avoidi.pdf

7/29/2019 avoidi.pdf

1/38

Like 2.4k

Choose your language/country

Need any help? Call 0115 966 7955

For International Numbers & Skype click here

English

UK Essays Our Services Instant Price Order Now Guarantees About Us & Help Free Resources

You are here: UK Essays Dissertations Project Management Avoiding Project Failure

Our Services:

Essay Writing Service

Dissertation Writing Services

Coursework Help Writing Service

Assignment Writing Service

Marking and ProofreadingService

More Services

UK Essays:

About UK Essays

The UK Essays Team

Our Essay Writers

Contact UK Essays

Prices - Free Quote

FAQs

How This Works

Buy Essay Help

Resources:Essay Help

Free Essays

Essay Examples

Dissertation Help

Dissertation examples

University Essay Writing

UK Universities

The free dissertation examples that we

publish on UK Essays have been

submitted to us by students. These

dissertations are not the work of our

own expert writers. Thanks to all of the

students that have submitted their work

to us. READ MORE

TweetPrint

Download

Email

S h a r e & d o w n l o a d :

Search for more free examples... Search

Avoiding Project FailureDissertation

ABSTRACT

Project management have become increasingly important in the

development of any nation. Various organisations have used project

management techniques as a means of bridging the gap between failure and

success in implementation of projects. Despite this increasing awareness of

project management by organisations, projects still fail.

The purpose of this dissertation is to systematically investigate the causes of

project failure and how these can be prevented, managed, or controlled.Research studies investigating the reasons why projects fail, has been

ongoing for years, with various researchers, organisations and project

management institutions, providing lists of reasons, which they believe, are

the cause of project failure. However, despite these lists projects continue to

fail, Atkinson (1999).

This research is done with the anticipation of not only adding information to

the body of knowledge already in existence, but also examining the major

issues currently causing project failure; this will help organisations effectively

manage projects. To determine how to avoid project failure the criteria for

measuring project success has to be properly determined and agreed upon;

the major criteria commonly used are; cost, time and quality. Then the

causes of project failure need to be determined.

This study also examined generalisations made from existing literature about

causes of project failure and methods of avoiding project failure using three

construction case studies in United Kingdom. This is a secondary or desk

research, which involves the collecting and analysis of secondary data, or

data that already exists, from which inferences have been made, and

conclusions drawn.

GET A PRICEWe're sorry we cannot showyou a price because ourcalculator needs Javascriptto work and it has beendisabled in your browser.Once you have enabledJavascript the calculator willbe able to calculate a pricefor you.

United Kingdom

Essay

Undergraduate 2:1

1000 Words (~4 pages)

GBP ()

Order Now Have a question aboutour service?

See our FAQs

Ask our writers a direct

question now

See the UKEssays team

Customer testimonials

Come and visit us

Tweet

Share this

FAQs Forum Blog Contact Buy Now My accountSu

Page 1 of 38Avoiding Project Failure Dissertation

3/20/2013http://www.ukessays.com/dissertations/project-management/avoiding-project-failure.php


2/38

CHAPTER 1: INTRODUCTION

1.1Research background

Projects make a vital contribution to industrialisation and hence the growth of

a nation's economy. The importance of projects in the development of any

nation cannot be overemphasized. This is demonstrated in various

literatures explaining the success and failure of projects. Although projectsare said to be important, its implementation can be an uphill task. Various

researchers have discussed project management as a technique to help

prevent against failure in projects. Others have established checklists to help

prevent failure. Despite the increased project management awareness and

these checklists, some projects still fail, Atkinson (1999).

All projects are constrained by inherent risks; knowledge of these risks will

play an important role in achieving success and avoiding failure. Usually

projects consist of three stages consisting of the approval, execution and

evaluation stages. If any of these stages is not managed properly it may

result to the failure of the entire project.

Failure or Success in projects is a multi-dimensional issue and may be

influenced by so many factors. Some projects may have failed in project

management practices including cost overrun, scope creep, delay in

schedule etc, and other projects may fail in procurement practices. Despite

these failures in the following areas the project may still be perceived as

successful by the end users. An example is Wembley Stadium; despite all

the issues associated with the project in terms of project management and

procurement practices, it is still perceived to be successful and a state of the

art stadium by the end users. This may result from the fact that it has hosted

world class sporting events.

Usually, projects are designed to meet stakeholder's objective. These

objectives define the criteria for success of that project, and projects not

satisfying these objectives are deem to fail. Effective communication and

clarity in the stakeholder's objective is vital to the project manager.

This thesis examines the causes of project failure and how these can be

prevented, managed or controlled. It discusses project failure and success

with the help of case studies in order to identify the critical success factors

and reduce failure in the implementation of projects.

This research is done with the anticipation of not only adding information to

the body of knowledge already in existence, but also in defining the criteria

for project success and identifying the variables involved. This wil l help

organisations effectively manage projects.

1.2 Aim

The aim of this research is to carry out appraisal on the causes of project

failure and the appropriate methods of avoiding project failure. This aim is

intended to be achieved with the following objectives.

1.3 Objectives

To provide a review of project management

To analyze success criteria for projects

To explore factors that causes project failure or success

To examine methods of avoiding project failure





3/38

1.4 Scope

This research is based on construction projects executed in the United

Kingdom over the last two decades.

1.5 Research Structure

Chapter One, Introduction this introduces the research; topic highlighting the

aim, objectives and scope of the research.

Chapter Two, Literature review critically reviews the existing Literature

regarding the subject. It establishes the definition of project success and the

success and failure criteria / factors.

Chapter Three, Methodology describes the methodology used to undertake

this research. It demonstrates the fact that secondary data was mostly used

in undertaking this research.

Chapter Four, Case Studies - Case studies on projects from the UK

construction Industry were discussed in this Chapter. These case studies

were analysed and linked to the literature review chapter.

Chapter Five consists of the analysis of the discussion and findings. This is

derived from critically analysing the Wembley, Heathrow terminal five (T5)and Holyrood case studies.

Chapter Six, Conclusion and Recommendation: This chapter concludes the

research and suggests directions for further research.

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

The importance of avoiding project failure in a rapidly evolving project-driven

21st century cannot be over-emphasized. Attempts to understand the

causes of project failure and/ or success have proven problematic, despite

attempt by many practitioners and academics over the years. Project

demands have constantly increased over the last decade and have drivenour society into a constantly changing environment.

Despite attempts to make project appraisal and delivery more rigorous, a

considerable proportion of delivery effort results in project that does not meet

user expectations and are consequently rejected. In our view this can be

attributed to the fact that few organisations have the facilities, training and

management discipline to bring project to successful completion.

Project success does not come easily; much has been contributed over the

last decade to our understanding of the nature of and reason for successful

and unsuccessful project completion. In addition many projects fail to

complete at all. Sometime failure to satisfy all the original goals of a project

can still be regarded favourably if the main sponsor is not satisfied with the

outcome and the key stakeholders have gained in some way.

Generally, the key development considerations are to have the goal clearly

defined, to plan how to realize the goal and implement the plan. Developing

an alternative methodology for project management founded on

stakeholders, senior management support and proper planning should lead

to a better understanding of the management issues that may contribute to

the successful delivery of projects.

This literature review is aimed at carrying out appraisal on the causes of

project failure and the appropriate methods of avoiding it. It begins with key

definitions, then analysis of causes of project failure and project success.





4/38

Then it looks at success factors and criteria; also examine ways of avoiding

project failure. The chapter ends with summary of the discussion.

2.2 What is a Project?

Gary and Larson (2008:5) defined project as a complex, non routine, one-

time effort limited by time, budget and resource, and performance

specifications designed to meet customer needs. This is in contrast to how

an organisation generally works on a permanent basis to produce their

goods and services. For example the work of an organisation may be to

manufacture a vehicle on a continual basis, therefore the work is considered

functional as the organisation creates the same products or services over-

and -over again and people hold their roles on a semi permanent basis.

A project can be defined as having constraints (usually centred around time

and resources, but also including all aspect of the process and the outcome);

projects are processes that in many circumstances are core business for

organisation. The diagram below show different levels in project

management.

2.3 What is Project Management?

According to Gray and Larson (2006) Project management is a task derived

from an organisation that enables professional project managers to use their

skills, tools and knowledge to plan, execute and control a unique project

within a limited lifespan by meeting the specification requirements of the

organisation. Since the outcomes of the capital projects have strategic

implications on the success and profitability of the business, the ability to

deliver based on pre-determined objectives should be critical to the

company's success.

And yet one-third of all the oil and gas projects exceed budget and time

projections by more than 10 percent. Failure to deliver big projects on budget

and on schedule is highly publicized and damage the companies profile with

capital markets that predictability and strong returns. Continual use of

traditional project management techniques will not alter this trend.

Companies that want to change and improve on their performance with

critical capital projects will need to adopt new techniques.

Munns and Bjeirmi (1996) also defined project management as a process

used as a control to achieve the project objectives by utilizing the

organisational structure and resources to manage a project with the

application of tools and techniques, without disrupting the routine operation

of the company.

Project management is the discipline of managing all the different resources

and aspects of the project in such a way that the resources will deliver all the

output that is required to complete the project within the defined scope, time,

and cost constraints. These are agreed upon the project initiation stage and

by the time the project begins all stakeholders and team members will have

a clear understanding and acceptance of the process, methodology and

expected outcome'.(http://www.projectsmart.co.uk/introduction-project-

management.html accessed on 30/06/09)

Project management has been defined as the process by which projects

(unique, complex, non- routine, one-time effort limited by time, budget, and

resources) are defined, planned, monitored, controlled and delivered such

that the agreed benefits are realised (APM, 2006:3)

Other definitions have been offered, Reiss suggests that a project is a

human activity that achieves a clear objective against a time scale, and to

achieve this while pointing out that a simple description is not possible, he

suggested that project management is a combination of management and

planning and management of change.

Join our circle on Google+

Find us on Facebook Follow us on Twitter

Get our latest updates

Instant Price Order Now





5/38

Despite all the suggestions about what is project management, the criteria

for success, namely, cost, time, and quality remain and are included in the

actual description. Meaning that Oisen's definition of project management

was either correct, or as a discipline, project management has not really

changed or developed the success criteria over 50 years. Therefore project

management is a learning profession. The significant point from all the

definitions and suggestions of project management is that while the factors

have developed and adopted, changes to the success criteria have been

suggested but remain unchanged.

In 2008, a survey undertaken by Booz Allen Hamilton (project management

consultant) which comprises of 20 companies in engineering, procurement

and construction; shows that 40 percent of all projects executed where faced

with cost overruns and behind schedule. These overrun in cost and schedule

has led to client's dissatisfaction on project performance; this view also

agree with the research of M J Lang (1990). Therefore effective project

management is very vital in such a volatile business environment.

2.4 Project Management Methodology

Generally, projects are split into three phases Initiation, implementation and

closure. Every stage of a project has multiple checkpoints which must be

met before the starting of the next stage. The degree to which a project willbe managed depends on the size of the project.

For a complex project in a large organisation that involves a number of

people, resources, time and money, a more structural approach is needed,

and there will be more steps built into each stage of the project to ensure

that the project delivers the anticipated end result. For a simple project in a

small organisation, agreed milestones, a few checklists and someone to co-

ordinate the project may be all that is required.

2.5 Defining Project Failure

From Penguin English Dictionary (1992), failure is define as unsuccessful

project that fails to perform a duty or an expected action, non-occurrence or

non-performance. Whereas success can be defined as the achievement ofsomething desired, planned or attempted (Cambridge Dictionary, 2007). It is

also said that success is an event that accomplishes its intended purpose

(dictionary.com, 2007). Anything short of that is failure. Project failure is an

unpleasant event that cost large amount of money to the organisation.

2.6 Causes of Project Failure

Pinto and Mantel (1990) carried out a research on the causes of project

failure and revealed a good explanation that encompasses both internal

efficiency and external effectiveness. They state that project failure is a

vague concept, which has evoked much as to its definition, as the case with

the definition of project success.

A project is considered a failure whenever a project does not meet the

expectations of the stakeholders. This has lots of impact to both the

organisation and all stakeholders to the project. They include: cost and time

overruns, quality degradation, frustration and stress, sometimes resulting to

people quitting, low corporate market value, low public opinion and negative

media campaigns. The total effect can be very costly to the organisation; at

times even force the company into closure.

Bienkoski (1989) identified ten factors that can lead to project failure and

they are:

* Lack of change management- happens when there is no method to handle

or recognise changes.

Writer Jobs Fair Use Policy Terms & Conditions Privacy Policy

Cookie In fo Compla ints Po licy Get Verified Fraud

Corporate Client Services Sitemap

Copyright 2003 - 2013 - UK Essays is a trading name of All Answers Ltd. All

Answers Ltd is a company registered in England and Wales Company Registration

No: 4964706. VAT Registration No: 842417633. Licensed under the Consumer Credit

Act under Licence No: 0612201. Registered Data Controller No: Z1821391.

Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire,

NG5 7PJ.





6/38

* Communication- causes delay or even failure since team members do not

have the information they needed, issues or changes do not get escalated,

project reporting is sluggish

* Inadequate resources- Task take longer than expected to complete,

deadlines and milestones get missed, and project completion date comes

into jeopardy, one end of working more than necessary (double shift) to get

the work done

* No one is in control, not even the project manager, who is assigned to theproject but not given the free hand to manage the project. This is most

problem encounters in matrix organisation

* Project lacks structure caused by things such as critical tasks being under

rated

* Inaccurate estimates. A top- down plan causes constraints on the

prediction of the cost of the project

* Poor risk management. The project initiation stage is not properly planned

* Insufficient non-resources are not allocated to the project; for instance, it is

not possible for a project to succeed if the right resources are made

available for that project

* Incompetent project management skill

* Project changes from its original objective and goals. This can occur due to

additional requirement from the client

Pinto and mantel (1990) argue that the major causes of project failure are

changes in the project environment, as it goes out of hands of the

management.

2.7 Defining Project Success

Lewis (2005) states that project success can be defined as meeting the

required expectation of the stakeholders and achieving its intended purpose.

This can be attained by understanding what the end result would be, and

then stating the deliverables of the project. Shenhar et al. (2001) state the

opposite: that project success is commonly judged by time and budget goalscriteria, whereas in some cases this does not apply to some projects.

Thiry (2006) argues that project success can only be defined if executives

are able to consider the contribution of benefits and if the project is able to

achieve these measures in relation to resources, competencies and

complexity within the project parameters.

2.8 Key Performance Indicators (KPIs) as aMeasurement for Project Success

The purpose of the KPIs is to enable measurement of project and

organisational performance throughout the construction industry (The KPI

Working Group 2000).

Collins (2000) advocates that the process of developing KPIs involves the

consideration of the following factors:

* KPIs are general indicators of performance that focus on critical aspects of

output or outcomes

* Only a limited, management number of KPIs is maintainable for regular

use. Having too many (complex) KPIs can be time-and resource-consuming

* The systematic use of KPIs is essential as the value of KPIs is almost

completely derived from their consistent use over a number of projects

* Data collection must be made as simple as possible.





7/38

* A large sample size is required to reduce the impact of project specific

variables. Therefore, KPis should be designed to use on every building

project.

* For performance measurement to be effective, the measures must be

acceptable, understood and owned across the organisation

* KPIs will need to evolve and it is likely that a set of KPIs will be subject to

change and refinement

* Graphic delays of KPIs need to be simple in design, easy to update and

accessible.

Key Performance indicators for measuring project success can be illustrated

with the help of the diagram below (Albert & Ada, 2004).

They identified the following as the measurement of project success: Cost,

time, quality, commercial profitable/value, environmental performance, user

expectation/ satisfaction, health and safety and participants' satisfaction.

This will help in explaining what the project success might mean to different

stakeholders.

Key Performance Indicators

Dvir et al. (2003) state that the ranking of success is a one-sided judgement,as the definition of success is difficult to define, because it has different

meanings for different people; thus, the criteria of success should reflect the

diverse interest and view that lead to a multi-dimensional and multi-criteria

approach.

Baccarini (1999) states: that success entails hard criteria which often linked

with cost, time and quality. He also states that hard criteria which can be

easily measured can lead to some form of substantial agreement. In

contrast, soft criteria are known to be one sided, restrained and not easily

assessed. This implies that project success is a fantasy of the mind and only

an individual can turn such vision into reality.

A contrasting view from Westerveld (2000) defined project success as the

satisfaction of all the stakeholders', meaning that as long as the stakeholders

are pleased with the outcome and gain profits or revenue from the project,then it is classed as a success.

One of the "Square's root" corners, organisational benefits, drew much

attention because of its significance and it was further analysed. Kerzner

(2001, p6) suggests three criteria from the organization perspective in order

for a project to be successful.

The first is that it must be completed "with minimum or mutually agreed upon

scope changes", even though stakeholders constantly have different views

about projects' results (Maylor, 2005, p288).

Secondly without disturbing the main work flow of the organization" because

a project has to assist organisation's everyday operations and try to make

them more efficient and effective.

Finally, it should be completed "without changing the corporate culture" even

though projects are "almost exclusively concerned with change - with

knocking down the old and building up the new" (Baguley, 1995, p8).

A project manager's main responsibility is to make sure that he delivers

change only where is necessary, otherwise he is doomed to find strong

resistance from almost all organisational departments (Kerzner, 2001, p158)

which ultimately could lead to project failure.

A more structured approach to project success is grouping the criteria into

categories. Wideman (1996, p3-4) describes four groups, all of them time

dependent: "internal project objectives (efficiency during the project), benefit





8/38

to customer (effectiveness in the short term), direct contribution (in the

medium term) and future opportunity (in the long term)".

The characterization of time dependent' is based on the fact that success

varies with time. Looking at the future benefits of the organisation can be

really difficult, because in some cases they don't even know what they want,

yet it is vital to know what the project is trying to achieve after completion

time so that success criteria are clearly defined in the early stages.

This is quite a different approach, because the focus moves from the present

success criteria to the future, in a way that a project can be unsuccessful

during execution if it is judged by criteria like cost and quality, but in the long

term it can turn to be a thr iving story.

A good example of this hypothesis is hosting the Olympic Games in Athens,

Greece, which received mass criticism both during the planning period, due

to delays in construction time, and when it was finished, due to huge cost.

But the benefits that Greece will gain from the Olympic Games can be fully

understood after 5 or maybe 10 years from the hosting year

(Athens2004.com).

All the above success criteria "should be simple and attainable and, once

defined, they should also be ranked according to priority" (Right Track

Associates, 2003). Straightforward criteria are easy to understand by

everyone involved in the project and therefore commitment is guaranteed.

Unrealistic criteria can put a failure' label on many projects because of the

unreachable standards, can generate low team esteem and team

performance in future projects and finally generate unfair disappointment

among stakeholders. As for priority issues, it is inevitable that things will go

wrong and the project manager will be in a tough situation where he must

make the right decision having in mind that he has to sacrifice the least

important success criterion.

Also Shenhar et al (1997) are of view that project success can be seen from

the four area:

Project efficiency, impact of the project to the customer, business success

and finally what the project holds for the future. This was further explain in

the diagram in 3.

2.9 Defining Project Success Factors andProject Success Criteria

Muller and Turner (2007) defined the two components of project success in

relation to the use of project management as follows:

Project success factors are the elements of a project that can be influenced

to increase the like hood of success; these are independent variable that

makes success more likely.

Project success criteria are the measures by which judge the successful

outcome of a project; these are dependent variable which measure project

success.

We often hear or read about various success stories. But what is success

and what criteria should organizations use to identify success? What factors

lead to a successful project?

The purpose of this study is to define project success criteria, clarify their

difference with success factors and analyse their importance in project

management methodology.

One of the vaguest concepts of project management is project success.

Since each individual or group of people who are involved in a project have

different needs and expectations, it is very unsurprising that they interpret





9/38

project success in their own way of understanding (Cleland & Ireland, 2004,

p2).

"For those involved with a project, project success is normally thought of as

the achievement of some pre-determined project goals" (Lim & Mohamed,

1999, p244) while the general public has different views, commonly based

on user satisfaction.

A classic example of different perspective of successful project is the Sydney

Opera House project (Thomsett, 2002), which went 16 times over budget

and took 4 times more to finish than originally planned.

But the final impact that the Opera House created was so big that no one

remembers the original missed goals. The project was a big success for the

people and at the same time a big failure from the project management

perspective.

On the other hand, the Millennium Dome in London was a project on time

and on budget but in the eyes of the British people was considered a failure

because it didn't deliver the awe and glamour that it was supposed to

generate (Cammack, 2005).

"In the same way that quality requires both conformance to the specifications

and fitness for use, project success requires a combination of product

success (service, result, or outcome) and project management

success" (Duncan, 2004).

The difference between criteria and factors is fuzzy for many people. The

Cambridge Advanced Learner's Dictionary describes a criterion as "a

standard by which you judge, decide about or deal with something" while a

factor is explained as "a fact or situation which influences the result of

something".

Lim & Mohamed applied those definitions to project success and illustrated

the difference. It is clear now that critical factors can lead to a series of

events which ultimately meet the overall success criteria of the project, so

they should not be used as synonymous terms.

Project success can be seen from two different perceptive, the micro and

macro viewpoint (Lim & Mohamed, 1999). This can help in better

understanding of what project success means to different people.

2.9.1 Success Criteria

Many lists of success criteria have been introduced in the previous decades

by various researchers. Primal success criteria have been an integrated part

of project management theory given that early definitions of project

management included the so called Iron Triangle' success criteria - cost,

time and quality. (Atkinson, 1999, p338)

Atkinson continues that "as a discipline, project management has not really

changed or developed the success measurement criteria in almost 50

years".

To meet the urgent need of modernizing the out of date success criteria, he

suggest the Square Route' ( 3) success criteria instead of the Iron Triangle',

where he groups the criteria that other academics have proposed.

The main change is the addition of qualitative objectives rather than

quantitative, namely the benefits that different group of people can receive

from the project. These benefits are seen from two perspectives, one from

the organisational view and one from the stakeholders view.

It is obvious that each part will have benefit differently from projects. For

example one organisation can gain profit through achieving strategic goals

when a project is completed and at the same time these goals have a

serious environmental impact in the stakeholders' community.





10/38

This means that a successful project must bargain between the benefits of

the organisation and the satisfaction of end users. The fourth corner of the

Square Root' is the Information System which includes the subjects of

maintainability, reliability and validity of project outcomes.

Belassi and Tukel (2001) are of the opinion that criteria for measuring project

success/failure can grouped into two groups: the factor and system response

groups. The identified factor groups are: factor related to project manager,

factor related to project team members, factor related to the project itself, the

organisation handling the project and the factor related to the external

environment in which the project takes place. The diagram below shows this

in more detail.

2.9.2 Success Factors

As mentioned earlier; "success factors are those inputs to the management

system that lead directly or indirectly to the success of the project or

business" (Cooke-Davies, 2002, p185). Some project managers "intuitively

and informally determine their own success factors.

However, if these factors are not explicitly identified and recorded, they will

not become part of formal project management reporting process nor they

become part of the historical project data" (Rad & Levin, 2002, p18). Belassi

& Tukel (1996, p144) classified these factors into 5 distinct groups according

to which element they relate to.

2.9.2.1 The Organization

Top management support is the principal success factor for many

independent research groups (Tukel & Rom, 1998, p48) (CHAOS Report,

2001, p4) (Cleland & Ireland, 2002, p210) (Tinnirello, 2002, p14), which

means that no project can finish successfully unless the project manager

secures true support from the senior or operational management.

It is extremely difficult to work in a hostile environment where nobody

understands the benefits that the project will deliver to the organisation.

Stakeholder management and contract strategies (number of and size of the

contracts, interface between the different contracts and the management of

contracts) are separate success factors which are also considered part of

organization issues (Torp, Austeng & Mengesha, 2004, p4).

2.9.2.2 The Project Manager

Having a project manager is not going to guarantee the success of a project.

He must have a number of skills to use during the project to guide the rest of

the team to successfully complete all the objectives.

In the 2001 CHAOS report (The Standish Group International, 2001, p6),

business, communication, responsiveness, process, results, operational,

realism and technological skills are mentioned as some of the most

important skills a project manager should have to deliver success.

However, more resent research by Turner and Muller (2005, p59) has

concluded that "the leadership style and competence of the project manager

have no impact on project success". It is very interesting to investigate why a

highly respectable professional body for project managers published such a

contradictive position.

A possible answer could be found in the fact that project manager's results

are difficult to prove and even more difficult to measure.

If the project is successful, senior management will probably claim that all

external factors were favourable. On the contrary, if it turns to be a failure,

project manager easily becomes the scapegoat.





11/38

2.9.2.3 The Project Team

Project managers are very lucky if they have the option to choose their

project team. More often, their team is inherited to the project from various

sectors of the organisation.

It is vital to have a good project team to work with, with core skills that can

be evolved to core competences and capabilities for the whole organisation.

All members of the project team must be committed to the success of the

project and the overall mission of the company.

Apart from their skills and commitment, project team members should have

clear communication channels to access "both the functional manager and

the project manager within a matrix organization.

Effective management of this dual reporting is often a critical success factor

for the project" (PMBOK Guide, 2004, p215).

2.9.2.4 The Project Itself

The type of a project underlines some factors that are important to success.

For example, if a project is urgent, the critical factor in that case is time.

The Wembley stadium is expected to be fully operational due to May's 2006

FA Cup Final and that is the primary target.

However, the increase of cost "that has thrown the management's

calculations out of kilter" (Evans, 2005) was not a big issue at that time.

The size, value of a project and it's uniqueness of activities can be a puzzle

for the project manager who is used to planning and co-ordinating common

and simple activities (Belassi & Tukel, 1996, p144).

2.9.2.5 The External Environment

External environment can be the political, economic, socio-culture and

technological (PEST) context in which the project is executed. Factors like

the weather, work accidents or the government's favourable or unfavourable

legislation can affect the project in all of its phases.

Note that if a client is from outside the organization, he should also be

considered as an external factor influencing the project performance (Belassi

& Tukel, 1996, p145).

Competitors should also be accounted as external factors which can

undermine project success because the original project could be

overshadowed by a more glamorous and successful project launched by

another organisation.

2.9.3 Methods of Avoiding Project failure

Project success makes organisation stronger and better, and that means it is

important to ensure that organisation choose the right project; allocate theright resources, track progress along the way and taking an unflinching look

at actual result.(http://www.projectsmart.co.uk/pdf/do-you-know-where-your-

project-is.pdf. accessed on 12/07/09). More ways of avoiding project failure

will be discussed in detail in the subsequent chapter.

2.9.4 Summary

It is critical for a project manager to understand what the stakeholders

consider as a successful project.





12/38

In order to avoid any surprises at the end of the project, there is an urgent

need to identify the different perspectives of what success means before the

project goes live.

It is also vital to remember that success criteria are the standards by which a

project will be judged, while success factors are the facts that shape the

result of projects.

Success criteria have changed considerably through time and moved from

the classic iron triangle's view of time, cost and quality to a broaderframework which includes benefits for the organisation and user satisfaction.

An additional framework to capture success criteria depending on time was

also described.

As for success factors, they were grouped into five distinct sets and the

literature views were find to contradict on the issue of how critical a project

manager is to the final success of the project.

A common factor mentioned by many authors is senior management support

for the project and it is recognized as one of the most important factors of all.

In conclusion, early definition of success criteria can ensure an undisputed

view of how the project will be judged and early detection of success factors

will guarantee a safe path to deliver success.

CHAPTER 3: METHODOLOGY

3.1 Overview

Projects have become increasingly important in the development of any

nation. Various firms have used project management techniques as a means

of bridging the gap between failure and success in the implementation of

projects. Despite this increasing awareness of project management by firms,

projects still fail. Several factors may affect the outcome of a project. The

researcher highlighted various success and failure factors of projects in an

earlier chapter. This has formed the basis for the research question.

3.2 Research QuestionsYin (1994:4) suggests that the type of research method chosen for a study

should depend upon three conditions:

1. The type of question posed;

2. The extent of control the investigator has over actual behavioural events;

and

3. The degree of focus on current as opposed to historical events.

Based on the factors mentioned in the literature which may affect the project

outcome; the following research questions were framed.

* What are the criteria for measuring project success?

* What factors lead to success/failure?

* How can these issues be prevented or controlled?

Questions generally fall into two categories of who', what', where', how'

and why'. Each of these is best suited to different types of research methods

according to Yin (1994:5).

Experiments, historical studies and case studies are mainly used to answer

how' and why' questions while surveys and archival analyses are used to

answer who', what' where' and how'. Also Yin (1994:5) points out that

what' question, can be either exploratory or statistical. The latter type of

what' question is better answered through quantitative research while former

benefits from enquiries.





13/38

The fundamental questions of this study are both exploratory (what') and

explanatory (how'). The exploratory question, what are the criteria for

measuring project success? and what factors lead to success / failure? are

central to this study. Finally, this study ask how can these issues be

prevented or controlled in order to avoid project from failing.

3.3 Research Design

The research design provides the direction in which the researcher used in

carrying out this research. Based on the nature of this research, the selected

research design utilised will be that of a case study. The research

methodology will explain the various researches utilised. Ghauri and

Gronhaug (2005:109) define research methods as an orderly collection of

data for the purpose of obtaining information to answer a specific research

objective.

3.4 Method of Data Collection

In this research, articles gathered from other authors were critically

reviewed.

Bryman and Bell (2003, p.212) states that, the secondary analysis is

considered to be the most suitable data collection method. The researcheremployed the use of the following as a source of secondary data collection.

Secondary analysis - in this library -based dissertation proposal the

secondary analysis is considered to be most suitable data collection method.

It uses data that are collected by other researchers or by various institutions

in the course of their business; for example official statistics.

Bryan and Bell (2003,p212) defined secondary analysis as: the analysis of

data by researchers who will probably not have involved in the collection of

those data, for the purposes that in all likelihood were not envisaged by

those responsible for the data collection

Hence this method can be used in either qualitative or quantitative study

method based on the nature of the data. Also the secondary source

examination may be considered as producing a re evaluation that would then

become a primary source and possible contribution to the literature.

Saunders et al. (2003) classified secondary data in three types:

Documentary

Multiple sources

Survey

The researcher decided to use this method because it has the following

number of advantages:

Resource Efficient

Opportunity for longitudinal analysis

Provides comparative and contextual data

Offers new interpretation of data

Provides comparative and contextual data

3.4.1 Desktop Study

The researcher analysed the work of various authors and authority on the

subject matter. Information regarding project failure was obtained through

the following including journals, published books, databases and

Government websites.





14/38

3.4.2 Journals

In this study, the following journals were reviewed and analysed because

they are well referenced. They are the work carried out by professional in the

field with varied years of experiences over years. They help in clarifying the

subject of this research; the journal include

European Journal of Innovative Management

International Journal of Project Management

Project Management Journal

Advanced Management Journal

Journal of Marketing Research

Journal of Operation Management

International Journal of Production Research

Strategic Management Journal

International Journal of Operation and Production Management

3.4.3 Databases

Databases contain very vital information and in this research I sought for

information that relates to project management in different industries.

ABI Inform

Emerald

JSTOR

Proquest

Science Direct

Scopus

Web of Knowledge

Wiley Interscience

Google Scholar

Joule Library, The University of Manchester

Computer World

EBSCOhost

3.4.4 Government Website

I sought for information in government website because this is a place where

the laid down procedures are published and industries must strictly adhere

to. For instance office of government commerce contain information relating

to best practice which construction firms must follow in the United Kingdom.

They include

Office of Government Commerce (OGC)

National Audit office (NAO)

Other potential sources of information are textbooks available in the library,

academic research journals like the supply chain management journal, and

the journal of operations and logistics. Publications and websites of Project

Management Institutions like PMI (Project Management Institute) and APM

(Association of Project Management). Refereed conferences,





15/38

Dissertations/theses, reports/occasional papers, trade journals, newspapers,

and magazines.

3.4.5 Literature Review

In carrying out any research project, it is important to first of all review any

literature considered to be relevant to the research being carried out. It is

during the reviewing related literature that a theoretical framework for doing

any quantitative study is formed. For instance when an existing knowledge is

carefully considered, key variables and relationships are uncovered.

Because no research project exists as an island, previous studies must

constitute part of the process of discovery. According to Ghauri and

Gronhaug (2005:52), a literature review is principally intended to:

* Frame the problem being studied

* Identify relevant concepts, methods/ techniques and facts; and

* Position the study in terms of its intended contribution to knowledge

3.4.6 Case Studies

Case studies provide an opportunity for a problem to be studied in depth

(Bell 2005)

Yin (2003) explains that case study approach facilitates the use of multiple

sources of evidence. Ghauri and Gronhaug (2005:114) stressed that case

studies are especially useful when the phenomena being investigated cannot

practically be studied outside its natural environment and / or when variables

being studied are not easy to quantify.

The researcher has used some construction case studies to highlight failure

and success.

These case studies include :

Heathrow BAA terminal 5

Wembley Stadium

Holyrood Parliament building

These case studies were used by the researcher because they cut the

application of project management, their sizes, complexity and financial

implications involved in the development of such projects. These projects

also reflected the various processes which could result to failure or success

if managed appropriately. Such processes include effective project

management practices, procurement practices, management of stakeholders

etc.

Several factors and lessons learned were identified and highlighted by the

researcher to ensure best practice in the execution of projects.

3.5 Limitations

Due to the time constraint in this research, the researcher based his case

studies on the construction industry. Other industries should have been

researched to establish the similarities and challenges involved in avoiding

project failure.

Case studies of projects in developing nations should have also been

discussed, to establish if Government policies, geographical locations and

etc also impact projects.

Secondly, the literature review does not give a wider scope, covering project

success and failure in all industrial sectors. Moreover data does not look at

more than one company over a period of time to gain valuable and reliable

data. Finally there are insufficient data on one definition of project success





16/38

and failure; many authors work would have been reviewed before arriving at

a conclusion.

CHAPTER 4: CASE STUDIES

The purpose of the case studies in this research is to identify the factors that

have lead these projects to success or failure, by examining the main facts

behind each project used in the case. These case studies are the most

common ones in the construction industry and in terms of applications of

project management. They are transferable to construction projects in any

other geographical location in the world, though every project has its

uniqueness. They are

The Holyrood (Scottish Parliamentary Building project)

These various case studies will be reviewed in detail to see examine which

factors contributed to success or failure of these project.

4.1 Wembley Stadium Project-Successful/Failures

The aim of this project was to design and build a distinctive, state-of-the art

national stadium; a world -class home for English football. Plus, in addition to

hosting major football events, such as the FA final and England Internationalmatches, the stadium was to be capable of staging major athletics and music

events. Its design was to be both functional and architecturally significant: an

iconic replacement for the old Wembley stadium, world famous for its twin

towers. A key prerequisite of the new venue was spectator comfort, for

example, the provision of comfortable seats, generous leg-room,

obstructable view of the pitch, and outstanding catering facilities.

The new stadium will generate an important new income stream for the FA

with a proportion of the profits being reinvested in football.

4.1.1 Project Scope

Design and building of a stadium for staging football, rugby league and

music events, also could be adapted to stage major athletic competitionswith a removable platform, rather than a permanent running track.

Incorporated in the project are hotel, office accommodation and a visitor

centre.

Cost of Wembley Stadium project: Budgeted cost for this project was about

751M but due to design changes and unrealistic cost estimate the project

cost more than budgeted.

Parties involved: Wembley National Stadium Limited (WNSL) is the client

while Multiplex an Australian construction company is the major contractor

with many subcontractors.

Purpose of the Project: To design and build a stadium for staging football,

rugby league and music events.

4.1.2 Why Chosen Wembley Project as aCase?

This case study was chosen because of its size and complexity in terms of

engineering design. Also it is an innovative project with many stakeholders,

government involvement and a project with a single contractor managing

many subcontractors. This project also cut the application of project

management in a changing and challenging environment.





17/38

4.2 London Heathrow Terminal five Project

London Heathrow is one of the busiest airports in the whole world; an

extension project to the terminal was initiated by British Airport Authority

(BAA). The essence of this project is to build a terminal that would cater for

more passenger as the number of daily passengers increases on daily basis

(Aviation Daily 2001).

4.2.1 Reason for Choosing This Case(HEATHROW TERMINAL 5)

I chose this case because it is a project that cut across the project

management best practice. Also it show how important it is for every project

participant to be up and committed in ensuring that a project is delivered as

agreed.

This project is intended to revolutionize United Kingdom construction project

management practice, leading Brady et al. (2008) to classify the

development as a megaproject'.

4.2.2 Cost of London Heathrow Terminal 5

Project4.3billion pound was budgeted for the construction of T5; though British

Airport Authority invested 300 million in order to move to T5 bearing in mind

that their bid would surpass that of their competitors, KLM and Air France.

The project commenced in September 2002 and was funded by BAA.

An application for this project was filed by BAA in 1993. This project was well

planned, as it was the longest project with public inquiry in British planning

history; which contained 500 proofs of evidence, 5000 words of documents,

400 members of the public and 35MPs and MEPs, inclusive of 30million

words collated from 700 witnesses, and 80,000 transcripts of evidences

were produced. The project was approved in November 2001 by Stephen

Byers, the transport secretary. BAA was both the client and the project

manager for this project owing to the fact that they want to apply other

project management method that is unique to the ones the UK construction

industries has been using. There is no main contractor in this project; a

framework agreement was use to appoint 60 tier one suppliers. Ten of the

top suppliers are appointed based on the value of work performed.

T5 is the largest free-standing building-the waveform roof with airy, light and

contemporary architectural design. It took about eighteen and half years to

develop (planning and its associated public inquiry lasted 10 years). T5 is

deemed as one of the UK's most successful construction programmes.

T5 project process was based on partnering and collaboration .Under the T5

Agreement' BAA entered into a direct contractual relationship with all their

First Tier' suppliers (main suppliers, contrators and consultants),of which

there were over 80.

T5 consisted of 16 projects, which in turn were divided into 147 sub-projects.Each sub project was run by an integrated design and construction team,

containing between 6 and 25.First Tier Suppliers that was led by a BAA

project manager.

4.2.3 T5 Contract

The main objective of the Agreement was to create a unique contract under

which BAA retained all the risk relating to the project. Additionally, the

contract needed to be flexible as BAA appreciated that their requirements

would change during the course of the contract





18/38

The contract is generally considered to be a balanced agreement, which

facilitates appropriate relationships and behaviours. Drafted in a non-

adversarial style, the negative and potentially confrontational aspects of

traditional construction contracts were replaced by a commercial model and

policy that created commercial tension without erecting commercial barriers.

While not explicitly derived from the NEC form, the two contacts have

aspects of partnering and integrated working in common. The contract was

designed to enable all participants to concentrate on:

The root cause of problems and not their effects

Working within integrated teams to deliver success in an uncertain

environment

The proactive management of risk rather than the avoidance of litigation

Note: The T5 agreement was supported by BAA's novel risk insurance

policy.

Each first-tier supplier was responsible for appointing, developing and

managing their own supply chain (second' and lower' tier

suppliers/subcontractors). BAA expected the contractual arrangements

within the supply chain to conform to the principles of the T5 agreement, for

example, to avoid risks being transferred down the chain to those least able

to carry them and to promote cooperative working methods. To this, BAArecommended the use of modified version of the NEC Engineering and

Construction Contract (ECC) to appoint second tier suppliers.

4.2.4 Risk Management With Respect to T5Project

A key component of the T5 Agreement, and a major departure from common

practice, was the notion that BAA retained ownership of risk rather than

seeking to transfer it.

Transferring risk will be counter-productive; many risks are unforeseeable

before or during the bidding process and it is naive to behave as if they are:

The old game would be to go to the market with an incomplete

understanding of what you want, ask for bids without understanding the

inherent risks and then get bids from contractors that are designed to beat

the competition rather than address the real risks. (Tony Douglas Managing

Director of the T5 Project), no construction company would be able to carry

the financial liabilities generated by the 4.2bn project

Irrespective of how risks are apportioned, ultimately the purchaser always

bears and pays for the risk.

As a result BAA retained all risk on the Project (eliminating it from the supply

chain) and insured it, rather than requiring suppliers to include it in their

prices.

4.2.5 Cost Reimbursement

Pre-emptive risk management: Integrated teams were responsible for

identifying the root cause' of each risk in a timely manner, assembling the

most appropriate resources and managing the risk as effectively as possible

Integrated teams - BAA''s strategy was to adopt a problem solving approach

to risk, identifying its sources at an early stage and then assembling the best

resources(integrated teams) to proactively manage them.

Promotion of a non-adversarial approach or no blame policy

Collaborative project software: To facilitate open and t imely communication

within the integrated project teams, T5 utilised a collaborative project

software package that provided access to the programme, scope of work,





19/38

and risk reports. The system was also credited with helping to reduce

misunderstanding and delays

4.2.6 Difference between T5 andconventional contract principles

T5 assumptions

Conventional principles

Cannot transfer risk

Transfer of risk

Remain Flexible

Price in advance

Integrated teams

Profit at risk

BAA manages the risk

Penalties

Active risk management

Defined scope

Reimburse properly incurred

Employer's team

Profit levels pre agreed

Skill and Care

Emerging pre-planned scope

Compliance/remedies driven

Single integrated team values

Silos

Exceptional performance

Performance are not exceptional

Goals/Targets

Goals/target sometimes are not well defined

Liability

Conventional principle do not accept liability

BAA (T5) clearly went for relationship management. They understood that

they were building a mega project which would have been difficult to transfer

the risks involved to a contractors considering the potential changes in the

project. They made the decision that they are better placed to manage the

risks. Also, they had studied similar projects around the world and the

outcome was not pleasing to them to follow the conventional way of doing aproject. It seems that all the projects they examine both in the UK and

abroad had cost overrun and delayed completion.

So they took the decision to manage the project themselves. It was a good

decision but there were always elements of what if .

BAA concluded that without the adoption of a fundamentally different

delivery methodology, the T5 project would have exceeded budget by more

than 1 bn.





20/38

4.3 The Holyrood Project

The Procurement Route and ConstructionManager:

The decision to adopt construction management as the procurement vehicle

for the construction of Holyrood building was found to be one of the most

significant, if not the most significant decision taken during the course of theproject. Construction management is one of the relatively new fast track'

methods of construction procurement, developed in 1980s.

Under this arrangement, (construction management design) tendering and

construction overlap. The client employs a designer and, separately, a

construction manager who is engaged as a fee earning consultant to

programme and co-ordinate the design and construction activities.

The actual construction activities are divided into three packages which are

sequentially put out to tender and are undertaken by trade contractors who

are contracted to the client.

Construction management offers the advantage of speed but with the

disadvantage of price uncertainty until the last package contract has been

leased.

4.3.1 Reason for Choosing this Case Study(Holyrood)

This case was chosen because it shows an example of bad practice in

project management. It be also be used to illustrate the importance of

awarding a project contract based on merit. A big lesson can be learn from

this project because it a project that involve the general public and the

government.

4.3.2 Holy rood Project - Successful/Failure

The Scottish office chose the construction management procurement route

in July 1998 after due professional consideration, including advice from the

design team. However, they did not prepare a comprehensive procurement

strategy document, and the procurement strategy for the new Parliament

was incomplete in that:

There should have been a reason analysis supporting the adoption of the

construction management route represented by the appointment of Bovis as

construction managers in January 1999. Such a strategy consideration of the

procurement route could have been best conducted at the beginning of

1998, in conjunction with the evaluation leading to the decision to proceed

with an international designer competition for the new Parliament building.

There should have been a systematic assessment of the risk implicit in the

chosen procurement route (designer appointment and subsequent

construction management) and how best to manage these risk.

4.3.3 Cost Increase of the Project (Holy roodBuilding)

The increase in cost came after the handover in 1998; they can be attributed

to request for redesign of the debating chamber in early 2000; increased

requirement for space and budget, and increase in cost due to the foyer roof

and use of Kemnay granite.

The Auditor General for Scotland undertook examination of the project under

the Public Finance and Accountability (Scotland) Act 2000. This report





21/38

identified a number of project management and government issues. For

instance whilst recognising the unique and complex nature of the project, the

report identified some shortfalls. These include shortfalls in the procurement

strategy, on project cost reporting and in accounting for the risk.

CHAPTER 5: DISCUSSION

5.1 Introduction

Project success and failures are dependent on how the stakeholders and

people that will be affected by the project perceived it. For instance Wembley

Stadium project received lots of criticism from the general public because of

increase in cost originally budgeted for the project; dispute between the main

contractor Multiplex and the subcontractors over payment and other issues.

But at the end the project received several awards and at the same time

termed as a successful project by the stakeholders. Project success can be

seen from the following point of view:

5.1.1 Meeting design goals which include

* Operational specification

* Technical specification

* Time goals

* Budget goals

5.2.2 Impact on the customer

* Fulfilling customer needs

* Solving major organisational problems

* Actually used by the customer

* Level of customer satisfaction

5.2.3 Benefits to the organisation* Level of commercial success

* Generated a large market share

* Opened a new market

* Opened a new line of product

* Developed a new technology

From Pinto and Mantel (1990); project success and failure can be assessed

based on the implementation process, the perceived value of the project and

client's satisfaction with the delivered project. The implementation process is

primarily concerned with the internal efficiency of the project execution

whereas value and satisfaction the client or the user had from the

completed/ delivered project are the project external effectiveness andimpact.

Therefore in more advanced phases of a project, external factors such as

customer needs and satisfaction become more important. Baker, et al.

(1988) suggested that overruns in budget and time cease to be important

after the project is terminated. Then customer satisfaction and its relation to

the project organisation continue to be important even beyond project

boundaries.





22/38

5.3.1 Success Dimension 1- Project Efficiency

These measures project success in short- term, measure the efficiency with

which a project process is managed. It simply tells us was completed on time

and within the specified budget. It also show immediate dimension with

which the project can be assessed, first during execution, and immediately

after completion. Although success in this dimension may indicate a well-

managed, efficient project, but may not indicate success in long-term nor

benefit to the organisation.

However with increased competition and shorter product life cycle, time-to-

market (time to initiate concept to market introduction) becomes a crucial

component. Enhanced project efficiency should therefore be seen as adding

to product competitiveness.

Some organisations may use additional measures of efficiency. For

example, the number of design changes before the final design release, cost

of material and tooling, efficiency and yield of production ramp (Wheel-

Wright & Clark, 1992). Other measures may involve efficiency of reliability,

safety etc. However one must realize that all of these measures relate to

successful implementation of project execution, and does not mean total

success.

5.3.2 Success Dimension 2- Impact on thecustomer

These had to do with the importance organisation should place on customer

requirement and real needs. These involve meeting performance measure,

functional requirement, and technical specifications.

From the contractors point of view, this dimension also includes the level of

customer satisfaction, the extent to which the customer is using the product,

and whether the customer is willing to come back for the a follow-up project.

5.3.3 Success Dimension 3- Business andDirect Success

This dimension has to do with the direct impact the project may have on the

organisation. In the business context, these questions are asked;

Did it provide sales, income as profits as expected?

Did it help to increase business results and gain market share?

However this dimension may apply to projects not aimed at building new

products. For example, internal reengineering projects (Hammer & Champy,

1993).

This is the measure with which such an assessment could be made. It will

include measures of performance time, cycle time, yield and quality of the

process, and total improvement of the organisational performance. All of

these will assess the direct impact the project had on the organisation.

5.3.4 Success Dimension 4- Preparing for thefuture

This is the longest term dimension in measuring project success and

involves the following question:

* How the project does prepare for future opportunities?

* Does it explore new opportunities for further markets, ideas, innovations

and products?





23/38

* Does it build new skills that may be needed in the future, or develop new

technologies and core competencies?

* Does it prepare to make a change and create the future in its industry or to

adapt quickly and meet additional challenges, unexpected moves of

competitors, and market and technology surprises?

5.4 Success- Time Dependent

Project success, therefore should be considered as an integrated concept in

which both short-term and long-term implication are considered. The relative

importance of each of these dimensions is more important at different times

with respect to the moment of completion. The project efficiency dimension

is the most important. In fact it is used for measuring deviation from plans

and looking at various efficiency measures may be the best way for

monitoring the project progress and control its course. Once the project is

completed, however the importance of this dimension gradually declines. As

times goes by, it matters less if the project has met the resource constraints;

in most cases after about a year, it is completely irrelevant.

In contrast, after project completion the second dimension, impact on the

customer and customer satisfaction, becomes more relevant. The third

dimension, business and direct success can be determined later. It takes

time before a new product or delivered project starts bringing profit or

establish market share.

Preparing for the future can only be recognised and assessed much later.

The long-term benefits of projects will affect the organisation after say three

to five years. These can be illustrated using the diagram below.

In contrast, after project completion the second dimension, impact on the

customer and customer satisfaction, becomes more relevant. The third

dimension, business and direct success can be determined later. It takes

time before a new product or delivered project starts bringing profit or

establish market share.

Preparing for the future can only be recognised and assessed much later.

The long-term benefits of projects will affect the organisation after say three

to five years. These can be illustrated using the diagram below.

5.5 Earned Value Management as a Methodof Measuring Project Success or Failure

Earned value (EV) is a management tool for tracking and communicating a

project status. Earned value management (EVM) will let you know the actual

state of the project by comparing the current project performance against

plan. Knowing the project's performance will help in taking action needed to

ensure that the project is completed on time and within budget.

From project magazine, earned value management is defined as, A

methodology used to measured and communicate the real physical progress

of a project taking into account the work completed, time taken and the cost

incurred to complete the work, whereas field operative defines it as, thephysical work accomplished plus the authorized budget for this work. The

sum of the approved cost estimates, (which may include overhead

allocation) for activities, (or portions of activities), completed during a given

period, usually project-to-date.

Therefore earned value differs from the usual budget verses actual cost

incurred model, in that it requires the cost of work in progress to be

quantified. The project manager needs to agree the project scope, create a

work breakdown structure (WBS) and assign budget to each work package,

the lowest level of the WBS, then create a schedule showing the calendar

time it will take to complete the work.





24/38

The overall plan is baseline (plan value) and used to measure performance

throughout the project.

As each work package is completed (earned), it is compared with planned

value showing the work achieved against plan. A variance to plan is

recorded as a time or schedule deviation. It is necessary to obtain the actual

the actual costs incurred for the project from the organisation's accounting

system. The cost is compared with the earned value to show an overrun or

under run situation.

Earned value provides the project manager with an objective way of

measuring performance and predicting future outcomes. This can also help

in reporting progress with greater confidence and highlight any overrun

earlier. It also enables the management team to make cost and time

allocation decisions earlier.

5.6 Value the Client or User Derived From aCompleted Project as a Measure of ProjectSuccess/Failure

Value management in its broadest sense, is the benefit to the client. That is,

the project is worth doing and can be quantified in business terms not

necessarily in financial terms for example, creating a better working

environment.

Value means ensuring that the right choices are made about obtaining the

optimum balance of benefit in relation to cost and risk. Therefore value

management provides a structural approach to the assessment and

development of a project to increase the likelihood of achieving these

requirements at optimum whole life value for money.

The principles centre on the identification of the requirements that will add

value in meeting the business need. Workshops led by value management

facilitators are often used to identify value to the business.

These workshops should involve stakeholders and members of the

integrated project team. Value management aims to maximise project value

within time, cost and quality constraints. However it should be recognised

that improving whole life project value sometimes requires extra initial capital

expenditure.

The key difference between value management and cost reduction are that

value management are:

Positive, focused on value rather than cost, seeking to achieve an optimum

balance between quality, whole-life cost and time.

Value management structured, auditable and accountable

Multidisciplinary, seeking to maximise the creative potential of all project

participants working together

All projects are likely to include some unnecessary cost, however, cutting

cost without proper analysis is likely to lessen value; therefore only

unnecessary cost should be removed where wasteful processes and /orpractices contribute to cost. There most be no loss of functionality or quality,

otherwise value is diminished or reduced.

For instance, the construction of Tunstall Western Bypass, a high-risk 12M

project is completed 10weeks ahead of schedule, within budget and to the

agreed high quality. The final cost of the project was reduced by 800,000

through joint value management and value engineering.





25/38

5.6.1 Importance of Value Management

It enables stakeholders to define and achieve their needs through facilitated

workshops that encourage participation and team working. The focus of

value management is on function and value for money not reducing cost.

5.6.2 Benefits of Value Management

* Better understanding of the business needs, including the flexibility

required to meet the future needs

* Simple, clear definition of specific stakeholder needs

* Achievement of optimum value for money while satisfying the range of user

requirements

* According to office government commerce (OGC) value for money is

defined as the best combination of whole-life cost and quality, to meet the

public sector organisation's needs.

5.6.3 Function Analysis

This technique is designed to help in the appraisal of value by careful

analysis of function: For instance the fundamental reason why the project

components exist or are being designed (Merna, 2005). For example

Wembley stadium project was designed to stage sporting and music events.

It is a basic element in the creative stage of value management.

Once the value management team have received a full briefing on the

project, it involves the value management team in brainstorming to identify

the required functions of the project. This process will define the finer details

that aid in the description of client requirement. It serves as the input for

creating function analysis system technique diagram (Fewings, 2005).

5.6.4 Function Analysis System Technique(F.A.S.T)

This technique promotes a holistic view of project with a view to

understanding the customer's perspective of the finished product. It uses a

function diagram to illustrate the relationships and inter-relationships of all

functions within a specific project.

Once the objectives are prioritized, we can evaluate the options that would

return the most value based on predetermined value criteria, example

targeting true customer needs and wants; Delivering requirements but still

enable cost reduction by focusing on what the function accomplishes

versus what the product is. I t helps to define and understands customer's

NEEDS and WANTS. It also promotes discussion and terms interaction, help

to support the process of generating creative alternative solutions.

Elimination of unimportant requirements; adding incremental costs to

achieve large performance and reducing cost simultaneously (Sims, 2002)

5.6.5 Whole- Life CostingWhole-life costing assesses the cost of an asset over its lifetime taking into

consideration; capital costs, operational costs, maintenance costs and

recycling costs at the end of its life. It enables investment options to be

evaluated more effectively by taking into account the impact of all costs

rather than only the initial capital costs.

In calculating whole-life costs, all future costs and benefits are brought back

to a present day value through discounted technique. Example Wembley

national stadium construction project exceeded its initial cost (budgeted) but





26/38

still deemed as a successful project by i ts stakeholders, after assessing its

long term returns.

5.7 Return on Investment as a Measurementof Project Success/Failure

Projects are not approved and funded on the basis of their estimated costs

and/ or execution plans. Projects are only approved because of the value it

creates or benefit(s) derived from it is more than the cost of the investment.Also, project sponsors are measured by and rewarded based upon the

successful delivering of the promised benefits for which the project was

initiated.

Therefore in the word of financial analysis, return on investment (ROI) is a

tool that can be use in measuring or comparing capital expenditures, such as

investment in capital and mega projects. These can be large projects that

have a pre-determined useful life against which projected returns can be

easily compared. Some large scale projects can effectively be quantified in

terms of ROI, more often user experience improvements are an ongoing and

iterative process.

For instance after completion of the Wembley stadium project, it received

prestigious award owing to the fact that the stakeholders were satisfied with

the project ; though the general public criticised the stadium due to cost overrun and lots of delays the project encountered but the client and user were

seeing the long tern return on investment.

5.8 Discussion on Causes of Project Failureand appropriate Methods of Avoiding SuchFailure

5.8.1 Compressed or Unrealistic Timelines

This was seen in Wembley Stadium project; there was a tight schedule

associated with this project owing to the fact that the client wanted to stage

FA cup final. In this kind of project (innovative), adequate time need to be

exercise to enable proper planning.

So compressed or unrealistic deadline can cause reduction in project scope,

or even lead to extension of time fr

Documents

avoidi.pdf