Project Management Institute

Relationship between project attributes, project performance, and project governance dimensions--building the theoretical framework

Abstract

Projects differ from each other in terms of their attributes and may require different management and governance mechanisms so that the specific project needs, based on the changing context, can be fulfilled. This paper focuses on finding the relationship between project types and project governance by exploring the relationship between project attributes and project governance dimensions or roles, taking into account the moderating impact of project performance on this relationship.

The research takes a transaction cost economics perspective using a contingency approach. The development of theoretical framework, through literature review, is part of a larger research project, which will be conducted for information technology (IT) industry within Gulf Cooperation Council (GCC) countries.

Introduction

The basic nature of humans, to learn and do new things, has created a sense of competition and uncertainty. Because of this uncertain nature of our environment, organizations have to constantly change the way they are doing work, to keep them competitive, and perform different functions in a more productive manner. That might be the reason that Turner and Keegan (2001) stated that our current environment is a “more project-based economy” (p. 254).

Such organizational changes and resulting initiatives cannot be handled through the routine operations that organizations perform; thus organizations have to create projects within them, or among themselves, which can keep them more viable and competitive in the market. These projects are formed to meet the desired objectives, using the provided resources, within the defined constraints.

Although similar in terms of the certain attributes these projects may differ in complexity, size, organizational setup and other attributes. Because of these differences all project cannot be managed in a similar manner and will require different management models (Shenhar, 2001).

Along with management, these projects need surveillance, support, and guidance from executives to achieve the desired objectives. This is part of the governance mechanism that needs to be put in place. However, the governance mechanism for projects cannot be applied in a similar manner for all types of projects (Miller & Hobbs, 2005). This paper focuses on the relationship between project attributes and project governance dimensions or roles.

From a theoretical perspective, various researches have been carried out that discuss these concepts. Exhibit 1 identifies some of these studies.

Related concepts in literature

Exhibit 1: Related concepts in literature

However, a study has not been carried out in the Gulf Cooperation Council (GCC) region related specific to project governance. Also, it appears that there has not been any research conducted, which related project attributes and project governance in terms of project performance. Thus, it will be valuable to add the perspective, where the relationship between project attributes and project governance dimensions is viewed from the aspect of project performance.

From a practitioner's perspective, it will be beneficial to provide insight into designing context sensitive project governance frameworks. This will help organizations to deploy effective governance mechanism for different types of projects, which can adjust based on changing project contexts, especially project's performance.

This paper focuses on the following research questions:

  1. Is there a relationship between project attributes and project governance dimensions?
  2. Does the project performance influence the relationship between project attributes and project governance dimension?

Reviewing the Literature

Project and Project Attributes

Defining a Project

Office of Government Commerce (OGC) defines a project as “a temporary organization that is created for the purpose of delivering one or more business products according to an agreed Business Case” (OGC, 2009, p. 3.). Project Management Institute (PMI) states that “a project is a temporary endeavor undertaken to create unique product, service or result” (PMI, 2008, p. 5). Association for Project Management (APM), on the other hand, defines project as “a unique, transient endeavour undertaken to achieve a desired outcome” (APM, 2009, p. XV). These definitions focus on three project characteristics:

  1. Temporary organization—represents a beginning and an end;
  2. Endeavour or production function—represents some actions; and
  3. Objective or outcome—represents something to achieve.

PMI's definition focuses on the unique of the outcomes, whereas APM's definition refers to the uniqueness of the endeavour. OGC does not explicitly refer to the uniqueness of a project.

Lundin (1995) referred to projects as a tool for goal accomplishment and defined them “as the successful result of separating the realization of a task from its environment (a separation that has been denoted “bracketing”), whereby better conditions are created for the realization (given that realization is in fact what counts)” (p. 315). Müller (2009) concurred to the goal accomplishment concept, and mentioned that projects “are created to accomplish an organization's strategy” (p. 15).

While working toward a theory of project management, Turner (2006a) explained the concept of project from different perspectives:

  1. A “project is a temporary organization, which the owner creates to create value” (Turner, 2006a, p. 3), which means that project is transient and a production function which generates value.
  2. A “project consumes resources to do the work, to deliver output, which will be operated to achieve a beneficial outcome” (Turner, 2006a, p. 3), which means that project is a resource utilization and production function which results in beneficial change.
  3. The “work of the project is non-routine, and therefore risky” (Turner, 2006a, p. 3), which relates to the concept of uniqueness of project and touch bases on the concept of uncertainty and risk which is at the core of all projects.

Project Attributes

Projects differ from each other based on different attributes. Some projects might have high complexity and uncertainty, whereas, for others these factors would be at a lower level (Shenhar, 2001). There might be projects that have a longer conceptualization phase as compared to others (Miller & Hobbs, 2005). Crawford et al. (2005) developed one of the most influential studies for project categorization. Exhibit 2 summarizes different project attributes that are discussed by researchers.

Project attributes for categorization

Exhibit 2: Project attributes for categorization

Project Performance

There seems to be general agreement among researchers (Shenhar, Levy, & Dvir, 1997; Atkinson, 1999; Cookie-Davies, 2002; Hartman & Ashrafi, 2002; Karlsen & Gottschalk, 2002) that project performance measures, in terms of project progress, and project success criteria, though interlinked, can be differentiated from a perspective of ex ante and ex post project closure metrics.

In terms of software projects, Jiang et al. (2004) defined project performance as “the extent to which the software development process has been undertaken as well as performance of the delivered system from the view point of the users” (p. 282). They related to the idea proposed by Nidumolu (1996), and mentioned that the project performance should be studied from the perspective of product performance as well as process performance (Jiang et al., 2004). This is because, a project that delivers a high-quality product, while exceeding time and cost expectation, cannot be considered as a high-performing project. Jiang et al. related to the idea of standardization and mention that the software development maturity level of the organization has an influence on project performance.

Nidumolu (1996) while developing a risk-based model for software project management, divided the overall project performance into process and product performance, and explained that standardization and requirements uncertainty have an impact on software process as well as product performance. This relationship is mediated by the level of difficulty to estimate performance during the later project phases, which Nidumolu termed as residual performance risk. Nidumolu's model seems to be quite influential in the sense that numerous researchers (Na et al., 2004; Jiang et al., 2004; Han & Huang, 2007; Na, Simpson, Li, Singh, & Kim, 2007) have utilized the model or the concept in their studies.

Karlsen and Gottschalk (2002) related the concept of the iron triangle to project performance, which can be assessed during the project execution. This concept was also discussed by Atkinson (1999), when it was mentioned that time, cost and quality can be considered as the temporary criteria available to measure project performance, or progress for control related aspects during the delivery stage.

Na et al. (2007) divided software project performance into subjective and objective. They mentioned that subjective performance measures are easy to collect, however, they have issues with standardization, as they are based on opinions of people and can differ from manager to manager. Objective performance measures are related to measurement of cost, time and scope (Na et al., 2007) and can be measured through standard techniques such as earned value analysis (EVA). Na et al. based on their research, recommend using both subjective and objective performance measures. This is in alignment with the study conducted by Cooke-Davies (2002), in which he focused on the important distinction between project success and project management success. He explains the difference, by mentioning that project success is more in terms of relating to meeting the overall objectives of projects; whereas, project management success is measured against the typical constraints of cost, time and quality.

This study focuses on the monitoring and measurement of project performance and progress, during its life cycle or right after closure and does not directly relate to measurement of project success in terms of business benefits or product success over its lifetime. This is in alignment with the Cookie-Davies (2002) proposal that “For the project management community, it is also important to make the distinction between project success (which cannot be measured until after the project is completed) and project performance (which can be measured during the life of the project)” (p. 188).

Thus, based on the study conducted by Shenhar et al. (1997), it is important to focus on measures such as project efficiency and customer satisfaction, and based on the study of Na et al. (2007), both subjective and objective performance measures can be used to measure performance. Exhibit 3 shows the performance metrics that meet the measurement criteria discussed:

Performance measures for this study

Exhibit 3: Performance measures for this study

Project Governance

Defining Project Governance

Researchers have focused on project governance from different perspectives and scope. Some researchers focused on the governance using behavioral control (Müller, 2010b) through governance of project management, whereas, others have paid attention to governing the project environment through different mechanisms, roles, and institutions (Turner & Keegan, 2001; Müller, 2011). Yet, there are others who have paid attention to governance functions required for specific projects based on project attributes (Miller & Hobbs, 2005; Müller & Blomquist, 2006; Klakegg et al., 2008). All of these perspectives are important to design an effective project governance environment within an organization.

Klakegg et al. (2008) mentioned that alignment of the portfolio with organizational objectives and sustainability of results can be termed as governance through projects whereas efficient delivery of project is related to governance of projects. They defined project governance as “Governance of projects concerns those areas of governance (Public and Corporate) that are specifically related to project activities. Good project governance ensures relevant, sustainable alternatives are chosen and delivered efficiently” (Klakegg et al., 2008, p. 29).

Turner and Keegan (2001) focused on the objectives of governance mechanisms, for project-based organizations, and mention that these mechanisms are “adopted to support the operation control processes, and to manage the interface between project teams and their clients” (p. 256). Turner (2006b) stateed that “Project governance provides a structure through which objectives of the project are set and the means of attaining those objectives are determined and the means of monitoring the performance are determined” (p. 93). Taking an internal perspective, in order to elaborate on the relational structure of project governance, he further explained “Project governance involves a set of relationships between a project's management, its sponsor, its owner and other stakeholders” (p. 93).

Müller takes an objective achievement and value addition perspective about project governance, when he states that “It comprises the value system, responsibilities, processes and policies that allow projects to achieve organizational objectives and foster implementation that is in the best interests of all the stakeholders, internal and external, and the corporation itself”(Müller, 2010a, p. 3; Müller, 2011, p. 306). Müller identified three important aspects of project governance, which are these (Müller, 2010a; Müller, 2010b):

  1. Defining the objectives of the project.
  2. Providing the means and resources.
  3. Monitoring and controlling the project progress and utilization of resources through governance oversight.

PMI defines project governance as a mechanism that “provides a comprehensive, consistent method of controlling the project and ensuring its success” (PMI, 2008a, p. 20). The project governance framework must be aligned with the larger context of the organization, which owns, or sponsors, the project.

Project Governance Dimensions or Roles

It is important to discuss the term dimension, which is considered as a synonym for attribute, or aspect. American Heritage Dictionary defined dimension (Dimension, n.d.) as aspect or element. The concept of governance dimension is at a higher level, of abstraction, and is, in some terms, different from the functions of governance. Crawford et al. (2008), when they discussed the role of sponsor, and Müller (2009), when he discussed the role of steering group, referred to governance roles, which is in alignment with the concept of governance dimensions.

There are three main roles or dimensions of project governance:

  1. Project surveillance, which relates to overseeing the project progress in order to ensure that the project is moving as per the committed plan and within the defined threshold (Müller, 2010a; 2010b). Müller (2009) refers to the meetings conducted by steering groups, when he related to the concept of surveillance, and mentions that the frequency of such meetings is sometimes related to the project life cycle phase. Stretton (2010) mentioned that the progress of project should be consistently monitored by the governance entity. This review can happen periodically or based on certain triggering events such as project authorization in a programme.
  2. Project control, which relates to controlling the progress of the project and the action of the management team. Klakegg et al. (2008) identified this focus, in all three projects that they investigated with varying degrees of control intensity and focus. Müller (2010a; 2010b) also identified the project progress control as an important aspect of project governance. He mentioned that controlling the project progress, as well as, the project deliverables, is a responsibility of steering groups (Müller, 2009).
  3. Project support and guidance, which relates to the need of support and guidance from the project governance team during project life cycle. Müller (2010a, 2010b) mentioned that one of the major functions of project governance is to provide the means and resources required to achieve the defined project objectives. Stretton (2010) also mentioned that providing resources and ensuring resource availability is a governance function. Along with that, the issues that a project manager is unable to resolve are generally handled and dealt by the governing entity (Stretton, 2010). Müller (2009), while referring to steering groups, assigns the responsibility of providing support to the project team, in terms of resources as well as assisting them in terms of issue and risk resolution, on the steering groups.

Project context and its impact on project governance.

Uncertainty and risk associated with the projects act as a major factor in determining the governance structure (Turner & Keegan, 2001). Miller and Hobbs (2005) mentioned that large complex projects have a very high level of uncertainty in the beginning thus require different governance regimes. This means that project governance regimes should not focus on a single ideal governance structure, rather, the focus should be to select different governance models based on the project context and the issues at hand.

While referring to the sponsor role in project governance Crawford et al. (2008) mentioned that the focus of the sponsor should shift from a support dimension to scrutiny and control in the case the project is facing issues or is performing poorly. On the other hand if the project is moving smoothly or exceeding expectations the focus generally moves toward support and guidance (Crawford et al., 2008). It is important to identify project performance trends and control projects with performance issues by escalating them to executive management for actions (Cable et al., 2004).

Project duration has an impact on the with the way project governance mechanism is designed. Projects with long durations need to have governance frameworks that evolve as the projects progress. The surrounding environment of the project is bound to change, requiring a revision in the governance framework (Miller & Hobbs, 2005).

The project governance regime is impacted by the project life cycle, as different phases of a project require different focus from the governance regime. Miller and Hobbs (2005), while referring to large complex projects, mentioned that the governance scope for such projects should include governing activities related to commissioning and ramp-up. As complex projects, which have a protracted life cycle, progress, the types of issues and challenges that they face, will also evolve based on the project context, requiring a flexible and adaptive governance framework (Miller & Hobbs, 2005).

The ownership of the project has an impact on the project governance structure. The APM special interest group (SIG) on governance of project management mentions that multi-owned projects require different governance requirements as compared to projects owned by single entity (APM, 2007b). Governance concerns in such arrangements are focused around alignment of interest and understanding between the parties, owner nominations, shared setup for project management, disclosure, and reporting arrangements aligned with requirements of all parties, risk and reward mechanism for the project lifespan and mechanisms for joining and leaving the multi-owned project setup (APM, 2007b). Exhibit 4 provides a conceptual view of project governance, and shows different aspects of project governance, as well as, different factors that affect the design and implementation of project governance:

Project governance conceptual framework

Exhibit 4: Project governance conceptual framework

Building the Theoretical Framework

Theoretical Perspective

While performing the literature review it was recognized that what the research was trying to achieve can be best explained through the lens of transaction cost economics, using a contingency approach. Transaction cost economics mentions that, transaction costs can be economized through assigning transactions with different attributes, to governance structures which have different adaptive capacities and related costs, in a selective way (Williamson, 1985). This means that efficiency can be achieved by aligning governance structures and transactions that are being governed. If we equate a transaction with project (Turner & Keegan, 2001), then the main objective is to find out the relationship between project attributes (transactions that differ in attributes) and project governance dimensions (governance structures that differ in competencies). Also, as a result it is necessary to consider an interaction approach of contingency theory (Drazin & Van de Ven, 1985), in terms of the impact of project performance context on the relationship between project attributes and focus on project governance dimensions.

Knowledge Gap

Based on the literature reviewed, there has been a major emphasis on project attributes, project performance and project governance. Researchers have also focused on relationship between project attributes and project governance, project attributes and project performance as well as project performance and project governance. However, to the knowledge of the researcher, there was no study that reviewed the relation between the concepts of project attributes, project governance dimensions and project performance.

Resulting Hypotheses

There is an understanding, that certain project attributes have an impact on the design of project governance framework and its dimensions (Turner & Keegan, 2001; Miller & Hobbs, 2005; APM, 2007b; Klakegg et al., 2008; Müller, 2009). Also, there are studies which recognize the impact of project attributes on different aspects of project (Exhibit 1). Thus, it is logical to apply this concept at the project governance level. There is also a strong indication that, as the project progresses, project performance has an effect on this pre-established relationship, between project attributes and project governance dimension (Cable et al., 2004; Crawford et al., 2008). Thus we have the following hypotheses:

  1. H1: Project attributes have an impact on project governance dimensions
  2. H2: Project performance influences the impact of project attributes on project governance dimension

Theoretical Framework

Exhibit 5 depicts the result of this study, the theoretical framework that has been derived through the literature review process and resulting knowledge gap and hypotheses.

Theoretical framework

Exhibit 5: Theoretical framework

Conclusion

Governance has been a topic of discussion for decades, however; since the last 15 years there has been a major focus on project governance. This is because organizations, which initiate projects to meet the strategic goals, have realized that projects have uncertainty built at the core, and that in order to meet the project goals successfully an oversight mechanism is required which should supervise, support and control projects. Even though the concept of project governance is general in nature, however; the actual implementation of the governance practices for a specific project may differ based on project types. As shown by some of the literature in this paper, there is an emphasis on dependency of project governance and its dimensions on various types of projects. It is recognized that each project has its own degree of uniqueness, which affects the type of governance to use. Thus, we can conclude that project governance regimes, which are specific to a particular project, must be aligned with the project attributes and adapt to the changing project context. From a theoretical perspective, Exhibit 5 developed through this study, can be tested empirically and further insights can be developed. From a practitioner's perspective, this model can be utilized to define a contingent framework for project governance, which can adjust based on changing project context, thus, providing organizations more flexibility to adopt to the situations at hand.

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

© 2012, Muhammad Ehsan Khan, PgMP, PMP
Originally published as a part of 2012 PMI Global Congress Proceedings – Marseille, France

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