the agreed objectives in terms of time, cost and quality may not be achieved.

A full disclosure of the contract of engagement for consultant project

managers can be obtained from the Royal Institution of Chartered Surveyors (RICS) and further recommendations are evident from BS6079.

Clearly, once again, these requirements emphasise the project managers duties with respect to the delivery of time, cost and quality. Therefore, an evaluation of the project management effectiveness must be focussed upon building project performance in terms of the delivery of time, cost and quality.

Question

By focussing on time, cost and quality we neglect many other performance attributes that we have discussed, many of which may be considerably influenced by project management. Do you think we are correct to disregard the others in favour of time, cost and quality?

In summary, project management represents a transaction cost for construction clients. If you pay someone you expect something in return and in the case of project management, what is expected in return at the bottom line is 100% predictability in securing the project deliverables and for most clients and most projects the deliverables are almost always defined in terms of time, cost and quality.

So, we have covered much ground in determining what project management

is, how performance and project management success could be measured

and we have considered what the typical project manager can be expected to accomplish. But we still don’t have an answer to whether or not it actually makes a difference.

6.13 Does project management deliver or not?

Sadly, when we consider the criteria, time, cost and quality, and ask this question, the answer is an emphatic NO!

The evidence against the value of project management in construction projects is almost overwhelming!

In 1987 a study carried out by the World Bank determined that 90% of

construction projects were delivered late; In 2000 a survey by the National Audit Office reported that 70% of public construction projects in the UK

were running seriously late or seriously over budget; In the early 1980’s Morris undertook a study of 1449 separate construction projects and found that only 12 were delivered within budget. These studies are not

encouraging for a discipline that we have determined can be measured against its ability to deliver these criteria with 100% predictability. All of the PM tools and processes have the delivery of these goals as their primary aim. The evidence does not stop there! Further studies by Kalantjakos (2001), Schlinchter (2001), Crawford and Pennypacker (2001), Clarke (1999) and Pinto & Mantel (1990) amongst many others, seriously question the ability of PM to successfully deliver project targets in the case of construction projects.

6.14 What if?

What if all of these studies have just looked at the performance of the projects from afar instead of looking at the performance of PM in detail- perhaps the projects had unique circumstances and would have been very much more late or over budget if it had not been for the involvement of the PM. If this were the case then the picture would be positive since the PM process could be seen to be working from the perspective of mitigation.

This is a valid question. In order to get a better handle on the detail, we need to find out how a PM managed project compares with a non-PM managed (traditional) project. Such a study has been undertaken by the author using a causal path model.

The causal path model, shown below, compared PM projects with non PM

projects.

The numbers on the arrows represent the influences between the

variables.

E 1 RK 0.859 0.830 E 3 E 2 0.743 E 6 0.899 TC VA
E 1
RK
0.859
0.830
E 3
E 2
0.743
E 6
0.899
TC
VA
Q E
+0.899
-0.372
-0.500
0.816
E 4
+0.478
PM
PR
T E
+0.648
+0.691
RK
Risk
Technical Complexity
Project Management
Variations to Contract
PR
Procurement
TC
TE
Time Effectiveness
0.865
E 7
PM
QE
Quality Effectiveness
VA

Note that there is no cost variable shown on the model. This is because no statistically significant influence could be found between PM and delivered cost. This in itself is a somewhat damning finding as it seems to suggest that the final delivered cost of a construction project is entirely uninfluenced by the management techniques implemented and instead depends on factors entirely outwith the control of management.

In terms of the rest of the results shown in this model, it is apparent that project managers have no direct influence upon any of the performance variables.

However, project management does seem to reduce the level of risk encountered within building projects. It also appears to be influencing the level of technical complexity within projects (this was measured in relation to programmed activity, specification and repetition). Project management appears to produce a tendency to adopt less traditional contractual forms. Thus, through the variables, TC and PR, project management appears to influence building project performance in an indirect manner despite the lack of evidence for any direct influence.

The increased technical complexity which is associated with project managed projects results in a greater number of variations made to contracts which in turn seems to reduce the effectiveness of quality delivery.

On the other hand, the more advanced contract forms associated with project managed projects act to improve the time performance of projects.

Project management can, therefore, be seen to have indirect influences upon building project performance which are beneficial to the time delivery of projects but which are detrimental to the effective delivery of quality. No influence, either direct or indirect, is evident between project management and cost.

This is particularly important. It is essential that the use of project management can be shown to demonstrate net additionality (or added value) in either or all of the time, cost, quality criteria. Remember project management represents a pure transaction cost. If net additionality cannot be demonstrated then the case for clients using project management services for the management of future projects is severely weakened. This is because value for money cannot be demonstrated.

ο Interpretation of the indirect effect

We see that project management is not observed to have any direct effect upon building project performance and has only an indirect effect upon the performance variables of time and quality, time benefiting at the expense of quality. An assessment of the overall effect of project management upon these variables may be computed as follows:-

ο Effect of PM on TE @ 95% =

(PPR,PM x PTE,PR)

= +0.648 x +0.691

= +0.448

This means that the use of project management improves time performance by +0.448 standard units (remember the data had to be standardised to allow the model to work.

ο Effect of PM on QE @ 95% =

(PTC,PM x PVA,TC x PQE,VA)

= +0.478 x +0.899 x (-0.372)

= -0.1599

This means that the use of project management reduces quality performance by 0.159 standard units.

When the results are converted back from the standardised values to the original scales of measurement, the results indicate that the use of project management improves time delivery by 0.171 or 17.1%.

On the other hand, this improvement in time is balanced by a reduction in quality delivery of 0.122 or 12.2%.

6.15

Where does this leave us?

The analysis undertaken above indicates that project management does not act upon the delivered time, cost and quality outputs in the manner we can reasonably expect nor in the manner that construction clients expect.

The results of the path analysis suggest that project management, in fact, has no direct influence project performance! Instead, the results obtained provide evidence for an indirect relationship between project management and construction project performance. This finding, in itself, is considered significant, however, it is important to note that the indirect relationships identified exist only between project management and the performance criteria of time and quality. No evidence substantiates even an indirect link between project management and performance in terms of cost delivery. Moreover, returning to the indirect relationships, the results obtained from the path analysis suggest that projects managed by project managers realise their time objectives at the expense of quality implying that project managers place greater emphasis upon the successful delivery of time than is the case for the delivery of quality (This perhaps indicates the success of the project management planning and scheduling tools you have studied in PM1 and PM2, but indicates that less value is attached in practice to the strategic tools available to project managers).

The same project has neither a better or worse chance of being delivered in accordance with its agreed budget regardless of the use of PM! Therefore it is clear that project management in practice does not provide or guarantee the benefits which may be expected as a result of its application to construction projects.

It follows that a similar improvement in the time performanceprojects may be realised at a lesser cost to the client by removing fees paid to project managers.

The assessment of whether or not project management adds value must depend to a large extent upon where the priorities in relation to performance are placed by the particular client organisation in question.

In the case of a project which has timeous delivery critical to its success, the expenditure of money on project management does, in fact, add value.

Therefore we can see that ‘net additionality’ with respect to the time component does appear to be present, albeit indirectly. However, we cannot identify any net additionality, direct or indirect, in relation to the cost and quality components.

This must of concern to us as project managers. The cost component is perhaps of most critical importance to the majority of construction clients. The same problem is inevitably demonstrable when considering

a project which has the successful delivery of quality principal amongst its performance objectives.

The path model tells us that there is a problem with project management application in construction projects not simply that there are huge problems with construction which PM is helping to mitigate as we had earlier supposed!!

What is going wrong? From your studies in PM1 and PM2 we know how project management should perform and what it should influence. Yet all of the evidence indicates that project management in practice does not deliver. Before you question the value of project management at a more fundamental level, let us address a crucial point.

None of these studies have identified any evidence that suggests project management theory, in terms of the tools developed or in terms of the recommended working practices you have studied in PM1 and PM2, cannot deliver in practice that which is expected of it. In the absence of evidence that there is a fundamental problem with project management knowledge we must conclude that the problem lies not with project management per se. but with project management implementation in construction. Alternatively, it is possible that the systems and processes which are currently employed by clients in order to integrate project managers within the organisational structures of their projects in some way restricts the ability of the project manager to perform in a manner which approaches ‘Best Practice’.

6.16 Explanation

There are only a limited number of possible explanations for the results

obtained:-

(i)

The contemporary project management discipline does not possess the knowledge or the capability to successfully deliver modern complex construction projects, or;

(ii)

The tools and systems designed to underpin project management, many of which you have studied in PM1 and PM2, are not equal to the task of managing projects, or;

(iii)

There is a general failing to implement project management properly in relation to the recognised requirements that are fundamental within the discipline.

We must consider which of these is most likely to be valid.

6.17

The probable cause of failure

Clearly, the project management profession in the UK construction industry does not consistently deliver the results demanded by contemporary clients.

We need to carefully consider what this means for both the practice of project management and for the management of projects generally. Do the results mean that project management is a flawed concept, do they mean that project management techniques are not sufficient to cope with the demands of managing modern construction projects or, finally, do they mean that there is something seriously wrong in the manner with which they are presently applied in the UK construction industry.

The first question we must address is whether or not project management has some fundamental problem that prevents it from being successful. If this is true we can expect project management to consistently fail when applied to a wide range of projects in a wide range of industries.

We can be reasonably confident that this is not the case. When the track record of project management is examined across a wide range of project based industries, ranging from Aerospace, Computing and Manufacturing we see that the general record of project management has been reasonably good. This was not the case in the late 1960’s to the early 1980’s where

project management in general seemed to perform very poorly in relation to

its ability to deliver complex projects, however, lessons concerning project

management implementation were learned and the present situation is generally good. Sadly, the construction industry has a tendency to lag behind other industries in terms of performance improvements and the lessons learned in other industries are only coming to fruition in

construction now. The Latham and Egan reports testify to this.

With these facts in mind we can be reasonably confident in asserting that project management per se is not fundamentally flawed.

The second question we must consider is whether the tools and systems used to underpin project management are not equal to the task.

A couple of points arise here. First, the nature of technological advance

means that the tools and systems we have available to us today will not be perfect and that we can expect to see improvements in future, particularly in the way of project management information technology systems which are developing at a considerable rate.

Therefore, we can expect that in future, the tools and systems available to us

as project managers will be better and will therefore better enable project

managers to manage projects towards successful outcomes. However, the fact that we know tools and systems will improve does not mean that the tools and systems available at present are not equal to the task if properly used.

Once again we can answer this question by considering other project based industries that use the same tools and systems. Because the recent track record of project management in aerospace, computing and manufacturing is relatively good and because these industries use tools and systems that are equally applicable in construction, we can confidently say that the problem does not lie with the tools and systems themselves.

Therefore, we are left with implementation.

If the tools and systems developed to implement project management at the operational level are applied without a corresponding implementation of practices at the strategic level concerning the integration and organisational aspects of projects then, purely from a theoretical perspective, problems are inevitable.

We can argue that this is the basic problem with project management in the UK construction industry at the present time insofar as the project management function can be and sometimes is viewed as a non- strategic activity whose purpose is to control the delivery of projects. Viewing project management in a non- organisational way means that the project management function is subsumed within the procurement or pre- delivery phase of the total project lifecycle. This is, of course, far removed from the intended nature of the project management discipline with regard to the overall management of projects.

The application of project management at only the operational level would indicate a misunderstanding and consequently a misapplication of project management practice in the context of UK construction.

In other words, the failure described does not condemn the project management discipline in terms of the body of knowledge and tools that have developed therein over a period of some 60 years. Rather, the results question the ability of the UK construction industry to appropriately comprehend and apply the pure project management function in relation to sufficiently empowering one individual or group with an appropriate level of authority to implement that function efficiently. This is of much importance to us if we are to be successful in project delivery in the future.

The ability of project managers to successfully deliver time, cost and technical performance objectives in industries where the product can be argued to be very much more complex than a typical contemporary building give credence to such an assertion (an example would be the aircraft industry). It is apparent that the project manager, in the context of the UK construction industry, is rarely permitted (as a result of institutionalised professional prejudices) to effectively discharge the project management function as this was conceived.

The project management function has become confused in the case of UK construction and the term ‘project manager’ is too frequently associated

with a consultant who is used to monitor the progress of projects using sophisticated packages and tools. We must recognise that no matter how good or sophisticated they may be, project management tools cannot manage projects by themselves. The project managers leadership role is of absolute importance if project management is to be successfully implemented.

Recent thinking suggests that the characteristics of the individual or the team that act as the project manager, particularly, in respect of leadership and political skills is of much greater importance in successful project management than any other single factor. We will investigate this later in this module.

Clearly, if project management is only implemented at an operational level, or if restrictive established professional roles, such as those of the Architect, Quantity Surveyor, or Contractor, interfere with the ability of project managers to take strategic decisions, this single factor may not have the chance to have any bearing on project success.

The integration and organisational responsibilities of the project management function have been neglected in the context of the UK construction industry and too much emphasis has been placed upon the achievement of time and cost targets which are frequently poorly defined and which in some instances the project manager has not been involved in specifying. This has been at the expense of ensuring that the product performs in- use once delivered. Hopefully, the inadequacies of such situations are obvious and it should be equally obvious that project success is unlikely in such scenario’s.

It is suggested, therefore, that the results presented earlier are indicative of a general failure of the UK construction industry rather than a failure of the project management discipline per se.

6.18

Self Assessment Questions

(i)

The purpose of contemporary project management (PM) is to deliver projects on time, within budget and to the required quality standards.

Discuss this statement making particular reference to the record of PM in delivering successful projects and giving consideration to the present need for strategic project management practices.

(ii)

Evaluate the role that systems management and project implementation tools have played in the development of the UK construction project management discipline and appraise the usefulness of the same in delivering successful project outputs.