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.
CHAPTER 1: INTRODUCTION
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 projects are 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 will help organisations effectively manage projects.
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.
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
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
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 driven our 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. 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.
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 will be 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 of something 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.
* 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 the project 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 goals criteria, 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 a Measurement 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.
* 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 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 thriving 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 and Project 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 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.
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.
184.108.40.206 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).
220.127.116.11 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.
18.104.22.168 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.