Change management in project-based organizations--a case study of a construction company

Lund University

Abstract

In 1995, John Kotter published his groundbreaking work Leading Change and since then, much attention has been devoted to the subject and literally thousands of articles and books have been written. Despite all this attention, a recent study by Aiken and Keller (2009) mentioned that very little seems to have changed or improved, and they suggested a different framework.

This article examines how applicable these two frameworks apply to the specific case of a Swedish construction company. By combining Kotter's (1995) classic eight-step process with Aiken and Keller's (2009) nine-step method, we attempt to reach new insights into how change management within a project-based organization should be achieved.

Project-based organizations are, according to Bresnen (1990), unique, uncertain, and often have short life cycles. Moreover, project-based organizations are characterized by a high level of decentralization, autonomous teams, and a loose connection between projects. Therefore, the managing of such organizations differs a lot from managing a traditional bureaucratic organization (Lindkvist, 2004).

At the studied company, Construction Sweden, a new project management tool called Visual Planning has been rolled out and is being introduced in an increasing number of projects. The empirical foundation of this article is based on seven interviews with five site managers and the two change initiative owners at the company. The information is then analyzed based on a categorization of the two frameworks into four segments, which leads to a set of eight points that we find to be of most importance when managing change in this type of project-based organization.

Keywords: change management, project-based organizations, construction industry, implementation, Visual Planning

Introduction

Companies are forced to adapt to changing environments, boost their competiveness, and prepare for the future by implementing change (Kotter, 1995). Therefore, change management has become a strategic necessity for corporate survival in all but a few industries. Since Kotter came out with his groundbreaking work Leading Change in 1995, much attention has been devoted to the subject and literally thousands of articles and books have been written. Despite all this attention, a recent study by Aiken and Keller (2009) mentioned that very little seems to have changed or improved. Based on a survey of 3,199 executives around the world, they found that only one in three transformations succeed, roughly the same number as Kotter had identified 15 years earlier (Aiken & Keller, 2009).

This article will review a change that is taking place in a Swedish construction company. The company is currently implementing a new planning method in its construction projects called Visual Planning (VP). A construction company is an example of a project-based organization since construction projects are unique and uncertain and have short life cycles. As any other type of organization, this brings certain organizational and managerial issues (Bresnen, 1990). A potential hypothesis could thus be that certain organization-specific aspects must be considered in order to manage change successfully in project-based companies.

Although Kotter's (1995) eight-step process for implementing transformations has been called the “change bible” for managers around the world, and Aiken and Keller (2009) aimed at updating that template, both of them overlook different industry- or company-specific features. By applying the frameworks on the data generated from the case study, the purpose of this report is to develop a theoretical addition on how to manage change in project-based organizations.

The empirics have foremost been gathered through qualitative interviews. However, aspects that aim to normalize the answers have been used when developing the questions to facilitate comparability between the interviews conducted. This is in line with the intention to lift the findings from the qualitative interviews to make generalizing conclusions about the interviewed population. Further conclusions about project-based organizations similar to those in the construction industry will be made, thus fulfilling the purpose of the paper.

A substantial part of all available site managers involved in projects that have been or are using VP in the investigated region have been interviewed, as well as the two senior managers responsible for the implementation. The focus is on site managers because of their ability and sole right to lead and manage the work on site, and because they are the only source of information to the affected subcontractors.

Access to the interviewed site managers was granted and arranged by one of the change leaders from management. Because of this, guarantees about the secrecy of the identities of the site managers were explicitly and clearly pronounced to minimize the risk of getting fabricated answers. Because the change leader was responsible for the success of the change and the originator of this paper, full freedom to conduct the interviews was granted.

The empirics have then been analyzed by the four areas of relevance identified in the theory. Aspects critical for successful implementation of change in the construction company are identified before a further generalization is made on project-based organizations characteristics for the construction industry as a whole.

First, the paper describes the theoretical foundation of how to manage change, which will be Kotter's (1995) eight-step and Aiken and Keller's (2009) nine-step method. Thereafter, a brief introduction to the theoretical field of project-based organization will be made. This will be followed by identified characteristics of a construction company. Based on the theoretical foundation together with the empirical findings, relevant areas of change management in construction companies will be identified. These areas will constitute the outline of the first part of the analysis where collected data will be processed and analyzed by using the theoretical framework. Thereafter, important features that surfaced during the implementation of VP, in the company studied, will be highlighted in the second part of the analysis. This will result in formulated recommendations to project-based organizations with similar characteristics to construction companies on how to manage change in project-based companies.

Change Management

In this paper, we use the following definition of change management: the coordination of a structured period of transition from situation A to situation B in order to achieve lasting change within the organization (Change management, n. d.). In this case, the transformation from situation A to B is the implementation of VP as a new way of managing projects.

The mentioned high failure rate of change initiatives indicate the difficult task to achieve successful organizational change. The theoretical foundation applied in this paper is Kotter's (1995) eight steps in Leading Change and the nine-step insights in change management from the recently published article “The Irrational Side of Change Management” by Aiken and Keller (2009).

Neither Kotter nor Aiken and Keller considered the amount of difference the change causes for the affected stakeholders. Watzlawick (1978), however, highlighted the importance of defining change and distinguished two categories—the first and second order. Changes of the first order are changes within the system where the way of finding solutions to problems is conducted in the same way. The changes are something that already exists and are not completely new to the organization. When the patterns and way of acting as an organization changes, Watzlawick defined this as a change in the system and labels this as change of the second order (Ahrenfeldt, 1995).

As mentioned, industry- or company-specific features may also have great influence on managing change. In order to draw conclusions on successful change management in project-based organizations and construction companies, theories within the field must be explored.

Table 1. Primary Frameworks Applied in Article Within the Field of Change Management

Kotter (1995, p. 60-67) Aiken & Keller (2009, p. 102-109)
Not Establishing a Great Enough Sense of Urgency

Managers underestimate how hard it is to drive people out of their comfort zone. To avoid this, managers can stage crises or use other highly motivating arguments to force change.

What Motivates You Doesn't Motivate Most f Your Employees

Most people aren't truly motivated by the success of the company as much as management. Impact on society, customer, company, the work team, and oneself have been found to be of equal importance.

Not Creating a Powerful Enough Guiding Coalition

It is essential that the group of followers grows with enough speed so that a state of stall is not created. For large corporations, this number should be at least 20-50 committed prople, including several of high rank.

You're Better Off Letting Them Write Their Own Story

However, important it is to tell people about what change should be done, listening is equally important. Change is much easier to accomplish when people feel that they made the choice themselves.

Lacking a Vision

Plans and instructions aren't enough to create effective change. A vision is a clear description of a goal that creates a unanimous direction for all parts of the organization. Without a vision, there is a risk that the change initiative will only create confusion.

It Takes A Story With Both + And - To Create Real Energy

A story that only points out shortcomings can lead to blame and fatigue among employers. By also evoking thoughts about possibilities and strengths, managers can engage all parts of people's minds.

Undercommunicating the Vision by a Factor of Ten

There is a risk of under communication the vision, either as a result of not using enough of the communication channels or because of the existence of management members that don't truly support the change, and therefore not actively address it.

Leaders Believe Mistakenly That They Already “Are the Change”

Humans tend to think they are better than they are, and many managers fail to see what they themselves need to change and focus on what the others should change. That way, they miss a lot of what being a role model means.

Not Removing Obstacles to the New Vision.

Often, people want to change but find themselves blocked, either by organizational structures, reward systems, or other people. Whatever the obstacle, it should be identified and dealt with early and in line with the new strategy.

“Influence Leaders” Aren't a Panacea for Making Change Happen

Many companies are good at pointing out influential people at the top and make them leaders of change. The risk is that they become panaceas rather than meaningful agents if their motivation isn't truly with the change initiative.

Not Systematically Planning For, and Creating, Short-Term Wins

Most people must have goals in the near future to stay motivated. To maintain momentum, it is important to actively find, reach, and celebrate wins along the way.

Money Is the Most Expensive Way to Motivate People

Satisfaction equals perception minus expectation. Often, the rewards of most disproportional impact are small, unexpected gestures that people can easily connect with their achievements.

Declaring Victory Too Soon

It happens that management is too quick to pronounce victory, and along with active resisting people, the whole change initiative can die. One to two years is usually far from enough time to complete the process and management must continue to put in active effort also after this time.

The Process and the Outcome Have Got To Be Fair

If the change goes against people's sense of fairness, they will go out of their way to resist it. If the change is badmouthed by employees, significant damage can be created in very short time.

Not Anchoring Changes in the Corporation's Culture

The changes need to become “the way we do business around here.” If people don't identify with the new way of work within a few years, changes may be lost when the change champion quits or retires, for example.

Employees Are What They Think, Feel, and Believe In

Behavior can most often be connected with personalities, and no matter how hard management tries to motivate them to change, they might not have the right capabilities for what management is trying to do.

  Good Intentions Aren't Enough

Employees need to get the chance to apply new learning in their day-to-day jobs with workshops or forums in between to get thinking into practice. They need to be given enough tools to adapt so that change becomes not only accepted, but also doable.

Project-Based Organizations

As any other organizational form, project-based organizations are characterized by unique features, which results in certain organizational and managerial issues. Project tasks are, according to Bresnen (1990), unique and uncertain and often have short life cycles. Moreover, project-based organizations are characterized by a high level of decentralization, autonomous teams, and loose connection between projects. Therefore, managing of such organizations differs a lot from managing a traditional bureaucratic organization (Lindkvist, 2004).

Hobday (2000) highlighted the different types of project-based organizational forms, exemplifying the extremities from the “radical” and “pure” structure to the more functional and matrix-oriented kind. The form chosen is dependent on whether or not the project form is the primary mechanism around which the main functions of the company is organized.

The construction industry is a prime example of a project-based industry, according to Bresnen (1990). It has often constituted the norm for project-based organizational forms as it has a broad spectrum of activities from greater, independent projects to smaller repetitive constructions. As the organization around the project is dependent on the features of the project, the organizational form adopted in construction projects will vary considerably. However, considering the conditions of the industry, Lindkvist (2004) claimed the radical project-based form of an organization to be common. It entails new product development processes of, for instance, roads, bridges, and buildings with nonrutinized production processes as well as complex interprofessional and interorganizational relationships (Bresnen, 1990). Bresnen and Marshall (2000) further asserted that decentralized teamwork is the norm in the construction industry, which in turn brings differentiation horizontally and vertically within the individual firm. Moreover, it separates the operative projects and the organizational strategies to a great extent (Dubois & Gadde, 2002). Project teams in construction firms are constituted by a wide range of professions and organizational backgrounds, making them very heterogeneous. Additionally, movement of staff between projects is common to synchronize the phases of the project and to tackle time pressure (Bresnen & Marshall, 2000).

Lindkvist (2004) stated that projects are not “context less” as they always constitute a part of existing routines and networks of relations within an organization. However, projects often prove to be temporary, complex, and independent. This, together with the constantly changing conditions for projects and shifting organizational terrains due to the wide range of projects undertaken causes modes of organization and management practices and techniques specific to the project to be developed which are not easily aligned with regular organizational processes (Grabher, 2002).

Theory has established a clear correlation between construction companies and project-based organizations. The following step is, therefore, thus to dig deeper into the research subject, in this case a construction company in Sweden.

Case Study – A Construction Company in Sweden

The empirical study is conducted at one of the leading construction companies in the Nordic region that is divided into seven different business areas of which one is Construction Sweden. The company's construction projects have been previously managed in a traditional way with a strong site manager, where the contractor has made up timetables for the project and their subcontractors have consequently been contracted to accept the time slot granted. This enables subcontractors to be less committed to their timeframe and that the site manager has to have a huge workload since he or she has to maintain the focus on all of the activities in the project.

After a change in the management team in the construction company's southern region, an initiative to try out a new project management tool called Visual Planning (VP) was started. VP is originally derived from Toyota, and furthermore, adjusted to fit the construction sector. The physical attributes of VP is that activities and questions are posted on walls enabling a higher visibility, where all the involved coworkers are ensured to know when and where their contribution fits the overall plan and that they are updated on the current focus of the project. The purpose is thereby enabling a higher sense of commitment and morale.

By studying the VP philosophy, management in the organization has recognized that the expertise of the subcontractors is not completely used. If they were to be more involved in the development of the timetable, they would recognize that the potential of shorter production times is feasible. The core idea behind this is that the subcontractors, as experts, should be better at estimating how long a specific activity should and will take. When actively posting the time-span themselves, a sense of commitment to the plan is supposed to exist instead of being able to blame the contractor that the allocated time was too short, thus resulting in a shorter total production time.

VP has previously been tested in the company's central region, with mixed project-results, and at some of the major competitors. This case study will follow the implementation of VP in four projects and in different segments such as housing, roads, and infrastructure.

Using Watzlawick's (1978) definition of first and second order of change, it is of great importance to define accurate borders of the system. This is because different systems within the same organization can be affected in separate extents to a change, thus resulting in both a change of the first and second order. VP implementation in a project organization is a second order change since the interaction and definition of responsibility of planning shifts from the site manager to the subcontractor, thus changing the way the project team works and think. If the system instead is defined as the company as a whole, the way of doing business is still the same, i.e., managing construction sites and delivering completed projects on time and budget and changing of the first order. From now on, the change in the project team is considered in this paper and consequently related to a second order change.

The theoretical foundation of Kotter (1995) and Aiken and Keller (2009) described earlier is grouped into four different segments during the presentation of our empirical findings and the consequential analysis of the interaction of theory and empirics.

1. Communication

  • Lacking a vision (Kotter [K]),
  • Under communicating the vision by a factor of ten (K),
  • Leaders believe mistakenly that they already “are the change” (Aiken & Keller [A&K]), and
  • “Influence leaders” are not a panacea for making change happen (A&K).

2. Motivation

  • Not establishing a great enough sense of urgency (K),
  • Not systematically planning for and creating short-term wins (K),
  • What motivates you doesn't motivate most of your employees (A&K),
  • You are better off letting them write their own story (A&K),
  • It takes a story with both + and – to create real energy (A&K), and
  • Money is the most expensive way to motivate people (A&K).

3. Managerial Support

  • Not creating a powerful enough guiding coalition (K),
  • Not removing obstacles to the new vision (K),
  • Declaring victory too soon (K), and
  • Good intentions are not enough (A&K).

4. Culture

  • Not anchoring changes in the corporation's culture (K),
  • The process and the outcome has got to be fair (A&K), and
  • Employees are what they think, feel, and believe in (A&K).

These four segments have been chosen to develop a framework where the empirics can be evaluated and the common features of the different aspects of the theoretical framework can be examined; thus, providing a basis from which common conclusions can be drawn and generic advices formulated to add a contribution to the question of change in project-based organizations. The findings from the interviews with site managers and change leaders are presented and interpreted under each of the four segments.

Communication

Based on the interviews with the two executives foremost involved in the implementation of VP, a uniform vision has been explicitly formulated. The objective and goal with the change initiative has been expressed as a way of generating a more reliable plan of execution due to increased commitment among the various subcontractors by involvement in the planning process. Consequently, this is supposed to result in a leaner, slimmer, and more effective operation.

Interviewed site managers claim no clear vision has been communicated. They have a vague idea regarding the purpose and the effects of VP; however, this idea is highly heterogeneous among site managers and differs from the vision formulated by management. The gap between management's and the site managers' view of the vision is a conscious tactic from management's side, as they wish to transform the theoretical vision into operational terms and provide useful tools in the daily operations.

Many of the change initiatives are designed and approved high up in the organization and then carried down into the organization. Site managers play a central role, as they are the primary information channel between the initiative owner and the construction team. Moreover, site managers claim that they must search actively for information; consequently, much communication responsibility is in their hands. Information regarding VP is distributed through the same channels as other initiatives, such as environmental, cost savings, and purchase initiatives. The site manager estimates VP to constitute less than one percent of total information from management to site level.

Prior to the implementation of the first project, much attention was devoted to promoting VP and its implications for the workforce. Awareness among workers rose and a management executive gradually became the face of VP. He has been involved in all projects in the investigated region and is still supporting the affected projects. As a preparation for the planned big scale launch of VP, management plans to educate a number of change agents to inherit the previous role of the executive.

The purpose of the monthly site manager's meeting is primarily to provide an update on current, finished, and upcoming projects. Even though site managers have expressed that motivation for adopting VP is generated by positive word-of-mouth between site managers, the meetings have never been used as a forum to share experiences. No emphasis has been placed on using subcontractors with VP experience in these first projects, although site managers have explicitly expressed their view about how subcontractors familiar with VP facilitate the implementation.

Lacking a Vision

The importance of creating a unanimous direction for all parts of the organization affected by the change to avoid confusion is actively taken into consideration by management. However, this is done contrary to the theory of communicating a clear vision that describes the goal with the change. The advantages with VP are instead conveyed on an operational level, so that a unanimous direction related to the affected people's day-to-day business is created.

The lack of a vision covering more than the operational work might be a consequence of the lack of confidence site managers have pronounced towards management's understanding of the everyday work. The site managers and subcontractors are not interested in knowing the theories—why the focus lies in rational and useful tools that can be applied daily.

Under Communicating the Vision by a Factor of Ten

The sole communication channel between the strategic and operational project level, i.e., the site manager, is already overloaded with information. As mentioned earlier, site managers estimate VP information to only one percent of the total information flow. Thus, even if a clear vision had been formulated by management, conditions to communicate it effectively to the project-level are inadequate.

Leaders Believe Mistakenly That They Already “Are the Change”

Because of the distinct hierarchy, many layers of leaders will have to be convinced to be able to get to and affect the subcontractors. The site managers have been told to use VP by regional management. Because of the attitude that management on a higher level than the people actually doing the work on site have lost contact with what happens, it is quite clear that management is not viewed as understanding and “being the change.” Although one management executive works to support and provide the necessary tools, it is a feeling that not all VP parts are applicable on the actual work that is being done and the method, or any method, is best when modified by the site managers and the subcontractors themselves.

Influence Leaders Aren't a Panacea for Making Change Happen

As discussed previously, the executive took the role of impersonation of the change. The executive is, among the most affected people, viewed as the change. He has been involved in all projects implementing VP and is the only person in the organization that really knows the method. While trying to duplicate him, efforts to affect the crucial site managers are still being ignored. Even though all interviewed people agree that without the support of the site managers, the method is doomed to fail. The only channel to convince and motivate them is through the change agent. Hardly any information is shared between involved site managers, who have more credibility among each other, and consequently, a better chance of affecting each other.

Motivation

Whereas the prime motivation for the management team is in creating gains for the company, the site managers express a greater concern about the fellowship with the workers and the commitment to the team. With the subcontractors more involved in the planning process, it is the site manager's view that they will also tend to take on more responsibility, which benefits the team spirit at the site. The site managers claim they put a lot of effort into facilitating the work for their work force and take a lot of responsibility for the satisfaction of the workers. They also tend to be more motivated by the demands of the customer than the wishes of the company. Sometimes these do not seem to be aligned. The influence of the opinion of other site managers is important; they sometimes form a common opinion.

The site managers believe that the pressure to adopt VP will increase as it spreads throughout the industry. However, most of them do not think of it as a competitive advantage, nor a crucial factor for survival. One important factor that decreases the motivation to adopt change in the construction sector is the pressure to stay on time. “There are really no incentives to learn new things, as long as your project is on time,” said one site manager. Another site manager emphasized the importance of positive experiences in order for the implementation to be successful.

The power to decide how to work is more or less completely decentralized, and all site managers experience a freedom to design their own systems. According to one of the VP change leaders, a desire to be left alone is a common feature with site managers; the profession attracts that kind of individuals; however, not everyone perceived trying VP to be optional. Some thought that the major source of motivation was the change agent and that this person had to drive everyone to enable the implementation of VP. It is a common perception that upper management, in general, consists of too many executives. In addition, site managers consider upper management as too academic and theoretical, and that they do not hold enough leadership and construction skills.

VP is perceived as a method that helps to inform and involve the subcontractors in the project. Information and participation gives motivation, but constructors are habit people, they do not change easily and they often need to see monetary benefits. In the implementation of VP, the site managers feel like everything has to change at once. It is difficult to measure the success of the method, which is one of the reasons why there has been no recognition of the short-term gains throughout the implementation.

Not Establishing a Great Enough Sense of Urgency

VP introduces a new methodology that when successfully implemented it will change a lot about how things are done in the planning process of a construction project. In order for things to really change and not just go back to normal after the first trial, it will require the site managers to not only exit their own comfort zone but also to drive the subcontractors out of theirs. Much emphasis is put on the potential long-term gains from improving the project planning process, but there is no sense of urgency introduced by the change leaders. They communicate the potential benefits but not the importance of a successful adoption of VP within the organization. It is a common perception that the pressure to adopt the method will increase as it spreads within the industry, but as long as it is not believed to be a possible source of competitive advantage, there are really no incentives to walk ahead of the competitors. It is necessary for the change leaders to find the highly motivating arguments and use these to create a greater sense of urgency. For the change to happen, it has to be perceived as important.

What Motivates You Doesn't Motivate Most of Your Employees

The VP change leaders do seem to be aware of the differences in sources of motivation. The potential economic gains of the company do not speak to most of the site managers. Instead, a lot of focus is put on the possibility to save time and make the workflow more efficient through increased responsibility and commitment from the subcontractors. The question is whether this is not just another way of expressing the motives of upper management and the change leaders: to save time is to save money. What speaks to the site managers does seem to be the idea of improving the working environment and creating a better team spirit through increased motivation among the subcontractors and the workers. By addressing the right sources of motivation, there is a good chance that change will be easier to accomplish.

You're Better Off Letting Them Write Their Own Story

When introducing top-down change incentives in a decentralized, project-based organization, this might be one of the most critical factors for successful implementation. Site managers tend to be strong individuals, and they cannot be expected to appreciate being told what to do, or at least not do what they are told. At the construction site, they are the ones to set the rules. To pull through change, in particular in the working methods, site managers not only need to be convinced of the benefits but also they need to feel like they made their own choices. The general lack of confidence in upper management that was uncovered throughout the interviews reinforces the importance of this aspect. The intention of the change leaders was to address those who wanted to try; still most of the ones in the program feel that they really did not have an option.

It Takes A Story With Both + And – To Create Real Energy

When change is introduced to achieve incremental improvement and not to solve an obvious problem, it might be difficult to create a great enough sense of urgency. On the other hand, it decreases the risk of causing blame and fatigue. Arguments for possibilities and strengths might be just as important to create real energy in the project. This is supported by the experience of several site managers saying that positive experiences will be crucial in order to create confidence in VP benefits.

Not Systematically Planning For and Creating Short-Term Wins

It is hard to measure the success of the VP implementation. Consequently, it is difficult to set and follow up on relevant subtargets along the way. Site managers feel like the change leaders have unrealistic expectations for everything to change overnight. There is an obvious risk that the immediate effort of making change happen gets too big given the lack of short-term benefits. People are more likely to stay motivated if goals can be seen in the near future. By celebrating achievements, momentum can be maintained.

Money Is the Most Expensive Way to Motivate People

In VP implementation, there are no actual monetary incentives for the site managers. It may be the most expensive way to motivate people, but when there is an obvious economic advantage for the company to be gained from a successful implementation, it may be an effective way of aligning the interests of the site managers with those of the company. However, money is not the sole source of motivation, small, unexpected gestures from the change leaders may be important, not only to motivate the ones being rewarded but also to signal the importance throughout the organization.

Managerial Support

Upper management at the construction company claims to introduce new change initiatives and instructions every year. Site managers have to judge for themselves which ones to prioritize; no project can adopt each one. Due to the decentralized structure, upper management asserts that they have little impact on project operations. Therefore, it is difficult to create an organization accustomed to directives and changes initiated on higher levels. Furthermore, several site managers state that they are generally skeptical of management initiatives. Management also notices the mistrust of top-down directives among site managers. Several of the interviewed site managers also claim that they feel alone in the directives that are assigned to them and that there is little concern from above for the simultaneous demand put upon them that the time schedule and budget are met.

Management points out that most change initiatives at the construction company are of a continuous nature and take a long time to implement. Usually most of the managerial effort is spent in the initial phase of a change program and much less time is spent enforcing it. According to one site manager, only zero, or one out of two or three of the yearly change programs that are rolled out actually makes a lasting change. Management also agrees with site management that there is no strategy of ranking the importance of different change programs and other improvement initiatives. Instructions are typically spread through written instructions and sometimes, like in the case with VP, through committed change agents. When VP is to be implemented throughout the organization, the operations department has been assigned to design a communication plan and a course to educate change agents in the different regions.

Some discrepancy as to how upper management and site management perceive the implementation of VP has been identified through the interviews. Although the importance of taking advantage of people that are positive to the change is consequently emphasized, the site managers are much more aware of obstacles that arise due to mainly subcontractors that resist VP. Even though one active resistor can compromise the entire initiative at a project site, upper management does not express an active strategy to handle this problem.

Not Creating a Powerful Enough Guiding Coalition

The structure of the construction industry, with decentralized teams both in terms of geography and in terms of responsibility, causes some difficulty in creating effective large guiding coalitions. Additionally, the skepticism from workers towards upper management would decrease the impact of a top-driven group of change agents. However, as more and more projects are successfully adopting VP, a passive but very large group of followers will be formed. When this group is formed, site management will probably feel less alone even though the concern about budget and time will remain.

Not Removing Obstacles to the New Vision

There are several obstacles to the roll out of VP. Most are recognized by site managers, but not all are actively addressed and removed. No plan of handling these problems is derived from upper management. Site managers are largely left to figure out how to handle this by themselves. These obstacles include the lack of site managers' experience as well as personal obstacles among subcontractors and workers, such as change resistance, lack of motivation and incitement, and the lack of the skills required to perform the required tasks.

Declaring Victory Too Soon

Since most of the changes in the company are slow and continuous, the company cannot really be said to declare victory too quickly. However, by not addressing each change initiative continuously and actively for several years, they risk the same problem. Additional risks include management declaring a victory in a successful implementation of VP in a single project instead of addressing the issue of enabling the participants and site manager to spread VP to their next assignment. As a result, a victory has been declared at the wrong level. As a site manager describes it, “Change basically means we get another form to fill out in our work.” Maintaining momentum in many of the initiated changes is difficult.

Good Intentions Aren't Enough

The rigid schedule typical for construction sites makes it hard to allow extra resources in terms of time to change initiatives, and site managers feel that they have to make do with what they have. The extra tool available to them in the VP initiative is the change agent, who comes out to the sites a number of times to help them integrate the changes and gives feedback on their work. Site managers claim the change agent is the only source of information concerning VP and that there is no collaboration between the different site managers using VP. Although the information channels are limited, the site managers actually feel that they receive enough education and information material to inform their team.

Culture

As mentioned by Lindkvist (2004), the construction industry is characterized by a decentralized and hierarchical organization. Projects are greatly independent and complex, which makes the project leader, in this case, the site manger, a key individual in the organization around the task. Upper management states that the job of the site manager is characterized by a great amount of responsibility, authority, and freedom. This in turn attracts certain kinds of personalities who seek such features in a job.

There is a clear consensus among both site managers and upper management regarding the conservatism in the construction industry. There are neither external nor internal driving forces to change. Due to the decentralized structure, upper management says that they have little impact on project operations. They claim it is difficult to create an organization accustomed to directives and changes initiated on higher levels. Furthermore, several site managers assert they are generally skeptical to management initiatives. This dislike of top-down directives among site managers is also noticed by management.

According to upper management, much of the rigidity in the industry can be explained by restricting rules, regulations, and requirements, which the construction companies must obey. However, much can be related to the culture of the industry. In this case, management claims there is seldom an active resistance towards change. It is more often a passive approach. It is also a matter of age, where older site managers tend to be more resistant than younger. They further argue that people are generally willing to learn new things, however, they find it hard to abandon the old ways. Management argues that this is clearly exemplified by VP, where the primary challenge so far has been to create long-term usage of the planning method as some projects have returned to the former working method.

The dissension between management and the project team is further highlighted when discussing the uniqueness of the projects and the possibility of standardizing working methods. Site managers emphasize the importance of adapting routines and practices to fit the specific task and have little faith in too much standardization as they consider each project unique. Upper management claims that the projects are less unique than what is being argued by site management, and they seek more standardized work methods. The implementation of VP clearly exemplifies the different opinions on standardization, where site managers prefer to use parts of the method suited for the specific project. Upper management, on the other hand, strongly believes that the planning method must be applied as a whole on the projects to create an actual change.

Upper management states that the heterogeneous workforce in each project creates complex interprofessional relationships between the construction companies involved. Furthermore, each participant has its own agenda and stake in the project, which afflicts the collective goal of the project. In the clear separation of responsibilities, the ambition lies in doing the appointed task as good as possible, rather than caring about the project as a whole. Site managers also express the opinion that a constant flow of different subcontractors in each project might be a cultural problem in using the new method in a new project. The rigidity in the different roles of the project supposedly further fortifies the conservative culture. The subcontractors are forced to change in order for VP to work, which site managers and upper management agrees to be a reasonable requirement. However, some subcontractors have required extra compensation for the bother, which could be interpreted as a perception of unfairness among these subcontractors. Furthermore, site managers claim that some constructors have lacked the adequate skills required by the method, which could, if not handled properly, create resistance to the new way of working. Until now, site managers have supported the subcontractors in need, imposing an extra workload for the site manager.

Not Anchoring Changes in the Corporation's Culture

As with any type of organization, it is of great importance to establish the change fundamentally in the organization and to do so before the change agent is out of the picture. However, the long-term adaptation of a change could be further complex in the construction industry due to several aspects. The autonomy in the site manager's job facilitates an abandonment of the change. The lack of sharing experiences and information that prevails in the industry dampens an interactive and “chatty” culture, where changes are on the agenda. The great turnover of new project participants could prolong the implementation of a change, as the change has to be anchored repeatedly.

The Process and the Outcome Have Got To Be Fair

VP impacts the way subcontractors must work in relation to the construction company, i.e., they have to be better prepared and work more proactively at meetings. Furthermore, if the change does not respect the highly valued freedom in the site manager's job, this could be seen as unfair. Thus, as in any other organization, construction firms and further project-based organizations must respect the value of fairness among the individuals affected by the change.

The heterogeneousness of the constructors and individuals within a construction project could make the perception of fairness divided. Implementing a change generally in a construction firm without taking into consideration the different groups affected, could thus cause great damage. Therefore, project-based companies, as in the construction firm, are characterized by heterogeneous teams. Thus, it is of great importance to differentiate between the different target groups and to take into consideration the different perceptions of fairness.

Employees Are What They Think, Feel, and Believe In

The purpose of VP is to change the characteristics of traditional methods, namely poor planning and preparation before meetings with subcontractors. As mentioned earlier, several subcontractors lacked the right skills to perform the extra requirement of the new method. This imposes a great problem as the concept of VP fails if one link in the chain malfunctions. The new method also requires increased active participation on meetings, which could be perceived as frightening and uncomfortable. Site managers have great skills in planning, however, planning methods vary greatly. For some, VP may be a small change in comparison to current planning methods, while for others a great leap. Some site managers may lack adequate skills to adapt to the new method, for instance, site managers from an older generation.

Based on the analysis conducted on the empirical findings, relevant areas of change management in the case company have been identified by reasons of communication, motivation, managerial support, and culture. These aspects and their importance will now be presented in the context of a general construction company.

Manage Change in a Construction Company

The following presentation of important parts of change management theories and their implications in a construction company will furthermore result in formulated recommendations on how to manage change in project-based companies.

Communication

As Bresnen and Marshall (2000) explained, vertical differentiation indicates the difficulty of implementing change throughout the organization. Because site managers are practically the only information channel between management and subcontractors, nothing really happens without the approval of site managers. A consequence is that they get directives from all parts of the organization but get no indication of how to prioritize between initiatives. This could risk suboptimization and excess workload for the site manager. When VP, as expressed by some as the only change in the last seven years, only gets one percent of information space, it is necessary to convey how site managers should prioritize between the different directives.

To be able to affect the decisions made in the project team, upper management must communicate the vision clearly by containing formulations about the implementation of the change in a large scale. It is also necessary to explain the benefits to the company. However, communication must be adjusted to the level of the site managers and subcontractors and formulated as the return for the energy invested by the project team itself. Projects often are unique and of a much shorter life span than an organization. Moreover, the vision must naturally be graspable and comprehensible in order for the change to be successful. This project specific subvision should then be broken down into milestones for the completion of the change, for instance, as a percentage of the meetings being conducted according to the new method. This enables the change to be celebrated among team members after each successful implementation step as well as providing a foundation for a long-term aspiration to the change.

Motivation

In the section regarding motivation issues, upper management is aware of the different sources of motivation from that of the site managers and themselves. They foremost relate to the motivation and acceptance of the site managers as the crucial part in implementing VP. They have also recognized the importance of making the site managers positive to the change by doing the implementation trial somewhat voluntarily. They have thus tried, but not succeeded, at involving site managers in the design of the implementation. When VP in its core is about committing people to a task by letting them be a part of deciding what that task should be and how it should be done, one might think it is obvious that implementation of such a process should involve the same features. So committing the explicitly expressed crucial site managers to the task by letting them be a part of forming the method should constitute a vital part of implementation. However, the change effort has been rather top-down oriented, as no efforts have been made to engage site managers in setting an operationally oriented vision, and thus for the project team, comprehensible vision, subtargets, and milestones for the change, etc. This may have caused site managers to claim that VP is not completely applicable in practice and the somewhat skeptical attitude could have influenced their ability to act as role models for the change.

Managerial Support

The empirics show that the studied construction company works actively with most of the insights brought forward by both Kotter (1995) and Aiken and Keller (2009). Under the segment of managerial support, the organization created a guiding coalition and tried to remove obstacles through continuous help and various tools, which also has enabled employees to learn the process of VP without taking too much time out of their ordinary workday. Without answering the question if these initiatives have been successful or not, it can be said that the guiding coalition needs to involve the right people who know the business, are trusted, and can influence decisions. Because the site managers are the people that lead the day-to-day business and have freedom to lead the work after their choosing, they are also the ones that foremost positively influence the difficulties in implementing VP highlighted by site managers and management.

Since site managers have a huge workload, introducing methods easing that load, should not be impossible to anchor. Because of the widespread mistrust in upper management's ability to judge and lead their work, getting site managers onboard and to enable a forum to let them affect each other is crucial. Thereby, a tipping point in the change process can be accomplished and thus a powerful guiding coalition vital for implementing a change is established.

Culture

While established previously that site managers are crucial for implementation of a change, they are, at the same time, a product of the culture within a company. As expressed, the culture and way to do things is strongly tradition bound, and although responsible, the site managers are in many ways just one of the “guys.” Problems have also arisen because management has underestimated the strong culture and how much site managers value fairness and the well-being of the subcontractors. To site managers, VP may be good in theory; it may be just another paper to fill out in practice. This is why some projects have abandoned parts of VP because it is not in line with what they are used to doing. Site managers have expressed their reluctance to making their subcontractors do tasks they do not believe in.

Each member of the project team should be able to see where in the accumulated change his or her contribution fits. This must be enabled with a timeline of the change and include the projects and their milestones. Subvisions are correlated to each other and to the overall vision. In a decentralized organization, a clear communication must be achieved and a single change agent cannot be responsible for keeping the pieces together.

Manage Change in Project-Based Organizations

Based on several features, Lindkvist (2004) characterized construction companies as radical types of project-based organizations. Much of the empirical findings and conclusions can be applied to companies representing similar characteristics. The hypothesis presented initially in the report concerned certain organization-specific factors, which must be considered to manage change successfully in project-based organizations. We hereby present recommendations on how to manage change in such organizations.

Identify and Engage Key Persons

In a project-based organization, the project leader is the key individual as he or she is the cog in the wheel between strategic and operational level. The guiding coalition must, therefore, involve these individuals and make them in favor of the change to enable the implementation.

Find Their True Sources of Motivation

Motivation among the affected stakeholders of the change is crucial. When such a group is highly heterogeneous, it is of utter importance to take into consideration the different sources of motivation.

Avoid Strict Top-Down Implementation of Changes.

For a successful implementation, involve those affected by the change in developing the terms of change, especially in decentralized organizations characterized by a high degree of professional freedom and empowerment.

Design the Implementation Plan with Consideration of the Project Leader's Concern for His or Her Project Members

Projects could be regarded as “small companies” within a larger corporation. Thus, the project leader may feel greater loyalty and dedication to the project team than to the company. When implementing a change, one must not neglect the project members as this may have destructive impact on the change and the crucial project leader.

Rank the Change Initiatives

The project leader is a central connection point of information channels and has great impact on operations in the project-based organization. However, management must clearly communicate what he or she must prioritize on the agenda to ensure operational and strategic alignment in current objectives.

Create Adequate Conditions to Enable Sharing of Experiences and Thus Create a Word-Of-Mouth Effect Between Project Groups

As there may be a greater trust between project leaders than towards management, expanding the guiding coalition could be facilitated by increased usage of horizontal communication channels between project leaders.

Adapt the Vision and Communication Means With Respect To the Vertical and Horizontal Differentiation in Project-Based Organizations

The strategic and theoretical vision on management level must be altered to fit the operationally oriented project group and must consider the heterogeneousness often distinguishing project teams.

Set Clear Sub-Targets and Rewards for Achieving Them

As projects are characterized by short life cycles, the project members are used to instant profits, which could complicate the implementation of the often long-term oriented organizational changes. The overall change objective ought to be divided into clear short-term targets and accomplishment of these deadlines should be connected to desirable benefits.

Former studies within the field of change management pay little attention to the varying conditions of different kinds of organizations. These recommendations are derived from the frameworks of Kotter (1995) and Aiken and Keller (2009) but have been modified to suit organizations with certain characteristics typical for project-based organizations. Strong team leaders with a great concern for the project team, congested information channels, and difficulties to diffuse experience and knowledge in the organizations are some characteristics that have been identified in this study and thus incorporated in the framework. By following these recommendations, it should be possible to decrease the failure rate of change initiatives in such organizations.

References

Ahrenfelt, B. (1995). Förändring som tillstånd. Lund: Studentlitteratur.

Aiken, C., & Keller, S. (2009). The irrational side of change management. The McKinsey Quarterly, 2, 101–109.

Bresnen, M. (1990). Organizing construction: Project organization and matrix management. London: Routledge.

Bresnen, M., & Marshall, N. (2000). Partnering in construction: A critical review of issues, problems and dilemma. Construction Management and Economics, 18(2), 229–237.

Dubois, A., & Gadde, L-E. (2002). The construction industry as a loosely coupled system: Implications for productivity and innovation. Construction Management and Economics, 20(7), 621–631.

Grabher, G. (2002). Cool projects, boring institutions: Temporary collaboration in social context. Regional Studies, 36(3), 205–214.

Hobday, M. (2000). The project-based organization: An ideal form for managing complex products and systems? Research Policy, 29(7–8), 871–893.

Kotter, J. (1995). Leading change: Why transformation efforts fail. Harvard Business Review, MarchApril, 59-68.

Lindkvist, L. (2004). Governing project-based firms: Promoting market-like processes within hierarchies. Journal of Management and Governance, 8(1), 3–25.

Watzlawick, P. (1978). The Language of change. New York: Basic Books.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2010 Project Management Institute

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