Professional Documents
Culture Documents
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.
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.. This is the origin of
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.
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.
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.
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.
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.
We will return to the organisational design theme later in the module when
we examine the implementation of project management in practice.
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
Value
Engineering
Technical Data
Management
Configuration
Management
Systems Analysis
Resource Allocation
Concurrent
Engineering
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.
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.
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.
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 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.
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 Type
Product/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;
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.
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
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.
ο Price:-
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].
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
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.
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.
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.
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).
Question
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
The causal path model, shown below, compared PM projects with non PM
projects. The numbers on the arrows represent the influences between the
variables.
TC VA QE
+0.899 -0.372
-0.500
0.816 E4
+0.478
PM PR TE
+0.648 +0.691
RK Risk PR Procurement
TC Technical Complexity TE Time Effectiveness 0.865 E7
PM Project Management QE Quality Effectiveness
VA Variations to Contract
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.
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:-
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.
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%.
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.
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.
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:-
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.
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.
The second question we must consider is whether the tools and systems
used to underpin project management are not equal to the task.
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.
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.
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.