How to Improve Project Management in Croatia?
Hrvoje Sukić, Senior Project Manager, Vipnet usluge d.o.o.
Krunoslav Štriga, Senior Project Manager, Vipnet usluge d.o.o.
Two joint research studies have been done on Croatian project managers and subsequently on the companies doing projects. The main goal of the joint research was to provide insight into the project management usage and practices in Croatian companies. Secondary goals were to assess organizational project management maturity and to compare that with the global trends, to provide an overview of the factors that are influencing development of project management, and to provide insight about the application and characteristics of the project management methodologies used in Croatian companies. By completing these goals, research provides a valuable contribution as one of the first-of-its-kind assessments of project management practices in this geographical area. In addition, it assesses key characteristics of project management methodology and provides insight into the factors that influence its formation. It also brings the topic of project management to the attention of the academic community by fostering and proposing further areas of research. But, most of all, it provides a significant starting point for the future development of project management practices in the Croatia by displaying its strong and weak sides.
Following global trends over the past 20 years, project management is becoming a topic of interest in Croatia as well. Project management principles and practices are applied and accepted in Croatian companies aiming to obtain and maintain their competitive advantage on the market.
Croatia is still characterized by transformation from socialistic market to open market, similarly to other post-communist countries of Central and Eastern Europe. Companies are aiming to maintain competitiveness on the local market while trying to extend their business on even more competitive foreign markets. It is expected in the future, as Croatia is in the process of accession to the EU, that majority of companies will extend their business to European market.
The Global Competitiveness Report (World Economic Forum, 2008) is produced every year by the World Economic Forum. The report is based on the global competitiveness index (GCI) measuring national competitiveness on both microeconomic and macroeconomic levels. Competitiveness is defined as “the set of institutions, policies, and factors that determine the level of productivity of a country” (World Economic Forum, 2008, p. 3). As a very complex and comprehensive index, GCI is an interesting tool to show the position of Republic of Croatia in today’s economy and to try to draw some conclusions from the examples from more developed economies.
By using GCI, it can be shown how Croatia has been developing over the past period. The Croatian GCI in 2004 was 3.94, which ranked Croatia as 61 in worldwide economies (World Economic Forum, 2004). In 2008, that GCI increased to 4.22 but overall there was a fall from 57th to 61st place in comparison to 2007 (World Economic Forum, 2008). After making a couple of years of progress between 2005 and 2007, Croatia has been on a downward spiral ever since, and it was placed in position 77 in 2010 (World Economic Forum, 2010).
The project management community in Croatia began to develop during the last decade. In 2003, the Croatian Association for Project Management was established, and it is a national member of the International Project Management Association (IPMA). In 2004, the Zagreb, Croatia Chapter for the Project Management Institute (PMI) was chartered. During these several years, both organizations have grown to approximately 250 members each. The establishment of the organizations was a result of a growing need to organize professionals in the propulsive field of project management, but on the other hand, growth of the organizations in the following year most certainly contributed to the recognition of the project management profession and project management professionals. One of the signs of that recognition is recent regulation in construction industry, which requires all the project managers to be certified or at least to have comparable education in project management.
The main goal of the research was to provide insight into the project management usage and practices in Croatian companies. Furthermore, additional goals were to assess organizational project management maturity and to compare that with the global trends, to provide an overview of the factors that are influencing development of project management, and to provide insight about the application and characteristics of the project management methodologies used in Croatian companies.
Project Management Maturity Among Industries
The purpose of research on project management maturity was to investigate project management usage in Croatian companies, to find out the current level of organizational project management maturity and to compare that with the global trends. The research was conducted to assess the project management maturity level in companies in Croatia, to analyze and compare the average level of project management maturity depending on their industry among other things, and to compare findings against the available similar research and results of organization project management maturity. The maturity level was analyzed by using Kerzner’s project management maturity model (PMMM) and the associated assessment questionnaire on a sample of 79 Croatian companies that base at least part of their operations on projects. Kerzner’s PMMM (Kerzner, 2001) is comprised of five levels, with each of the levels representing a different degree of maturity in project management.
Prior to starting this research, it was assumed that organizations in Republic of Croatia are generally at a low maturity level of project management and that there are differences in maturity levels of different organizations depending on their industry. Program and portfolio management maturity levels are expected to be dependant to project management maturity level.
The research target group has been defined based on the criteria that each company is already applying project management principles for business purposes, suggesting again that their employees are members of project management associations in Croatia. The questionnaire was completed by different participants who are managing projects or are leading and directing project tasks in projects they are part of it and/or are familiar with the project management practice in their respective organizations. The survey was conducted using a Web-based questionnaire that was available for a four- month period (September 2008–January 2009).
The main goals of the research were to investigate the overall maturity level of the Croatian companies and to investigate if there are any differences in maturity levels based on the industry. Different analysis methods were selected to support achieving this goal.
Descriptive statistics are used to describe all questionnaire responses, mainly with frequencies. To investigate possible differences between industries according to maturity levels, the Kruskal-Wallis test was used (Weinberg & Abramowitz, 2008). Kruskal-Wallis test is a nonparametric test used in a situation with nominal (categorical) independent variable with two or more categories and an ordinal dependent variable. It tests “the null hypothesis (that all population distributions are identical) against the nondirectional alternative that at least one of the population distributions is different from at least one of the others” (Weinberg & Abramowitz, 2008, p. 512). Therefore, the rejection of the null hypothesis indicates that there is statistically significant difference for at least one category of the ones that are observed. The level of significance used in the analysis was α=0.05.
For the analysis between project, program, and portfolio management maturity levels, we used Spearman’s rank correlation coefficient, which measures the linear relationship between two ordinal variables not assumed to be normally distributed (Weinberg & Abramowitz, 2008). It also tests the null hypothesis that variables are independent, and the level of significance is again α=0.05.
Comparison between different categories, which are directly related to research questions, was performed only for categories with sufficient frequency.
Maturity Level of Companies in Croatia
The research results are expressed as a median and mean values. Since that maturity level is discrete in its basis, the use of median is found to be more appropriate. On the other hand, the reasoning for expressing the maturity level as a mean value is to ensure possible comparability of the results with the some of the previous researches.
The results show that the median level of the maturity level of the whole population of all companies included in the research is 2. Mean of the maturity level is very close, 2.13. Distribution of the companies by achieved project management maturity levels is shown in the Exhibit 1.
Exhibit 1. Distribution of companies by achieved project management maturity level.
The majority of the companies (47%) included in survey were assessed to operate at level 1 (common language). Twenty percent of the companies reached level 2, and level 3 (singular methodology) was achieved by 14% of the companies. Eleven percent of the companies are operating at level 4. The most mature, level 5, was achieved by 8% of the companies that are characterized by performing evaluation of information obtained through benchmarking and improvement of the singular methodology (Exhibit 1). Our first hypothesis that the overall maturity level is generally low is confirmed by this result.
Exhibit 2. Basic characteristic of the distribution of maturity levels.
The majority of the participating companies in the survey (45%) are from information and communication technology (ICT) industry. Furthermore, 18% of the companies are from finance and insurance industry, 15 % from construction industry, 8% trading industry, and 5% are from manufacturing. Other participating companies are from publishing, distribution, education, chemical, and oil and pharmaceutical industries were less than 9% combined. For the analysis of the maturity level of the industries, we selected only industries that were sufficiently represented in the whole population. For that reason, we compared finance, construction, and ICT, and we found a statistically significant difference between selected industries (p=0.02) in maturity levels distribution. Among them, only the construction industry has a median maturity level 1, while the finance and ICT reached maturity level 2.
ICT and finance companies are distributed at all maturity levels, with ICT having lower skewness (0.34) than finance (0.74) or construction (2.08) (Exhibit 2), which means that companies in ICT are distributed more closely to normal distribution which is peaked at maturity level 3. From Exhibit 3, it is visible that no construction companies have been assessed at maturity levels 4 or 5, and that result was surprising. The former evidences (Cooke-Davies & Arzymanow, 2003) and common belief put expectations that traditional engineering industries like the construction industry should score higher maturity levels as they apply project management for the longest period. ICT has been a driving force for some period now, by driving companies to find value in applying project management methods and techniques and by moving the discipline forward, most often by finding more advanced project management techniques.
Further analysis of maturity levels by other variables like company size and market on which companies operate show that the construction industry in Croatia is more oriented toward local market (55%) compared to the ICT industry, which mainly operates on both local and foreign markets (64%). Additionally, construction companies operations on foreign markets are more oriented toward less developed markets (e.g., Bosnia and Herzegovina) while among ICT companies could be found the ones that are oriented to more developed markets as well. This could also partially explain the difference in maturity levels between these two industries.
It was interesting to see in more detail that the ICT industry was the most represented industry in the sample with 46%. ICT companies with more than 500 employees have a median maturity level 4, which is by far highest result found in this analysis. Other ICT companies have median maturity level 2. The same explanation as for all companies with more than 500 employees could apply in a combination with the fact that 80% of these ICT companies operate on both local and foreign market.
Exhibit 3. Comparison of maturity level by industry, company size, and market.
Project Management Methodologies
Research and Analysis Method
Project management methodologies and its usage in Croatia were researched in order to get information how project management is developing in Croatia and what influences its current development. This part of the research was based on the following hypotheses: project management in Croatia is currently developing at a fast rate; more and more companies are introducing project management as a business process, most frequently used project management and that majority of methodologies in Croatian companies are based on PMI and IPMA standards.
Therefore, the research questionnaire was formed to collect information about which project management methodologies are used in Croatia and to what extent. It also questioned which standards have a main affect on the methodologies used and the main characteristics of methodologies used. To examine the quality of project management methodologies’ implemented in Croatian companies in order to find areas for improvement, the questionnaire contained questions distributed in these three groups: introduction (questions about basic information considering company); general questions (basic information about project management processes in the company); and methodology (detailed information about project management methodology used in company and quality of methodology implementation).
The research was aimed at all companies in Croatia that apply some form of project management. The goal was to enable all practitioners to answer the questionnaire, no matter if someone from their company already completed it. As already explained, project managers are mainly members of two major associations, each with its own subsidiary in Croatia, PMI and IPMA. Therefore, the target group for the questionnaire was formed for all members of the both associations, and the questionnaire was distributed among the members with the help of both PMI Chapter Croatia and IPMA Croatia. This made the target group homogenous. The total number of completed questionnaires was 130.
Descriptive statistics are used to describe all questionnaire responses, mainly with frequencies
The majority of research participants have experience in project management between 1 and 10 years, more accurately, 41% have 1–5 years, and 38% have 5–10 years of experience. Regarding their job positions and the roles they take on projects, 54% of participants are project managers and 29% are usually participating on projects as project team members.
The majority of companies where participants are employed are from the ICT (47%) industry. Manufacturing companies contributed with 12%, finance 10%, construction 8%, consulting 5%, research and development (R&D) 4%. The remaining 14% goes to other industries. In terms of size, 34% of the companies have less than 100 employees, 22% have between 101 and 500 employees, 8% have between 501 and 1,000 employees, 26% have between 1,001 and 5,000 employees, and 10% have more than 5,000 employees.
Considering companies’ organizational structure, 62% have a matrix structure, 24% functional, and 14% are projectized organizations. Seventy-three percent of the companies operate on a domestic and foreign market, 25% only domestically, and 2% operate only on foreign markets.
Exhibit 4. Usage of project management methodologies between industries.
As shown in Exhibit 4, project management methodologies are used in all companies in the consulting industry, while 98% of companies in the ICT industry use them, 93% in manufacturing industry, 75% in the construction industry and finance, and 60% of companies in R&D industry.
Exhibit 5. Project management methodology scalability.
Today, there is a growing trend toward the one size does not fit all concept (Shenhar & Dvir, 2007; Wysocki, 2007). Therefore, it was interesting to see if methodologies within companies are prepared for adapting them to different categories of projects. The results have shown that there is a high level of project management methodology scalability, especially in construction industries where all companies scale the methodology. It is not very different in other industries, with the rate of companies that do scale their methodology in descending order: finance (89%), ICT (83%), manufacturing (79%), construction (71%), and R&D (67%) (Exhibit 5).
Exhibit 6. Basis for project management methodology.
Project management bodies of knowledge are made of practices that are usually regarded as applicable most of the time to most situations. Therefore, they offer a general base for the formation of usable project management methodologies, with all the methods, procedures, templates, and best practices described (Crawford & Pollack, 2007; Morris, Jamieson, & Shepher, 2006; Project Management Institute [PMI], 2008a). The influence of the bodies of knowledge, for example, A Guide to Project Management Body of Knowledge (PMBOK® Guide)—Fourth Edition (PMI, 2008a) and IPMA Competence Baseline (IPMA, 2006) is given through the previously mentioned local organizations. On the other hand, practical implementation of project management methodologies within the particular company must address all the specifics of that company.
The results have shown that the majority of the project management methodologies used are companies’ proprietary (45%) methodologies and slightly less based PMBOK® Guide (41%). Only 8% of companies use methodology based on the IPMA standard (Exhibit 6). This could be explained by noting that company’s specifics actually do prevail and that those companies pick elements of the methodologies according to their own need, with no regard to certain standard. Regardless, if they choose to use some standard, the PMI® standards will prevail, probably because of its prescriptive nature that makes it suitable for methodology implementation.
Exhibit 7. Certification of the employees.
The growing popularity of the PMBOK® Guide is seen as well in the certification process that companies support. A vast majority of the companies, therefore, certify their employees according to PMI credentials (76%), whereas IPMA and other certifications are represented with 12% each (Exhibit 7).
Exhibit 8. Implementation of methodology elements.
Finally, the implementation of several methodology elements was assessed. The basic assumption was to find several knowledge areas or specific elements within knowledge areas that were expected to be at somehow decent levels. Our assumption was mostly confirmed (Exhibit 8). Risk management is implemented in all R&D and a majority of ICT companies (95%). Finance with 90% and consulting with 83% of implementation can be considered good as well, but manufacturing (69%) and especially construction (57%) shows significant prospects for improvement. Considering quality management, it is implemented in all of the consulting and construction companies that were assessed, followed by ICT (93%), manufacturing (77%), R&D (67%), and finance (60%). Lessons learned are well implemented in consultancy and R&D where all companies use it, but manufacturing with 62% of implementation is a good prospect for improvement. Best practices are an area of possible improvement for all industries because they span from 83% in consultancy to below average of 56% in the finance industry. The knowledge management area has the biggest differences: from 100% in consultancy to 36% in manufacturing. Considering all industries, we can conclude that quality management is the most used and mature area, whereas knowledge management is main area for improvement (shown in Exhibit 8).
Project Management Software Tools
Tools in project management are usually considered as software tools and are widely applied on projects throughout the organizations. However, previous research in Croatia had different results. The project management software tools are found to be widely used (Smadilo, 2006), while the other research found that usage was much lower, about one-half of the companies used some project management software tools (Brodar & Pihir, 2007). Therefore, we have considered the question of usage of project management software tools important, so we wanted to find out the real case.
The results showed again that all of the consulting and construction companies used software tools, and that some of the companies within the ICT industry did not use it (7%). In other industries, we concluded that software tools are used in majority of the companies (87%) (Exhibit 9).
Exhibit 9. Project management software tools usage.
Program and Portfolio Management
Companies were also assessed for the program and portfolio management maturity levels with additionally extended maturity level questionnaire. The null hypothesis that project maturity level, program maturity level, and portfolio maturity level are independent variables is tested and statistically significant differences are found (p<0.001) indicating that all maturity levels are highly dependent and that are linearly related, meaning the higher project maturity level, the higher will be the program and portfolio maturity level (Exhibit 10). The result is not surprising, bearing in mind that program and portfolio management are considered a higher level of organizational project management maturity (Andersen & Jessen, 2003). Usually, organizations involved in program and, subsequently, in portfolio management on higher levels of project maturity have program and portfolio maturity levels that are somehow lower than project maturity levels in the same companies.
Exhibit 10. Differences in project, program and portfolio management maturity levels.
Where to Go From Here
Previous discussion provides one of a first-of-its-kind assessment of project management practices in Croatia. It assesses key characteristics of project management methodology and provides insight into the factors that influence formation of project management methodology. Moreover, it provides a thorough assessment of project management in Croatian companies through project management maturity. Finally, research provides a significant starting point for further research in any area of the project management practices in Croatia.
We can conclude that there are some industries that show much higher levels of developed project management practices. First, to our surprise, the consulting companies used much of the practices we found relevant. ICT companies, which we expected that would excel, as it is main development driver of project management in Croatia, did not differ significantly from other industries. Maturity levels of ICT companies were the highest, but not much higher from the average, except for the ICT companies with more than 500 employees that were assessed at the highest maturity level of all the groups, level 4.
The somehow opposite situation is found with companies in the financial and construction industries. They were assessed at lower maturity level, and usage of project management methodologies and software tools is lower than average. Therefore, financial and construction industries present quite a growth prospect, as projects within these industries are definitely not less complex than within other industries. This is especially the case with the construction industry, which is traditionally good in project management, so they should implement some more comprehensive project management methodologies.
Knowledge areas were thoroughly discussed within the results discussion, and some recommendations for their improvement were given immediately. Mainly, the knowledge management area and tightly related best practices are definitely the most underdeveloped area. Therefore, in order to improve project management methodologies, companies should work harder to retain knowledge and experience gained on previous projects in order to improve future practices.
Instead of huge conclusion, a reflection to the introduction follows.
Given the good prospect of finalizing negotiations for EU accession, Croatia will probably become an EU member state in the short term. With this accession, companies will be more open to the Western market and not only to the neighboring countries. Given the propulsion of the project management profession in the last decades, it is certain that in order to stay competitive, companies have to invest in project management practices. Our belief and hope is that assessment as this one can help to identify areas for improvements and help companies build their project management expertise comparable to companies in their industries worldwide.
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© 2011, Mario Špundak, Hrvoje Sukić, Krunoslav Štriga
Published as a part of 2011 PMI Global Congress Proceedings – Dublin, Ireland