Explaining project success with client expectation alignment

Abstract

This study examines the management of client expectations during project implementation. The problem is that expectations of clients may change over the course of a project and may lead to disagreements and consequently to project failures. Based on stakeholder theory, we derive the concept of client expectation alignment. It represents processes to continuously involve clients to express their expectations, set their expectations, and adjust inappropriate expectations. With data from 206 projects, we analyze the relationships between client expectation alignment, goal changes, client support, and project success. Using structural equation modeling (SEM), the analyses reveal mediating effects of project goal changes and client support of client expectation alignment on project success. The study also identifies three important factors that facilitate the expectation alignment process: client competence, project team competence, and project manager's formal project decision authority. The results expand the stakeholder theory and offer a conceptual and empirical basis for research in project management. The results direct project managers to the mechanics and the specific challenges in achieving client expectation alignment and its consequences for achieving project success.

Keywords: client expectation alignment; goal changes; project success; stakeholder theory

Explaining Project Success with Client Expectation Alignment: An Empirical Study

Clients play an important role in projects because they are the ones for whom a project is usually intended and made use of. They determine project scope, influence project implementation and test a project's result (Project Management Institute, 2004). Consequently, meeting their needs is an important criterion for achieving project success (Turner, 1999; Takim, 2009). However, project managers report that it is hard to satisfy their client's needs, especially when projects are complex and face high levels of uncertainty (Boehm & Ross, 1989). The problem is that clients cannot always clearly describe their needs at project start or their needs may change over the time of the project execution. Concepts of quality management, like the house of quality (Griffin & Hauser, 1992), are used to identify explicit and unspoken needs. Meeting those needs would lead to client satisfaction only if they remain stable over the implementation of a project. But, needs are based on expectations, and they might change based on the dynamics in the business environments of projects.

As a result, project tasks often change as clients realize new needs during the design and production phases, especially in high value, complex industrial products, and systems projects (Hobday, 2000). In customer-driven industries like the aerospace industry, customer requirements are a major source for initiated project changes (Eckert, Clarkson, & Zanker, 2004). Although some other factors may contribute as well, clients are one of the main contributors for goal changes (Turner, 1999). The detrimental consequences of goal changes for project success are consistently confirmed by several empirical studies (Murphy, Baker, & Fisher, 1974; Lechler, 1998; Dvir & Lechler, 2004).

Due to the dynamic conditions of projects, conflicts are nearly inevitable. The support of clients in these situations seems to be important to achieve project success. The importance of client support for project success was also empirically confirmed (Karlsen, 2002; Villachica, Stone, & Endicott, 2004; Takim, 2009). Managing client expectations will lead to a stable relationship between clients and the project manager and consequently will foster the support of clients in conflicting situation.

Both relationships between managing clients' expectations to reduce goal changes and obtaining client support to achieve better project results seem to be important questions for the management of projects. Another question that seems equally important for the management of projects is the determinants of client expectation management. In this paper, we introduce the concept of client expectation alignment to represent the process to manage client expectations and address its importance in two ways: to reduce goal changes and increase client support. The second goal is to identify important determinants, which can facilitate the management of client expectations. The third goal of this study aims to derive important implications for the practice and research of project management.

The paper is organized in six sections. The first section lays a theoretical foundation based on a comprehensive literature review to define client expectation alignment and its relationship to goal changes and client support. The second section explains the conceptual model and hypotheses. Section 3 describes the data collection methods, research design, and data analysis methods. Section 4 gives the results of our empirical test of the hypotheses. Discussion and implications of the results follow.

Literature Review

Project Changes Induced by Instable Client Expectations

During project implementation, clients or customers are probably always in a situation where they would like to introduce changes (Globerson, 1997). Kreiner (1995) also described clients as those fighting for their rights to keep suggesting additions to, changes in, or new directions for the project, almost up to the time of delivery. The instability of client expectations may cause harmful results to projects. A project may lose its relevance when changes of client expectations during project implementation are ignored or disregarded (Kreiner, 1995). The downside of adapting to changes of client expectations is the problem that if the project is hypersensitive to its clients and adapts itself to every change of client expectations, it will face many changes (Kreiner, 1995). Not surprisingly, there is a growing awareness of the instability of client expectations by researchers (Frame, 1987; Parasuraman, Berry, & Zeithamel, 1991; Zeithaml, Berry, & Parasuraman, 1993; Kreiner, 1995; Yao & Murphy, 2002).

The research shows that instable client expectations lead to a loss of client support (Baccarini, Salm, & Love, 2004). The value of the project to the clients is reduced when their expectations are not met and consequently their support to the project is lost. Thus client support is essential to project success and loss of client support may bring detrimental results to projects (Villachica et al., 2004). The lack of client support is often reported to be a factor contributing to project failure (Takim, 2009).

The changes of client expectations are also effecting goal changes. Many empirical studies confirm that the definition of project goals is important for project success (Rubenstein, Chakrabarti, O'Keefe, Souder, & Young, 1976; Pinto, 1986; Thamhain & Wilemon, 1986; Larson & Gobeli, 1987). Project task or goal changes occur when clients realize new needs, especially in high value, complex industrial products and systems projects (Hobday, 2000). The change of client needs could lead to goal changes. The problem is that frequent goal changes have a strong negative impact on project performance (Dvir & Lechler, 2004; Murphy et al., 1974).

Reasons for Instability of Client Expectations

In this section, we develop a theoretical explanation for the dynamics of client expectations. We consider two assumptions to explain the instability. The first assumption is related to information asymmetry, and the second is related to the clients' motivation to maximize value.

Information asymmetry exists between project clients and the project team. As insiders, project manager and project team members are in a position to know more about the project than their clients are. Information asymmetry between clients and project team is an important reason to cause instability of client expectations. The clients do not have access to the same information as the project manager, and do not know if the project represents their interests and follows an appropriate process to deliver a product that will meet their needs. The existence of information asymmetry between them creates the potential for mistrust (Turner & Müller, 2004). As a response, the clients may adjust their expectations to a more demanding level out of fear that the project team will seek to maximize the team's utility rather than theirs (Parasuraman et al., 1991). In addition, without updated knowledge of the project value proposition and the project status from the project team, clients may change their expectations to impose new requirements since they have no idea of the impacts that these changes will have on projects (Gil, Tommelein, & Schruben, 2006).

From a traditional economic perspective, researchers state that a major aim of consumers is to maximize their utility or value (Fishburn, 1987; Eatwell, Millgate, & Newman, 1987). As Machina (1987) stated, consumers always choose that “prospect,” which maximizes the value of their individual utility function at a particular point in time. Also from the stakeholder perspective, stakeholders can be seen as supplying the firm with critical resources and in exchange expecting their interests to be satisfied (Hill & Jones, 1992). As for customers, they supply the firm with revenues and expect value for money in exchange. Clients try to maximize their value in any situation they encounter. On one hand, typically, clients do not have a clear understanding of what they want from a project. They may feel something is wrong or needs an improvement, but do not know what kind of improvement this should be. Also, they may be unfamiliar with that kind of project or they do not have the knowledge to understand the technological design. As a result, clients may just have fuzzy or implicit expectations and are not able to clearly specify their needs at the start (Ojasalo, 2001). However, when they could clearly express their needs at a later stage or new ones reveal through their experiential learning during the project implementation, clients will change their expectations to maximize their value. Even if clients have clear expectations at an early project stage, they might not be satisfied with their past choices at a later project stage particularly with increasing project duration. Their changed expectations depend on their experiences, or temporal dependencies and their dissatisfaction with their past choices (Huber et al., 1997).

Thus, as clients are motivated by value maximization, their change of expectation is contingent on new information they perceive from the environment (Zeithaml et al., 1993; Kreiner, 1995). This is also the reason why researchers argue that client needs are dynamic and misunderstood (Frame, 1987; Parasuraman et al., 1991).

From the previous analysis, it is quite evident when managing client expectations, the project team needs to constantly inform the clients in order to reduce information asymmetry between project team and clients and consider value maximization to stabilize client expectations.

Client Expectation Alignment

To avoid changes of client expectations, it is important to constantly monitor them and communicate with the clients potential issues. We call this process client expectation alignment to control for the instability of client expectations. Client expectation alignment in this paper is defined as the processes to bring client expectations into alignment with project objectives and project team's ability to meet the requirements. These processes may include allowing clients to express their expectations, setting their expectations, and adjusting inappropriate expectations. All these processes rely on information sharing and mutual understanding (Rogers, 1986). As Reich and Benbasat (2000) argued that such information sharing over time causes the individuals to converge to achieve the mutual understanding and further support. Since alignment is achieved by maximization of mutual information, a regular two-way communication between project team and clients is especially important.

Client expectation alignment is the key to manage client expectation with the intent to reduce goal changes. To align client expectations with the reality of the project, clients have to be constantly persuaded to maintain realistic value expectations. Their perceived value of the project will be shaped, reminded, and reinforced, leaving no necessity to change. Taylor (2006) suggested that educating the client to have a realistic expectation of how the project will progress is a key to ensure client satisfaction. Client expectation alignment is an important educational process. Moreover, client expectation alignment through communication, especially when the communication is timely, can serve to promote trust by overcoming information asymmetry and clarifying misunderstanding (Etgar, 1979; Moorman, Deshpande, & Zaltman, 1993; Turner & Muller, 2004; Pinto, Slevin, & English, 2009). Parasuraman et al. (1991) also stated that open, regular, two-way communication paves the path for trust. Research suggests that when trust is established, client expectations tend to stay stable (Anderson & Narus, 1990; Parasuraman et al., 1991; Morgan & Hunt, 1994; Yao & Murphy, 2002). Clients are likely to buy into the project product and process or keep their expectations if they believe the project team is trying to be fair and behave as expected. Therefore, client alignment through regular mutual communication should help stabilize expectations and further reduce the frequency of goal changes during project implementation.

Client expectation alignment can also help increase support from clients. According to the theory of planned behavior, a person's behavior is driven by an intention to perform a behavior and that intention can be predicted from three factors: attitude toward the behavior, subjective norms, and perceived behavioral control over the performance of the behavior (Ajzen, 1991). Since client's support of a project can be considered a behavior choice, the forces that govern general human behavior can be relevant to this specific behavior. Client expectation alignment mainly influences the attitude of the clients to get their support. The attitude refers to “the degree to which a person has a favorable or unfavorable evaluation or appraisal of the behavior in question” as Ajzen (2005, p.118) states “people intend to perform a behavior when they evaluate it positively.” On one hand, the alignment process will bring client expectations into alignment with project objectives. When clients believe the project team strives to meet their expectations, they tend to have a favorable evaluation of the project and try to cooperate and commit to achieve the common goals. On the other hand, during the alignment process, the assumptions held by the clients for the project are realistic and consistent with the deliverables promised by the project team. In this case, once a project is faced with difficulties, clients with prepared minds will not evaluate project unfavorably and will continue to support the project rather than be disappointed. Therefore, client expectation alignment helps the project to gain the necessary commitments and buy-in from the clients through managing their expectations.

Model Development and Hypotheses

Based on the previous discussion about theoretical background and literature review, we drew the conceptual framework of our study in Figure 1. As it shows, we use a multidimensional approach for assessing project success, which was recognized by many other researchers (Pinto & Mantel, 1990; Tatikonda & Rosenthal, 2000; Shenhar, Tishler, Dvir, Lipovetsky, & Lechler, 2002; Lechler & Dvir, 2010).

Figure 1: Conceptual framework of this study.

Goal changes in our study are the changes that reflect a change in the project goals with high importance and high frequency. It is typically caused by the conscious decisions of stakeholders as we assume in this study that clients are one of main reasons for goal changes (Baccarini et al., 2004). These frequent goal changes are harmful to the project. Project goals are supposed to provide direction for the project team. Frequent goal changes may break down efforts and cause difficulty in efforts to implement the project. As Williams (1999) recognized, goal changes will result in product and project complexity while continuous changes may make it extremely difficult to deliver the project in a stable way with constrained elements assigned to a project. Thus, project progress may be hindered because of ad hoc changes or even terminated (Baccarini et al., 2004). A few empirical studies have demonstrated the direct negative effects of goal changes on project success (Murphy et al., 1974; Lechler, 1998). For example, Lechler's study (1998) showed that a lack of continuity in goals is significantly related to failed projects. Therefore, we expect a negative impact of goal changes in all measures of project success.

Hypothesis 1: Goal changes are negatively related to project success.

The basic idea of project stakeholder theory is that the project has relationships with many constituent groups and the support of these groups needs to be considered and maintained. As clients are one of the primary stakeholders in the project, their support is important to project success. When clients support the project, they will share a vision of common success measures with the project team. In addition, their support will bring their commitment and buy-in to the project that lays the foundation for successful development and implementation efforts of the project team (Villachica et al., 2004). On the other hand, lack of client support is often reported to be a factor contributing to project failure (Takim, 2009). Therefore, we propose that client support will positively impact the success of project.

Hypothesis 2: Client support is positively related to project success.

In this study, client expectation alignment means the processes to bring client expectations into alignment with project objectives. These processes include the extensive involvement of clients to express their expectation, timely communication between the project team and clients to increase shared understanding of the project and the like.

Taylor (2006) suggested that educating the client to have realistic expectations of how the project will progress is a key to ensure client satisfaction. Some empirical studies have also been conducted to test the effect of client management on project success. They find that client involvement (Dvir, Lipovetsky, Shenhar, & Tishler, 1998; Deakin, 1999; Hyvari, 2006), client consultation, and client acceptance (Pinto & Prescott, 1988), or client communication (Mo & Ng, 1997; Gopal, Mukhopadhyay, & Krishnan, 2002) are critical success factors. Quality improvement tools and techniques in project management also help heighten awareness of the importance of gathering input from the customer (Kumar & Wolf, 1992; Jonker, 2000; Jugdev & Müller, 2005). Pinto and Slevin (1988) emphasized the importance of interaction with the project's clients throughout the duration of the project. Further, researchers confirmed the role of interaction with clients through different kinds of projects such as new product development (Gruner & Homburg, 2000), design and build project (Mo & Ng, 1997; Chan, Ho, & Tam, 2001; Deakin, 1999), defense development projects (Dvir et al., 1998), offshore software development (Gopal et al., 2002), the high-technology projects (Hobday, 2000), and the large engineering design project (Gil et al., 2006). For example, Gruner and Homburg (2000) found intensity of customer interaction and closeness with customers to be significant in early and late stages of new product development (NPD) projects.

In sum, we expect the processes to align client expectations will increase the efficiency of the project, improve the effectiveness, and ensure client satisfaction and economic success.

Hypothesis 3a: Client expectation alignment has a strong positive effect on project success.

In our conceptual discussion, we demonstrate that managing client expectations is an effective way to reduce client induced goal changes. In practice, especially in software project management, managing user expectations has been considered increasingly important. Researchers point out that managing user expectation is to ensure that the assumptions held by the user for a software project are realistic and consistent with the software deliverable promised by the project team (Baccarini et al., 2004; Ginzberg, 1981). These expectations “must be correctly identified and constantly reinforced in order to avoid failure” (Schmidt, Lyytinen, Keil, & Cule, 2001). That is the function of client expectation alignment. Client expectation alignment is about managing the promises. Project goals will have a better chance of staying stable when a project team's promises reflect the project actually delivered rather than an idealized version. At the same time, project teams should help clients set expectations at a reasonable level before the project starts, and then reinforce their expectations and get their buy-in throughout the project. Therefore, client expectation alignment is the key to manage client expectations to reduce the frequent goal changes through educating clients to have realistic expectations, reinforcing their perceived value of project and clarifying misunderstanding between clients and the project team. We expect a negative effect of client expectation alignment on goal changes.

Hypothesis 3b: Client expectation alignment has a strong negative effect on goal changes.

Client expectation alignment is expected to increase support from clients based on our conceptual discussion. When clients' expectations are aligned with project objectives, their attitudes toward the project are also influenced in a positive way. According to the theory of planned behavior, while the clients are aware that the project team is striving to meet their expectations, they are willing to cooperate and commit to achieve shared goals. Their favorable evaluation of the project also ensures a necessary buy-in and support during the implementation of the project. Therefore, we propose:

Hypothesis 3c: Client expectation alignment has a strong positive effect on client support.

We also expect client expectation alignment to relate indirectly to project success through client support and goal changes as mediators. Indeed, as client expectation alignment reduces the frequency of goal changes, project success will be improved since the negative impact of goal changes on project success is reduced. Similarly, as client expectation alignment increases client support, it becomes increasingly likely that the client support will increase project success.

Considering the findings from prior empirical literature that client management has significant direct effects on project performance, we expect that client expectation alignment will still have significant direct effects on project success. Stated differently, we expect the relationship between client expectation alignment and project success will be partially mediated by goal changes and client support.

Hypothesis 4a: Client support partially mediates the relationship between client expectation alignment and project success.

Hypothesis 4b: Goal changes partially mediate the relationship between client expectation alignment and project success.

Since client expectation alignment is so important, we explored important factors that might facilitate the alignment processes. We take into consideration the competence and authority of relevant stakeholders including clients, project team, and the project manager.

In Cleland and Ireland's (2004) book, competency is defined as being properly qualified and capable, adequate for the stipulated purpose. Individuals' competency depends on their knowledge, skills, and attitudes. Since a project is usually conducted within the context of some technology, we consider the technical knowledge of clients and the project team as part of their competence. We also consider sufficient training and understanding of project team.

Cleland and Ireland (2004) define authority as the power to command others to act or not to act. Project managers' authority may be defined by their position and their competency. With high competence or authority, clients, the project team, and the project manager have more capabilities to influence each other and tend to have a shared vision of success criteria. In the client expectation alignment processes, when both clients and the project team have more relevant technological knowledge, it is easier for them to communicate and achieve a common understanding of the implementation process, its complexity, and its limitations. The clients' expectations will be more realistic accordingly. The project manager with sufficient power builds the foundation to align client expectations with project objectives since authority will be needed to make change decisions about the project to align project with client expectations or to negotiate with clients to bring their expectations in alignment with the abilities of the project team to deliver the project. Thus, we expect client competence, project team competence and PM authority will positively influence the client expectation alignment.

Hypothesis 5a: Client competence is positively related to client expectation alignment.

Hypothesis 5b: Project team competence is positively related to client expectation alignment.

Hypothesis 5c: Project manager authority is positively related to client expectation alignment.

Methodology

Research Sample and Data Collection

The proposed model was tested based on a sample of project data collected between 2001 and 2006 in the United States. A detailed questionnaire was developed to collect information on the success factors of project management. The collection was assisted by project team members and/or project managers. They were asked to select a single successful or failed project that was recently completed within their organizations, or that was close to completion, with a budget of at least US$500,000 and duration of at least six months. These individuals were then given three identical questionnaires, which they were asked to distribute to the project manager, a core project team member, and the senior manager responsible for the funding of the project. The questionnaires were independently completed by the different participants. As a result, at least two members of each project we selected responded to the survey, which resulted in over 600 surveys and a sample of 249 projects. Thirty-nine percent of our respondents are project managers, 36% are project technical team members, 9% are project administrative team members, and 17% are other members. The multiple respondents help to avoid the common rater variance and reduce the expected value of correlation between systematic sources.

The sample included different kinds of projects. As shown in Table 1, we used the project manager's response about type of project. In our sample, 39% of the projects are new product development projects, IT/IS projects count for 34%, and construction projects and R&D projects are 8% separately. The sample also includes 5% organizational projects, 1% investment project, and 6% other kind of projects we did not specify in our questionnaires. In sum, our sample provides a representative cross-sectional distribution of projects conducted in U.S industry.

Table 1: Distribution of project types.

Research Measures

The questionnaires used in this study include 199 single items and some quantitative measures of project-specific characteristics. Out of these, 67 items were directly taken from Pinto's questionnaire, with permission of the author. The remaining items were developed with the help of some experienced project managers. Each item was assessed on seven-point rating scales, with a range from “strongly disagree” to “strongly agree.” All constructs and items relevant to this study are listed in Table 2. We applied existing and validated measurement from prior literature. Those constructs consisting of multiple items were tested for composite validity using factor analysis and Cronbach's alpha. The Cronbach's alpha scores ranged from 0.83 to 0.95, well above the acceptable scale levels as suggested by Van de Ven and Ferry (1980).

Project Success. There is no commonly accepted framework to measure project success. Reviewing the project management literature, Brown and Eisenhardt (1995) and Tatikonda and Rosenthal (2001) identified two dimensions of new product project performance: (1) the operational success, and (2) market success. Pinto and Mantel (1990) provided three aspects that were concerned with internal efficiency and external effectiveness of project performance: (1) the implementation process itself; (2) the perceived value of the project; and (3) client satisfaction with the delivered project. Shenhar et al. (2002) suggested another three success criteria: (1) meeting design goals; (2) benefit to the customer; and (3) benefit to the organization. Following our previous study (Lechler & Dvir, 2010), we use a four-criteria success measure: efficiency, effectiveness, customer satisfaction, and economic success. The four criteria are confirmed by the exploratory factor analysis using our sample and the Alpha values of the four success scales are between 0.85 and 0.95 indicating high reliability of the success measure.

Client Expectation Alignment. We measured this construct by integrating items from the scales of client consultation and client acceptance developed by Pinto and Prescott (1990). In their study, client consultation means communication and active listening to concerned parties and potential users. The items measuring this construct include “the clients had been given the opportunity to provide input early in the project development stage,” “the clients were told whether or not their input was adopted into the project plan.” Therefore, this process helps clients express their expectations, which is necessary for the project team to align the project objectives with the client expectations. The typical items for client acceptance are “potential clients had been contacted about the usefulness of the project output,” “adequate advanced preparation had been done to determine how best to ‘sell' the project to the clients,” and the like. From an expectation perspective, these activities allow the project team to keep clients' expectations realistic and aligned with the abilities of the project team to deliver the project. In addition, two-way communication and mutual adaption between the project team and the clients reflected in those two constructs are necessary to pave the way for our concept of client expectation alignment. Thus, we include items from both of these construct as measures of client expectation alignment. The result of exploratory factor analysis showed only one main factor underlying the items, which suggests undimensionality of the created measurement construct (Hair, Anderson Jr., Tatham, & Black, 1998). The reliability of this measure is 0.89 and suggests a good reliability of this scale to measure.

Goal Changes. Two items are used to measure this construct. This scale emphasizes the frequency and the magnitude of the change in project goals. The alpha of this variable is 0.85.

Client Support. The item used to measure this variable is “In case of difficulties, the clients supported the project team.” If the clients can support the project team in case of difficulties, they must have high support of the project. Therefore, this item represents the scale to measure client support.

Client Competence. Client competence mainly measures the technical competence of the clients using the item “During the negotiation process the client appeared knowledgeable regarding the technical aspects of the project.”

Team Competence. Three items are used to measure team competence. One item is about sufficient training, another one is about technical competence and the third about the project understanding of the project team. The alpha of the construct is 0.83.

Project Manager's Authority (PM authority). PM authority is measured by four items describing the sufficiency of project manager's authority to negotiate with clients, make necessary decisions and make change decisions to achieve the project goals. The alpha of PM authority is 0.84.

Table 2: Measurement.

Data Analysis

Because the variables in this study were conceptualized at the project level, individual scores had to be aggregated to the project level by taking the average of project members' scores. We calculated the within unit agreement rwg(j) to justify our aggregation. The rwg(j) statistic estimated the consistency of judgments made by project manager, project team members and senior managers in a project for each relevant variable. The average rwg(j) values for all scales were above the generally acceptable level of 0.70 (George, 1990) except for those of 43 projects which showed a lower agreement among project team members. Therefore, we deleted the data of those 43 projects and aggregated the left 206 project teams. There were no big differences in the distribution of type of respondents and projects. All further analyses in our study were based on the sample of 206 projects.

The mediational hypotheses were tested using a structural equation modeling—LISREL. The advantage of LISREL is to allow simultaneous analysis of hypothesized causal relationships for multiple variables (Jöreskog & Sörbom, 1993). It greatly simplifies the modeling of mediation by allowing one to incorporate measurement error and provides modeling of nonrecursive structures (Brown, 1997), which are two limitations of multiple regression models (Baron & Kenny, 1986). LISREL can also give a diagram of all relationships among variables, compute indirect effects and handle missing data in a better way. Multiple criteria were used to evaluate the fit of the structural equation model such as chi-square, adjusted goodness of fit index (AGFI), and the comparative fit index (CFI). To accept the model, the following criteria have to be satisfied: a chi-square with P above 0.05 (Browne & Cudeck, 1993), AGFI > 0.90 (Baumgartner & Homburg, 1996), and CFI > 0.85 (Bentler & Bonett, 1980).

Results

Descriptive Statistics

Descriptive statistics and zero-order correlations are provided in Table 3. Consistent with prior studies, goal changes are negatively correlated with all success measures (r between –0.33 and –0.4), while client support is significantly positively correlated with success (r between 0.53 and 0.77). Other significant correlation includes the relationship between client expectation alignment and project success (r between 0.40 and 0.65). As we expect, client expectation alignment is significantly negatively related with goal changes and positively related with client support. Finally, the correlations suggest that client competence, team competence, and PM authority significantly relate to client expectation alignment with a correlation coefficient of 0.50, 0.60, and 0.38 respectively.

Table 3: Descriptive statistics and correlations among the measured variables.

Note: * Correlation is significant at the 0.05 level (2-tailed).

** Correlation is significant at the 0.01 level (2-tailed).

Tests of the Research Hypotheses

We applied LISREL analysis to test the interaction of our model variables simultaneously. The results of the structural equation model are presented in Figure 2. Fit indexes suggested that the model fitted reasonably well (χ2 = 2.19, df = 1, P–value=0.14, AGFI = 0.94, CFI =1.00). Parameter estimates are from the completely standardized solution and are significant at P < 0.05 or better. Since all tests achieve or exceed the required fit criteria, the final structural equation model is accepted.

Figure 2: Results of the structural equation model.

Hypothesis 1 stated that goal changes would be negatively related to project success. The significantly negative path coefficient (-0.14) of goal changes on project success supports this hypothesis. The high positive impact (+0.59) of client support on project success fully supports our second hypothesis H2. As the positive path coefficient (+0.24) shows project success is significantly affected by client expectation alignment. Hypothesis 3a describing the direct impact of client expectation alignment on project success is supported. The signs of the path coefficients indicate negative effect (-0.32) of client expectation alignment on goal changes and positive effect (+0.56) of client expectation alignment on client support. Thus, Hypotheses 3b and 3c proposing the effects of client expectation alignment on goal changes and client support are also fully supported.

Table 4: Direct and indirect effects to project success.

Hypotheses 4a and 4b proposed that client expectation alignment would be mediated by goal changes and client support to influence project success. Baron and Kenny (1986) defined that a variable functions as a mediator when it meets the following conditions: (1) variations in levels of the independent variable significantly account for variations in the presumed mediator (i.e., Path a); (2) variations in the mediator significantly account for variations in the dependent variable (i.e., Path b); and (3) when Paths a and b are controlled, a previously significant relation between the independent and dependent variable is no longer significant, with the strongest demonstration of mediation occurring when Path c is zero. In our model, Condition 1 was assessed by H3b and H3c and was supported. Condition 2 was assessed by H1 for the effect of goal changes on project success and H2 for that of client support on project success. Condition 2 was also met for both mediators. Condition 3 was assessed by the significance test of indirect effects of client expectation alignment on project success. LISREL gave the direct effects of client expectation alignment on project success (+0.24), total effects (+0.62), and total indirect effects (+0.38) as shown in Table 4 and significant tests of these effects. Since we proposed two mediators, we followed Brown's (1997) suggestions to decompose the total indirect effects of two mediators into two specific indirect effects. The specific indirect effects of client expectation alignment on project success via goal changes (0.05) and client support (0.33) were significant. Since three conditions for a mediational effect to be present were met, Hypothesis 4a, describing the mediational effect of goal changes and 4b describing the mediational effect of client support, are fully supported.

The exploratory hypothesis H5, proposing facilitating factors of client expectation alignment, was tested by a linear regression model using a stepwise method. Stepwise regression is a procedure in which the most correlated variable is entered into the equation first, and then remaining variance in dependent is explained by the next most correlated variable and so on. The results of the regression model are shown in Table 5. All three determinants are significantly related with client expectation alignment. Project team competence is the most important determinant. The three variables in total account for 50% of variance in client expectation alignment. We also tested the collinearity among independent variables and it was not a problem in the model. Therefore, Hypothesis 5 is supported.

Table 5: Regression results with client expectation alignment as the dependent variable.

Notes: * p<0.05 ** p<0.01

Standardized betas are given with standard errors in parentheses.

Discussion

Prior literature suggests that taking into account the needs and requirement of project stakeholders is an essential element of project success (Cleland, 1986; Diallo & Thuillier, 2005; Olander & Landin, 2005). Our study supports this view. In addition, we suggest that dynamics of client expectations drives the need for managing client expectations. We developed a conceptual model of instability of client expectations to understand its effects and possible reasons. The instability of client expectations may cause a project to lose its relevance and client support or it may lead to frequent goal changes, both of which are harmful to project performance. We made two assumptions to explain why clients change their expectations: one is information asymmetry, and the other is value maximization. Understanding the underlying reasons that cause clients to change their expectations helps us to propose that client expectation alignment will stabilize client expectations. It is the processes to align client expectations with project objectives over project implementation. Our result showed a significant and highly positive relationship between client expectation alignment and all project success criteria including efficiency, effectiveness, customer satisfaction, and economic success.

Moreover, we explored how alignment processes influence project success through reducing goal changes and increasing client support. Goal changes and client support are proposed to mediate the effects of client expectation alignment on project success. The mediational effects are fully supported. However, goal changes have a weaker mediational effect (7% of the total effects), while client support has a much stronger mediational effect (54%). One possible reason is that negative effects are usually hard to detect, while positive effects are overestimated in empirical studies. The results confirm the findings in the literature of change management. The study supports the argument of researchers (Gil et al., 2006; Hobday, 2000; Eckert, Clarkson, & Zanker, 2004; Baccarini et al., 2004) that clients are the main causes for change requests in projects due to instability of their expectations. The negative effect between goal changes and client success is consistent with other researchers (Murphy et al., 1974; Lechler, 1998).

Our results also confirmed the significant effect of client support on project success, which is a general success factors suggested by stakeholder theory. Combing these findings, we can see that client expectation does not only influence project success directly, but it is also mediated through goal changes and client support to improve project performance.

Finally, it is worthwhile to note that three factors were found to be important to facilitate the alignment processes: client competence, project team competence, and PM authority. These three factors explain about 50% of variance in client expectation alignment. They represent important preconditions to align client expectations with project objectives.

Implications and Outlook

In this paper, we focus on management of the client. Specifically, we are interested in management of client expectations represented by client expectation alignment. By analyzing the interactions between client expectation alignment, client support, goal changes and project success, this study contributes to stakeholder theory. Stakeholder management is an important part of the management of an enterprise and the management of a project. From a stakeholder management perspective, a project needs to simultaneously satisfy a variety of its stakeholders each of whom has its own desires and expectations with respect to the project. These desires create fundamental conflicts when taken together (Boehm & Ross, 1989; Gil & Beckman 2007). For example, the users of a software project want a user-friendly system and as many functions as possible, while the project team desires to deliver the project as soon as possible with necessary functions under budget. However, relatively little has been published about the dynamics of stakeholder expectations and mechanisms of how this dynamics influence projects. This study addresses this gap. Our study showed that expectations of clients may change and lead to problems such as frequent goal changes and lack of client support.

The results of this study also showed that the management of client expectations has significant effects on project success both directly and indirectly through goal changes and client support. The analysis provides insights into the role of client expectations and their stability for project performance. Project management research should consider both direct and indirect effects of client expectations on project success.

This study makes a contribution to the practice of project management in two ways. First, according to our study, management of client expectation helps improve project performance. The results also suggest the nature of alignment processes. One important suggestion is allowing clients to express their expectations from the start and during the project. A second suggestion is rather than tailoring the project to meet the client's unrealistic expectations, the project team may attempt to educate their clients to let them know what is achievable through the project by intense communication. The clients become more realistic when they understand the implementation process, its complexity and its limitations. Once they become committed to the project, they will tend to support the project even in difficult situations. Second, our study shed light on the management of change. Prior literature provides many prescriptive suggestions to manage changes caused by clients such as making more explicit to clients the economic impact of changes, formulating contractual arrangements to shape the behavior of the parities (Dayanand & Padman, 2001) or frequent meetings with clients to discuss the status of the project (Pitsis, Clegg, Marosszeky, & Rura-Polley, 2003). However, our study explored mechanisms to stabilize client expectations. Our results showed that management of client expectations did reduce goal changes. Therefore, this study helps the practitioners who struggle with frequent change requests from clients to understand their issue in a deep way and develop their own alignment process accordingly.

Although the study offers several new insights, some limitations should be noted. One limitation is that although we proposed a conceptual model for reasons of instable client expectations, we were not able to directly test our theoretical model. Another limitation is the common method variance problem, which is attributable to the measurement method itself (Podsakoff, Mackenzie, Podsakoff, & Lee, 2003). One potential source of the common method variance is common rater problem, which means the same person is asked about his or her activities and outcome. Since we collected project data from at least two members of a project team, this doesn't seem to be a significant problem. Another potential source is related to the same questionnaire we used for collecting all of data. We conducted a Harman's single-factor test, and there was not a primary factor emerging from the confirmatory factor analysis. Therefore, the common method variance in our paper does not pose any significant problems. Another limitation is the absence of a direct measure of client expectation. Finally, the design of this study is cross-sectional, which limits our ability to draw causal inferences.

From this study, we gain some suggestions for further research. First, we introduced an operational definition for our core variable: client expectation alignment that needs to be more accurately defined and operationalized. At least alternative measurement models should be tested. Second, we explored the effect of management of client expectations in this paper, and it was found to be beneficial to the project. A further direction may be how to manage expectations of different internal and external stakeholder groups and its effect on project success. Third, project uncertainty may be a factor that could be added to our suggested model as a moderator variable. When the project is under high uncertainty, the completion of the goals involves high risks. In this situation, aligning client expectations with project objectives to get necessary commitment and buy-in from clients is more important for the project than under lower uncertainty. Fourth, the existence of significant direct effect between client expectation alignment and project success indicates more mediating factors except goal changes and client support. We may develop a more complete theory about instability of client expectations to find more significant mediators that help us understand the role of client expectation alignment in project management.