Project Initiation and Sustainability Principles

What Global Project Management Standards Can Learn from Development Projects when Analyzing Investment

By Claudia Weninger

Abstract

Sustainable development is of relevance in organizations. To gain performance benefits, sustainability principles must be integrated into the core processes of an organization, such as the project initiation process. To relate sustainability principles to the project initiation process, a process-related sustainability definition is applied in this paper and includes the following principles: economic, ecologic and social-orientation; short, mid and long term- orientation; local, regional, and global-orientation, as well as values-based. This conceptual paper discusses select project management standards, such as the International Competency Baseline (ICB), A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Projects in a Controlled Environment 2 (PRINCE2), and a project management approach for developing projects such as the Logical Framework Approach (LFA), to see how sustainability principles are considered. As a result of this paper, the potential for further developing globally recognized project management standards is discussed.

Target audience: researcher

Keywords: project initiation; investment analysis; sustainability principles

Introduction

In the Brundtland Report, sustainable development is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, 1987, 43). Increasing interest in the topic of sustainable development is observable in organizational management and strategy research (Cummings & Daellenbach, 2009). Sustainable development is relevant for different social systems, such as society, region and organizations, and for projects (Gareis et al., 2012). Research has shown that only by integrating sustainability principles into the core processes, an organization can gain performance benefits (Wagner, 2007). Gareis et al. (2012) integrate sustainability principles into project initiation and project management and indicate that the project initiation process is most relevant for integrating sustainability principles, because in this early phase, the most influence can be made (Gareis et al., 2012). We differentiate a project from an investment that is initialized by a project (Gareis, 2005).

The influence of global recognized project management standards, such as A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (Project Management Institute, 2008), IPMA Competency Baseline (ICB) (International Project Management Association, 2006), or Projects in a Controlled Environment PRINCE2 (Office of Government Commerce, 2009) offered by international project management associations is widespread (Hodgson & Muzio, 2011). These standards are developed by practitioners and represent best practices across organizations and industries within the field (Garcia, 2005). These standards offer a generic project management approach (i.e., applicable for all project types). Different contexts (e.g., industries or project types) are not considered.

Project management approaches can also be project specific. This paper discusses the topic of sustainable development linked to project management approaches of development projects based on the assumption that in the project initiation of development projects, a higher awareness about sustainability principles exists. Sustainable development is an important issue in development projects (Bell & Morse, 2005; Lyons et al., 2001; Stockmann, 1997). An approach for development projects is the Logical Framework Approach (LFA) (Norad, 1999), which is applied by the World Bank (The World Bank, 1997) to implement international development projects in developing countries (Ika et al., 2012). International development projects are described as medium to large public projects (Youker, 2003), which take place in extremely difficult contexts with many different stakeholders (Ahsan & Gunawan, 2010; Diallo & Thuillier, 2005). These projects are mostly financed by multilateral development agencies like the World Bank, the European Union, or the United Nations Development Program (Ahsan & Gunawan, 2010; Diallo & Thuillier, 2005; Youker, 2003). The LFA can be considered an important project management approach applied in international development projects.

This paper reports first the results of a PhD research. This paper seeks to analyze how sustainability principles are considered in the project initiation process applied in globally recognized project management standards and what we can learn from development projects. The research question discussed in this paper is:

What can globally recognized project management standards learn from the project initiation of development projects?

To discuss this research question, we analyze how far sustainability principles are considered in the project initiation process of globally recognized project management standards and in the LFA for development projects.

The paper is structured as follows: After discussing sustainability principles, the project initiation process and the business case analysis, the cost benefit analysis, the social cost benefit analysis, as well as the environmental impact analysis, are briefly described. Then, the consideration of sustainability principles in the described investment analysis methods is discussed. Then the results of the analysis of globally recognized project management standards (the ICB, PMBOK® Guide, PRINCE2) and the LFA on how they consider sustainability principles in the initiation process, especially in the investment analysis, are provided. Finally, limitations of this analysis are reflected and learning potentials are discussed.

Sustainability Principles

In the literature, many different definitions and interpretations of the term sustainable development and its principles exist (see e.g., Davidson, 2000; Fergus & Rowney, 2005; Hopwood et al., 2005; Lélé, 1991; Pezzey, 1992; Pezzey & Toman, 2002; Redclift, 2005). Content-related definitions and process-related definitions of sustainability are differentiated (Fergus & Rowney, 2005; Hopwood et al., 2005). In the context of projects, a process-related sustainability definition is suggested (Edum-Fotwe & Price, 2009; Eid, 2009; Silvius et al., 2012). Gareis et al. (2012) propose the following sustainability principles for managing projects:

Economic, ecologic, and social-orientation: Sustainable development is traditionally based on economic, social, and ecologic principles (Edum-Fotwe & Price, 2009) and considers all three principles as equally important (Arnold, 2001). These principles are interrelated and influence each other (Dyllick & Hockerts, 2002). A holistic integrative approach requires a proportional integration of economic, ecologic and social considerations in decision-making (Lafferty & Hovden, 2003; Steurer & Martinuzzi, 2005). The ideal is a holistic approach to considering all three principles equally, which points to the necessity of balancing economic, social, and ecologic orientation.

Short, mid, and long term-orientation: The essence of sustainable development, as indicated by the Brundtland Report, is the consideration of future generations, which indicates a long-term orientation in decision-making (Bagheri & Hjorth, 2007; World Commission on Environment and Development, 1987). Gareis et al. (2012) add to the long-term orientation the necessity of short- and mid-term orientation and point out the necessity of balancing between these temporal scales.

Local, regional, and global-orientation: Ecologic, economic, and social processes take place simultaneously at various spatial scales (Holling, 2001) ranging from the global to the regional and the local. Gareis et al. (2012) differentiate between the local, regional, as well as global orientation and discussed the necessity of balancing between these various spatial scales.

Values-based: Sustainable development is a normative concept (see Adams, 2006; Davidson, 2000; Martens, 2006; Robinson, 2004) and thus reflects specific values and ethical considerations. The balance of the above described sustainability principles is based on values, such as intra-generational equity, transparency, fairness, trust, and innovation (Global Reporting Initiative, 2006). Sustainable development is based on a bundle of specific values in any social system, such as the society, a company, or a project (Gareis et al., 2012).

Project Initiation

Different definitions of the term investment exist. In the financial sector, an investment is defined as the purchase of a financial product with the expectation of future returns. In the business sector, an investment can be described as the purchase or development of a product or service with the hope of improving future business (Investorwords, 2011; Turner, 1995, 3). An investment can be described with costs and benefits, is characterized by a number of payments, and can be perceived as long-term investment in real assets (e.g., investments in buildings, machines, and also in customer relationships or products) (Gareis, 2005).

Projects initialize investments in new products, markets, organizations, or infrastructures (Gareis, 2005). The project initiation process starts with the investment idea or the problem formulation and ends with the project assignment (Gareis, 2005; Gido & Clements, 2008; Samset, 2008; Wijnen & Kor, 2000). The process has been considered as very important (Artto et al., 2001; Morris, 1998; Morris & Pinto, 2004; Wijnen & Kor, 2000). The main objectives of this process are to make a decision regarding the realization of an investment, to generate information about the investment and project, and to describe the project definition (Artto et al., 2001; Samset, 2008; Wijnen & Kor, 2000).

The description of the investment idea or the problem formulation lays the basis for the investment analysis. The main objective of an investment analysis is the calculation of the economic benefit (Litke, 2007). For the investment analysis, different methods exist, such as the business case analysis, cost benefit analysis, social cost benefit analysis, and environmental impact analysis. These methods are briefly described later.

After the investment analysis, an investment proposal is developed. This document includes the investment idea description and the results of the investment analysis. Robb (2007) describes the main risks of the investment as important attachments to the investment proposal. The investment proposal is an important communication document. The customer, the company board, and other important stakeholders achieve central information from this document (Robb, 2007). The development of an investment proposal is the basis for the investment decision.

If the investment decision is yes, the project proposal is developed. One important step in the development is the project definition. A project as a social system is considered by clarifying the distinction to its context on which it depends (Gareis, 2005). The project definition determines what a project includes and is very important for a successful performance of a project (Cano & Lidon, 2011; Kähkönen, 1999). This method provides a common understanding of the project boundaries (Wijnen & Kor, 2000) and is a central factor for a better project performance (Morris, 1998). With explicit exclusion of those issues, which do not belong to the project, the needed clarity regarding the project boundaries is achieved (Engwall, 2003; Sahlin-Andersson & Söderholm, 2002).

The project definition is used as a basis for the development of the project proposal. In the project proposal, general structures of the project become clear and are the basis for the initiation of a project (Steyn, 2003). This document lays the basis for the project decision.

If the project decision is yes, the project assignment is developed. This document is a further development of the project proposal and is a formal summary of important project information between the project manager and the project owner. Signing the project assignment is the start event for the project that initializes the investment (Gido & Clements, 2008).

Investment Analysis as the Central Method of the Project Initiation Process

As described above, the investment analysis lays the basis for the decision regarding the realization of an investment. Different investment methods exist, such as:

Business Case Analysis

The business case analysis considers the cash in-flows and out-flows and possibly an investment calculation or a simulation. Only cash-effective consequences of the investment are considered and typically analyzed as well as rated with dynamic investment calculations, such as net present value, internal rate of return, or the annuity method. In contrast to static investments methods, dynamic investment methods are payment flow oriented and considered a wider investment period (Geyer et al., 2003; Hirth, 2008).

Cost Benefit Analysis

It is the main objective of the cost benefit analysis to find the investment with the best relation between costs and benefits (Drews & Hillebrand, 2007). It is important to analyze at least one alternative to each investment (Jorge & Rus, 2004). In the cost benefit analysis, different types of costs and benefits are analyzed. These are direct costs and benefits; indirect costs and benefits; tangible costs and benefits; and intangible costs and benefits (Scholles, 2006).

Social Cost Benefit Analysis

The social cost benefit analysis is a further development of the original cost benefit analysis. In contrast to the traditional analysis, the social cost benefit analysis considers also social costs and benefits. Brent (2006) describes the social cost benefit analysis as more holistic in comparison with a traditional cost benefit analysis because it is more long-term oriented and prefers future generations in the social discount factor.

Environmental Impact Analysis

In the above described analyses methods, environmental principles are often not considered. The main focus of the environmental impact analysis is the consideration of the environmental impact, which is caused by the investment. To cover environmental impacts of the investment in the planning phase and minimize their negative impact is the main objective of this analysis (Barthwal, 2002; Morris & Therivel, 1995).

The investment methods described considers sustainability principles in different degrees. Table 1 relates sustainability principles to different investment methods. Traditional methods, such as the business case analysis or the cost benefit analysis, focus only on economic principles and are short to mid-term orientation. The social cost benefit analysis is a more holistic further development of the classic cost benefit analysis and considers also social principles. Furthermore, a wider investment period and a social discount factor are considered. Ecologic principles are not considered in the social cost benefit analysis. The environmental impact analysis considers environmental and social factors. In many companies, only traditional and therefore only economic-based analysis methods are used.

Investment method Economic, ecologic and social-orientation Short, mid, and long-term orientation Local, regional, and global orientation
Business Case Analysis Consideration of economic principles Short term orientation -
Cost Benefit Analysis Consideration of economic principles Short to mid-term orientation -
Social Cost Benefit Analysis Consideration of economic and social principles Mid to long-term orientation -
Environmental Impact Analysis Consideration of ecologic as well as social principles Mid to long-term orientation Local, regional as well as global orientation

Table 1: The consideration of sustainability principles in investment methods.

Methodology

This is a conceptual paper based on research literature and an analysis of selected project management standards, such as ICB, the PMBOK® Guide, and PRINCE2. These project management standards were selected because they represent the best practices (Garcia, 2005) of project management. Furthermore, they are the basis for international certification of project managers (see e.g., Ahlemann et al., 2009; Morris et al., 2006). In contrast to these project management standards, the Logical Framework Approach (LFA), which is used by the World Bank, was analyzed. The LFA is mostly used in development projects, has a focus on the initiation process of a project, and considers sustainability principles in its methods (e.g., in the investment analysis methods). These standards were analyzed as to whether and how sustainability principles are implicitly considered in the project initiation process, especially in the investment analysis method. The implicit or explicit consideration of sustainability principles in the initiation processes, especially in the described investment analysis method, is analyzed.

Organization Document Short Description
IPMA—International Project Management Association ICB International Competence Baseline 3.0 (International Project Management Association, 2006) Describes technical, context, and behavioral competence elements for project managers. Is the basis for IPMA project manager certification; it has global relevance.
PMI—Project Management Institute A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (Project Management Institute, 2008) Is a global standard for project management and is the basis for a PMI project manager certification.
OGC—Office of Government Commerce Managing Successful Projects with PRINCE2 (Office of Government Commerce, 2009) Is a well established and relevant project management standard and the basis for a project management certification.
NORAD—Norwegian Agency for Development Cooperation; The World Bank The Logical Framework Approach (Norad, 1999; The World Bank, 1997) The logical framework approach (LFA) was developed from the Norwegian Agency for Development Cooperation (NORAD) in the 1990s. This project management standard is often used in projects with a difficult political project environment. Since 1997, the World Bank (OECD) has been using the LFA, also named as log frame, as a key reference for the project cycle (Norad, 1999; The World Bank, 1997).

Table 2: Analyzed project management standards/approaches.

Analysis Results

This section presents the following analysis results of select project management standards and the LFA approach, which are then summarized in Table 4.

The consideration of sustainability principles in the project initiation process of ICB

The project initiation process is comparable with the project development phase described in the ICB. In the project development phase, a business case is developed. Furthermore, an environmental impact plan and a safety and security plan are developed.

In the business case, only economic principles are considered. Ecologic principles are considered in the environmental impact plan. The safety and security plan considers social principles, because in this document, important issues such as safety conditions and fair and correct working policies are covered. Stakeholders can be involved in the development of the business case but are not involved in the investment decision.

In the ICB, the behavioral competences of project managers are described. Values like ethics, values appreciation, and reliability are listed, which need to be considered in the project development phase as well as in the project management process. Although these values are mentioned, they are not completely reflected in the investment methods described in the ICB (International Project Management Association, 2006).

The consideration of sustainability principles in the project initiation process of the PMBOK® Guide

The Initiating Process Group described in the PMBOK® Guide is comparable with the project initiation process. In the Initiation Process Group, a business case and a cost benefit analysis are described as investment analysis methods.

The result of the investment analysis is described in the business case document. Because the cost benefit analysis is not described in detail, it can be assumed that this analysis represents a traditional cost benefit analysis but in the business case document, in addition to the monetary and economical results of the cost benefit analysis, other principles like customer requests, technological advances, legal requirements, as well as environmental impacts and social needs, are considered. Stakeholders are included in the development process of the project charter that includes the business case but are not involved in the investment decision.

In addition to the PMBOK® Guide, PMI developed a code of ethics. This document needs to be considered in the whole project and in every decision. Thus, underlying values should be considered when making a decision regarding the realization of an investment (Project Management Institute, 2008).

The consideration of sustainability principles in the project initiation process of PRINCE2

The Starting up a Project process of PRINCE2 is comparable with the project initiation process. In this process, a first draft of a business case and a cost benefit analysis are described as investment methods.

In the business case costs, benefits, and risks are provided. A detailed description of the cost and benefit analysis is not provided in the business case but it is indicated that the benefit of an investment can also be described with non-monetary principles. The benefit of an investment may be described in a qualitative way and intangible costs and benefits can be considered. Intangible costs and benefits are often not considered in traditional cost and benefit analyses. The non-monetary evaluation of the benefit is an important sustainability aspect. The consideration of social and ecologic issues is possible because of the qualitative description. During the development of the business case, an investment appraisal is developed. This appraisal considers the whole investment life cycle and therefore considers the long-term costs of the investment but is a traditional and only economic focused investment calculation. Social and environmental principles are not considered in the investment appraisal. Stakeholders can be involved in the development of the business case but are not involved in the investment decision (Office of Government Commerce, 2009).

Consideration of sustainability principles in the project initiation process of the LFA

The Analyzing the Situation process is comparable with the project initiation process. It includes a cost benefit analysis as an investment analysis.

As a first step in the Analyzing the Situation process, a participatory analysis is developed. In this analysis, all important stakeholders are identified and prioritized. The result of this analysis provides the basis for the process design of the LFA. All important stakeholders are invited to participate in the process and contribute actively to the decision regarding the realization of an investment. This active involvement is a central difference to globally recognized project management standards. Investment ideas are identified and discussed in workshops. Each stakeholder has the possibility to define investment ideas and to share his or her opinion. In the LFA, a holistic cost benefit analysis is described. It includes economic, social, as well as ecological principles but the described cost benefit analysis is not a social cost benefit analysis; this is an interesting inconsistency, because the World Bank developed its own approaches for social cost benefit analysis but don't use them in the LFA.

The cost benefit analysis described in the LFA defines the following criteria: total costs, benefits to main stakeholder, probability of achieving objectives, and social risks (Norad, 1999; The World Bank, 1997). Furthermore, the LFA defines following possible additional criteria:

Criteria type Criteria
Technical Appropriateness, use of local resources, market suitability, etc.
Financial Costs, financial sustainability, foreign exchange needs, etc.
Economic Economic return, cost effectiveness, etc.
Institutional Capacity, capability, technical assistance, etc.
Social/distributional Distribution of costs and benefits, gender issues, socio-cultural constraints, local involvement, and motivation, etc.
Environmental Environmental effects, environmental costs vs. benefits

Table 3: Criteria according to the investment analysis of LFA (Norad 1999: 44).

The criteria for this analysis are selected by all stakeholders and can be extended if necessary.

A central value of the LFA is transparency. Problems, causes, and effects are analyzed and communicated to the stakeholders. This open and transparent communication form leads to a more holistic investment decision, because the identified problem, cause, and effects can be considered in the decision. Values like participation, transparency, and acceptance are very important in the LFA. No decision is done without the confirmation of the stakeholders. A high social responsibility about countries but also about the stakeholders is observable.

Summary of the analysis results

Project management standard/ approach Name of the project initiation process Used investment analysis method Consideration of sustainability principles in investment analysis method Involvement of stakeholder in process Underlying values in decision process
ICB (International Project Management Association. 2006) Project development phase Business case analysis; environmental impact plan; safety and security plan

Consideration of only economic principles in the business case analysis.

The environmental impact plan considers ecological principles. Social principles are considered in the safety and security plan.

Stakeholders can be involved in the development of the business case but are not involved in the investment decision. Definition of different values in the behavioral competence part. Values like ethics or value appreciation are the basis for each decision.
PMBOK® Guide (Project Management Institute. 2008) Initiating Process Group Business case, cost benefit analysis Cost benefit analysis considers only economic principles. In the business case economic, social, as well as ecologic factors are considered. Stakeholders can be involved in the charter development but are not in the investment decision. Values are not defined in the PMBOK® Guide but in the Code of Ethics from PMI.
PRINCE2 (Office of Government Commerce. 2009) Starting up a project process Business case; cost benefit analysis Consideration of only economic principles in the analysis. It is allowed to describe the benefit in a qualitative and non-monetary way. Consideration of long-term principles in the investment appraisal. Main risks are described in the business case. Stakeholders can be involved in the development of the business case but are not involved in the investment decision. Values are not explicitly described.
LFA (Norad. 1999; The World Bank. 1997) Analyzing the situation Cost benefit analysis Consideration of economic, social as well as ecologic principles. Stakeholders are considered and involved in the whole process. Stakeholders can choose the criteria for the cost benefit analysis and actively contribute to the final investment decision. Strong underlying values like ethics, participation, transparency, and acceptance.

Table 4: Summary of analysis results.

Discussion and Conclusion

As shown in Table 4, the analyzed globally recognized project management standards (ICB, PMBOK® Guide, and PRINCE2) have a strong economic orientation but consider few sustainability principles implicitly in investment methods applied in the initiation process. However, the analyzed globally recognized project management standards (ICB, PMBOK® Guide, and PRINCE2) consider less sustainability principles, in contrast to the LFA, which is used for development projects and reflects the importance of sustainable development (Bell & Morse, 2005). Stakeholders are involved in the whole initiation process. In the LFA, a participative process design is used. This means that stakeholders actively contribute to each decision. All stakeholders decide what criteria are important when analyzing the investment. This is one main difference between the LFA and globally recognized project management standards. As described above, the LFA (Norad, 1999; The World Bank, 1997) considers economic, social, as well as ecologic criteria when analyzing the investment. Values like ethics, participation, transparency, and acceptance are very important in the LFA. These values are the basis for each decision. Overall, the LFA has a strong social focus.

In addition to the LFA, different approaches to integrating sustainability principles into investment analysis methods exist. In the 1970s, the concept of Responsible Investments was developed by societal and environmental activists in the United States. Responsible Investments are defined as “[…] the integration of environmental, societal and governance (ESG) issues into investment decision-making” (Louche & Lydenberg, 2011: 2). The main focus of this concept is on the integration of sustainability principles into investment analysis methods. It is mostly used by the finance sector for monetary investments. The target group is investors of companies (Louche & Lydenberg, 2011). In addition to the concept of responsible investments, the concept of ethical investments was developed. Ethical investment combines the model of sustainability, environment, responsibility, and ethics in its overall process and in the investment methods (O'rourke, 2003). These investments are defined as “[…] the integration of personal values, social considerations and economic factors into investment decision” (Michelson et al., 2004). Multilateral development agencies like UNIDO or The World Bank realized around 1970 that the integration of sustainability principles into the investment analysis is important and developed approaches to integrating sustainability principles into investment analysis methods. As a result, they further developed the traditional cost benefit analysis and developed social cost benefit analysis methods that are mostly used to analyze investments in development countries (Bruce et al., 1976; Dasgupta et al., 1972; Little & Mirrlees, 1974; Squire & Van Der Tak, 1975).

Louche and Lydenberg (2011) show that the concept of responsible investment is important and often used when analyzing financial investments. The concept of ethical investment shows how sustainability principles can be integrated into investment analysis methods (Michelson et al., 2004; O'rourke, 2003). The concepts of responsible investments as well as the concept of ethical investments focus only on the investment analysis and not on the whole project initiation process. However, much criticism about the use of logical frameworks and their weaknesses in culturally and developmental diverse contexts exists (Crawford, 2003; Dale, 2003; Den Heyer, 2002), but in fact most criticism appears to contradict the sustainability principles of the LFA (Bell & Morse, 2005). Traditional investment analysis methods (e.g., the business case analysis or the cost benefit analysis) focus only on economic principles (Drews & Hillebrand, 2007; Geyer et al., 2003; Hirth, 2008). Further developments like the social cost benefit analysis show that the consideration of social principles is possible when analyzing the investment (Brent, 2006). Other investment analysis methods, such as the environmental impact analysis consider ecologic as well as social principles (Morris & Therivel, 2009). Public organizations like the World Bank have much experience with the consideration of sustainability principles in the project initiation and investment analysis (Bruce et al., 1976; Little & Mirrlees, 1974; Squire & Van Der Tak, 1975; The World Bank, 1997). They show how social costs and benefits can be considered in the investment analysis. Weiss (1978) defines the negation of the multi-dimensionality of each specific evaluation problem and the restriction to a one-dimensional performance criterion as the main problem of the above approaches of the social cost benefit analysis. Furthermore, the work of Little and Mirrlees (1969; 1974) and Squire and van der Tak (1975) about the social cost benefit analysis is criticized, because externalities and distributional effects are not sufficiently taken into account (Henn, 2004). In fact, the social cost benefit analysis of UNIDO or The World Bank use a more holistic approach than the traditional cost benefit analysis but focus only on some parts of sustainable development. Social costs and benefits are considered but, for example, environmental costs and benefits are not considered. As described above, it is an inconsistency of the World Bank that the developed social cost benefit analysis methods are not integrated into the LFA. In the LFA (Norad, 1999; The World Bank, 1997) a holistic cost benefit analysis is considered by using economic, social, as well as ecologic criteria for decision-making. One important sustainability issue in the LFA is the concept of participation that has been an important topic in development projects from the beginning (Finsterbusch & Van Wicklin Iii, 1987). Stakeholders are included in the whole process and involved in every decision. This creates a more open situation when analyzing the investment. It is allowed to discuss the criteria and choose criteria that are important and necessary for the investment decision. This creates an open and transparent decision process, and the final investment decision is not only based on economic factors. Another important issue is the involvement of stakeholders in the decision process. Via workshops, a strong participatory process design is realized. All decisions are made along with the workshop participants.

The consideration of stakeholders in the decision process of the investment is the first step in achieving a more holistic and sustainable investment. A participative process design allows an open decision process. The analysis of important stakeholders is the basis for such an involvement. Further developments of investment methods (e.g., the social cost benefit analysis) show that a more holistic consideration of costs and benefits is possible. The LFA (Norad, 1999; The World Bank, 1997) shows that the involvement of stakeholders in the process allows them to define criteria for the analysis that are important for them. This means that, for example, the costs and benefits of the stakeholders are considered. Another potential to achieve a holistic investment decision is to allow a qualitative and non-monetary description of costs and benefits. Therefore, the consideration of ecologic and especially social factors is possible. Another result of a qualitative description is a better description of costs and benefits of different stakeholders.

As described above, sustainability principles are an important factor in development projects. Approaches from multilateral development agencies focus on the consideration of sustainability principles in the project initiation, especially when analyzing the investment. The social cost benefit analysis methods from UNIDO or the World Bank (Bruce et al., 1976; Dasgupta et al., 1972; Little & Mirrlees, 1974; Squire & Van Der Tak, 1975), the concept of responsible investments (Louche & Lydenberg, 2011), ethical investments (Michelson et al., 2004; O'rourke, 2003), or the LFA (Norad, 1999) are good examples of how sustainability principles can be integrated into the project initiation process, especially into investment analysis methods. These examples are a good learning experience and can be used for further development of project management standards.

In summary, this paper presented an analysis of globally recognized project management standards (the PMBOK® Guide, ICB, PRINCE2) as well as the project initiation of development projects. They were analyzed on how and what sustainability principles are considered in the initiation process, especially in the investment analysis. A summary of the analysis results can be found in Table 4.

The identified learning potentials can be summarized as following:

  • The considerations of stakeholders in the decision process of the investment are the first step to achieving a holistic and sustainable investment.
  • A participative process design allows a transparent and open decision process.
  • The involvement of stakeholders in the investment analysis allows considering costs and benefits of stakeholders.
  • A qualitative and non-monetary description of costs and benefits allows the consideration of ecologic and especially social costs and benefits.
  • A holistic investment analysis method considers economic, social, as well as ecologic principles and considers also the costs and benefits of stakeholders.

Some limitations in this paper can be identified. First, the analysis is based on secondary data, because the globally recognized project management standards are used for document studies. It is certain that they represent project management practices carried out in real life. But, in fact, the standards are developed by practitioners discussing best-practices. Thus, it is reasonable to use them as a standard for current project management practices. Furthermore, these standards are the basis for certification of project managers all over the world. Second, only the LFA from the World Bank were analyzed. This document represents only one view and therefore a deeper analysis is necessary for a better understanding. However, some potential for the further development of project management standards was identified, but a stronger focus on the project initiation of development projects is necessary.

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