Project Management Institute

Avoiding the successful failure

Introduction

Can a project be ‘on time’, ‘on budget’ and still be considered a failure, despite delivering 100% of its scope? The short answer is yes: the Millennium Dome in London met the criteria of time, cost and scope, but has been described as a ‘white elephant’ and a solution in search of an application. On the other hand it is possible for a project to be over budget, over time, missing scope and a success: the Sydney Opera House is an example of this position. Traditional views of project success hinge around the ‘iron triangle’ of time, budget, and scope: the theme of this paper is that while they are always important considerations, other factors have more influence on how successful a project really is.

This paper will demonstrate that delivering value (time, cost and scope) is only one aspect of success, and must be in balance with other elements - managing the project's risk profile to avoid alienating key stakeholders by exceeding their risk tolerance threshold, and managing stakeholder expectations and perceptions by building robust and effective relationships. To achieve this objective, this paper will be divided into the following sections: a brief discussion of three examples of high profile projects, a summary of the research on project success and failure, followed by an exploration of the synthesis of this research into a more balanced view of project success and failure based on: Value Delivery, Relationships, and Risk. The second section discusses project management skills and characteristics necessary for successful project delivery and the strategies that an organisation (and the PM profession) can establish to assist project managers acquire these skills. The final section examines the Stakeholder Circle™, a methodology supported by software that will guide the project manager and project team to a better understanding of the project's stakeholders and their expectations, the best methods of managing those expectations, and monitoring the effectiveness of this engagement and communication.

Project Success (or Failure?)

The project manager's traditional role has been to balance scope, schedule, and budget to deliver the specified output. But often achievement of these traditional objectives does not mean that the project is perceived to be successful. In this section I will examine three projects: one IT project (Taurus) and 2 Public Construction projects (Sydney Opera House and the Millennium Dome) and attempt to identify for each project: was it considered successful? by whom? was it on time? within budget? to scope? The historical element: was it successful then? is it successful now?

Taurus

In early 1993, after more than 10 years development effort, the London Stock Exchange abandoned the development of its Taurus paperless share settlement system. This system was intended to support the buying and selling of shares through processing payments, amending the share register and issuing/cancelling share certificates. The project had cost the City of London over £800 million; the project's original budget was slightly above £6 million and its schedule was approved at 6 months, from planning to implementation using the current technology and software. Taurus was 11 years late and 13,200 percent over budget without any viable solution in sight. There was never an approved scope statement, and the project team was unable to negotiate a solution that was acceptable to all parties: all requirements were combined into a complex hybrid model

The Sydney Opera House

The Sydney Opera House is one of the most recognisable images of the modern world and of Australia. It was designed by Jorn Utzon of Denmark, who won the competition conducted by the NSW Government in 1957 from 233 entries. Utzon's design was based on the sails of a ship, and gull wings using architectural concepts borrowed from the ancient Chinese.

The sponsor of the Opera House project was the Labor Party Premier of NSW, Joe Cahill; he understated the cost to gain approval. The eventual cost was A$102 million, 10 times the original estimate. A new government was elected two years after the project begun. This government was unsympathetic to Utzon's vision and sought to control both costs and the design. The architect ‘resigned’ and the Government significantly modified the designs causing millions of dollars of equipment to be scrapped. The Opera theatre was reported as an “aesthetic and acoustic disaster.”

The Millennium Dome

The Millennium Dome was built in London to celebrate the millennium. It is the largest single roofed structure in the world, with twelve support towers (one for every month) and 365 metres in diameter (for every day of the year). The scope, size and funding was considerably extended in 1997 under Tony Blair to represent a “triumph of confidence over cynicism”. The project was completed on time and within the re-approved budget of £600m; it has however cost the British Government £30m in maintenance since it closed to the public at the end of 2000.

The press has called it a ‘white elephant’, based on the difficulties of finding appropriate uses for the building. After its closure, it remained empty while the Government attempted to find a buyer and a purpose for the building. Some sporting events have been planned: it will host the Olympic basketball and gymnastics finals for London's Olympic Games in 2012, and perhaps a permanent circus.

Analysis of success and failure

Exhibit 1 - Analysis of success and failure

Exhibit 1 summarises the outcome for each of the three projects; the Dome, which has been re-named the O2 by its new owners, unlike the two projects it was compared to, did indeed meet the requirements of time, cost and scope but was perceived to be unsuccessful by the press, and other stakeholders groups, primarily because of difficulties of finding appropriate uses for the building.

The Research

Project management and other researchers have attempted to quantify the impact of project failure on organisations. The CHAOS research found that executives considered only 13% of IT projects they funded were successful; confirmed that user involvement, executive support, and clear business objectives, and the leadership of an experienced project manager in combination, increased the chance of success to 65% (Hancock, 1999).

A different perspective (Sauer, 1993) links project success with three dependant relationships: failure can be understood through supporters' perceptions of expectations not met, or promises not delivered, or the belief that the support (resources) could be applied elsewhere. These perceptions are not necessarily based on logic, but often on the quality of the relationships between the project and its stakeholders.

Research of Jiang and Klein (1999); Lemon, Bowitz, Burn and Hackney (2002); Bourne and Walker (2003) provides a strong case for the conclusion that project success is influenced by:

  • The level of knowledge, skills, and experience of the project manager and project team
  • Appropriate and consistent use of project management tools, processes and methodologies
  • Alignment of the outcomes of the project to organisation strategy
  • Managing the expectations of project stakeholders
  • Appropriate, timely and consistent involvement by users and managers
  • Timely management of risk.

Successful project management, therefore, depends on balancing the conflicting requirements of managing within the constraints of time, cost and quality to deliver the defined strategic benefits to the performing organisation through a temporary organisational structure. At the same time the needs and expectations of the project's stakeholders must be managed within an environment of uncertainty and ambiguity.

A Balanced View of Success: ‘Pillars of Project Success’

The three pillars of project success

Exhibit 2 - The three pillars of project success

The six categories of project success defined in the previous section can be further refined into three interrelated elements – three ‘pillars of project success’: delivery of value, management of uncertainty and building and maintaining project relationships. Exhibit 2 describes the interrelatedness of project success and the centrality of stakeholders. It is important for the project manager and project team to understand how stakeholders perceive project value and then to align management of the project and the performance metrics to the expectations generated from these perceptions: or to negotiate within the relationships to align expectations with feasible project outcomes. Each of the ‘pillars’ is essential to project success, but none of them can be clearly defined in isolation to the others, nor can stand alone as more important than any other.

Delivery of Value

Value is delivered to organisations through the traditional skills and techniques of managing a project's schedule, budget, and quality/scope, but also through ensuring that the project fulfils the appropriate conditions for its benefits to be realised. An additional component is the provision of accurate, timely, and focussed reporting as the essential tool for communication to project stakeholders. Defining, delivering and measuring the value to the organisation is the first of the three interlocking elements of project success.

Delivering value through managing schedule, budget, scope/quality is not just about conformance to the project plan, and realisation of business and organisational benefits is not just about meeting the financial obligations of the Business Case: Delivering value also requires managing project relationships and managing risks by ensuring that the expectations of all stakeholders are met with regard to what is delivered as well as when and how.

Managing Risk (Uncertainty)

Risk management is about minimising potential risks while maximising potential opportunities. Selecting the right project is managing business risk: corporate governance supporting strategic alignment of projects is an essential aspect of managing business risk. Managing project risk is managing uncertainty to meet stakeholders' expectations. Managing project risk requires identification, analysis and response to likely risk events and takes continuous planning and action: it also requires management of project relationships to ensure that the human causes of risk events are managed. The impact of risk can impact any or all of the project's stakeholders.

Contracts are an essential risk management tools. Contracts will help the project manager to know where responsibility and control lie within the project environment, and define how risk will be transferred or deflected. The negotiations that are part of project contract preparation should also be useful in developing relationships useful to project success (Winch, 2003; PMI, 2004).

Managing Relationships

Project relationships are the relationships between the project manager and the project stakeholders, and between the project stakeholders themselves. The concept of the project environment has been developed from these views of project relationships. The project environment is a seven-element framework forming the network or ‘sphere of influence and support’ on which a project depends for its very existence. It represents the relationships within and around the project. These seven ‘directions of influence’ are forwards, backwards, upwards, downwards, inwards, outwards, and sidewards and have been incorporated into the Stakeholder Circle™ methodology to support identification of project stakeholders.

Managing the forwards component of the project environment is about anticipating and planning; backwards is about developing and maintaining appropriate control systems, historical records and the explicit and implicit knowledge of others. Managing upwards is about developing and maintaining robust relationships with those senior managers whose support is vital to maintain organisational commitment to the project; not all senior managers are important to project success. Managing downwards is about managing the team. Managing inwards is about seeking feedback from stakeholders about project and project management matters (Briner, Hastings, & Geddes, 1996) and practitioner reflection and learning. Managing sidewards is about managing the project manager's peers to ensure collaboration, rather than competition.

Managing outwards involves considering the needs and impacts of a large group of stakeholders external to the project, and often to the performing organisation. This group will include some (or all) of the following: clients or customers of the performing organisation, users of the solution and their managers, the ‘public’, ratepayers, voters, lobby or action groups, government or regulatory bodies, shareholders, suppliers of personnel, material or services, families of these stakeholders. Each of these outwards stakeholder groups will have different requirements of the project. They are grouped in one ‘direction of influence’, but it is important to clarify their requirements of the project and their impacts on the project as separate groups.

In describing the first two pillars of project success, managing relationships is a key component. One output of Value Delivery is project information that constitutes tools for communication and for assurance that the project is ‘on track’; relationships poorly managed are key aspects of project risk. A thorough knowledge of each important stakeholder's risk tolerance, and indications of triggers or ‘early warning systems’ that may indicate a stakeholder's loss of interest or support for the project, can be managed through the reporting and monitoring aspects of the Stakeholder Engagement Strategy in the same way that risk must be managed (Bourne & Walker, 2005). Each of the three pillars is inter-related with the others but within the overall structure of stakeholder relationships.

For project success, the project manager must know how to work within the organisation's cultural and political environment to ensure that both the project organisation and its stakeholder community have their needs met (Pinto 1998; Pinto, Thoms, Trailer, Plamer, & Govekar, 1998; Post, Sauter-Sachs, and Preston, 2002; Bourne & Walker 2003; Bourne & Walker 2005). Communication, in the form of assurances to senior management through regular project updates and formal project communications and presentations are useful to build and maintain project relationships.

Project Manager Skills and Characteristics

Project management is a relatively recent professional discipline. It initially developed out of the construction and defence industry's need to plan, control and manage large, complex series of activities (projects) to produce for example, a hospital, bridge or battleship. From these endeavours arose ‘hard’ skills for the most commonly accepted project success criteria such as schedule, cost, scope, and quality management.

The three dimensions of PM skills (Bourne and Walker 2003)

Exhibit 3 - The three dimensions of PM skills (Bourne and Walker 2003)

Project managers must also establish and maintain relationships with many stakeholders within the project management organisation. Project management can be regarded as a mixture of art and craft and is closely connected to concepts of management and leadership; a successful project manager must be able to balance the requirements of art and craft, of management and leadership. Successful completion of project deliverables depends on project management of both hard skills, the control of time, cost, scope, and soft skills relating to leadership and relationship management throughout the project lifecycle. The hard skills are part of the craft of project management and are the 1st Dimension. The second set of skills is defined as 2nd Dimension skills and described as the art of project leadership. Soft skills are required to facilitate the application of hard skills because it is people who realise projects and not techniques or hardware. There is an additional set of skills that are essential for successful delivery of projects; these are 3rd Dimension skills requiring competencies beyond managing and leading.

The key to 3rd Dimension skills is the ability to read the power structures of the organisation and the willingness to operate in this environment. Project managers need to develop these skills and to acquire the appropriate experience and wisdom to manage within the political environments surrounding the project. Part of this skill set is understanding the organisational culture, the power bases operating within them, the expectations and perceptions of important stakeholders, and the development of strategies to ensure their support.

Project manager influence

Exhibit 4 - Project manager influence

Strategies to develop 3rd Dimension skills

An ‘experienced’ project manager should understand the factors that contribute to project success, ensuring that user involvement, executive support, and clear business objectives are achieved. This project manager will also have general management skills and knowledge for managing teams, dealing with procurement issues, risk management, and senior management reports. The difference between a ‘successful’ project manager with 3rd Dimension skills and ‘knowhow’ and others, is that this project manager has the experience, knowledge and capability to understand what has to be done, and to do it.

A novice Project Manager is expected to have some knowledge of the craft – tools and techniques of project management, but little or no art – project-focused relationship management knowledge. Knowledge of tools and techniques can be taught through courses, and can be documented for reference. This knowledge is clearly explicit. Relationship management can be taught or documented to a limited extent (but rarely is in most organisations), instinct and experience are the primary means of acquiring this knowledge/expertise. Through time, as the individual progresses through levels of project management, he/she becomes more adept and both art and craft. One of the primary ways that this experience is acquired is through project failures and other learning experiences, both positive and negative. Even after twenty years of such experience, it is still possible to be faced with new learning experiences (positive and negative).

The skills of the 3rd Dimension – wisdom and knowhow - are usually acquired in mid-career. These skills, understanding the politics and culture of the organisation and having the ability and willingness to work within that context are hard won. They cannot easily be taught, articulated, documented or codified; it is tacit knowledge. With each new experience expanding this perception of reality, the Project Manager builds a significant portfolio of ‘learnings’ as well as healthy cynicism. Organisations and the PM profession can encourage acquisition of higher levels of project management skills and knowhow through mentoring, coaching and apprenticeship schemes and support for continuing professional education.

A Methodology for Managing Relationships

The key to forming successful project relationships is the understanding that different stakeholders have different expectations of the project and different definitions of project success. Thus, a project's success or failure is strongly influenced by how well it meets its stakeholder's expectations and their perceptions of its value. Stakeholder expectations and perceptions can be influenced by the capability and willingness of the project manager to engage effectively with the project's stakeholders and manage organisational politics. One methodology and visualisation tool that can help manage these relationships is the Stakeholder Circle™.

The Stakeholder Circle™ is designed to enhance the management of a project's stakeholder community to the benefit of the stakeholders and the project. It is a stakeholder management methodology supported by software that supports the project team in all aspects of stakeholder management: identification of all stakeholders; analysing this list to establish the key stakeholders for that time in the project; mapping these stakeholders into the visualization tool; developing the engagement strategy for ALL stakeholders leading to a targeted communication strategy; and finally monitoring the implementation of this strategy and measuring the effectiveness of the communication. The methodology will be described in more detail in a later section of this paper.

Based on the premise that a project can only exist with the informed consent of its stakeholder community (Weaver & Bourne 2002), and that managing the relationships between the community and the project will increase a project team's chances for achieving a successful outcome. Given the stakeholder community consists of individuals and groups, each with a different potential to influence the project's outcome positively or negatively. The visualisation tool highlights the project's key stakeholders to help the project team to understand which stakeholders are essential for project success.

Identification of Stakeholders

The process of identifying project stakeholders begins by using the categories upwards, downwards, outwards, and sidewards. This is followed by identifying mutuality (French & Granrose 1995), as defined in terms of understanding what each stakeholder requires from the project as well as the significance of the stakeholder to the project. Asking these questions establishes the nature of the relationship between the project and the stakeholders and ensures that project managers understand each groups' needs. This exercise is conducted through a workshop with project team members and individuals from the organisation who are familiar with the project's deliverables and constraints, and the organisation's structure and politics. This information is entered into the tool and validated. Once complete, the next step—prioritisation of the identified stakeholders—can commence.

Prioritisation of Stakeholders

The assessment of each stakeholder based on ratings from the project team members of the stakeholder's perceived power, proximity and urgency, produces an ‘index’ for each stakeholder within the tool, which will then produce the list of prioritised stakeholders as assessed by the project team. This list with its associated data on each stakeholder supports the development of an engagement strategy; one that enables the project team to ensure that the expectations of key stakeholders are understood, acknowledged, and managed. A map of the current stakeholder community is produced from this data. Exhibit 5 will illustrate one such stakeholder community.

Maintaining Engagement

Defining appropriate responses requires an understanding of each stakeholder's levels of support and receptiveness to messages about the project: this is the engagement strategy and the precursor to a targeted communication plan. Project managers must convert the resulting strategy of who, what, when and how, of delivering the tailored messages defined for each stakeholder into action. This involves integrating the communication plan into the project schedule and reporting on it through team meetings and regular reports.

The benefit of using this methodology and tool is derived in part from the analysis process and assessment process, and in part from the ease with which project teams can assess a key stakeholder's influence on the project once the project's unique Stakeholder Circle™ is complete. Project teams should update this assessment regularly as the stakeholder community changes so as to reflect the dynamic nature of project relationships.

Maintaining the Currency of the Stakeholder Community

Neither the project nor its stakeholder community is static. As the project moves forward, updating the analysis of both the community and levels of support and receptiveness supports measurement of the effectiveness of the engagement and supports changes to the project's stakeholder community. The project's stakeholder community changes as stakeholders move within the organisation or leave it; or their relative importance to the project or their power and influence changes over the project's life cycle. As the project moves through its different phases, different stakeholders may have more or less of an impact on the project. To maintain currency, the stakeholder assessment process may have to be repeated in whole—or in part—many times. To be most effective, the project team should update their assessment regularly, particularly as the project progresses through the phases of its lifecycle or as the stakeholder community changes to reflect the dynamic nature of the project's many relationships.

Interpreting the Stakeholder Circle™ Visualisation Tool

The Stakeholder Circle™ shows stakeholder power and proximity along its radial axis and the team's assessment of its urgency/importance along its arc. The resulting diagram shows the relative influence of each stakeholder and offers a visual tool to facilitate decisions about the amount of effort the project team will allocate when managing the relationship with any given stakeholder. The overall size (or area) of a stakeholder's segment gives an indication of the overall influence of that person (or group of people) on the project. The outcome of the visualisation process is a diagram designed to facilitate decisions, one showing where the project team should focus its efforts when managing stakeholders.

Colour coding is essential to interpreting the nature and structure of the stakeholder community: senior managers (upwards) are coded orange; external stakeholders (outwards), blue; the project team (downwards), green; the project manager's peers, purple. The relationships are summarised by showing each stakeholder's priority number, direction of influence and the nature of their relationship with the project.

An IT project, eDocRec, within an Australian government organisation, Department 1 will illustrate how the Stakeholder Circle™ maps the project's community and allows analysis of the relationships within it. The main objective of this project was to create a single, department-wide electronic document and records management solution, one that complied with standards defined (and being defined) by the regional Office of the Chief Information Officer (OCIO). The solution had been implemented in other parts of Department 1 as well as in other departments, so the project team was leveraging off this experience. Exhibit 6 shows the stakeholder community for this project and Exhibit 5 shows the characteristics of the top 5. An analysis of the project's community follows.

Staff from the group that was described as Pilot Site #1 was not only the most important stakeholder group but also had power to kill the project. This is unusual; generally a stakeholder with upwards direction of influence such as the CEO, the sponsor, or a governance group has most power and influence within the community. Probing uncovered conflict between the project manager and the manager of Pilot Site #1: these stakeholders were not acting in a way to support successful realisation of this project; they were motivated by some other political agenda

Top 5 stakeholders for eDocRec

Exhibit 5 - Top 5 stakeholders for eDocRec

The regional chief technology officer (CTO) was third on the list of key stakeholders. Generally in Australian government organisations such as Department 1, policy makers and standards enforcers such as the CTO play roles peripheral to project success. At the time of the workshops the CTO was developing the strategies that, once completed, would require compliance. eDocRec was being implemented in advance of the strategy's approval and implementation. The project manager considered the CTO's awareness and understanding of the work of eDocRec essential for two reasons: it complied with a high-level strategic thrust; and it guided them in developing and implementing appropriate strategies.

Project Community for eDocRec

Exhibit 6 - Project Community for eDocRec

Conclusion

This paper examined the concept that a project can deliver to schedule, budget and scope and still be regarded as unsuccessful by some (or all) of its stakeholders. Through an investigation of three well-known projects and findings of project management research it was concluded that stakeholder's perceptions as well as the traditional deliverables must be understood and managed to actually achieve project success. A concept of three pillars of project success was developed, espousing a balance of: delivery of value to the organisation, management of uncertainty and management of relationships overlaid by the input of these pillars to management of stakeholder expectations and therefore their perceptions of project success. A methodology, the Stakeholder Circle™ was described as one way to support the project manager and the project team in developing and building robust relationships and through this achieving project success.

Considering the question that was the foundation of enquiry for this paper: can a project be ‘on time’, ‘on budget’ and still be considered a failure, despite delivering 100% of its scope, it is possible to conclude that even the case of the Millennium Dome is not a clear-cut example of meeting the traditional criteria for success but being perceived as unsuccessful. The building itself met the criteria for success but it was the poorly executed application of the building that caused it to be perceived as unsuccessful. Only the passage of time will provide the necessary evidence whether the Dome will become part of the tourist and sporting landscape of London; whether over time the perception of the successful use of this building will change from unsuccessful to successful. But in the meantime an understanding of the expectations of the building's stakeholders can be facilitated through use of the tools and techniques supported by the Stakeholder Circle™.

References

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Post, J. E., Sauter-Sachs, S., & Preston (2002). Redefining the Corporation: stakeholder management and organizational wealth. Stanford, California: Stanford Business Books.

Weaver, P. & L. Bourne (2002). Projects - Fact or Fiction? PMI Conference - Maximising Project Value, Melbourne: PMI Melbourne Chapter.

Winch, G. M. (2003). Managing Construction Projects. Oxford: Blackwell Publishing.

© 2007, Lynda Bourne
Originally published as a part of 2007 PMI Global Congress Proceedings – Hong Kong

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