Introduction
Over the past few years, the issue of trust in project management has grown in importance and the level of activity in both research and practice has grown significantly. Since 1999, the Project Management Specialisation at the University of Calgary, under the direction of the Chair in Management of Technological Change, has been undertaking research into the role of trust in project management effectiveness. This paper presents some of the findings of the underlying primary research and some of the closely related projects that have extended the reach of the primary study.
The primary study was to understand how trust can be developed faster and how it may be used to benefit all participants in the temporary teams that are used in delivery of projects. The Color Trust Model was developed, has since been enhanced and further tested and validated. In parallel with this a number of other studies related to trust and its specific impact on aspects of project management have been investigated. These additional studies are part of the work of the Chair and are projects undertaken by some of the approximately twenty doctoral and masters students supervised by the Chair.
The reference section in this paper includes the principal study, as well as selected relevant findings of some of the students’ projects. Selected projects include those shown in Exhibit 1.
The paper concludes with some of the interesting observations and links that have emerged from the work of this research team.
Background
Trust as an issue is gaining prominence as leading project management practitioners and academics grapple with the next frontier in the search for competitive advantage. The concept of trust has, for a long time, been treated as either of no importance (why trust when we have watertight contracts) or as an implied—and largely ignored—given (of course we trust others, usually until something goes wrong).
Exhibit 1. Selected Trust Research Projects
Trust emerged as the only common ingredient in a series of diverse studies and projects investigating a range of project management issues. These issues included the following, which represents just part of the list of topics looked at.
• Accurate and honest reporting of project progress
• Effective project teams
• Improvements in contracting
• Dispute resolution
• Getting the best ideas from vendors for better value engineering
• Constructability reviews and their effectiveness.
The mere fact that so many—and so diverse—topics should have just one common ingredient in the issues that need to be addressed to improve performance, suggests that this ingredient—trust—has a special place. It may be argued that this special place is indeed a critical one for the enhancement of performance on projects.
The question of whether trust can be defined and understood or not is now on the table. Many researchers and academics from a variety of fields, including social sciences, psychology, and law, have addressed this question, both directly and indirectly. There is a range of definitions for trust that have emerged from this body of work. Many of these definitions are situation-specific. The research at the University of Calgary in the area of trust started with a simple idea: to better understand the mechanics of trust. In other words, we wanted to look at trust as a definable part of a business process rather than a social or psychological phenomenon, a culturally defined or anthropological set of norms or behaviors, or indeed anything other than a simple and measurable set of business traits and corresponding practices. To this end we built a model based on an extensive search of available literature from the fields described above as well as from the new but growing business literature in this area. The model identified three distinct types of trust. Each one acts independently and together to create specific and predictable situations in a business context. This model incorporates an analogy to the three primary colors, and so is named the Color Trust Model (TCM). The early work in defining the TCM was published and presented at conferences. The general response to the model both in its use within the research, and from those to whom the model has been exposed, has been surprisingly positive—even enthusiastic. It seemed interesting—if not important—to understand the possible reasons for this.
The Trust Phenomenon
Possibly influenced, and certainly highlighted, by the devastating impact of the events of 11 September 2001, there has been an emerging interest recently in the trust phenomenon. The original interest by the researcher—in 1999—was driven by its regular appearance in research findings as well as an intuitive sense that the trust phenomenon would become important in a shrinking world where cultural and other differences are becoming more abundant. Such differences are potential barriers to trust. World events as well as the growing amount of concern over business integrity—as brought on by the collapse of Merchant Banks, the Enron debacle, and other experiences—have all contributed to growing anxiety. Scams that are defrauding companies and individuals seem to be growing in both frequency and ingenuity.
In this jungle, we can reasonably expect people to go back to requiring a degree of integrity and accountability from the officers and executives responsible for spending their money. That money will be found in the form of the taxes we pay, investments in corporations and ventures, pension funds, insurance policies, or charitable donations. Wherever we rely on others to spend that money, we are probably entitled to some accounting for the use of those funds. All projects spend money directly or indirectly through the use of resources. Thus trust becomes an integral part of any project and therefore critical to effective project management.
The issue of trust, if looked at using the TCM, devolves into three questions about the project and its delivery team. First, will the project be delivered and can the team deliver it as promised? Second, will the project be designed to protect my interests, and will the team uphold those interests in delivery of the project? Finally, does this project feel right and do I feel comfortable with the team? These questions can be answered through a number of devices. In the SMART management framework, there are a number of tools used to triangulate the answers to these questions, so a degree of validation is obtained. The three questions can be asked of the core project team, individuals and their relationships, the larger project team, key stakeholders, and others. The higher the level of trust, the better communication will be, the easier it will be to work as a team, the simpler the contractual arrangements can be, the more flexible the parties will be in their response to each others’ changing or evolving needs, and so on. All of these phenomena are likely to lead to improved performance. So it is easy to establish a connection between them and better project management—at least in principle. The research program was established to test this idea, learn more about the impact of trust on behaviors and performance, and to see if we can develop better ways of delivering projects as a result.
The Research Program
Trust, as something to investigate in the world of project management, was the outcome of a preceding five-year program sponsored by industry, the Natural Sciences and Engineering Research Council (NSERC), and the Social Sciences and Humanities Research Council (SSHRC). These agencies funded the Chair in Project Management to study better ways of managing projects. This mandate resulted in an eclectic collection of research projects. All of them, regardless of the topic being investigated, all had one thing in common. One of the variables that affects projects under each of these headings is trust.
When the Chair was renewed a mix of about 60 percent applied and 40 percent basic research was planned and endorsed by the sponsors. The Chair was funded for a further five years. What follows is a brief outline of some of the projects, and what they are starting to tell us.
Selected Projects
The first project in this program was to develop and test an appropriate model for trust (Hartman 1999). This model (the Color Trust Model, or TCM) has evolved as understanding has grown. What follows is some of the current work and a summary of how the early results of this work are being integrated and synthesized.
Project Team Competencies (Greg Skulmoski/Ph.D.)
Management competencies are increasingly well understood. This study is about the management related skills and knowledge needed in key parts of an effective project team.
Why do some teams work better than others? What are the competencies inherent in the team members that influence the performance of the team and the project? This study investigates the competencies of team members that lead to effective teams in the information systems (IS) business. A modified Delphi study was adopted as the first step in the study. The result was a way of characterizing projects, teams, and the nature of the attributes of team members’ roles. This framework was used to help manage the variables in the second phase. The second phase is in progress and will use structured interviews to garner the professional opinion of practitioners with either or both a technical and managerial role on projects.
Although trust is not central to this study (it was started before the new mandate of the Chair), some of the characteristics of project managers and project teams and the trust relationship between them can be better understood in the light of the findings. These findings have identified the competencies—most of them learnable—that help people be good team members. There are elements that reflect good communication, technical competence, and self-direction where appropriate (low maintenance team members).
Contract Cost Reduction and Trust (Ramy Zaghloul/Ph.D.)
Having established a way of measuring the cost of exculpatory clauses, this research is aimed at reducing or eliminating this significant cost.
Contract clauses that reflect low trust between a buyer and a vendor carry a transaction cost that has been established and verified as being between 8 percent and 20 percent with an approximate mean of 15 percent. This is a lot of money. The range is a reflection of market conditions and the difficulty of the contracted task. A large part of the difficulty has to do with factors such as the perceived balance of power between contracting parties, the nature of the contractual relationship, how well the parties know each other, and the perception of risk that each party has. The results of the main part of this study are still being developed. This said, some of the findings indicate that good risk apportionment and the associated equity will help reduce the transaction cost. Some of the areas that have the potential to yield real savings in a practical way include the following:
• Assign risk to the party most competent to handle it.
• Where commercially reasonable, work with businesses and individuals with whom you have some past (and good) experience.
• Evaluate more than just (lowest initial, bid) price in making your selection of a contractor. Stipulate the metrics you will use for selection in the call or bids.
Trust, Leadership, and Projects—The Connection (Jennifer Krahn/Ph.D.)
Rapid trust building in project leaders is the focus of this study. What makes us comfortable with the boss? Is it charisma? Competence? A sense of assurance and self-confidence? Does the boss have the clout or connections to obtain the resources to deliver the project? Even at the early stages of developing this project into a full research proposal and associated methodology, some of the theoretical foundation offers clues that are pointers to how trust might be built more readily in the presence of specific characteristics and attributes of a project leader.
• It is easier to trust a leader who understands enough of the project issues and speaks the right language.
• A leader who considers the input of the team, respects the expertise, and helps in supporting the relative weaknesses of the project team will be more effective than one who is blind to the faults in the team or who does not listen to suggestions.
• A leader who inspires confidence through their presence, management style, or other mechanisms will inspire the team more than one who creates doubts in the team, the leader, suppliers, or even the client.
These preliminary ideas are intuitively obvious. The research will investigate these and other issues derived from the literature review and from observation. The observations above are derived by the author from both interventions in live projects and on mini-studies conducted by graduate students in various industries as part of specific course assignments. These mini-studies are part of a series that now span about 200 projects and are based on some 420 interviews with practitioners and subject matter experts.
The Impact of Negotiation on Trust (Roch DeMaere/MSc)
This cause-and-effect study will help us understand the impact of the dispute resolution process on relationships between individuals and the companies they represent.
Exhibit 2. Color Trust Model Summary
One of the seminal events on many projects is the resolution of a difficult dispute or confrontational situation. Such resolution is usually the result of some form of negotiation. Both the process and the outcome influence how people work together afterwards. And this inevitably influences the effectiveness of the participants and the outcome of the project. It is likely that the negotiation process is affected by trust. Equally, the level of trust between participants will influence the approach to negotiation. This project investigates the trust-negotiation relationship using an experimental approach.
The experiment involves a simulated dispute between three parties who are deliberately placed in a polarized situation where each participant believes they are an innocent neutral party and it is the other two participants who need to resolve their issues. This simulation was originally developed to demonstrate particular aspects of disputes to both undergraduate students and experienced professionals using experiential learning. One of the features of the simulation observed over the years was the remarkable consistency of responses by participants. Using this simulation therefore was an appropriate approach as the variables could be contained.
Participants were drawn from industry and from graduate students (typically with between four and twenty years of experience on projects and in project management) in graduate project management classes at the University of Calgary. A survey instrument to test trust levels before and after the simulation was developed, tested, and used.
Some observations based on preliminary analysis of the results would suggest the following:
• Negotiation affects trust levels.
• Generally, trust increases over the negotiation process if the outcome is considered acceptable to the participants.
• Higher initial trust (even between strangers) will normally yield a more acceptable outcome to the negotiations.
• Where participants had a greater knowledge of each other (graduate students) the outcomes were acceptable to the parties more often than when the participants had not previously met (practitioners).
Improving Contracting Strategies (Liwen Ren/MSc)
The first step in building a supply chain is the initial contract. The nature of this contract appears to be critical to subsequent performance—this study investigates this phenomenon. The focus of the study is on selection of engineering contractors for capital projects in the petrochemical industry.
This study was conducted in two parts. The first part was a modified Delphi study to determine the criteria used in selection of contractors generally, and engineering contractors in particular, in the Oil and Gas industry. These data were then used to further investigate practices in development of contracting strategies and selection of engineering contractors using in-depth structured interviews, and adapting the coding techniques used in grounded theory to build a picture of what happens in this strategy and selection process. The role of trust using the TCM was a specific focus in this research. Selected points arising out of this study included the list below.
• The competence of the contractors was assessed based on past experience and the skills of key personnel. Competence trust was essentially a prerequisite to being considered as a potential contractor.
• The integrity of the contractor, often determined based on past experience with the company or with key individuals, would influence the nature of the contract. The greater this trust, the easier it is to enter into a contract with more unknowns.
• The intuitive trust of the contractor by the owner’s personnel seemed to be important, though respondents from buyer organizations were often reluctant to admit this at the outset.
More Effective Resolution of Transcultural Issues Based on Better Understanding of Trust (Mona Sennara/MSc)
In this study we want to shed light on the impact of cultural differences on trust levels between participants on projects using Canada and Egypt as a basis for the study. This case study and interview-based research project confirmed the importance of trust in cross-cultural projects. Understanding of, and sensitivity to, cultural differences demonstrated to be critical to project success. Peoples’ attitudes and approaches to trust vary between the two cultures studied. For example, on the Egyptian side of the study trust between the same people in a work environment is categorically separated from the social environment. The lines between the business and social environment in Canada are much more blurred. For example in Egypt you can have a good friendship with someone, yet be adversarial and aggressive to the same person in the work environment. In Canada, on the other hand, it is less likely that the same two people will golf together while suing each other over a business deal.
Exhibit 3. Combined Observations Linked to the TCM
Some observations emerging out of this work include:
• Trust is built separately for business and social environments in Egypt and tends to be more closely linked between the environments in Canada. This is one of the cultural differences that need to be addressed in managing contracts that straddle the two cultures.
• Integrity trust in Egypt is perceived as being more strongly linked to consistent behavior, while in Canada it is more closely associated with looking after each other’s interests. In other words, in Egypt, doing business with a consistently unreliable contractor or partner is arguably better than working with an inconsistently reliable one.
• Intuitive trust, ultimately, is a stronger indicator of sustainable relationships on a project than integrity trust or competence trust.
It is worth looking now at these observations from ongoing research and tying the findings into the color trust model.
Integration of Results
The TCM identifies three distinct types of trust, as summarized in Exhibit 2.
We can assign the observations made in the studies reported on in this paper to one of the trust types. Exhibit 3 shows how that would appear. The observations made in each of the projects outlined above can be categorized and linked to one or more of the trust colors. The TCM is further validated through this research.
Trust permeates what we do in our daily lives as well as at work. At work, one of the biggest challenges that sets project management apart is the project team—essentially a temporary organization by definition. Temporary organizations have a number of challenges. One of the single biggest is that such teams do not have the luxury of time to build the relationships and norms for high performance, yet typically they are expected to perform to demanding standards if the project objectives are to be met. We know that high trust organizations work more effectively. So finding ways to build trust quickly is key to success. Other work done to validate or test the TCM has led to an observation that senior executives make many key decisions based on Intuitive (Red) Trust. Why is this so, when it is the hardest to audit or justify? It seems that there may be several reasons for this that are reflected directly or indirectly in the observations in Exhibits 2 and 3.
• Red Trust is based on experience and knowledge.
• Intuition (and the good judgement that this implies) is what senior executives are paid for.
• Red Trust forms very quickly (seconds) and is difficult to change.
• Where there is insufficient time to complete a full audit or due diligence process, we need to rely on other ways to assess a business decision. Red Trust is a natural option, especially if the people relying on their intuition have confidence in themselves—a key ingredient in good leadership.
In North America we have substituted carefully crafted—and often defensive—contracts to replace Integrity (Yellow) Trust. We now know that the transaction costs associated with such legal agreements is high. Better contracting has the potential to lower this unnecessary cost to our projects. We can learn from this.
• Good performance can be linked to effective communication.
• Communication is more open, efficient, and fluid when there are high levels of Integrity Trust.
• Substitutes for Integrity Trust (such as watertight contracts and exculpatory clauses) carry a high transaction cost and probably lead to other inefficiencies.
• Yellow Trust builds slowly and is based on direct personal experience, which may be modified to some extent through referrals, particularly ones from people in whom we have high Integrity trust.
• Repeat business for a supplier probably benefits both the supplier and the buyer.
Competence is typically a learned skill that may be enhanced by innate competencies of an individual or by the support infrastructure of an organization. As such Competence Trust can be more readily assessed based on past project performance, references from past team members (peers, client, and contractors), and other documented means (letters, certificates, professional designations, degrees, and so on).
Competence Trust is built over a lifetime. It tends to be more robust than the other two types of trust. If a reliable person makes a mistake, we consider it to be an exception and give them the benefit of the doubt. We are less inclined to do this if someone breaches our trust in his integrity. And how often do we analyze our first impressions and then change our opinion? What is this telling us?
• Blue Trust often forms the basis on which we select our project team with little or no consideration for the two more powerful types of trust.
• Competence Trust is easy to measure and tends to be fairly stable.
• Lower levels of competence on a project team are much easier to detect and address than the other types of trust asset—such as integrity and good judgement.
Conclusions and Observations
These observations suggest that we can possibly learn from other cultures. They suggest that some of our traditional approaches and solutions may be inappropriate for the next evolution of project management. In assessing the role of trust we cannot separate the relationship between trust and risk. Higher trust implies higher risk. Higher risk traditionally is associated with higher returns. This introduces several aspects not even considered so far in this paper. One key element is the culture of the organizations participating in a project and their propensity to take risk.
If indeed trust does impact performance of a project in a significant way, we still have a long way to go to understand all of the implications. But one thing is already obvious. Doing business with the same people, where performance is generally good will likely result in competitive advantage because trust levels are higher, and will generally yield better results over time. As the research reported on in this paper and other associated projects proceed to completion, we expect not only new insights to the theory and practice of project management but some intriguing synergies and opportunities to arise. One spin-off already identified is the “DNA” of enterprises and their projects. Understanding the nature of an organization by characterizing it in a structured way will help map the culture and nature of the project to the enterprises involved in the project and should provide insights to better ways to manage the project more effectively.
Acknowledgements
The author would like to acknowledge the support of the Natural Sciences and Engineering Research Council (NSERC), the Social Sciences and Humanities Research Council (SSHRC), and the Canadian Project Forum for its support of this research. In addition the support of corporations, government agencies, and individuals through the University of Calgary Project Management Endowment and the Organisation for Project Advancement and Leadership (OPAL) are gratefully acknowledged. The creativity and hard work of the students involved in this program is also recognized and appreciated.