Perspectives in project management : a selection of masters degree research projects 9781527508378, 1527508374

Table of contents :
Content: Part One: People and Organisations --
Part Two: Methodologies and Practice Domains --
Part Three: Issues in Applications --
Part Four: Continuous Improvement and Benchmarking.

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Perspectives in Project Management

Perspectives in Project Management: A Selection of Masters Degree Research Projects Edited by

Anthony Wood and Raufdeen Rameezdeen

Perspectives in Project Management: A Selection of Masters Degree Research Projects Edited by Anthony Wood and Raufdeen Rameezdeen This book first published 2018 Cambridge Scholars Publishing Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2018 by Anthony Wood, Raufdeen Rameezdeen and contributors All rights for this book reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. ISBN (10): 1-5275-0837-4 ISBN (13): 978-1-5275-0837-8

TABLE OF CONTENTS

List of Illustrations ..................................................................................... ix List of Tables ............................................................................................ xiii Foreword ................................................................................................... xv Introduction ............................................................................................. xvii Abstracts ................................................................................................... xix Part One: People and Organisations Chapter One ................................................................................................. 3 A Modern Family: Integrating the New Kids into the Project Management Family Dean Borg, Anthony Wood, Raufdeen Rameezdeen Chapter Two .............................................................................................. 21 Inter-Generational Differences in Project Management: Tools and Techniques Rochèle Berwick, Raufdeen Rameezdeen, Anthony Wood Chapter Three ............................................................................................ 39 Management Challenges with a Fly-In/Fly-Out Workforce Damien Choy, Anthony Wood, Chris Martin Chapter Four .............................................................................................. 59 The Human Side of Project Management Marina Lysenko, Olivia Nunn, Anthony Wood Part Two: Methodologies and Practice Domains Chapter Five .............................................................................................. 89 Knowledge Management in Australian Defence Projects Graham Chant, Chris Martin, Anthony Wood

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Table of Contents

Chapter Six .............................................................................................. 107 The Influence of Procurement Practices on Project Risk in the Construction Industry James Earl-Spurr, Anthony Wood, Chris Martin Chapter Seven.......................................................................................... 123 Application of Agile Project Management Principles to Brownfield Capacity Improvement Projects in the Australian Mining Industry Nicholas Kyobe, Doug Larden, Anthony Wood Chapter Eight ........................................................................................... 139 The Use of Mobile Technology by Project Managers Melissa Ogden, Anthony Wood, Raufdeen Rameezdeen Chapter Nine............................................................................................ 157 Improving Project Performance by Adopting Control Theory Methods Bahram Sarmadi, Desiree Beekharry, Anthony Wood Chapter Ten ............................................................................................. 179 Project Risk Management Practices in Small to Medium Enterprises in the Australian Defence Industry Andrew Skinner, Doug Larden, Anthony Wood Part Three: Issues in Application Chapter Eleven ........................................................................................ 201 Project Management in the Arts: Integration, Application and Benefits Melanie Selwood, Heidi Metcalfe, Anthony Wood Chapter Twelve ....................................................................................... 217 Effective Management of Infrastructure Projects in Remote Northern Territory Henri Susanto, Anthony Wood, Olivia Nunn Chapter Thirteen ...................................................................................... 245 Integrated Project Delivery in Large-Scale Residential Architecture in Australia Daniela Wolff, Desiree Beekharry, Anthony Wood

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Part Four: Continuous Improvement and Benchmarking Chapter Fourteen ..................................................................................... 265 Establishing and Benchmarking Project Management Maturity Andre Du Preez, Anthony Wood, Chris Martin Chapter Fifteen ........................................................................................ 285 The Impact of Modular Construction on Liquefied Natural Gas (LNG) Megaprojects Martin Richardson, Dean Borg, Anthony Wood Chapter Sixteen ....................................................................................... 307 Case Study: The Implementation of Process Improvement in a Remote Australian Construction Project Leigh Renaud, Anthony Wood, Chris Martin Chapter Seventeen ................................................................................... 327 Case Study: Implementation of a Continuous Improvement Program within an Australian Engineering Firm Michael McCowan, Anthony Wood, Chris Martin Contributors ............................................................................................. 343

LIST OF ILLUSTRATIONS

Figure 3-1: Figure 4-1: Figure 4-2: Figure 4-3: Figure 4-4: Figure 4-5: Figure 4-6: Figure 4-7: Figure 4-8: Figure 4-9: Figure 4-10: Figure 4-11: Figure 4-12: Figure 4-13: Figure 4-14: Figure 4-15: Figure 4-16: Figure 4-17: Figure 4-18: Figure 4-19: Figure 4-20: Figure 4-21: Figure 7-1: Figure 7-2: Figure 8-1:

FIFO Management Challenges and Underlying Themes .... 44 Components leading to individual competency .................. 59 Project management theory versus the element of human psychology .......................................................................... 60 Project Risk Management Overview................................... 62 Risk Management Process .................................................. 62 Nature of influences on individual risk tolerances .............. 64 Risk type personality ........................................................... 65 Model of risk tolerance ....................................................... 65 The human elements affecting risk propensity.................... 66 Cross-level applications of risk management ...................... 67 Risk-Type Compass ............................................................ 68 Project Risk Management Overview with processes affected by the element of human psychology .................... 69 Influence on project outcome with the addition of the element of human psychology ............................................ 72 Stages of the Project Life Cycle most affected by the element of human psychology ............................................ 74 Project Life Cycle stages affected by the element of human psychology .............................................................. 75 PMBOK® Guide Risk Management Processes affected by the element of human psychology.................................. 76 Cognitive Biases Model ...................................................... 76 Natural cognitive biases affecting an individual’s risk perception ............................................................................ 77 Results: Individual's risk type ability to influence the decision making of the project group .................................. 78 Results: risk type personality .............................................. 79 Results: risk management processes affected by the element of human psychology ............................................ 80 The Human Element of Psychology affecting Risk Management Process........................................................... 80 The Agile: Scrum Framework at a Glance ........................ 125 Average Train Consist Dump Times – Monthly ............... 132 Use of Mobile Device by Industry .................................... 147

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Figure 8-2: Figure 8-3: Figure 8-4: Figure 9-1: Figure 9-2: Figure 9-3: Figure 9-4: Figure 9-5: Figure 9-6: Figure 9-7: Figure 9-8: Figure 9-9: Figure 9-10: Figure 9-11: Figure 9-12: Figure 9-13: Figure 9-14: Figure 9-15: Figure 10-1: Figure 10-2: Figure 10-3: Figure 10-4: Figure 10-5: Figure 11-1: Figure 11-2: Figure 11-3: Figure 12-1: Figure 12-2: Figure 13-1: Figure 13-2:

List of Illustrations

Proportion of Project Managers that use more than one mobile device ............................................................. 149 Percentage of Project Managers that use more than one application .................................................................. 150 Comparison between PMIS User and Non-PMIS Users ... 151 Sample project and work breakdown structure ................. 161 Input vs output signal of the sample project ..................... 162 Project dynamics seen as a black box ............................... 163 Estimates of transfer function model for sample project... 163 Closed loop representation of a project ............................. 165 Step response of the sample project .................................. 166 SIMULINK model of the sample project including the controller C ................................................................. 166 Root locus drawing of closed loop controlled sample project ............................................................................... 167 Step response of the controlled sample project ................. 167 Model of the sample project without the controller .......... 168 Model of the sample project with the controller ............... 168 Plot of the planned CBS vs the output of the sample project ............................................................................... 169 Plot of the planned CBS vs the output of the controlled sample project ................................................................... 169 Plot of the error signal (called Sum3) vs the output of the controller ..................................................................... 170 Rework cycle in SD model ............................................... 175 Timeline of Defence Reviews ........................................... 181 Defence Project Complexity Compared to Other Sectors . 184 Surveyed Risk Maturity Levels by Risk Maturity Dimension ......................................................................... 187 Defence Project Performance Trends................................ 189 Impact on cost, schedule and risk of Requirements .......... 193 Impact of knowledge area to success vs. management priority .............................................................................. 206 Life cycle of a theatre project measured in days ............... 209 Differences between Scope Management Processes ......... 210 Breakdown of survey respondents .................................... 224 Risk frequency/impact matrix ........................................... 225 Most effective PDM for large-scale multi-housing projects .............................................................................. 251 General knowledge/experience levels of respondents with IPD ............................................................................ 252

Perspectives in Project Management

Figure 13-3: Figure 15-1: Figure 15-2: Figure 16-1: Figure 16-2: Figure 16-3:

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Advantages of IPD ............................................................ 253 Cost and schedule overruns on Australian LNG projects . 288 Cost of global LNG projects ............................................. 290 The Deming Wheel ........................................................... 309 Research Methodology ..................................................... 312 Key activities to be undertaken during a standard Deming Cycle ................................................................... 322

LIST OF TABLES

Table 1-1:

Leveraging Intergenerational Diversity in Problem Solving (LIDPS) ................................................................. 15 Table 3-1: Positive and Negative Aspects of the FIFO Working Arrangement ....................................................................... 47 Table 4-1: Risk Related Themes and Characteristics ........................... 81 Table 5-1: Size of organisation in relation to KM attributes ................ 95 Table 5-2: When Project Knowledge is captured ................................. 97 Table 5-3: How Project Knowledge is captured ................................... 98 Table 5-4: Types of Project Knowledge captured ................................ 98 Table 7-1: Research Process Overview .............................................. 128 Table 9-1: Transfer function model for tf2i ........................................ 164 Table 9-2: Transfer function model for tf3i ........................................ 164 Table 10-1: Technical Risk in Defence Reviews.................................. 182 Table 10-2: Risk maturity level definitions .......................................... 185 Table 11-1: How arts organisations measure success ........................... 207 Table 12-1: Risk Score categories ........................................................ 226 Table 12-2: Risk score of challenges in delivering remote projects ..... 226 Table 12-3: Frequency of application of strategies to overcome challenges.......................................................................... 228 Table 12-4: Effectiveness of strategies to overcome challenges .......... 229 Table 12-5: Summary of interviews ..................................................... 230 Table 13-1: Research Hypotheses ........................................................ 253 Table 14-1: Process Maturity Principles in SEI/CMM ......................... 267 Table 14-2: Project maturity assessment for PMBOK® Guide knowledge areas ................................................................ 267 Table 14-3: Comparison of Maturity Models ....................................... 270 Table 14-4: Summary of results ........................................................... 273 Table 14-5: Project Management Maturity International Comparison . 274 Table 14-6: Level 1: Common Language individual results ................ 275 Table 14-7: Level 2: Common Processes individual results ................. 277 Table 14-8: Level 3: Singular Methodology score interpretation ......... 278 Table 14-9: Level 3: Singular Methodology individual results ............ 279 Table 14-10: Level 4: Benchmarking individual results ........................ 280 Table 14-11: Level 4 Quantitative Benchmarking score interpretation .. 281 Table 14-12: Level 4 Qualitative Benchmarking score interpretation.... 281

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List of Tables

Table 14-13: Level 5 Continuous Improvement individual results ........ 282 Table 15-1: Cost of Australian LNG Megaprojects at FID .................. 287 Table 15-2: Projects using modular construction impacted by logistical challenges .......................................................... 292 Table 15-3: Proposed Project Planning Improvements ........................ 300 Table 15-4: Proposed Project Engineering Improvements ................... 301 Table 15-5: Proposed Project Quality Control Improvements ............. 302 Table 15-6: Proposed Material Management Improvements................ 303

FOREWORD

The University of South Australia (UniSA) was founded in January 1991 through the amalgamation of the South Australian Institute of Technology and the Magill, Salisbury and Underdale campuses of the South Australian College of Advanced Education. UniSA has an excellent reputation for its high quality, research-informed and industry-relevant academic programs and an enviable record in graduate employability. Established in 2004, the School of Natural and Built Environments (NBE) focuses on the unique relationships between the natural and built environments, and maintains strong links with industry and government to ensure students gain relevant practical experience, and graduate with sought-after skills and knowledge. The University of South Australia has offered the postgraduate project management program since the university was founded. NBE now offers the program both online and on campus as a suite of nested, post-graduate programs. Endorsed by the Australian Institute of Project Management (AIPM), the UniSA Master of Project Management degree aims to provide graduates from diverse disciplinary backgrounds with specialised knowledge and skills in project management best practice, as adopted by many government and industry sectors worldwide. The NBE masters degree also provides students with the opportunity to apply and develop knowledge through a substantial, integrated research project, which has been offered in various forms over the years. To complete this research project, students need to apply expert, specialised cognitive and technical skills from within the body of knowledge of project management, and to independently plan and execute a significant research-based project or piece of scholarship. This monograph captures a selection of research papers arising from this program. The range of research projects in this publication is a strong indication of the expertise of the graduates. The papers are also indicative of the wide application of project management principles and practice across industry sectors.

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Foreword

I commend the work that Anthony Wood and Raufdeen Rameezdeen have done on this monograph project. I trust this will be the first of many to come, as we promulgate the excellent research being undertaken by our post graduate students, as they make a valuable contribution to the ever-expanding Project Management body of knowledge and practice. David Farwell FAIPM, CPPD Adjunct Senior Lecturer Chair, Project Management Advisory Committee University of South Australia

INTRODUCTION

This book is a monograph—a published volume in which each chapter is a condensed version of a research project undertaken by students in the final year of the online Master of Project Management degree delivered by the University of South Australia (UniSA) through Open Universities Australia (OUA). Students who successfully completed this program were invited to work with their supervisors and experienced academics to adapt their theses and dissertations for publication in this monograph, as a means of promulgating their findings to the wider project management community. Accordingly, contributors to this book consist primarily of graduated students of the UniSA Master of Project Management Degree, supported by supervising academics and relevant industry practitioners. As a result, the authors collectively represent current research interests across the breadth of Australia. This book is organised in four Parts, each of which focusses on a key theme. Part 1: People and Organisations explores several challenges impacting modern project managers. In Chapter 1, Borg, Wood and Rameezdeen consider the integration of new generations into the “project management family”, and Berwick, Rameezdeen, and Wood continue the theme in Chapter 2 by further examining the nature and implications of intergenerational differences. In Chapter 3, Choy, Wood, and Martin investigate the human resource management challenges of working with a fly-in/fly-out workforce, and Lysenko, Nunn, and Wood close out the theme in Chapter 4 by analysing the human side of project management. Part 2: Methodologies and Practice Domains addresses how we understand common methodologies in today’s world of practice, and how these domains can interact with each other. Chant, Martin, and Wood lead off in Chapter 5 by considering knowledge management perspectives in defence projects, and Procurement Practices and their influence on Project

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Risk in the Construction Industry is addressed in Chapter 6 by Earl-Spurr, Wood, and Martin. Chapter 7 explores new territory with Kyobe, Larden, and Wood explaining how Agile project management principles can be applied to brownfield capacity improvement projects in the Australian mining industry. In Chapter 8, Ogden, Wood, and Rameezdeen discuss the use of Mobile Technology by Project Managers, and Sarmadi, Beekharry, and Wood investigate improving project performance by adopting control theory methods in Chapter 9. Skinner, Larden, and Wood conclude this theme in Chapter 10 with an analysis of project risk management practices in small to medium enterprises in the Australian Defence Industry. Part 3: Issues in Application includes reports on investigation of application of project management processes across the arts, infrastructure, and residential construction sectors. In Chapter 11, Selwood, Metcalfe, and Wood report on aspects of integration, application and benefits of project management in the arts sector; Susanto, Wood, and Nunn present their findings from an investigation into management of infrastructure projects in Remote Northern Territory in Chapter 12; and in Chapter 13, Wolff, Beekharry, and Wood address issues concerning integrated project delivery in large-scale residential architecture projects. Part 4: Continuous Improvement and Benchmarking contains four chapters, each of which examines aspects of quality management in project environments. In Chapter 14, Du Preez, Wood, and Martin benchmark resource company project management maturity, and Richardson, Borg, and Wood discuss the impact of modular construction on the success of liquefied natural gas (LNG) megaprojects in chapter 15. The theme is closed out with a report on process improvement practices in remote Australian construction projects by Renaud, Wood, and Martin in Chapter 16, and an examination by McCowan, Wood, and Martin into the implementation of a continuous improvement program within an Australian engineering firm in Chapter 17. We are confident this collection of research articles adds to the present-day body of knowledge of project management in Australia and beyond, and demonstrates, at least in part, the great value that student researchers offer to industry and professional practice. Anthony Wood and Raufdeen Rameezdeen Editors

ABSTRACTS

Part One: People and Organisations Chapter One: A Modern Family: Integrating the New Kids into the Project Management Family The nature and implications of intergenerational differences has been a topic of widespread debate for several decades. Much of the literature contends that differing styles and strategies should be employed in the management of each generation. The premise that project teams commonly involve members of diverse age groups creates a need to consider these differences when managing project teams. Analysis reveals marked variation across a number of application and preference areas between Gen-Y and previous generations in planning and control techniques, tool sets and expectations. The research findings strongly support the notion that generational characteristics play a significant role in the application and expectations of project management tools, techniques and structures. A model is offered for assessment of how prepared an organisation is to harness the positive attributes of younger practitioners.

Chapter Two: Inter-Generational Differences in Project Management: Tools and Techniques The research addresses issues of generational bias in applied project management. In particular, the study investigates the differences in tools techniques and methods applied by Generation Y (Gen Y) project managers compared to those of Baby Boomers (Boomers) and Generation X (Gen X) respectively. The research utilised qualitative and quantitative methods; interview transcripts were compared to the results of the survey and triangulated via the literature review. The results demonstrate an overriding consensus that whilst some generational differences exist, there are no major distinctions in preferences for tools and techniques. Research into this area will produce a wealth of new knowledge, as the available literature on the topic is limited due to relative newness of the topic and the slow recognition of project management as a professional discipline.

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Chapter Three: Management Challenges with a Fly-In/Fly-Out Workforce The Fly-in/Fly-Out (FIFO) workforce is increasingly being used in the Australian resource and construction industry to mobilise labour and skilled workers to remote locations. This study investigates the management challenges of working with a FIFO workforce from a human resource management (HRM) and organisational design perspective. Thirty-one current FIFO workers were interviewed in this exploratory study, and data was analysed using a qualitative phenomenological methodology. The study showed that the FIFO workforce presents unique challenges to human resource management practices and the organisational design which enable successful project delivery, particularly in the determining of policy to maximise employee satisfaction, designing the organisation and the level of decentralised decision making. Project managers seeking to maximise productivity and project delivery from the FIFO workforce will find this research useful in planning and managing the project team and stakeholders.

Chapter Four: The Human Side of Project Management The human side of project management is an underlying element of risk management. This research investigates the element of human psychology in project management and its potential to affect project outcomes in the context of project risk management in a team environment. This research was undertaken using questionnaire and face to face interviews with project managers and project team members. It was found that the element of human psychology is present in the project risk management area, with the potential to affect project teams by influencing decision making processes and consequent project outcomes. This research demonstrates that an understanding of the human element in project risk management in a team environment, including the appreciation of individual characteristics and behaviours of team members, is essential to successful team decision making. When implemented effectively, this understanding leads to a cohesive team environment with the appropriate level of risk appetite, resulting in a higher probability of successful project delivery.

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Part Two: Methodologies and Practice Domains Chapter Five: Knowledge Management in Australian Defence Projects This study investigates the inability of project team members to capture tacit knowledge and convert it into explicit knowledge. The practices of a range of Australian Defence companies was analysed to discover when, how and what information was gathered, whether they had management support and a knowledge vision, and whether they had a dedicated person who had responsibility for knowledge management. The investigation was conducted by means of a small-scale survey of elite respondents in the project management field. The key finding of this research was a common failure of the companies to convert more of their tacit information (conversations, phone calls and personal information) into explicit information. This conclusion is significant because most knowledge generated on projects is tacit, so if this knowledge is not converted to explicit knowledge, there is significant time wasting and expense incurred in having to re-solve a problem that was encountered and solved on a project previously, but was not documented.

Chapter Six: The Influence of Procurement Practices on Project Risk in the Australian Construction Industry Poorly managed procurement risks can lead to large project delays, cost overruns and quality defects, yet many procurement decisions do not consider risk as highly as other criteria such as cost. This contradicts directly with what some researchers believe – that procurement risk should be the prominent criterion that determines the selection of a procurement method. The aim of this research is to investigate the influence that procurement practises have on project risk to better understand their effectiveness. The study consisted of a case study of a single organisation with multiple, large construction projects and a supporting literature review. The case study method primarily involved interviews with procurement specialists within the case-study organisation. The research found that the selection of an appropriate vendor is more effective in mitigating project risk than attempting to transfer risk onto partners or using monitoring and control practises. Therefore, most efforts to mitigate procurement risk should be directed to those practises that assist in choosing the best project partner.

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Chapter Seven: Application of Agile Project Management Principles to Brownfield Capacity Improvement Projects in the Australian Mining Industry Agile Project Management (APM) methods revolutionised how software projects organised. Recently, these methods have been used in hardware infrastructure projects. However, the question of how to be agile during brownfield capacity improvement mining projects requires further investigation. This research investigates the application of APM practices with a particular focus on brownfield capacity improvement projects in the Australian mining industry. A range of published works (1986-2014) is examined to identify trends and interconnections. Twelve project practitioners were surveyed to gain an overview of the Australian mining industry, and one practitioner was interviewed to validate the theories presented. It was found that APM provides flexibility in the project management approach as it allows the project team to iterate towards the required project outcome. Thus, mining organisations who require working products through the project life cycle are likely to APM Scrum framework to be useful in brownfield capacity improvement projects.

Chapter Eight: The Use of Mobile Technology by Project Managers There are a variety of tools and technologies available to support the communication and management of information used by project managers. The introduction of mobile technology has changed communication in the workplace and made information more accessible than ever for project managers. The research aimed to determine the drivers that influenced the adoption of mobile technology by project managers and to gain an understanding of how technology is changing how project managers manage project information and communication. Data was collected using two research methods: a document review process and a survey questionnaire issued to project managers. The study found that many project managers regularly use mobile devices to access a variety of software applications to conduct various project management activities. By gaining an understanding of the usage trends an insight into how the use of mobile technology may influence the approach to project information and communication management is obtained.

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Chapter Nine: Improving Project Performance by Adopting Control Theory Methods Reasons for project failure continue to vary based on perceived understanding of project behaviour due to mixture of internal and external factors, while the need for underlying theory remains a concern. This study investigates the potential application of methods used in control theory to project management in order to improve project performance. A sample project was used in MATLAB to produce a transfer function model. The model was then simulated using SIMULINK for comparison. The result showed that if the output of a project is controlled to follow a desired input set point by using control theory then the performance of the project that has a closed loop configuration will be improved. The research outcome can contribute to understanding project behaviour, project modelling, and more importantly, to provide new ways of controlling project performance.

Chapter Ten: Project Risk Management Practices in Small to Medium Enterprises in the Australian Defence Industry Defence acquisition projects are characterised by high levels of complexity, manifesting in technical and programmatic risk. This research aims to better understand contemporary project risk management practices within small to medium enterprises (SMEs) participating in the Australian defence industry. SMEs employ half of all Defence industry workers and receive one third of acquisition spending, making them a significant contributor to project outcomes. A survey methodology was used to investigate project risk management practices in SMEs, and a review of major defence project performance data was conducted in parallel to provide context. Survey findings were mapped to a project risk management maturity model and analysed to determine maturity levels in defence SMEs. The research finds that most SMEs exhibit mid-range project risk management maturity. Results of the review into major project performance are significant in terms of their characterisation of an industry beset by schedule and cost over-runs, leading to a recommendation for further research.

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Part Three: Issues in Application Chapter Eleven: Project Management in the Arts: Integration, Application and Benefits Today’s arts industry produces shows, exhibitions and festivals that impact society and culture. As ‘temporary endeavours’ with specific goals they can be defined as ‘arts projects’, yet some perceptions within creative arts projects preclude the application of a formalised project management methodology. This research investigated the links between project and arts management to determine whether project management tools are adaptable or appropriate for arts projects. An online survey and in-depth interviews were undertaken to gather data about which project management tools were currently being applied, and to explore the application and potential benefits of applying project management tools to arts projects. The research found that some formal project management methods are being utilised in the arts, however there is room for further application, particularly in the areas of cost, time risk and communication management. The outcomes of this research may assist arts organisations to understand the benefits of formal project management, while creating a path for future interdisciplinary research opportunities between project management and arts management.

Chapter Twelve: Effective Management of Infrastructure Projects in Remote Northern Territory There is limited literature that discuss the challenges and strategies in managing infrastructure projects in Australia’s Northern Territory (NT). This study makes recommendations for project managers to overcome these challenges. A literature review on the management of remote projects was conducted to determine the challenges and strategies in delivering projects in remote locations. Data was collected from core members of project teams who have delivered projects in remote NT by online survey and interviews. The study found that nine out of the thirteen challenges in delivering remote projects that were identified from literature have either high or extreme risk scores. Furthermore, most strategies identified in literature were found to be at least moderately effective in overcoming the challenges in delivering remote NT projects. The findings of this study will help project managers delivering essential infrastructure projects in remote NT to focus their efforts on mitigating the risks associated with challenges with high or extreme risk scores and to find ways to implement the strategies found to have high effectiveness.

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Chapter Thirteen: Integrated Project Delivery in Large-Scale Residential Architecture in Australia Although there has been a huge interest in integrated project delivery (IPD), the current adoption status of IPD remains relatively small. This paper investigates whether a shift from ‘traditional’ project delivery methods (PDM) towards IPD can be expected for large scale residential developments in Australia in the near future. The research included a comparison between design-bid-build (DBB), design-build and construction management at risk with IPD as well as a survey of 52 industry professionals, using structured web-based questionnaires. It was revealed that, although a majority of respondents regard DBB as an effective PDM for these projects, a majority of participants also do see IPD as a possible alternative. Additional findings showed that most respondents also believed that a shift towards IPD would result in enhanced design quality, construction quality and industry innovation. The results may encourage organisations within the industry to move away from ‘traditional’ project procurement towards a more integrated approach.

Part Four: Continuous Improvement and Benchmarking Chapter Fourteen: Establishing and Benchmarking Project Management Maturity The primary objective of the research was to establish a baseline of project maturity for a resource company, identify key gaps and make recommendations for improvement. The initial focus of the research was to explore project management maturity models that may be best suited for use or to be adapted for use in assessing project management maturity in the resources and energy sector in Australia. A survey was conducted with a sample of employees at the subject company by using the selected Kerzner Project Management Maturity Model. The results established a benchmark for the organisation and provided a relative assessment compared to companies of similar size. Gaps in project management maturity at the company were identified and recommendations were made for improvement, which ultimately is anticipated to improve the probability of success of the project pipeline at the company. The resultant “case study” provides a useful model by way of example for other organisations undertaking project management maturity assessment.

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Chapter Fifteen: The Impact of Modular Construction on LNG Megaprojects This study investigates whether a link exists between modular construction strategies used on Liquefied Natural Gas (LNG) megaprojects with associated cost and schedule overruns, focussing on the root causes of overruns and identifying mechanisms to reduce them from reoccurring. Published works were examined to identify differences in project execution strategies and known causes of overruns on megaprojects to date, and data was gathered by surveying and interviewing experienced participants in the LNG industry for insight to real issues experienced during project execution. The results identify that problems lie more with the ineffective management of construction strategies, particular within project controls, engineering, quality control and material management. The key recommendation is to minimize the transfer of scope from fabrication yards to the final construction site as this is a major contributing factor to the overruns. Organizations will find the recommendations in this research a useful aid during the up-front planning of LNG project execution.

Chapter Sixteen: Case Study: The Implementation of Process Improvement in a Remote Australian Construction Project The remote Australian construction industry has some of the most unique demographics in the world and research to date has not significantly focused on process improvement techniques. This research demonstrates that a process improvement approach for construction companies, adapted for the challenges of the remote work environment, can deliver significant competitive advantages for the company. This research included a review of existing literature on process improvement as well as a qualitative, opinion-based survey of professionals currently working within the remote Australian construction industry. A key conclusions of this research is that management commitment and communication are essential for process improvement to be successful in a remote construction context. Furthermore, all parties need to be aware that process improvement takes a significant investment of time to implement. With this in mind, an intentional commitment from both management and employees to the process is of greater importance in remote projects than metropolitan projects.

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Chapter Seventeen: Case Study: Implementation of a Continuous Improvement Program within an Australian Engineering Firm This research examines the use of Continuous Improvement (CI) and how it can be employed to streamline the day to day operations of a manufacturing company. The primary focus was the attempted implementation of a CI program within an Australian based engineering and manufacturing firm, and was undertaken to gain an insight into the difficulties associated with program realisation. The research concentrated on a series of interviews of those involved at a working level, providing a new perspective from the typical top-down approach presented in most available literature. Whilst the company involved was unable to successfully implement the program over the research timeframe, it was possible to identify several areas where improvements could be made. These included increased worker training, increased staff motivation and program buy-in, and a more developed project management structure. The results presented can help other companies avoid the pitfalls associated with implementing a CI program.

PART ONE: PEOPLE AND ORGANISATIONS

CHAPTER ONE A MODERN FAMILY: INTEGRATING THE NEW KIDS INTO THE PROJECT MANAGEMENT FAMILY DEAN BORG, ANTHONY WOOD, RAUFDEEN RAMEEZDEEN

The existence of intergenerational differences between the Baby Boomers, Generation X (Gen-X) and Generation Y (Gen-Y) has been a topic of widespread debate in the popular media and numerous scholarly publications for several decades. Many of these articles and literature contend that differing styles and diverse strategies should be employed in the management of each generation, often within a single team. A simple extrapolation of this concept, under the premise that project teams commonly involve members of diverse age groups, shows that Project Managers (PMs) also need to consider these differences in the administration of project teams. Similarly, scholarly discussion, popular press and relevant peak bodies such as the Australian Institute of Project Management (AIPM) have long debated the application of project management. Much of this literature has developed around the following elements: development and application of project management tools, development and application of project management techniques, changing roles of project managers and the structure of project delivery. As a subsequent review of the available literature reveals, there are stark differences in the values, attitudes and expectations that help to explain the underlying sentiment behind those conversations. Similarly sourced from the literature, the nature and application of project management values and tools is changing and there may be a link. Unfortunately, the literature review discovers that there is little research

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Chapter One

that explains how differences in generational characteristics can impact the delivery of projects. An understanding of this link will help to explain intergenerational differences, the future of the profession and strategies to make the most of the diversity. The scope of this research is limited to that required to discover any links between the characteristics of Gen-Y and changes to the project management profession. A literature review further narrows the scope of this research effort, culminating in a set of research aims and objectives. The purpose of this paper is to inform readers on the application of project management by Gen-Y practitioners, and provide those readers strategies to apply those lessons to an operational context. In this instance, primary data will be sourced in two ways. The first was though a short web-based survey, taking participants approximately ten minutes to complete and the second collection method via a series of one-on-one interviews, delivered both in person and by telephone. The survey and series of interviews are the basis for a comprehensive discussion, including development of a potential strategy for addressing intergenerational differences and contenders for future research. The first contribution of this paper is development in the pursuit of assessing the compatibility of an organisation with the varied characteristics and expectations in project management of Gen-Y project managers. This takes the form of a maturity scale, with each level in maturity characterised by a simple set of descriptors. Organisations can use this tool to measure their current state of compatibility and target a desired future state. The second contribution of this paper is an ongoing management strategy that facilitates cross generational management. This strategy focuses on the positive aspects of all generations and attempts to synchronise their application in, for instance, the event of a younger project staff member raising an innovative but potentially risky idea.

Background The profession of project management as we know it today can be traced back to the early 20th century with the development of the Gantt chart by Henry Gantt off the back of Fredrick Taylor’s discoveries on scientific management (Sisk, 2000). Project management gained popularity during the 1950s and 1960s in the US aerospace, construction and defence industries. During this period a range of new techniques for

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controlling projects were developed, including the program evaluation and review technique (PERT), earned value management (EV) and network based techniques, notably the critical path method (CPM) (Burke, 2007). Developments into the organisation of project management and how project management teams fit into traditional functional structure (silos) was pioneered by Bechtel in the 1950s. This was one of the first companies to adopt a matrix style of cross-functional project responsibility to administer oil infrastructure (ibid). Project management and technology first mixed in 1983 with the earliest software planning tool known as the Harvard Project Manager and for the first time centralised a repository of project information (ibid). Over a similar period, research emphases appear to fluctuate wildly over a number of disparate subjects, all somehow linked to project management. For instance, a focus on teamwork typified project management research in the 1970s, but this focus shifted to project organisation and project risk during the 1980s (Crawford, Pollack & England, 2005). More recently, trends in project management research over the 10 year period between 1994 and 2003 have shown downward trends in project scope and project marketing and increasing academic interest in project evaluation and strategic alignment. Resource management, time management, cost management and risk management have remained of interest to researchers over the study period (ibid). Research on generational differences is relatively recent, and began with the realisation that the cohort of employees born between 1960 and 1982, depending on the literature, displayed differing characteristics to previous generations (Smola & Sutton, 2002). In fact research published in the early 2000s still only identified the baby boomers and Gen-X as the two main working groups, with Gen-Y or the millennials only just entering the workforce (ibid). More recent research provides detailed insights in to the unique characteristics of Gen-Y and articulates the unique environmental factors that shaped this generation (McCrindle & Wolfinger, 2010). Credible research on the emerging generational influences on the Project Management profession, specifically trends in the application of Project Management tools and principles, would afford practitioners, academics and the wider industry with a basis upon which corporate project management frameworks, formal Project Management training and further research can be tailored or updated to service a developing

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profession. Customisation may prove critical in unlocking the full potential of what is regarded by some to be the most productive generation yet (Martin, 2005). The ratio of Gen-Y to previous generations in the work force has increased substantially in recent years and continues to do so. The profession of project management is no less exposed in this respect than any other recognised discipline. Much research has been completed into the unique expectations and characteristics of Gen-Y, but little exists on how these distinctions of a growing workforce will be realised in the context of project management. Any generationally dependent implications affecting how Gen-Y project management practitioners are trained, retained and deployed must be discovered, documented and shared with the wider project management community before the valuable lessons learned by exiting practitioners are lost in a flurry of technology driven by headstrong youngsters. Currently, organisations in general appear to be having difficulty engaging, developing and retaining talented young staff (Solnet & Hood, 2009; McCrindle, 2006). The obvious solution would be not to hire anyone from Gen-Y but with growing labor shortages, an aging population and a growing majority of highly educated Gen-Y coming of age, organisations searching for new talent have little choice (McCrindle, 2006). Although no literature currently exists on the scale of this problem in the project management industry, there’s no obvious reason to believe it will be excluded from this general workplace trend. To lend further weight to the inability for work places to retain staff, research conducted by Hinkin and Tracey (2000) indicated the cost of replacing a staff member could be measured, not only by recruitment costs in the thousands, but also by the disruption to peers and supervisors that was found to equate to thirty percent of the replaced staff members salary. The 2014 AIPM Salary Survey found that the average salary of a project management practitioner with three to five years of experience was $116,821 and presents organisations with a strong incentive to improve the way they are viewed by their employees. But even when staff have been secured, there’s still the question about how well their generational differences can be at least accommodated, if not exploited for added performance.

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The available evidence that attitudes and values vary starkly between generations is compelling (Sherman, 2006; Solnet & Hood, 2009, & McCrindle, 2006). Building on that is the earlier but still pertinent work of Meglino and Ravlin (1998) who clearly identify linkages between interpersonal value congruence and effectiveness of communication. Communication, both internal and external to a project team is clearly a key aspect of delivering change through projects (PMBOK 4th Ed). Giving further weight to the relevance of this link is literature by Schaubroeck, Cha and Lam (2007), who clearly link the effectiveness of a team to its leader’s ability to recognise and embrace values. As the default leaders of project teams, project management practitioners need to appreciate that intergenerational value differences can lead to miscommunication and friction within the team, hindering optimal team performance. Organisations need to keep up with the changing nature of project management tools, techniques and methodologies in order to stay competitive in the industry both as an employer of project practitioners and producer of goods and\or services. Research shows that industry leaders are already adapting to the reasonably dynamic profession of project management, at one significant indicator being greater emphasis placed on the understanding of all the projects undertaken by a given organisation (De Reyck et al., 2005). The practice of project portfolio management, and importantly the surge in software tool development to support it is representative of the profession and behoves general industry to be similarly dynamic as practices evolve and the potential benefits balloon.

Methodology The aim of the research is to establish connections between previously documented generational characteristics and the application or expectations of project management tools, techniques and structures. The analysis of primary research answers the following questions: 1. Does a link exist between Gen-Y’s desire of autonomy and the popularity of goal based planning techniques, which allow the achievement of goals but don’t define the tasks required to achieve them?

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Chapter One

2. Is there a significant variance in the nature of tools used (e.g. technology based, workshops) and is that related to generational identity? 3. What other project-related roles do project managers undertake (e.g. portfolio management, change management) and is there a correlation with generational identity? 4. When considering Project Management Offices, or organisations that employ structured project delivery, what are the average expectations of the next generation, and how does this vary from prior generations? The gathering of data for analysis was conducted in two stages. The first stage was a qualitative survey of a sample of project management practitioners across both Gen-Y and previous generations. The survey questions were designed to provide answers or at least clues to the research questions posed above. The second stage of this research involved a series of interviews that aimed at making like for like comparisons across both generational groups.

Key Findings The findings of this research strongly support the notion that generational characteristics play a significant role in the application and expectations of project management tools, techniques and structures. Research Objective One: To determine the preferences of Gen-Y project management practitioners with respect to planning and control techniques. The findings of this research effort were inconclusive in terms of confirming a definite link between generational qualities and the adoption of goal based planning techniques. There was, however, some evidence to suggest that an undiscovered link may have been found with a larger sample. The incidence of divergent intergenerational preference in project management tool sets. The sample demonstrated that the younger cohort of project management practitioners held a strong preference for technology based project management tools and techniques. Although older practitioners

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still, on balance, preferred technology based tools, the reported affinity to technology was far more prevalent with Gen-Y. Roles undertaken by project management practitioners and links to generational preference. There was no significant variance in the number of additional responsibilities taken on between the two generational groups, or whether or not they enjoyed taking on additional roles. There was, however, a clear difference in motivation behind that enjoyment. In support of previous research, it appeared that Gen-Y was motivated largely by the perception that they were adding additional value to the organisation. A similar motivational point was not identified by older practitioners. Differences in expectations of project management environments across generations. The results presented by the sample presented stark differences in the expectations across generations. In line with the findings of research question two, younger practitioners responded specifically with a suite of technology based tools and techniques. Not so much contrasting as complementary, older respondents defined their preferred toolset in terms of qualities such as well trained, fully integrated and consistent. When asked about other expectations such as organisational structures and attitudes, there were once again differing priorities. There was evidence to support the notion that expectations were tied to generational identity.

Discussion In the interviews, a Gen-Y respondent specifically identified the practice of “product based planning” as a preferred project management technique. The specific identification of product based planning by Gen-Y and the absence of it or similar practices by the Gen-Other respondents aligns with Martin’s (2005) assertion that the newest generation values autonomy far more than ever before. Interestingly, a significantly higher proportion of Gen-Other practitioners in the survey indicated a preference for “Task based control”. Assuming a common understanding of the concept of task based control to infer step by step control toward the final goal, this finding does align with the existing evidence that Gen-Y tend to shy away from what they would

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perceive as micro-managing practices (Martin, 2005). The author believes that the empirical evidence regarding Gen-Y’s preference for targets rather than tasks, combined with the growing popularity of output based methodologies (e.g. PRINCE and PRINCE2) (White and Fortune, 2002) does warrant further investigation. Furthermore, when asked why their selected techniques were preferred, a Gen-Y respondent to the interview specifically cited a willingness to trust project team members and their estimates. Respondents from both generational groups identified a range of tools and techniques consistent with industry trends, supporting much of the available literature (White & Fortune, 2002; Alshawi & Ingirige, 2003 & Becerik, 2004). For instance the majority of both respondent groups indicated a higher preference for technology utilisation in project management than they currently experienced. There was, however, a distinct difference reported when respondents were asked to identify specific tools and techniques that they preferred to use on their projects. Almost half of the tools and techniques identified by the younger group were technology based, such as electronic issue ticketing systems, screen sharing collaboration programs, online collaboration forums, collaborative brainstorming using “Zing thing”, teleconferences and tele-meetings. The survey results are highly consistent with Lewis (2003), with 86% of Gen-Y respondents identifying instant messaging as a preferred means of communication whilst only 12.5% of Gen-Other responded the same way. Interestingly, the results contrast sharply with an aspect of Hu, Herrick and Hodgins’ (2004) research, with no evidence of stark contrast was seen in this research. In fact, two thirds of older respondents reported extensive technology utilisation. In contrast, Gen-Other respondents identified a toolset rich in charts, reports and lists. Arguably, most of these tools could be delivered electronically but were not given in that context. When asked why these tools were preferred, a number or technology oriented responses were provided by the Gen-Y respondents. Amongst the benefits identified were that collaboration tools and instant messaging are media liked by Gen-Y, technology makes document control easier and that it doesn’t take people out of their workplace to attend meetings. These responses give credence to and build upon previous literature by re-affirming the generational

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differences in technology preference and going further to present some possible reasons. During the interview exercise both Gen-Y and Gen-Other were equally critical of technology based project management tools. Gen-Y acknowledged that a number of these tools require a high level of prerequisite knowledge and can turn away older project team members or stakeholder that are not familiar with the benefits of technology, whilst Gen-Other responded that blind adherence to technology can annoy and put off stakeholders. Although both criticisms, the contrast in these responses provides an interesting insight into the differing attitudes toward technology across the generations, with Gen-Y appearing to regard technology use as the status quo which some people just do not understand and Gen-Other regarding it as discretionary, to be used in moderation. These attitudes further strengthen existing research regarding generational affinity toward technology (Martin, 2005; Broadbridge, Maxwell & Ogden, 2007; Kerslake, 2005; Eisner 2005; Morton, 2002; Francis-Smith, 2004). Hewlett, Sherbin & Sumbergs’ (2009) definition of Gen-Y was supported by the results of this survey regarding preferred utilisation of technology based project management tools. In this instance, the overwhelming majority of Gen-Y reported to prefer the use of technology in most projects whilst only half of Gen-Others felt the same way. The extensive use of technology reported by the younger age group (100% of respondents) is also consistent with the findings of Bessen (2002), Martin (2005) and Hu, Herrick and Hodgin (2004). These findings strongly suggest that the selection of tools generally could be biased by generational identity, supporting the findings of extensive research (Martin, 2005; Broadbridge, Maxwell & Ogden, 2007; Kerslake, 2005; Eisner 2005; Morton, 2002; Francis-Smith, 2004). When considered in concert with documented trends in the popularity of project management tools (White and Fortune, 2002), an inference can be made regarding links between the project management tools preferred and the project management practitioners who prefer them. The available literature (Kehrli & Sopp, 2006) is consistent with the findings of the survey which found that whilst 100% of the younger age group reported to be continuously searching for better ways to do things, only 81% of the older age group responded the same way. The remainder

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of Gen-Other respondents reporting that they knew their current methods were best practice or that what they currently used worked well enough. The qualitative confirmation of significant variances drawn from literature between the two age groups surveyed ensures a firm basis for further analysis of results. A selection of questions in the interview was dedicated to identifying other roles that were undertaken by Gen-Y and Gen-Other participants. The objective was to determine whether any links existed between GenY’s craving for responsibility identified by Kerslake (2005) and the increasing adoption of other related professions or, allied professions, reported by Kwak & Anbari (2009). Both groups reported a range of other roles undertaken aside from that of project management. Gen-Y participants provided seven individual other roles including business analyst, portfolio manager and benefits realisation manager. Gen-Other provided five other alternate roles that shared business analyst and portfolio manager with Gen-Y, but added some others such as mentor and consultant. It is pertinent to note at this point that the Gen-Other respondents were in senior management positions in their respective organisations. This factor may have contributed to the additional roles of mentor and possibly consultant. When asked about how those additional roles were integrated into their responsibilities, the responses from Gen-Y included “by accident” and “I enjoy taking on other roles” which is of particular interest to this discussion. These responses infer that the participant either had little control over the assignment of these responsibilities or that they played a role in identifying the need and taking on those particular roles. This would indeed support Kerslake’s (2005) assertion that Gen-Y actively seek out additional responsibility and may help to explain the trends identified by Kwak & Anbari (2009). This link is consolidated somewhat by two of the five responses provided by Gen-Y respondents when asked whether they enjoyed the added responsibility; the responses were “I enjoy feeling like I’m creating a lot of value for my organization” and “feels like I can create more value for the organisation by doing these other roles”, and are consistent with the available literature (Barron et al., 2007; Martin, 2005). The sentiment may, however, be due to one of a list of trends identified by Barnes (2002) that are currently evolving the project management profession. Barnes (2002)

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contends that the entire profession is currently is a state of widespread development in a number of areas. Of particular importance to this study is development in the areas of program, risk, change and portfolio management. In contrast, Gen-Other responses included “it’s my core role” and as a function of working in smaller organisations where those roles and not previously existed. This aligns with Smola and Suttons’ (2002) findings that: x As age increased the workers desire to be promoted reduced and; x This may stem from employees’ desire to have less responsibility at work (Smola and Sutton, 2002). When asked to describe their expectations of a mature project management organisation, a Gen-Y participant immediately responded with a Project Portfolio Management, or PPM, tool. Modern PPM tools are typically technology based (Dickenson, Thornton and Graves, 2001) and centrally managed via a portfolio management office (OGC:P3O), and have three key objectives; 1) maximise the value of the portfolio; 2) provide balance and 3) support the strategy of the organisation (Dickenson, Thornton and Graves, 2001). Also mentioned were scheduling, issue ticketing, time sheeting and work update tools and some form of process modelling software, as well as a complete suite of templates for project documentation. Of particular interest was that a Gen-Y participant specifically identified strict role descriptions which would define and limit a person’s role in a project. This seems at odds with previous literature (Reynolds, Bush & Geist, 2008; Kerslake, 2005), which suggest that GenY seek autonomy and increased responsibility. Amongst the Gen-Other responses, one participant suggested a fully integrated tool set with a single source of truth. Also mentioned was that tools were consistent, easy to use, well trained and highly utilised at the lower levels of the organisation. The responses from the older age group tended to be descriptors of tools and techniques rather than identify specific tools, as was the case with Gen-Y. Gen-Y also identified a number of organisational governance expectations of a mature project management organisation. These included a dedicated Project Management Office, centrally controlled portfolio of projects, adherence to an organisational methodology, some form of project audit

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Chapter One

department, cross functional sponsors and overarching resources management. It appears from these responses that the Gen-Y participants had a clear idea of the structure of a mature project management organisation and the required level of transparency of project operations. Gen-Other respondents responded with even greater detail identifying gateway review (review points throughout the project lifecycle), specialist project managers and consistent reporting and delivery. Gen-Other participants went further to even hint at a required organisational culture where project sponsor are motivated to champion projects and all leaders exhibit the “right behaviours” to foster effective projects, without any political behaviour. Participants from both age groups displayed potentially complimentary but clearly differing perceptions of the capabilities of a “mature” project management organisation. The organisational culture points identified by the Gen-Other participants was a clear point of difference and perhaps a point for further research and learning for younger practitioners. Similarly, the clarity of organisational structure articulated by Gen-Y respondents may help organisations and older practitioners in positions of influence to begin positioning themselves for future growth and increased project management maturity. It is apparent that at least some points of generational difference exist with respect to the attitudes and preferences of project management practitioners. Practically speaking, project team members are likely to work in enterprise project portfolios comprised of PMO staff, and Project, Program and Portfolio (P3M) practitioners. In medium-large organisations these regularly interacting staff are likely to identify with all workplace generations. Managers and Senior Executives have the opportunity to leverage the diverse “lived experiences” of each generation to enhance creativity in problem solving and resolve tensions borne of intergenerational perspective. Achieving this end will require more than meme tolerance of generational difference; the diversity of views must be overtly embraced and the resultant tension actively channelled toward productive outcomes. When recruiting project practitioners, employers should regard generational diversity as a virtue that will improve team capability. Hiring managers should review the composition of existing teams, and consider

Inteegrating the Neew Kids into thee Project Managgement Family y

15

strengtheninng or introduucing perspecctives from an under rep presented generationall group. Table 1-1. Leeveraging Interrgenerational Diversity D in Prroblem Solving g (LIDPS) Continued d Surveillance Definee the reeal issue

Actively facilittate regular discussiion between a generational crooss section of the pproject team to elicit potential issuess. These are to bee noted and discuussed in a separate seession. Focus facilitatoor effort on potenttially “supressed” or underrepresenteed generational representatives. For instance a sole Baby Boomer in a prroject team of Gen-Y’s may not feel comfortable raiising issues that theyy can see from their unique and experienced perspective.

In a sepaarate session, focus onn individual issues inn turn. Merely understaanding the issue is often o half the challengge on a complexx project or in a channging environm ment. It is at these mooments that generatioonal perspecttives can reveal prreviously unseen contributing c factors or o wider implicatiions. In instancess where personneel or relationsships are the root of thhe problem, a cross functional f discussioon can help the team m empathise with affeected parties and find a mutually agreeablle way forward..

Explore consequences on the project

A cross generationnal teeam can access thhe leengthy experiencee off older generationns to o identify longer teerm operational (p post project) issuees orr wider en nvironmental issuues po otentially hidden from view. Faacilitated open deebate between teaam members m can bringg ab bout a hybrid peerception and reeveal pragmatic op ptions.

Derive and d Recommen nd Solution Options O

The breadth h of lived experiences and motivations afforded by an intergenerattional team can bee used, through faciilitated and open deebate, to generate a range of olution creative reso options. Old der practitionerss can draw on the extensive ex xperience in both the subject s matter and human h responses, and a younger practitionerss can draw on their familiarity with w new and emergin ng technologies.

In probllem solving, when creativ vity and collaaboration are arguably most criticaal in a project, a structurred methodollogy for eliciiting and balancing diiverse views is required. By y closely mannaging the inveestigation and consideeration process, a manager can keep an intergeneratio onal team

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Chapter One

away from the unhealthy personally targeted conflict that can stem from poorly understood generational perspective. To this end, the author proposes a structured, high-level process for leveraging generational diversity toward creative, problem solving outcomes. This process is called Leveraging Intergenerational Diversity in Problem Solving (LIDPS) and is detailed in Table 1-1.

Conclusion Using these findings and their synthesis with the existing body of knowledge, the LIDPS process was developed. Fully employed, LIDPS will equip leaders of multigenerational teams with a structure to exploit diversity as a capability for problem solving. Weston (2006) sums the situation up nicely: “Teams are most successful with their members are not only individually competent, but also cohesively united and energized”

In an economically unstable environment with a constantly shifting generational balance, it behoves employers, current and future to seek strategies to better manage and exploit all unique generational qualities.

References Alshawi, Mustafa and Bingunath Ingirige. 2003. Web-enabled project management: an emerging paradigm in construction, Automation in Construction, Vol 12, pp. 349 – 364. Australian Institute of Project Management, 2009, 2009/2010 Salary Survey Summary – Expanded Information, http://www.aipm.com.au/resource/2009-salary-survey-exp.pdf. Barnes, Martin. "A long term view of project management-its past and its likely future." In 16th World Congress on Project Management, Berlin. 2002. Barron, Paul, Adelina Broadbridge, Susan Ogden, and Gill Maxwell. 2007. Careers in Hospitality Management: Generation Y’s Experiences and Perceptions, Journal of Hospitality and Tourism Management, Vol. 14, No. 2, pp. 119-128. Becerik, Burcin. 2004. A review on past, present and future of web based project management & collaboration tools and their adoption by the US AEC industry, International Journal of IT in Architecture, Engineering and Construction, Vol. 2, No. 3, pp. 233 – 248.

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Bessen, James. 2002. Technology adoption costs and productivity growth: The transition to information technology, Review of Economic Dynamics, Vol. 5, No. 2, pp. 443-469. Broadbridge, Adelina, Gillian Maxwell and Susan Ogden. 2007. Experiences, perceptions and expectations of retail employment for Generation Y, Career Development International, Vol. 12, No. 6, pp. 523-544. Burke, Rory. Introduction to Project Management, Burke Publishing, 2007 pp 30-36. Crawford, Lynn, Julien Pollack and David England. 2005. Uncovering the trends in project management: Journal emphases over the last ten years, International Journal of Project Management, Vol. 24, pp. 175184. De Reyck, Bert, Yael Grushka-Cockayne, Martin Lockett, Sergio Ricardo Calderini, Marcio Moura, and Andrew Sloper. "The impact of project portfolio management on information technology projects." International Journal of Project Management 23, no. 7 (2005): 524-537. Dickinson, Michael W., Anna C. Thornton, and Stephen Graves. "Technology portfolio management: optimizing interdependent projects over multiple time periods." IEEE Transactions on engineering management 48, no. 4 (2001): 518-527. Eisner, Susan P., 2005. Managing Generation Y, SAM Advanced Management Journal, Vol. 70, No. 4, pp. 4-15. Francis-Smith, Janice. 2004. Surviving and thriving in the multigenerational workplace, The Journal Record, Vol.1, August 26. Hewlett, Sylvia A., Laura Sherbin and Karen Sumberg. 2009. How Gen Y & Boomers Will Reshape Your Agenda, Harvard Business Review, July-August 2009, pp. 2-8. Hinkin, Timothy. R. and Tracey, J. Bruce. 2000. The cost of turnover: Putting a price on the learning curve, Cornell Hotel and Restaurant Administration Quarterly, Vol. 41, pp. 14-21. Hu, Jie, Charlotte Herrick and Kim Allard Hodgin. 2004. Managing the Multigenerational Nursing Team, The Health Care Manager, Vol. 23, No. 4, pp. 334-340. Kehrli, Sommer, and Trudy Sopp. "Managing generation Y." HR Magazine 51, no. 5 (2006): 113-117. Kerslake, Phil. 2005. Words from the Ys, New Zealand Management, Vol. 52, No. 4, pp. 44-46. Kwak, Young Hoon, and Frank T. Anbari. 2008. Analyzing project management research: Perspectives from top management journals, International Journal of Project Management, Vol. 27, No. 5, Pg. 435.

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Lewis, K. R., 2003, Managing multiple generations in the workplace can be a challenge, Newhouse News Service quoted in Eisner, S. P., 2005, Managing Generation Y, SAM Advanced Management Journal, Vol. 70, No. 4, pp. 4-15. Martin, Carolyn A. 2005. From high maintenance to high productivity, Industrial and Commercial Training, Vol. 37, No. 1, pp. 39-44. McCrindle, Mark, and Emily Wolfinger. 2010. Generations Defined, Ethos, Vol. 18, No. 1, pp. 8 – 13. McCrindle, Mark. 2006. New Generations at Work: Attracting, Recruiting, Retaining and Training Generation Y, McCrindle Research, Norwest Business Park. Meglino, Bruce M., and Elizabeth C. Ravlin. "Individual values in organizations: Concepts, controversies, and research." Journal of management 24, no. 3 (1998): 351-389. Morton, Linda P. 2002. Targeting Generation Y, Public Relations Quarterly, Vol. 47, No. 2, pp. 46-53. Reisenwitz, Timothy H., and Rajesh Iyer. "Differences in generation X and generation Y: Implications for the organization and marketers." Marketing Management Journal 19, no. 2 (2009): 91-103. Reynolds, Leah, Elizabeth Campbell Bush, and Ryan Geist. "The gen Y imperative." Communication World 25, no. 3 (2008): 19-22. Schaubroeck, John, Simon SK Lam, and Sandra E. Cha. "Embracing transformational leadership: team values and the impact of leader behavior on team performance." Journal of applied psychology 92, no. 4 (2007): 1020. Sherman, Rose O. 2006. Leading a multigenerational nursing workforce: issues, challenges and strategies, Online Journal of Issues in Nursing, Vol. 11, Iss. 2, Pg 3. Sisk, Toney. 2003. The History of Project Management, Berkely University, http://art.cim3.org/pm_workshop/ProjMgmt_history_MS981015.doc Smola, Karen W. and Charlotte D. Sutton. 2002. Generational differences: revisiting generational work values for the new millennium, Journal of Organisational Behaviour, Vol. 23, pp 363-382. Solnet, David and Anna Hood. 2008. Generation Y as Hospitality Employees: Framing a Research Agenda, Journal of Hospitality and Tourism Management, Vol. 15, pp. 59-68. Weston, Marla J. 2006. Integrating Generational Perspectives in Nursing, OJIN: The Online Journal of Issues in Nursing, Vol. 11 No. 2, Manuscript 1.

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White, Diana and Joyce Fortune. 2002. Current practice in project management – an empirical study, International Journal of Project Management, Vol. 20, pp. 1 – 11.

CHAPTER TWO INTER-GENERATIONAL DIFFERENCES IN PROJECT MANAGEMENT: TOOLS AND TECHNIQUES ROCHÈLE BERWICK, RAUFDEEN RAMEEZDEEN, ANTHONY WOOD

The research will aim to address generational bias in applied project management. In particular, the study will aim to understand the differences in tools, techniques and methods applied by Generation Y (Gen Y) project managers compared to those of Baby Boomers (Boomers) and Generation X (Gen X) respectively. Previous research into this field was executed by interviewing and surveying younger and older project managers on their use of tools and techniques within the field. Whilst the results showed differences in terms of preference, it could not accurately prove that the differences were due to generational factors. Previous research indicated that there were other factors influencing peoples’ choice of tools and techniques such as Microsoft Project or PRINCE2. This research implements “controls” that aim to isolate other factors influencing results. The research utilised both qualitative and quantitative methods, along with Triangulation to form a comparative analysis on the results. What was found was an over-riding consensus, that whilst some generational differences exist, there are no major distinctions in preferences for project management tools and techniques. Interestingly, it was found that the affiliation and use of technology is not strictly centred towards people belonging to the Gen Y category, but rather embraced by the majority of project practitioners across cohorts. It appears all generations are embracing tools and technology in the workplace.

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Both the survey and interviews were amended from the previous researchers’ work on the impact of Generation Y on project management. This research is a development of the previous research conducted by Borg (2012 – see Chapter One). Unfortunately, Borg et al. (2012) were unable to prove that there was generational bias in the use of tools and techniques due to limitations of the chosen methodology. The aim of this research is to conduct a similar exercise, but applying controls to the methodology to ensure that external factors do not influence the results. These controls were applied from the outset of the project to maximise success. Research into this area will produce a wealth of new knowledge, as the available literature on the topic is limited. There are a number of reasons for this, including the relative newness of the topic and the slow recognition of project management as a professional discipline. If successful, the study will generate informed recommendations that will assist project managers in the application of their chosen tools and techniques.

Background With the inevitable cycle of new generations seeking employment, there comes a range of issues and topics that must be explored in order to understand their impacts on the workforce. Diversity in the workplace has been on the increase in Australia since the sweeping changes in immigration policies in the 1960s. This change of policy brought with it diversification of the workforce in terms of gender, race, ethnicity, sexual orientation, religion, politics and age. The differences in generational expectations and values are evident with life experiences playing a pivotal role in shaping one’s identity. Veterans (1922 to 1943) are the oldest generation in the workforce and were bought up in era completely different to modern-day society, having lived through the Great Depression and World War II (WWII). “Baby Boomers (Boomers) are people born between 1946 and 1964 who have somewhat different values and expectations in the workplace than Generation X (Gen X) employees, those born between 1965 and 1977” (McShane and Travagilione 2003, p.10). The authors also address the arrival of Generation Y (Gen Y, born between 1978 and late 1990s) employees to the workforce and their need for responsibility to thrive within their employment (McShane and Travagilione 2003). The traits of this generation appear to differ greatly from those of previous generations

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having been bought up in a techno-driven age, where technology has become entrenched as an essential part of daily life, and not solely a feature of the workplace. Literature suggests that managers are required to employ a variety of strategies for managing the generations within the workforce. This can often prove difficult, as a project team may be comprised of different cohorts. This research will go some way towards understanding if this is, in fact, a correct hypothesis. It has been noted by authors such as Anantatmula et al (2012), Clancey (2011), and Kyles (2005) that Generation Y has a tendency to prefer Information Technology (IT) related tools in the application of their work. This research would aim to prove that this preference is due to the experience and expectations of their generation. If successful, the research would provide new knowledge to the project management industry, as only minimal study has been undertaken in this field. Additionally, the information will help employees in an operational context. The research methodology employed is triangulation, which aims at validating data by comparing information from a number of sources in an endeavour to ascertain key similarities and differences. Previous research into this field was completed by interviewing and surveying younger and older project managers on their use of tools and techniques within the field. Whilst the results showed distinct differences in terms of preference, it could not prove with any degree of certainty that the differences were due to generational factors. Previous research indicated that there were other factors influencing peoples’ choice of tools and techniques; for example, an Information Technology (IT) project manager could be expected to assume a preference towards IT-based project tools and techniques. This research has utilised ‘controls’ that isolate ‘other’ factors influencing results, in a bid to demonstrate that generational differences, do indeed influence choice of tools, techniques and methods for project managers. This research has six key objectives. These questions are modified from the previous research conducted by Borg (2012): x To understand the preferences of Gen Y and Gen Other project managers with regarding tools. x To understand the preferences of Gen Y and Gen Other project managers with regard to techniques. x To understand the preferred methodologies among the cohorts.

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x To understand the different roles undertaken by project practitioners relative to their cohort. x To understand the differing expectations of project managers across the cohorts. x To understand the different Gen Y integration models available in companies and the effectiveness of those models. The literature has described an array of trends – in both tools and techniques – that have been relevant in the profession for at least 60 years. However, it remains clear that there is little examination of the possible links between individual generations and the preferred tools and techniques used by that generation in the execution of projects. Reviews of the history of techniques shows a shift from traditional methods such as PERT and CCPM, towards more computer-based tools, which allows flexibility and a focus on continuous improvement throughout the lifecycle of a project. Interestingly, none of the information draws any linkage between the preferences of tools or techniques amongst project managers. Kwak and Anbari (2008) address this in part in their review of the current trends and disciplines associated with the industry. Their significant findings included noting an increase in strategy, project portfolio management, earned value management as well an increase in the popularity of technology tools, confirming the steady shift in the industry towards IT and web-enabled tools. Furthermore Haughey (2011) discusses the most common tools used, which include Gantt Charts, logical network charts, PERT charts, product breakdown structures and work breakdown structure (Haughey 2011). Is it important to understand whether project managers of older generations are embracing tools such as the iPad, or are they steering away from these and relying on more traditional methods? It would be interesting to note how the modern project manager would survive today if all of their technologies were spontaneously removed. Would they revert to traditional planning methods such as PDM or CPM? Would younger project managers really understand how to use these tools, given that they have grown up in a tech-savvy age with a heavy reliance on IT-based tools? If this were so, the inference would be that older project managers would be quite able to continue their work, given that they have experience with more traditional hand-based project methods. This raises the question: is there generational bias in the application of modern-day project management? Do Generation Y project managers have a preference for IT-based tools? Does age have an influence on the choice of

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tools and techniques used? These are questions that this research will examine. The literature available makes little reference to project practitioners’ preferences for tools and techniques.

Methodology The research utilised both qualitative and quantitative methods. The research was completed in two phases, first through a survey pertaining to the six objectives of the research. The second phase was conducted via indepth interviews which provided further insight into project operations within organisations. Of the participants involved in the survey, four paired samples (eight individuals in total) were selected to undergo the indepth interview process. The results of the interviews have been compared to the results of the survey and triangulated via the literature review, to show if generational bias exists in the application of project management tools and techniques. Todd (1979) advocated triangulation as an appropriate research methodology whereby both qualitative and quantitative data collection is used to test, or understand, the research proposition(s). Typically, this 'blend' of research methods involves diverse data collection, and may embrace a mix of questionnaires, interviews, telephone surveys and case studies (Love et al 2002, p. 295). The respondents were chosen at random from specific industry groups with IT individuals excluded. The survey covered a broad spectrum of topics by assessing the operational application of project management. These questions were chosen in order to understand if there was any link to generational identity. The interviews were detailed and asked specific questions that consolidated survey information directed towards understanding project manager’s expectations at work. In a bid to eliminate useless data, participants were carefully selected in groups of pairs. To do this a method called paired sampling was employed. Paired sampling allowed respondents to be matched to a partner with similar traits. The advantage of employing this method was that it eliminated any bias from answers by ensuring that like factors were compared, thus enabling a more accurate result. Both the qualitative and quantitative data were triangulated along with the literature review to show the results. Dunbar (2001) refers to triangulation as a blended view and contends that methodological triangulation can yield three benefits: completeness, abductive inspiration, and confirmation.

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Key Findings Survey Respondents included 16 from Generation Y, 43 from Generation X and 20 Baby Boomers with an over-representation of males consisting of 22 females and 57 males. The sample included project managers from all education levels with that majority having completed undergraduate and postgraduate degrees. Both cohorts favoured the Construction industry followed by Defence, Pharmaceutical, Health, and Medical R&D. An ‘Other’ category popular among Gen Other included industries such as Education, Remote Mining and Offshore, Business and Industry, Telecommunications, Energy, Operation and Maintenance of water and wastewater services, and Higher Education. The scale of the companies worked in for Gen Y consisted of fewer than 100 employees, closely followed by companies consisting of fewer than 500. The majority of Gen X and Baby Boomers worked in companies consisting of over 1000 people All cohorts utilised digital technology at home and work. The majority were looking to improve the ways they work via the use of tools and techniques utilised daily and were also interested in trying new ones. Technology based project management tools such as WebEx sessions, social media and podcasts were generally not used on projects overseen by Gen Y managers and yet they indicated that they would like to utilise technology on the majority of projects undertaken. Gen Other had dealt with technology based tools on some projects, but would prefer technology based tools to be utilised on all projects. Both Gen Y and Gen Other preferred using Microsoft Project when scheduling their projects. The majority of all cohorts had not heard of tools such as Lighthouse, Springloops, Creative pro office, projectplace.com. Both cohorts identified email as the main form of communication, then face-to-face, followed by telephone and instant messaging. The majority of Gen Y stated that they prefer to use notebooks in the day-to-day running of their projects. The majority of Gen Other stated that have already invested in iPads or are planning to do so. A smaller number

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of the sample stated that they still prefer the use of notebooks but it appears that the majority of Gen Other favours technology-based tools. All cohorts took on extra responsibility within the workplace including project coordination, change management, resources management and were actively involved in the end to end lifecycle of projects. When it came to company loyalty both cohorts indicated that they would be happy to move jobs as required, to meet their personal needs. A fair number of the sample indicated they would be happy to stay in their current role for the foreseeable future. Gen Y practitioners had been exposed to the industry for no more than ten years, with the majority of the respondents having been in the profession for less than five years. The majority of the Gen Other category had been working within the profession for between ten and twenty years. The majority of Gen Y were familiar with the PMBOK® Guide framework followed by in-house designed methods. Gen Other noted a higher use with in-house methodologies, followed by the PMBOK® Guide and PRINCE2. The most important function of a project methodology for Gen Y was the ability to have comprehensive project documentation, followed by the facility to apply process and structure to a project, and lastly the choice of planning one’s work effectively. Likewise, Gen Other stated that a methodology should apply process and structure to your work and the ability to plan your project from end-to-end. These results show a similarity between the generations as it appears the cohorts have a similar definition and understanding of a methodologies purpose.

Interviews The Interviews uncovered a range of techniques including risk analysis, cost benefit, benefits analysis, quality plan, project meetings, documentation and others that were utilized by project managers. Both cohorts maintained the advantage of their chosen technique was the opportunity to implement structure and determine clear goals in projects. Gen Y noted flexibility and transparency as integral whilst Gen Other cited communication and a well-defined process for delivery. Disadvantages by both generations was the repetitive overhead of some documentation.

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From a tooling perspective Gen Y and Gen Other noted a range of tools consistently utilized which included the Microsoft Project and the Microsoft Office suite. Gen Other also highlighted an assortment of different types of tools, including Clarity, Bijingo, Swiftlight and Primavera Enterprise Project Portfolio Management (EPPM). The advantages of these tools, noted by both cohorts was ease of use, simplicity and control. Gen Other noted the visual aspects of the project plan, particularly how Gantt charts needed to be produced on tools that were visually easy to understand and read, especially for instances when presenting to key stakeholders. Themes from a disadvantage perspective included time consumption as a result of tooling integrations along with documentation overhead. Roles undertaken relating to project management for Gen Other were programme, portfolio and project director roles. Gen Y’s additional roles included resource management, team coordination and project scheduling. Gen Y stated that these roles were not always officially incorporated into their role. A Gen Other interviewee also commented that he enjoyed the additional tasks as he felt that they contributed to making the working day go faster! The consensus across both cohorts was that they enjoyed taking on the additional responsibility as it provided them with all levels of project management, from concept to implementation. A number of project managers agree that the role of the project managers was to wear many hats. Business divers and strategy held a large impact on dictating company direction and priorities. Organisational maturity was important, with Gen Y informing us that this is required to maintain governance, structure, policies, process, documentation and a clear project methodology. Gen Y expects maturity to be driven from an executive level down and also require senior management to value their resources. Gen Other’s results aligned with that of their younger counterpart; they also identified leadership, knowledge and training as critical to a mature project organisations. Gen Y and Gen Other discussed models within their organisations that allowed younger project managers to develop and progress up the ladder. These included graduate programmes and buddy systems, however half the Gen Y participants noted that the programmes in place were not structured well and as a result were largely ineffective. The remaining interviewees stated that the models had some benefits to the individuals

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taking part. Gen Other respondents agreed that the models they had experienced were effective but also stressed that these programmes should be in place for all employees – not just Gen Y. This factor was seen as critically important from a resource management perspective, whereby the ability to train, motivate and retain resources is essential to any projectcentric organisation.

Discussion Based on the results of both the survey and interviews, there appears to be an overriding consensus that whilst some generational differences exist, there are no major distinctions in preferences for tools and techniques. To further analyse the results gathered from the survey and interviews with a view to cement the findings, the six objectives of the research will now be individually addressed.

Preferences of Gen Y project managers with regard to tools With the increasing change and rapid growth in technology, project management tools are becoming increasingly online and technology based, being updated an average of every 18 months. Furthermore, the internet has changed the way we communicate by providing an international forum to facilitate conversation. Additionally, the internet has allowed enterprise wide projects to be run across the globe via intranet pages specifically designed and customised for a project (Saladis 2000). This is perhaps why in our survey the cohorts agreed that technology based project tools was important. This drive toward technology will bring about challenges for project teams, especially those that are multi-generational, multi-cultural and virtual. “As the workforce becomes multi-generational, we have to harness the power in the convergence of viewpoints and passions” (Raghupathy 2010, p. 2). Additionally, new technologies such as iPads will allow the workforce to become increasingly connected whilst being mobile. Gen Other noted a higher use of this tool whilst Gen Y stated that they planned on purchasing one to use in the near future. The ability to work wireless from any location offers new work methods which have not been seen before. As a product of the new era, Generation Y will thrive in this world and will have a lot to offer corporations. Gen Y needs to be cultivated, trained and retained as older generations leave the workforce for retirement. The future of the workforce is Gen Y which is why there is so much emphasis on getting the generational balance in the workforce

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right (Jorgensen 2003, Gale 2007, Liebowitz et al 2007 and Raghupathy 2010). There were a range of questions in the interview and survey which aimed at understanding tooling preferences. Predominantly, Microsoft Project proved to be the most popular tool utilised across the cohorts. Respondents in the interviews described the advantages associated with the tool, such as ease of use, general availability, and the option of having an overall picture of the project, at any point, from start to finish. In a similar study conducted by the Project Management Institute, based on information gathered from a random selection of 1000 participants, the researchers Fox and Spence (1998) found that 48.8% of the sample also listed Microsoft Project as their primary tool. Given that communication is essential in all projects, the most commonly used tools were assessed, with Gen Y citing email as their main medium. Gale (2007) explains that there is a heavy reliance on all things electronic among the younger generation. This reliance on technology has many authors inferring that there is total submission to the electronic age (Gale 2007, Jorgensen 2003). Gen Other also cited email as the most important tool for communication, closely followed by face-to-face. Gale explains that face-to-face time is essential for building up relationships with clients and that younger generations who do not employ this mode of business communication may be in danger of missing opportunities to foster their network (Gale 2007).

Preferences of Gen Y project managers with regard to techniques PMTT (Project Management Tools and Techniques) are utilised as “systematic procedures or practices that are used for producing specific project management deliverables” (Milosevic and Iewwongcharoen 2004). Milosevic and Iewwongcharoen discuss the importance of project techniques and the direct correlation this has to project success. “Toney and Powers (1997) discuss benefits of the appropriate use of PMTT as follows: increased efficiency, reduce training, improve project predictability, increase stakeholder confidence, increase probability of project success, and improve communication. Additionally, they also suggest that project managers should have adequate knowledge of and experience in the use of PMTT as a requirement (Milosevic and Iewwongcharoen 2004, p.3)”.

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This research has shown that in most organisations practitioners employ a select range of techniques when executing projects. In our research, the paired respondents were asked to explain the advantages and disadvantages of their chosen techniques. Both cohorts highlighted similar advantages, including clear goals, transparency and role responsibility. A distinct generational difference could not be drawn in techniques, as both cohorts appeared to agree on the advantages of their chosen techniques. Likewise, disadvantages were similar in nature and included themes such as high levels of documentation requirements and inexperience with execution of a technique. Bessen (2002) conducted an exercise while surveying Army Corporation, whose engineers utilised 37 processes and 116 techniques, prescribed in the Project Management Body of Knowledge. Their initial research found that there was considerable variance in use – and perceived usefulness – of techniques. The basic reason was the level of support at an organisational level (Bessen 2002). Thamhain’s study on project managers’ familiarity and use of PMTT (Thamhain, 1999) shows that, “out of 23 PMTT, only three of them are used by more than half of the organisations and that project managers have only about 50% basic familiarity with those tools and techniques (Milosevic and Iewwongcharoen 2004, p.4)” In our research Gen Y respondents stated that they are eagerly looking for ways to improve the techniques used at work and are open to new techniques that are presented to them. Likewise, the majority of Gen Other indicated that they are seeking new techniques while also remaining happy with ones they currently use.

Preferred methodologies among the cohorts Kerzner (2009) offers his definition of a methodology explaining that project management excellence is likely to be achieved through the use of an iterative process that is transferable on to every project, as well as through integrating processes into a management methodology. Kerzner notes that an effective methodology has the potential to lower cost, reduce resource requirements, decrease documentation requirements and eliminate duplicated efforts. Methodologies are driven from corporate culture and should include characteristics such as recommended level of detail, templates, standardised techniques, standardised reporting, flexibility, ease of comprehension and

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This sample was surveyed on the use of methodologies within their companies. They were asked to rate their usage of the PMBOK® Guide, PRINCE2 and any in-house designed methodologies. The results showed clear differences between the groups. Generation Y mainly used the PMBOK® Guide followed then by in-house designed methodologies. There was no use of PRINCE2 noted. This was in contrast to Gen Other, the majority of whom utilised in-house design methodologies, followed by the PMBOK® Guide and then PRINCE2. A parallel may be drawn between the organisational size and the use of methodology. The results have shown that the majority of Gen Other participants worked in companies employing more than 1000 workers. Generally, larger companies tend to be governed by structure and process. Thus we may assume that these companies may all have a standard methodology that their employees utilize. This is in contrast to smaller boutique project firms that may not have standardised methodologies perhaps due to scale. Gen Y all worked in smaller organisations which perhaps may employ the PMBOK® Guide as it is a more generic and adaptable methodology.

Different roles undertaken by project practitioners relative to cohort A project manager is often thought to wear many hats, being a coordinator, administrator, change manager, resource manager, scheduler, financial adviser, strategic influencer and business partner, etc. It is the project manager’s responsibility to ensure all objectives for projects are met and project deliverables are fulfilled. The project manager has the ultimate responsibility for the project and is accountable for all decisions made. Larson and Larson (2010) explore factors that may contribute to a project manager taking on many roles; these include where the “project is small, where the project is low-risk, organisational process does not support the separation of roles, organisational culture does not support the separation of roles and few cross functional business areas affected, small high performance teams where each member fulfils multiple roles, project resources are limited and budget does not allow for separating roles and measure of project success” (Larson and Larson 2010, p.1). When surveying the respondents about roles undertaken that were not directly related to project management, both Gen Y and Gen Other indicated that project co-ordination was their main function. The older cohorts indicated that change management was regularly performed whilst Gen Y noted project administration as another frequent task. In the

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interview phase the paired respondents discussed the various roles they undertook in the execution of their work. The cohorts all agreed that they enjoyed undertaking these additional roles, as it allowed them to be involved with their organisation and, more importantly, to have some input into how the organisation is run. When asked about how this was incorporated into his role responsibilities, one Gen Y interviewee stated that he believed that all these tasks become part of the role of a project manager. All Gen Other respondents stated that additional responsibility was part of their role as a more senior member of the team. These responses align with the findings put forward by Smola and Suttons (2002), mainly that values were influenced by generational experiences (Smola and Suttons 2002).

Differing expectations of project managers across the cohorts Organisations endeavouring to gain project competitive advantage or performance enhancements need an effective method to measure business capability and then compare it against internal and external baselines in a means to identify the strengths and weaknesses within the organisation’s business processes, and establish a path forward for improvement (Mullaly 2011). The paired respondents were interviewed with reference to their expectations of mature project organisations. Gen Y noted strong requirements for consistency across project methodologies, documentation and process. They discussed the need to have easy access to subject matter experts, particularly those in a senior role, and noted that governance being driven from the executive level down. Gen Other’s views were consistent with the younger cohort but also underlined the importance of culture and the need for the business to align projects with business strategy. “Project management is being embraced by most companies as the best way to develop and deliver new or improved products, services, and organisational process change. Enhanced capability to conduct project management is often sought through adopting new innovative ways to perform project management and through the use of new tools and techniques” (Cleland & Ireland 2007, p. 243). Business strategy focuses on how companies compete against rivals and how they place themselves within an industry so that they gain an advantage over others (Tse & Olsen 1999, Hamel & Prahalad 1989). The paired respondents agreed that business strategy was essential for any organisation as it maps the direction for the company.

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Gen Y integration models available in companies and their effectiveness The results of this research indicate that there are a range of models in use in companies, and that mentoring-style arrangements are the most popular. Mentoring has its origins in Homer’s Odyssey where Telemachus, Odysseus’s son, had a guardian and adviser named Mentor (Levin 2011; Gumaer 1999; Mears & Susemichel 2000). Mentoring is a relationship whereby a leader or more experienced individual guides a less experienced person through a process. Mears & Susemichel (2000) explain that today’s businesses are trying to use a range of management methods to gain competitive advantage on the global stage. Tools such as mentoring which focus on the manner in which information is shared within companies will be essential in ensuring critical advantage is gained (Mears & Susemichel 2000, p.1). One Gen Y respondent explained that the organisation he works for encourages the employment of the younger generation as the company was originally established by younger individuals. It was believed that the younger cohort provides valuable input to the organisation. Other Gen Y respondents noted annual training courses funded by their organisations. When questioned on their effectiveness the response was mixed. Half of the younger cohort believed the programmes in place were flawed and there was room for improvement; the other half believed that the programmes in place were effective. When comparing these results to the older cohort, two of the Gen Other respondents stated that their companies had graduate programmes, whilst yet another two groups collectively stated that their companies do not have programmes specifically aimed at the younger generation. When surveyed regarding their effectiveness, they tended to be quite complimentary and asserted that Generation Y provides new talent to organisations and thus should be encouraged, motivated and mentored through a range of methods such as team meetings and one-onone sessions

Conclusion The aim of this research is to contribute knowledge to the field of project management by providing companies with an understating of how to best utilise the skills and strengths of their project managers, by considering their practical preferences in methods, tools and techniques. The review of the current trends and practices in the industry, along with the defining characteristics of the cohorts, demonstrates that there is little generational bias in applied project management. Contrary to perceptions,

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there appears to be little generational difference in the choice of tools, techniques, methodologies and preferences of project managers. What is apparent from this research, is that the subset of tools, techniques and methodologies utilised appears to be both of a more generic and of a standardised nature. The implication is that they are generally accessible to project managers resulting in a generic adaptable project language that is interpreted and understood by project practitioners worldwide.

References Anantatmula, S Shrivastav, B 2012 “Evolution of project teams for Generation Y workforce”, International Journal of Managing Projects in Business, Vol. 5 Iss: 1, pp.9 – 26. Bessen, J 2002, “Technology adoption costs and productivity growth: The transition to information technology”, Review of Economic Dynamics, Vol. 5, No. 2, pp. 443-469. Borg, D, Wood, A, Rameezdeen, R, 2012, ‘Generational Bias in Applied Project Management’, Australian Institute of Project Management Conference 2012, 7-10 October 2012, Melbourne, Australia. Clancy, A 2011, “4 Things A Young Project Manager Can Teach an Old(er) One”. Accessed 10 March 2012. http://www.liquidplanner.com/blog/2011/10/5/4-things-a-youngproject-manager-can-teach-an-older-one.html. Cleland, DI & Ireland, LR 2007, “Project management: strategic design and implementation”, 5th ed, McGraw-Hill, New York. Fox, TL & Spence, JW 1998 “Tools of the trade: A survey of project management tools”, Project Management Journal, vol. 29, no. 3, pp. 20. Gale, S 2007 “Bridging the gap”, PM network, Project Management Institute, Newtown Square, Pa, Vol. 21, no. 3 (Mar. 2007), p. 26-31. Gumaer, J, 1999, “Mentoring in the project environment” PMI Seminars & Symposium. Proceedings, ET10.PDF. Hamel, G., & Prahalad, C. K., 1989, “Strategic Intent” Harvard Business Review, 67(2), 92 – 101. Haughey, D 2010, “A brief history of Project Management”, Project Smart UK. Accessed 15.03.2012. http://www.projectsmart.co.uk/briefhistory-of-project-management.html. Jorgensen, B 2003, “Baby Boomers, Generation X and Generation Y? Policy implications for defence forces in the modern era”, Foresight, Vol. 5 Iss: 4, pp. 41 – 49.

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Kerzner, H 2009, “Project Management: A Systems Approach to Planning, Scheduling, and Controlling”, 10th ed. John Wiley & Sons. 2009. Kwak, YH & Anbari, FT 2008, “Analysing project management research: Perspectives from top management journals”, International Journal of Project Management, Vol. 27, No. 5, P. 435. Kyles, D 2005, “Managing your multigenerational workforce”, Strategic Finance, Vol. 87 No. 6, 53-5. Larson, E. & Larson, R 2010, “Project manager and business analyst: are they one or two roles?”, Project Management Institute (PMI) Global Congress 2010—North America, Washington, DC. Newtown Square, PA. Levin, G 2011, Mentoring: a key competency for program and project professionals, Project Management Institute (PMI) Global Congress 2011—North America, Dallas, TX. Newtown Square, PA. Liebowitz, J, Ayyavoo, N & Nguyen, H. 2007, “Cross-generational knowledge flows in edge organizations”, Proceedings International Command & Control Research & Technology Symposium, Bellevue, WA. Love, PE, Holt, GD & Li, H 2002 “Triangulation in construction management research”, Engineering, Construction and Architectural Management, vol. 9, no. 4, pp. 294-303. McShane, S & Travaglione, T 2003 “Organisation Behaviour in the Pacific Rim”, McGraw Hill Publishing, Sydney, Australia. Mears, C.M., & Susemichel, A.D. (2000). “Increasing competitive advantage by implementing a mentoring program”. Proceedings of the Project Management Institute (PMI) Annual Seminars & Symposium, Houston, Texas, September 7–16, pp. 893–897. Milosevic, DZ & Iewwongcharoen, B, 2004 “Project Management Tools and Techniques: The Contingency Use and Their Impacts on Project Success”, Project Management Institute (PMI) Research Conference: Innovations, London, England. Mullaly, M 2011, “Maturity Models – A Framework for Organizational Improvement”, The Information Technology & Telecommunications Specific Interest Group. Accessed 15 May 2011. http://pmiittelecom.org/pmtopics/maturity-models-a-framework-fororganizational-improvement. Raghupathy, S 2010, “From boomers to bloggers challenges of managing a multi- generational teams”, PMI North Carolina Chapter, PMI, Proficient Project Consulting Inc.

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Saladis 2000, “Project communications new century new tools”, PMI Network, PMI Seminars & Symposium. Proceedings, 2000, 20355. PDF, Newtown Square, Pa. Smola, KW & Sutton, CD 2002 “Generational differences: revisiting generational work values for the new millennium”, Journal of Organizational Behavior, vol. 23, no. 4, pp. 363- 382. Todd, DJ 1979, “Mixing qualitative and quantitative methods: triangulation in action”, Administrative Science Quarterly, 24, 602-611. Tse, E. C., & Olsen, M. D, 1999, “Strategic management”. In B. Brotherton (Ed.), The handbook of contemporary management research (pp. 351 – 373). New York: John Wiley & Sons.

CHAPTER THREE MANAGEMENT CHALLENGES OF A FLY-IN/FLY-OUT WORKFORCE DAMIEN CHOY, ANTHONY WOOD, CHRIS MARTIN

The Fly-In/Fly-Out (FIFO) workforce has become a critical factor in the delivery of remote projects on time and to budget in the resource and construction industry in Australia. The use of FIFO workforces has grown strongly over the past two decades, alongside the "resource boom" that has occurred in Australia. There is debate whether the rate of growth of the mining industry has subsided in Australia, but with resource organisations’ preference towards a FIFO workforce continuing, the prevalence of the FIFO workforce is expected to continue in the near future (Deloitte 2012; Price Waterhouse Cooper 2013). The shift from a local to a FIFO workforce arrangement brings with it significant and unique Human Resource Management (HRM) challenges to organisations and may impact upon the choice of the organisation design that is adopted by the sponsor company. The organisational design defines the authority structure and can affect the effective use of resources and influence the success of project delivery (Burke & Barron 2007). Fly-in/fly-out is a form of long distance commuting, where workers travel significant distances to work away from their families, are provided with food and accommodation at or near their workplace for the duration of the roster, and then return to their permanent place of residence. Employees’ work patterns consist of a rostered number of days on site, followed by a rostered number of days at home (Storey 2001). A commonly used roster in the mining industry is two weeks on site, followed by one week off-site (Lifeline WA 2013).

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The focus of this study is to identify the most challenging factors, from a human resource management (HRM) perspective that a project manager must address in order to effectively manage the FIFO workforce to achieve project goals. The three key drivers for this research are, firstly, a renewed focus on successful project delivery and effective project management in the Australian resources sector due to the high value of the capital investments and the reduction in profitability in the industry; secondly, the forecast growth of FIFO as the primary workplace arrangement in the resources industry; and thirdly, the strategic decision by companies regarding organisational structure can greatly influence how projects are managed and can influence the success of an organisation’s projects. The study aims to provide a deeper understanding of the FIFO workforce and how to better organise, plan and utilise this workforce to deliver positive project outcomes. Although the research focuses primarily on project management, there are implications for general management who are responsible for the design of the organisational structure in which projects are run, and make the decisions on the use of the FIFO workforce.

Background Deloitte (2012) suggest a paradigm shift is occurring in mining portfolio management and project selection, which is now being based more on project returns and capital efficiency rather than production volumes. Price Waterhouse Cooper (2013, 2) propose that “the fundamental business dynamic of the mining industry is changing; miners can no longer focus on expansion at any price – the so called ‘volume frenzy’”. The implications are an increased focus on effective project management in terms of budget, schedule and execution for parent organisations. Greater focus on organising the workforce and maximising productivity is needed in the Australian resource industry as these are significant contributing factors in delivering successful projects (Pinto et al. 1998). The use of FIFO workforces has grown strongly over the past two decades. In Western Australia, which contains a significant proportion of Australia’s resource industry, it has become the preferred workforce system for new mines developed at a distance from established populations centres (The Parliament of the Commonwealth of Australia 2013). Prior to FIFO, mineral development were traditionally accompanied by the development of a permanent settlement, and many of the state’s interior

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communities have a mining heritage (Storey 2001). The commonly proposed drivers for the adoption of FIFO rather than purpose built mining towns are insufficient local infrastructure, improved technology for communication and transportation, lower overall costs and a shortage of skilled labour (Storey 2001; The Parliament of the Commonwealth of Australia 2013). Organisations benefit financially from the use of FIFO through tax benefits of writing off costs to avoid paying capital gains, increased flexibility through short term contracts for organisations, shorter lead-times in the start-up of new sites, and increased access to a larger supply of qualified labour who are unwilling to relocate to remote locations (Chamber of Minerals and Energy of Western Australia 2011). Currently, there is limited research on the FIFO workforce and the research “is generally inadequate for providing a good understanding of this form of employment” (Australian Centre of Excellence for Local Government 2012). Studies conducted from a HRM perspective have focussed on turnover, job satisfaction, motivation stress and fatigue in relation to the FIFO workforce. There is evidence that there are higher levels of worker turnover in the FIFO workforce than other working arrangements (D'Arcy et al. 2012). Beach, Brereton & Cliff (2003) found that turnover was due to exhaustion that arises from FIFO rosters—labelled ‘FIFO fatigue’—and workers struggle with spending long periods away from their families. Other factors that contribute to increased turnover include partner dissatisfaction and isolation from support structures such as family and friends (Peetz, Murray & Muurlink 2012; Walford 2012). In terms of motivation, there is significant public rhetoric that the majority of FIFO workers are “only in it for the money” (Duffy 2012; The Parliament of the Commonwealth of Australia 2013). Sibbel (2010), through interviews with 16 FIFO workers, reinforced this but also found a secondary attraction for entering the FIFO workforce to be career opportunities. Those pursuing a mining career were more likely to describe a long term commitment to the sector. This was distinct from those who were there predominantly to take advantage of the benefits associated with the generous income levels at the time, and the ‘opportunity to save and get ahead’(Sibbel 2010, 138). Beach, Brereton and Cliff (2003) determined that job satisfaction in the mining environment is affected by internal factors that can be controlled

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by the organisation and external factors that cannot be controlled. The internal factors were workplace conditions, workplace culture (e.g. organisational policy, group dynamics), remuneration levels, job design (e.g. skills development), commute and work roster. The external factors were personal attributes including personality factors and the level of work-home conflict (e.g. partner’s career opportunities, absence from home). Wood (2013) found that FIFO workers are also considered to be at higher risk of workplace fatigue, which poses a safety risk for an organisation. This is particularly concerning due to the hazardous nature of the work in the resource industry. Fatigue can be attributed to the long shift work, camp designs not conducive to lengthy sleep, hygiene, rotating shift patterns and long travel that are characteristics of the FIFO workforce (Wood 2013). Fatigue, particularly in those who work more than 60 hours per week, is shown to have a negative impact on productivity (Ricci et al. 2007). Similarly, the Australian Coal and Energy Survey (ACES), in a study by Griffith University of 2566 workers showed that 58% of workers had difficulties in sleeping due to the shift work and roster patterns in mining, particularly those with rotating rosters involving nightshift (Peetz, Murray & Muurlink 2012, 28). Studies indicate that FIFO workers suffer high levels of stress due to work-related and lifestyle related factors such as long shifts, culture shock, time away from home, poor on-site living conditions and isolation (Behr 2012; Clifford 2009; Lifeline WA 2013). The consequences of increased stress include higher levels of depression, mental health issues, obesity, alcohol-related violence and recreational drug use (Carrington & Pereira 2011; Torkington, Larkins & Gupta 2011). Stress has been found to be higher in workers with more compressed rosters (Clifford 2009). The level of stress is dependent on the time a worker has worked in the arrangement, with newer employees found to have a form of ‘culture shock’ when adjusting to the new workplace lifestyle, including new shift work and living conditions (Behr 2012). The organisational costs of stress include absenteeism, lower productivity while at work and higher staff turnover (Bowen, Edwards & Lingard 2013). There are indications of significant human resource challenges associated with the FIFO workforce arrangement, including high levels of turnover, fatigues, stress and motivation, which can affect productivity and the likelihood of successful project outcomes.

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Methodology For this exploratory study, a phenomenological, qualitative research design was used to explore the challenges of FIFO workforce to organisational design and HRM practices. Data was collected for this research through semi-structured one-on-one interviews with workers currently working in a FIFO arrangement. Thirty-one workers were interviewed one-on-one as part of the study and told of their lived experience of working in remote locations under FIFO conditions. The number of interviewees was selected with the goal of the research to gain a rich understanding of the topic through a phenomenological qualitative approach, rather than a statistically significant sample of the population. Participants were selected based on the criteria that, firstly, they were currently working in the Mining or Oil and Gas industry or currently working in the construction industry for resources in Australia, secondly, they are experiencing a fly-in working arrangement and are working on site with a regular roster pattern and thirdly, that they have not been hired locally to the site. Predefined questions were prepared prior to the interview, but could shift to follow the natural flow of the conversation. The interview schedule was divided into 3 key sections: 1) demographics, which detailed the background of the participant and their site; 2) the participant’s views on the FIFO work arrangement, including rosters and turnovers; and 3) the challenges to the organisational design due to the FIFO workforce. The administration of the questionnaire was held either face-to-face or by telephone and/or video conference. Face to face interviews were preferred to build trust with the interviewee, and make use of non-verbal cues. Content analysis was conducted using Attride-Stirling’s thematic network analysis, and Microsoft Excel™ software for qualitative data analysis. The material was transcribed and coded by hand and dissected into manageable and meaningful text segments. Themes were then abstracted from the coded text segments, and arranged into basic, organizing and global themes and a network prepared. Finally the thematic network was described and explored and patterns were interpreted (Attride-Stirling 2001).

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Key Findings The study found that the FIFO workforce provided unique challenges to traditional HRM practices within the Australian resource industry. Four global themes were identified: Employee satisfaction, Organisational structure, Roster design, and Campsite / Non-Work time. The themes and the underlying challenges are shown in Figure 3-1; the relative agreement from interview participants is shown in Table 3-1.

Fig. 3-1 FIFO Management Challenges and Underlying Themes

The first theme, employee satisfaction, showed unique challenges in terms of remuneration, job design, performance and motivation and turnover. When asked what the primary motivation for them to remain in the industry, the biggest motivator to stay in the industry was job satisfaction, followed by higher remuneration. For job satisfaction, participants spoke about how they found their roles technically

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challenging, providing new exciting and often unique experiences on a regular basis and working with people that they enjoyed working with. "I just love it. I get to play with massive toys. It is interesting projects [that are] technically challenging."

While 84% of participants felt that the higher remuneration was a positive of working FIFO, only 13% suggested that it was a motivation factor in their performance on a day to day basis. On a day-to-day basis, participants felt that the workforce can be motivated through effective job design and challenging but attainable project goals and targets. Respondents felt that, because they were in a FIFO working arrangement, away from their family, they could, in fact, be more productive and focus on their work due to limited family commitments and distractions during the "roster". 55% of participants felt that there was higher turnover in the FIFO workforce. Because of the long hours, high pressure and difficult conditions, there was a level of burnout, or dissatisfaction of the lifestyle that lead to turnover. The second theme of roster design was found to have a significant impact on employee motivation and performance. Too much time on site (both days and hours per day) could result in tedium and fatigue. A longer break was preferred by participants and was seen as a reward for hard work completed on site, and resulted in employees returning to work refreshed. Shorter rosters were preferred as it allowed employees to stay in touch with family and friends. However, overall, there was a balance between the aforementioned factors and the maximization of their wages. Whilst many participants, voiced the personal benefits of having reduced time on site, and increased breaks during their off-site, they mentioned that it would have to be a balance between those choices and the corresponding decrease in wages. In the FIFO working arrangement, the employer provides the employee facilities during their non-work hours. This third theme, camp or non-work time, provides a unique HRM challenge because the employee is still in the organisation's camp, but is not officially working at the time. The camp facilities and layout, as well as the culture existing within the camps were found to impact collaboration and productivity of the workforce. A positive campsite culture including positive social interaction would create stronger social bonds or "camaraderie", which would result in better team performance during work hour. When the workers socialise together at the

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camps, they are then ‘willing to chip in to get a job done’ during work hours. "Out here, it is quite a small site, so it’s pretty much a family based environment. Everyone knows everyone and everyone is willing to help everyone out."

Alternatively, due to the close living environment, conflicts could also escalate between the work and camp site, which could cause ongoing problems if not dealt with quickly. The presence of alcohol and alcohol abuse on site was found to have negative impacts on the workplace culture, which impacted productivity as well as led to turnover. Within the organisational structure theme, several significant challenges for the FIFO workforce were identified. Specifically related to the FIFO working arrangement, the key sub themes identified relating to management were: x There is a greater need for empowerment, particularly for professionals, due to the roster structure and that managers are not always on site. x Managers, on site, were closer to the workforce on a personal level due to living arrangements and more frequently interacted with the workforce on a social level. x Particularly during the construction phase, participants viewed the structure to have too many managers at the same hierarchical level, which resulted in lack of coordination and conflicting decisions. x The contractual relationship between site owner and contractors had a significant impact on the workforce’s views of management. x Implementing the right coverage strategy to ensure that knowledge, decision making and responsibility is ongoing when employees are on break. x Decisions made on-site were done faster, while the escalation of decisions off-site was found to take more time, particularly when they are process or commercially related. x There was a failure to adequately communicate key strategic decisions particularly those made off-site, which negatively impacted employee satisfaction.

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Table 3-1. Positive and Negative Aspects of the FIFO Working Arrangement Top 3 Positive Aspects

Responses Top 3 Negative Aspects Responses

Higher remuneration

26 (84%)

Extended leaves between rosters On-site experience / job satisfaction Ability to focus at work / increased productivity Camp facilities and camp culture Lifestyle factors

11 (35%)

Perquisites such as frequent flyer points Travel opportunities and working in nature Development opportunities Overcoming skills shortages (flexible workforce)

2 (6%)

11 (35%) 8 (26%)

Extended absence from family/partner Poor work-life balance / missing events Fatigue due to long hours Isolation/boredom

26 (84%) 13 (42%) 11 (35%) 9 (29%) 6 (19%)

5 (16%)

Negative culture due to alcohol use Disconnect from home office Fatigue due to travel

4 (13%)

Coverage (back to back)

3 (10%)

3 (10%)

Negative environmental Impact Poor internet connection

2 (6%)

6 (19%) 5 (16%)

6 (19%) 4 (13%)

2 (6%)

Discussion Some consider the most critical aspect for the successful delivery of projects is the project team, and it is people that will determine the success and failure of organisations (Clarke 2012; Müller & Turner 2010). Project HRM is required to make the most effective use of the people involved with a project and includes human resource planning, acquiring the project team, developing the project team and managing the project team (Project Management Institute 2013) . Consequences of poor project HRM are poor motivation and organisational culture, high employee turnover, the costs of having to recruit and train replacement staff and low productivity which can lead to project and business failure (Appelbaum et al. 2007; Pinto et al. 1998). This study finds that there are a number of factors that influence employee satisfaction in the FIFO workforce, which can be exploited to improve project delivery through reduced turnover and improved productivity.

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Higher levels of remuneration is found to be a significant positive benefit for the FIFO workforce, and for a high portion of the workforce is the primary motivating factor for individuals to seek employment and remain in the resource or construction industry, which aligns with recent studies (Duffy 2012; Sibbel 2010). However, while money is a significant attractor to the industry, whilst on site there was no evidence that increased wages led to improved performance. It is proposed that remuneration is a hygiene factor, as per Herzberg’s two-factor theory, and the provision of additional salary does not result in greater performance from that individual (Kerzner 2004). There was evidence that the FIFO workforce, particularly those solely motivated by money, had little loyalty to the organisation and will readily change sites or organisations for a better paying role "as little as $10 per hour", which is similar to the findings of Walford (2012). Hence, organisations must find other ways to entice employees to remain and be productive. A significant factor impacting employee satisfaction is the characteristics of the roster which can affect performance, and influence turnover. It is the challenge for organisations to balance characteristics of the roster to maximize production from the workforce, and ensuring the satisfaction of the employees by providing a roster that suits their lifestyle. From an organisational perspective, the goal of the roster is to maximize workforce productivity whilst minimizing the cost, or at least preventing unnecessary expenses. Minimizing travel costs will involve longer rosters, but there are performance implications of longer rosters due to fatigue. Other factors that organisations should consider in selecting rosters are attractiveness to employees, coverage provided by the rosters, flexibility and legislation regarding roster lengths dependent on the state and industry. There were indications that the longer rosters can only be sustained for shorter periods (suggested to be up to 2 years), and may be appropriate for construction phases, but in operations, shorter rosters become more common. Weekly rosters (5-2) were used for senior managers or workers with unique skillsets. This roster will have a higher cost, but provides workers the advantages of weekends with their families, and the availability of these key resources on site on a regular basis. The roster design is also shown to have an organisational impact on communication, employee performance and decision making "We have found we have more benefit [with a shorter roster] as people come back keen, and whilst they were on our stay, they still had energy and enthusiasm and productivity."

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The importance of the camps emerged as a key factor for employee satisfaction, including the use of the campsite as a retention strategy. Participants spoke of facilities such as gyms, pools and sporting facilities that provided entertainment while workers are not in the workplace. In addition, participants spoke of the organisations’ efforts to provide social activities such as barbeques, sporting teams and concerts to help alleviate boredom and isolation. The key benefits of these facilities and activities are the team building that occurs, which is transferred into the workplace, reduction in isolation, and a shift away from an ‘alcohol culture’ in the camps. In setting up camps, organisations must determine the campsite policy in terms of alcohol. Organisations may choose to limit the amount of alcohol that can be consumed in the wet mess, or ban alcohol from site completely. This policy may remove negative aspects such as negative social interactions such as conflict and removal of personnel from site. The influence of alcohol use on the workforce has been previously discussed by Carrington and Pereira (2011). Other key camp-related policies that organisations can choose to act on include: x Whether employees would rotate rooms every roster, or whether they could keep the same room, which is preferred. x Whether companies were housed in similar areas of the camps, or different companies were mixed to promote collaboration and team building. x Availability of internet access, and policy around the use of Skype™, a video conferencing tool, that would allow employees to talk with their families virtually face to face, which helps to keep the workforce connected to their families. x Whether employees are allowed off-site if there is a town close by. Participants voiced a desire to have the freedom to visit the town, as it was a way to escape from the boredom of camp by allowing them to go shopping for supplies, or to eat at restaurants. The negative is that in some cases, there could be problems with alcohol, or the locals related to town visits (Carrington & Pereira 2011). A significant portion of the participants detailed the job satisfaction that they receive from working in the industry as a positive of the FIFO

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lifestyle and motivating factor to perform during their roster. Discussions on this point ranged from the unique locations that they are working in, the experiences gained from being on site, enjoyment of their specific role, and the technologies and tools available to them in their role. In addition, this was a primary motivation detailed by participants of why they remain in the industry. While remuneration may be a significant factor in attracting workers to the FIFO lifestyle, it was job satisfaction that motivated many to remain in the industry, which echoes findings by Funston (2012) and Sibbel (2010). It is a key management challenge for a FIFO workforce to maximise the job satisfaction in order to retain the workforce. In addition, job satisfaction, as well as project goals and KPIs were the main motivators for the workforce to perform on a day to day basis. Particularly within the construction phase, there is a high volume of contractors that are working FIFO. The decision to use contractors may enable flexibility in the workforce, transfer risk or bring specialists to site temporarily (Storey 2001). Contractors seconded to the site organisation indicated challenges of the employee not ‘belonging’ to either organisation, lack of development opportunities provided by the site organisation, and lack of authority of the local manager in reporting performance. For seconded contractors, it is preferable for organisations to integrate them into the site organisation including goal setting and development. Participants indicated that, for some contractors, there is minimal support from home organisations in terms of HRM and communication, and they often felt like ‘forgotten’ employees of their home organisation. The organisational structure sets the hierarchy for the organisation, which defines responsibility and authority for all employees within that organisation. The organisational design was found to have a significant impact on collaboration, communication, decision making and how effectively resources will be used (Kerzner 2004; Thiry & Deguire 2007). Based on participant feedback, three key aspects of organisational design have a significant impact on the FIFO workforce: firstly, the design of rosters, secondly, the strategy to ensure coverage and finally, the decision making structure. Coverage refers to the approach used to ensure that the right level of skills and decision making authority are available at all time. The project manager will typically have the responsibility for designing a roster that maximizes productivity of the workforce, and

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ensures the delivery of the project including meeting any cost targets. From an employee’s perspective, there are a range of factors that drive their ideal roster, and inevitably, the roster can impact employee satisfaction, and hence turnover and productivity. Project managers, however, when designing rosters for the workforce, require a more holistic view of resource planning. Some key factors that were identified by participants to consider for a roster are: x Total costs including wages paid, cost of travel and cost of accommodation x Impact of fatigue from longer rosters on productivity x How to ensure coverage of key skills and decision makers x The number of shifts and teams required x The size of the camp to accommodate employees whilst on site x Ensuring consistency of rosters across the site x Designing a roster that will attract and retain of talent The selection of the roster has a significant impact on costs, and the more preferable rosters for the FIFO workforce, typically have a higher direct cost. Roster design has a significant impact on decision making, workforce flexibility and coverage, and is a critical factor to ensure a productive FIFO workforce. Coverage refers to the strategy used with the FIFO workforce to ensure the ongoing production, or minimization of disruptions during the transition of a worker from time on to time off. This was considered a significant challenge for senior managers who are responsible for managing rosters as it can impact productivity, cause communication breakdowns and slow decision making. For most workers, coverage was achieved through the use of consistent teams that shared the same roster. Handovers would occur at the end of each shift, and there would be no need for formal handover at the end of each roster. Breaks were staggered between teams, and for each team that returns from break, there is a team mid-roster which would continue to work with the returning team, ensuring continuity of project or production progress.

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Another common strategy was the use of ‘back-to-backs’ where two people would share a single job, and while one employee was on break, the other employee would be on site. In most cases, the workers were working an even-time roster, and the challenge is to adequately communicate progress, actions and issues to their back-to-back. Typically, there is only a small handover window, due to constraints in camp and office space and to reduce wages. In some cases, there is no face to face handover, and communication was via email, and in another case the handover occurred during an hour overlap at the airport whilst in transit. With this strategy, if the formal handover process is not done well, there is an impact to productivity as workers “get up to speed” after their break. A third strategy is the use of a rotating team, typically within a specialized function. Team members stagger their breaks so that any stage, an employee can conduct a face-to-face handover to a teammate who will remain on site during their leave. This approach provides greater flexibility in the case of leave, or turnover. However, this strategy is only feasible if there is sufficient need for a full team of those specialists. For decision makers and manager, an alternate strategy to back-to backs is the delegation of authority to a manager at the same level, but within a different function. An example provided was the construction manager would delegate authority to the design manager in his or her absence and vice versa. The implication of this is that decisions may take longer, or incorrect technical decisions could be made. In most cases, key decision makers made it clear that they would check their emails and answer phone calls while on breaks, but this was expected to be the exception rather than the rule. Having effective and speedy decision making is important for all organisations but is of particular important for the FIFO working arrangement due to the high value nature of the projects and the remote locations of these sites, typically away from the head office. Strategic decisions, such as capital expenditure, organisational structure and key production targets are typically conducted in a centralised manner – offsite at the head office. These decisions are high value, and affect the whole site. The major complaint concerning these decisions was the lack of communication of the decisions to the workforce. For some participants, there was a complete lack of communication on key strategic

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decisions, while for others there was a lack of communication of the underlying reasons why the decision was made: Operational decisions are any technical and project decisions that affected the day to day running of the site or plant. These decisions are typically reactive and specific to the location. The vast majority of participants reported that these types of decisions would be made ‘inhouse’. In particular, any decisions that affect the delivery to project milestones, site production, or have a safety or environmental impact are made extremely quickly. Operational decisions are made faster if made ‘on-site’ or decentralised, and decisions take longer if they were transferred off-site to the centralised head office. Slow decision making can impact project delivery as they can block progress. These findings support existing research in the field decentralised decision making in general construction (Kerzner 2004; Thomas, R, Keating & Bluedorn 1983).

Conclusion The FIFO workforce provides unique challenges to the traditional HRM practices and the organisational design within the Australian resource and construction industry. While the FIFO workforce is highly influenced by higher remuneration in the industry in terms of attraction and retention, this does not necessarily result in higher performance. On a day-to-day basis, the workforce can be motivated through job design, project goals and targets, workplace culture, roster and the FIFO lifestyle itself. The primary negative of the FIFO working arrangement is time away from family, which does not primarily fall within management’s sphere of control. Many of the challenges presented by the FIFO workforce are potentially within managements’ sphere of control, which can be leveraged to improve productivity and project performance. The camp facilities and layout and the culture existing within the camps has an effect on the culture in the workplace which affect collaboration and productivity. The roster structure, while it has a significant impact on project costs, can affect workforce productivity due to its relationship with fatigue, employee satisfaction and turnover. The strategy used to ensure coverage when key team members are on breaks will impact communication, decision-making and ongoing productivity.

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References Attride-Stirling, Jennifer. 2001. “Thematic networks: an analytic tool for qualitative research”, Qualitative research 3:385-405. Australian Centre of Excellence for Local Government 2012. Scoping Study Impact of Fly-In Fly-Out / Drive-In/Drive-Out Work Practises on Local Government Edith Cowan Univerity, ACELG http://www.acelg.org.au/upload/program5/1336624408_ACELG_Scop ing_Study_FIFO_May_2012.pdf. Bahn, Susanne & Cameron, Roslyn. 2013. “Sourcing Specialised Skilled Labour in the Global Arena: A Change in the Way We View Work in Australia?', Australian Bulletin of Labour 39:19-41. Beach, Ruth, Brereton, David & Cliff, David. 2003. “Workforce Turnover in FIFO Mining Operations in Australia: An Exploratory Study” Univerity of Queensland, Centre for Social Responsibility in Mining and Minerals Industry Safety and Health Centre, Brisbane. http://www.csrm.uq.edu.au/docs/TURN_FINAL.pdf. Behr, Alexei. 2012. “An Examination of the Relationship Between Cultural Adjustment, Work Locus of Control and Organisational Commitment in Fly-In Fly-Out Workers in Australia” Bachelor thesis, Murdoch University. Bowen, Paul, Edwards, Peter & Lingard, Helen. 2013. “Workplace Stress Experienced by Construction Professionals in South Africa.” Journal of Construction Engineering & Management 139:393-403. Bureau of Resources and Energy Economics 2013, Resource and Energy Major Projects April 2013, Canberra: Australian Government. http://www.bree.gov.au/sites/default/files/files//publications/remp/rem p-2013-04.pdf. Burke, Rory & Barron, Steve. 2007. Project Management Leadership: Building Creative Teams. London: Burke Publishing. Carrington, Kerry & Pereira, Margaret. 2011. “Assessing the social impacts of the resources boom on rural communities.” Rural Society 21:2-20. Chamber of Minerals and Energy of Western Australia. 2011. Submission to the Standing Committee on Regional Australia”s Inquiry into the Use “Fly-In, Fly-Out” (FIFO) and “Drive-In, Drive-Out” (DIDO) Workforce Practices in Regional Australia. Perth: CMEWA. http://www.cmewa.com/UserDir/CMEPublications/111003-PSDRAFT%20CME%20FIFO%20Submission-v0%202314.pdf.

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Clarke, Nicholas. 2012. “Leadership in projects: what we know from the literature and new insights.” Team Performance Management 18:128148. Clifford, Susan. 2009. “The Effects of Fly-in/Fly-out Commute Arrangements and Extended Working Hours on the Stress, Lifestyle, Relationship and Health Characteristics of Western Australian Mining Employees and their Partners”, PhD thesis, The University of Western Australia. Cooper, Cary & Dewe, Philip. 2008. Well-being—absenteeism, presenteeism, costs and challenges”, Occupational Medicine 58:522-524. D’Arcy, Patrick, Gustafsson, Linus, Lewis, Christine & Wiltshire, Trent.. 2012. Labour Market Turnover and Mobility Reserve Bank of Australia. http://www.rba.gov.au/publications/bulletin/2012/dec/1.html. Deloitte. 2012. Tracking the trends: The Top 10 Issues Mining Companies May Face in the Coming Year, Deloitte Global Energy & Resources Industry Group http://www.deloitte.com/assets/Dcom-Ireland/Local% 20Assets/Documents/Energy/2013/ca_en_energy_Tracking_the_trends _2013_112812.pdf. Duffy, Andrew. 2012. “Big bucks not the only lure for FIFO workers.” Australian Mining, Accessed October 11, 2013. http://www.miningaustralia.com.au/news/big-bucks-not-the-only-lurefor-fifo-workers. Ernst & Young. 2013. Effective mining and metals capital project execution. Accessed April 10. 2014, http://www.ey.com/GL/en/Industries/Mining---Metals/Effectivemining-and-metals-capital-project-execution---Achieving-majorcapital-project-effectiveness-in-mining-and-metals Funston, Daniel. 2012. “Work Interference with Family Life in Fly-in/Flyout Employment: I Need a Better Swing Mate.” Murdoch University. Accessed 7 September. 2013 http://www.fiforesearch.com/#!rostersatisfaction/cphp Kerzner, Harold. 2004. Advanced Project Management Best Practices on Implementation, 2nd edn. Hoboken: John Wiley & Sons. Lifeline WA. 2013. FIFO/DIDO Mental Health Research Report. 2013, Edith Cowan University, Sellenger Centre for Research in Law, Justice and Social Change. http://www.lifelinewa.org.au/download/FIFO%20DIDO%20Mental%2 0Health%20Research%20Report%202013.pdf Müller, Ralf & Turner, Rodney. 2010. “Leadership competency profiles of successful project managers.” International Journal of Project Management 28:437-448.

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Peetz, David, Murray, Georgina & Muurlink, Olav. 2012. Work and Hours amongst Mining and Energy Workers: Australian Coal and Energy Survey First Phase Report, Centre for Work, Organisation and Wellbeing, Griffith Univerity http://www.melbourneinstitute.com/downloads/hilda/Bibliography/Oth er_Publications/Peetz_etal_Work-and-hours-in-Mining-and-EnergyACES-report.pdf. Pinto, Jeffrey, Thoms, Peg, Trailer, Jeffrey, Palmer, Todd & Govekar, Michele. 1998. Project Leadership from Theory to Practice, Newton Square: Project Management Institute. Price Waterhouse Cooper. 2013. Productivity not Austerity: Productivity Mining Focus. Accessed October 4. 2013 http://www.pwc.com.au/industry/energy-utilities-mining/assets/ Productivity-Not-Austerity-Jun13.pdf. Project Management Institute. 2013. A Guide to the Project Management Body of Knowledge (PMBOK Guide) Fifth Edition, 4 edn, Newton Square: Project Management Institute. Ricci, Judith A, Chee, Elsbeth, Lorandeau, Amy L & Berger, Jan. 2007. “Fatigue in the U.S. Workforce: Prevalence and Implications for Lost Productive Work Time.” Journal of Occupational & Environmental Medicine 49:1-10. Sibbel, Anne M. 2010. “Living FIFO: The Experiences and Psychosocial Wellbeing of Western Australian Fly-in/Fly-out Employees and Partners.” PhD thesis, Edith Cowan University. Storey, Keith. 2001. “Fly-in/Fly-out and Fly-over: Mining and Regional Development in Western Australia.” Australian Geographer 32:133148. The Parliament of the Commonwealth of Australia. 2013. Cancer of the bush or salvation for our cities?, Canberra: House of Representatives Standing Committee on Regional Australia. Thomas, Randolph, Keating, John & Bluedorn, Allen. 1983. “Authority Structures for Construction Project Management.” Journal of Construction Engineering and Management 109:406-422. Torkington, Amanda M, Larkins, Sarah & Gupta, Tarun S. 2011. “The psychosocial impacts of fly-in fly-out and drive-in drive-out mining on mining employees: A qualitative study.” Australian Journal of Rural Health 19:135-141. Voysey, Wendy. 2012. “Satisfaction with a fly-in/fly-out (FIFO) lifestyle: Is it related to rosters, children and support resources utilised by Australian employees and partners and does it impact on relationship quality and stress?.” Honors thesis, Murdoch University.

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Walford, Matthew. 2012. “Fly-In Fly-Out (FIFO): The Uncommitted Worforce?.” Masters of Applied Organisational Psychology thesis, Murdoch University. Wood, Helen. 2013. “Managing FIFO Fatigue in Mining.” Australian Mining. Accessed August 11, 2013, http://www.miningaustralia.com.au/features/managing-fifo-fatigue-inmining. Wylie, Jon. 2013, “Solving the Mining Industry’s Skilled Worker Shortage.” Engineering and Mining Journal 214:57-59.

CHAPTER R FOUR THE HU UMAN SID DE OF PROJECT R MANAGEM MENT MARINA LYSENKO O, OLIVIA A NUNN, ANTHONY Y WOOD

The elem ment of humaan psychology is an essenntial feature in i project managemennt and has the potential to affect a the Proj ect Managem ment Body of Knowleddge (PMBOK® Guide) areaa of project rrisk managem ment. The element of hhuman psychoology comprises human chharacteristics including personalitiess, traits and atttitudes, which h dictate indivvidual behavio our ( Fig 4-1). The understaanding and appreciation of this element in a team environmentt is essential to establishin ng an effectivve team, main ntaining a cohesive and positive teaam environmeent and increaasing the prob bability of project success.

Humann characterisstics: Personaliity; Traits; aand Attitudees.

Behaviou ur and behaviou ural pattern ns

Elemen nt of humaan psychollogy

mponents leadin ng to individua al competency Fig 4-1. Com

This research tested whether w the psychological p l characteristics of the individual hhave the capaacity to disrup pt a project teeam’s effectiv veness in carrying outt project risk management, m and in particuular the risk asssessment process of thhe project. Thhe behaviourall focus is on th the implication ns arising from an indiividual’s natuural propensity y for risk takinng, risk percep ption and risk tolerannce, during the t risk assessment phasee of the pro oject risk managemennt process in a team environ nment.

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Project m management research dem monstrated thaat the field of o project managemennt is lackingg in formal understandiing of basicc human psychology and the elem ments of individual characteeristics and behaviour, leading tow wards establisshed behaviou ural patterns and the ind dividual’s overall com mpetency. Vann den Brink (2010) suggeested that behavioural competenciees are cruciall for successful project deelivery and that t there exists an oopportunity to t improve project p effecttiveness with h greater understandinng of human psychology. p Pant andd Baroudi (20007, 125) bellieve that in tthe context of o current project mannagement educcation at a un niversity leve l, there is an apparent lack of em mphasis placed on human n skills and psychology. Fig. 4-2 demonstratees this in balannce. Project management m ttraining consists of the of work brreakdown technical pprocesses succh as the development d structures, schedules, riskk assessment, etc. which is nnot effective alone a in a project manaagement envirronment (Blacck 2006, 19). The currrent focus is onn the mechaniics of project delivery ratheer than on team psychoology; much of o the project management research dem monstrates an emphasiss on the frameeworks, meth hodologies, moodels and pro ocesses of project mannagement, withh minimal attention to one of the most important i elements inn project mannagement; project teams aand in particcular, the individuals w who form those teams (Masscia 2012, 1). Project M Management Theory

Humann Psycholoogy

Fig 4-2. Project managemeent theory verssus the elementt of human psy ychology

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According to Zwikael and Bar-Yoseph (2004, 137) little attention is focused on team building processes, with the discipline of project management mostly dealing with technical aspects. Humphreys (2001, 605) stresses that the educational literature on the interpersonal skills in project management focuses on the areas of: risk taking, written and oral communication, conflict resolution, influence and persuasion, group dynamics, leadership, problem solving, and international and cultural awareness; with no emphasis on the human element causing and affecting these. The tools presented within the PMBOK® Guide processes do not allow for skills which are necessary for dealing with interruptions caused by the element of human psychology during the project life cycle (Zwikael and Bar-Yoseph 2004, 137). Zwikael and Bar Yoseph (2004, 143) also suggest that the interruptions of a psychological nature should be recognised and treated as such, using a more humanistic approach. Thomas et al. (2008, 105) point out that PMBOK® Guide does not allow for the integration of the technical and human skills.

Background Risk management is one of the PMBOK® Guide knowledge areas, and is, as defined by Brooke (2000) the “systematic process for the identification, analysis, control and communication of risks”. Pechan et al. (2011, 12) identify project risk management as the process of translating the substance and the core principles of generic and project management to the context of risk and risk-related decision making processes. Furthermore, the element of risk has been identified as having a particularly strong influence on the process of project selection and overall project management strategies (Archer and Ghasemzadeh, cited in Morris and Jamieson 2005). The PMBOK® Guide framework provides a project risk management approach (Fig 4-3) which is devoid of the element of human psychology, and is focused purely on the processes required to manage project risk. According to Coleman (2009, 129) within the last decade the area of project risk management has become institutionalised as a result of pressures to enhance organisational practices, previously destabilised by weak internal controls and regulatory oversight. In Australia and New Zealand, the application of risk management practices is supported by the

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established national staandard, refer to Fig. 4--4 for AS/N NZS ISO 31000:2009 (Knight 20100). Plan Risk Management

Identify Risks

Perform Qualitative Risk Analysis

Perform Quantitative Risk Analysis

Plan Risk Responses

Control Risks

Fig 4-3. Project Risk Manaagement Overv view (Adapted ffrom PMI 2013 3, p. 312)

Risk Analysis A

Monitoring and Review

Risk Iden ntification

Risk Assessment

Communication and Consultation

Establishing g the Context

Risk Ev valuation

Risk Trreatment

Fig. 4-4. Risk k Managementt Process (Stan ndards Australiaa 2009 p. vi).

Trickey and Stewart (2010, ( 2) havee found that m majority of rissk related research is focused on biographic b and d socioeconom mic predictors of risk, whilst the eelements of the t individuall’s personality ty affecting risk, have been largelyy disregarded.. Neverthelesss, Ropeik (citted in Duff 2011, 2 29), found that thhe human ressponse to risk is :a complexx mix of neurral wiring and chemisttry, subconsccious psycholo ogical processses and instincts, and fact-based cognitive fireppower”. Risk assessment is relliant upon an individual’s ffeelings identiifying the source of the emotion, itss usefulness an nd validity, too improve the decisionmaking proccess (Means 2012, 2 14). Slovic and Peterss (2006, 322) note that

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risk should be considered in two different fundamental ways which is dependent on how individuals perceive and act on risk: risk as feelings, and as an analysis. Where ‘feelings’ refer to the basic human reaction to risk, or that of intuition and instinct; and where ‘analysis’ refers to “logic, reason and scientific deliberation” (Slovic and Peters 2006, 322). Rahman and Kumaraswamy (2005, 1) believe that the attitudes and motivation of the project participants (team members, sponsor, contractors) is critical in a project collaborative environment. While Casey (2010, 83) found that risk management is one of the project management areas to be addressed when facilitating successful non collocated (virtual) team operations. Cooper (2003, 45) believes that project risk management efforts to minimise risk often do not take into account the team member’s individual propensity for risk, which is determined by their individual perception, experiences, and personality. Olson and Wu (2010, 3) have found that the individual or group attitudes toward risk are shaped by their individual and combined experiences. The psychology of risk management is based on the individual’s risk perception and risk tolerance, where according to Trickey (2011, 18), the individual’s propensity for risk taking is the result of one’s natural environment, circumstances and experience, as well as the current trends. Aidane (2013) suggests that the area of risk management theory and processes is focused on the assessment and management of the risk itself, while the individual’s perception and response to risk has been largely overlooked. While Nicholson et al. (2005, 157) suggest that an improvement in the understanding of the psychological causes of risk behaviour could see considerable contribution to the success of risk management strategies. Individual perception of risk is determined by a number of factors, including that of personality, behaviour, attitudes and biases (Cooper 2003, 39). While Nicholson et al. (2005, 157) believe that an individual’s propensity for risk is embedded in that individual’s personality. Trickey and Stewart (2010, 2) note that personality is one of the most researched areas in the discipline of psychology, as understanding personality leads to a knowledge of a range of predictive qualities, as well as removing racial and ethnic discrimination through research methodology.

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The founndations of peersonality are developed inn childhood an nd extend over the aduult lifespan of o the team member m (Casp i, 2000, p. 16 67). As a result of thiis apparent stability of perrsonality, Nichholson et al. (2005, p. 167) suggesst that a persoon’s propensiity for risk taaking is consiistent and predictable, based on past p situationaal experiencee. Kuhnen an nd Chiao (2009, p. 3) have establlished an exiisting geneticc relationship between personality aand risk toleraance, thus furtther affecting the developm ment of an individual’s personality. Trickey (2010, p. 1) 1 believes in i the imporrtance of naature and hereditary ggenes in the psychology p off the individuaal above all else, e or as the central ccause, with otther influences on the indivvidual’s risk tolerances consisting of nature, nurture, n risk situation, annd circumstaances, as demonstrateed in Fig. 4-5. Nature Nurture Situation Circumstancces

ure of influencces on individu ual risk toleran nces. Fig. 4-5. Natu (Adapted from m Trickey 20122b, p. 10).

Accordinng to Trickey (2010, 45), risk type refleccts the team member’s m core personnality, and reppresents the ‘n nature’ part oof risk toleran nce. Risk type is also consideredd an elementt of temperaament; and is i deeply embedded inn personality as an attributee, and is preddictably consisstent over an individuaal’s life (Wallsh and Trick key 2012b, 1)). Trickey (20 012b, 24) believes thaat of the eight risk types sho own in Fig 4--6, those who are more averse to rissk and ambiguuity are the in ntense, wary, prudent and deliberate d types; whilee the spontaneeous, carefreee, adventurouus and composed types are more fleexible in their approach to riisk.

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Spontaneeous Typee Carefree Type

Advennturous Tyype

Inntense Type

Risk Type/ Personality

Composed Type

Wary Typee

PPrudent Type Deliberate Typee

k type personaality. (Adapted from f Trickey 2 011, 2012a, 2012b). Fig. 4-6. Risk

On an inndividual levell, Trickey and d Stewart (20110, 17) have found f that the individuual team mem mber’s risk type t and riskk attitude lead d to that individual’s risk tolerannce, and thaat understandding those ty ypes and attitudes, wiill allow for a prediction of tolerances, seee Fig. 4-7

Risk T Type/ Person nality

Risk k Attitud de

Individua al's Risk Tolerancce

Fig. 4-7. Mod del of risk tolerrance. (Adapted from Trickeyy & Stewart 201 10, p. 17).

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Where thhe risk attitudde refers to rissk tolerance innfluencing facctors such as individuual learning, experiences, current trennds and beliiefs, and represents thhe ‘nurture’ paart of risk toleerance (Trickeey 2010, 45). Oechssleer, Roider annd Schmitz (2009, 148) ssuggest that cognitive ability also affects risk perception and d tolerance, annd have found d through research thaat higher coognitive abilitties appear tto result in less risk averseness ((see Fig. 4-8). While Tricckey (2010, 442) ascertainss that the individual’s temperamennt controls many m human characteristiccs which define an inddividual’s sennsitivity to risk k, as well as thhe natural responses to threat, changge and uncertaainty.

The Humann Element

Effect of the Human Element on the area a of Risk Managem ment

Effect on Teeam Contribution - In ndividual member's influence

Personality//Risk Type Behavviour

Risk Perceeption

Attituudes Overall Indiviidual's Risk Propen nsity

Cognitivve Biases Temperrament Experiiences

Risk Tolerance

Cognitivee Ability

Fig. 4-8. The human elements affecting riisk propensityy.

Risk maanagement is an integral part p of projecct managemeent and it applies at bboth operationnal and strateegic organisati tional levels (Coleman ( 2009, 16). T The function of risk manaagement throuughout the prroject life cycle affectts the manageement of in a project a m multi-level application, including thhe team membber (individuaal) level, at a team level and a at the project levell. The implicaations of each level are listeed in Fig 4-9.

The Huuman Side of Prroject Managem ment

Team Memb ber Level • Staff selecttion • Personal annd professional developmennt • Training oppportunities • Relationshiip building • Performancce assessment and developpment • Emotional iintelligence

Team Level • Team compossition • Team dynamiics, cohesion, effeectiveness • Mutual awareeness of individual pro opensity for risk • Awareness off scope • Balancing risk k taking tendencies off the team • Improving deecisionmaking

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Project Level • Creating a susttainable risk culture witthin the project • Working towarrds a quality outcom me • Achieving stak keholder (internal and ex xternal) satisfaction • Project successs • Meeting projecct objectives as per the organisational strategy

m Fig. 4-9. Cross-level applications of risk management. (Adapted from m Trickey 20122b, pp. 36-38).

The riskk culture and strategy of an n organisationn’s capacity to o assume risk is know wn as ‘risk apppetite’ (Moo ody 2008, 1700). Semple (2 2007, 24) notes that the risk apppetite shoulld be aligneed with the sponsor organisationn’s capacity limit, or the maximum amount of risk the organisationn may assum me. Semple (2 2007) also b elieves that there are considerablee benefits off articulating and commuunicating risk k appetite within the oorganisation, thus working g towards creaating a consistent risk managemennt culture orgaanisation-widee. Projects are dependennt on the spo onsoring organnisations and d as such, Becker andd Bostelman (1999, 47) note n that thee project man nagement processes shhould be drivven by organiisational strattegy and cultture. This very culturee of the sponsoring organisation has the potential to carry c over to the projeect and affectt the project team. The prroject manageer should allow for thiis existing preedetermining component c off risk managem ment.

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A numbeer of tools haave been deveeloped to allow w project man nagement practitionerss to better unnderstand thee effects of th the element of o human psychology on risk manaagement. One of these is thhe Risk-Type Compass tool (Fig. 44-10), which “addresses the aspects oof personality that are related to a person’s readdiness to take risks and theeir ability to cope c with it”, as well categorisatioon of individu ual team mem mbers by risk k type to allow the prroject team too develop better cohesion an and risk culturre (Walsh and Trickeyy 2012, 1).

pass (Trickey 20 012b, p. 23). Fig. 4-10. Rissk-Type Comp

The needd to recognisee why individu uals perceive and respond to risk as they do stem m from embeddded psycholo ogical roots (R Ropeik 2012, 1222). A better underrstanding of thhe psychology y of risk has thhe potential to o improve the overall m mental processses which un nderpin the deecision-making g process and the choiices made withhin the PMBO OK® Guide proocesses affectted by the element of hhuman psychhology (Cottrill and Rice 22013, 10)—naamely the process of: identify riskks, perform qualitative rrisk analysis, perform quantitative risk analysis, and plan risk k response. Rahman and Kumarraswamy (20 005) believe that risk sh hould be managed uusing a joint risk manag gement strateggy which reequires a collaborative, team workiing approach through t betterr motivation leading l to improved w working relatioonships and cooperative c teeamwork. Nicholson et

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al. (2005, 1771) suggests that t the organiisation, and byy extension th he project team, shoulld consider itts own risk profile p (“riskk seeking, avo oidant or neutral”). A strateegy for risk and a personality profiling hhas been sugg gested by Nicholson eet al. (2005, 1771), who belieeve that such pprofiling will allow for alignment oof the individdual team meembers’ needds and attribu utes in a project envirronment.

Plan Risk Management

Identify Risks

Perform Qualitative Risk Analysis

Perform Quantitative Risk Analysis

Plan Risk Responses

Control Risks

Fig. 4-11. Prooject Risk Man nagement Overview with proocesses affected by the element of hu uman psycholoogy. (Adapted from f PMI 20133, p. 312).

Method dology In order to determine the impact of the elementt of human pssychology in a project team environment and the characterristics and beehaviours directly affe fecting the PM MBOK® Guid de area of prroject risk, th his study undertook a literature reeview follow wed by quantiitative and qualitative q research meethods. This inncluded questtionnaire feeddback and facce to face interviews w with project managers m and project p team m members. The studdy incorporateed a structured d template of the research interview and collectiion of qualittative data. The T quantitattive research methods comprised a questionnaiire; the resullts of which underwent statistical analysis andd evaluation inn relation to the t research hhypothesis. Th he use of the combinaation of the approaches allows a for datta triangulatio on and a closer exam mination of thhe findings (S Sechrest and S Sidani 1995, 77). The quantitative research metthods have beeen selected tto add furtherr rigor to the data andd informationn analysis, leaading to a greeater scientificc support for the hypoothesis. A quaalitative reseaarch methodollogy has been n selected to better refllect the culturral context and d social aspectts of the reseaarch study matter and thhe subjects. The quanntitative and qualitative q datta collected w was analysed in n order to test the hyppothesis that thhe element off human psycchology is an essential factor in prooject manageement and hass the potentiaal to affect th he project

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outcomes in the PMBOK® Guide areas of project risk, cost, and time management. This paper focuses on the outcomes relating to project risk. The research methods utilised in this study included questionnaires conducted by 11 participants and face-to-face interviews with a further 10 participants. Overall the structure of the questionnaire and the interview focused on the following topics: 1. 2. 3. 4.

Background Information Organisational Background Project Team Experience Project Risk Management

Key Findings This research hypothesised that the element of human psychology is an essential feature of project management and has the potential to affect the area of project risk, requiring the identification of these characteristics for mitigation. This research aimed at reaching a level of understanding of the element of human psychology (individual’s personality, traits and attitudes) affecting project risk management in a team environment. This hypothesis has been supported. The first research objective was to identify the top 10 human characteristics (personalities, traits and attitudes) affecting the three PMBOK® Guide areas including project risk management. This research found that the 10 highest rated individual characteristics are: communication skills; collaborative skills; listening skills; ability to work under pressure; honesty; motivated; organised; dependable, understanding and adaptable. The second objective was to establish the optimal number of members in a project team with the most likelihood of delivering positive results and a successful project outcome. This research found that optimal number is between two and 10 project team members. The third objective was to establish whether opportunities for professional development and higher levels of responsibility impact an individual’s behaviour in a project team. It has been found that certain professional opportunities do have the potential to impact on an

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individual’s behaviour in a project team. These are listed as ‘professional development opportunities’, ‘appreciation and rewards’, and ‘career progression’. Conversely, it was found that various other professional opportunities have demonstrated little or no impact on an individual’s behaviour. These include ‘voluntary selection for participation in project’, ‘higher levels of responsibility’, ‘participation in the project plan development’, and ‘increased ownership of project parts’. The fourth objective was to establish during which stages of the project life cycle, the element of human psychology is at its highest influence. It has been found that the project life cycle is under the greatest influence from the element of human psychology during the beginning and earlier stages of the project, specifically the project initiation and the planning and design stages. The fifth objective was to identify which of the processes in the PMBOK® Guide areas of project risk, cost and time management, are most affected by the element of human psychology. In the area of risk management, these have been identified as the processes of ‘identifying risk’ and ‘monitor and control risk’. The practice of selecting compatible personalities when collating project teams has the potential to improve team work, establishing cohesive team environments and achieving successful project outcomes. Taking into account the previously discussed influences of an individual’s personality, and the direct correlation to an individual’s propensity for risk or risk type personality - the profiling or risk personalities is an important measure to gain an understanding of how those individual’s would operate in a team environment. Achieving the project outcomes is, in part, dependent upon combining compatible personalities, with a variety of introverts and extroverts, leaders, logical, perceptive and intuitive thinkers, as well as those with a more ‘spontaneous’ nature. Thus personality risk profiling not only establishes an individual’s natural propensity for risk, but also establishes a baseline personality type leading to a better understanding to how individuals behave in a team environment and the likelihood of them influencing the project team as a whole. The findings further suggest that introducing an organisational culture which encourages an appreciation of the concept of competence is beneficial

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to team members. As this results in achievement of a level of self-awareness that is advantageous for group relations in a project team environment. Thus leading to a greater understanding of one’s individual competency, and taking into account the subjective nature of self-assessment. This, in turn, leads towards identifying a true likeness of the individual’s professional competency and the expected contribution to the project effort.

Discussion Humphreys (2001, 621) said that the most important inputs into the project management system are the project team members. On the basis of these findings an opportunity to improve the project output exists in the context of project management education. This may be achieved through greater attention to the education of the human inputs, reflecting the team dynamic and individual member influences. The influence of culture, leadership, project management, PMBOK® Guide processes, and behavioural factors on project outcomes is presented in Fig. 4-12 along with the suggested element of human psychology that has the greatest influence over team decision processes. As seen in the figure, a number of factors have the ability to impact on the project outcome, thus influencing the project direction, and affecting project objectives and overall success.

Fig. 4-12. Influence on project outcome with the addition of the element of human psychology. (Adapted from Shore 2008, p. 6).

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Traditionally, as described by Shore (2008, 6), the influences were seen as mostly internal organisational and project factors, with minimal focus on the additional influence of the element of human psychology. Project team size also plays a part in the success of that team in delivering project outcomes. It has been argued that a team should not exceed 20 members, as a number higher than that would be structurally unable to reach a consensus (Buchanan 2009, 38). A committee or a project team working group comprised of primary stakeholders should not exceed eight members (Buchanan 2009, 38). When asked to identify an optimal number of members in a project team a general consensus between interviewees and questionnaire participants was that the optimal number of members in a project team is between two and six, and all of the responses received were supportive of project teams not exceeding 10 members, as a number greater than 10 in a project team environment is considered difficult to manage. Competency and technical skills should take a ‘back seat’ while the ability to manage and lead diverse teams grows in importance (Nellore and Balachandra 2001, 172). Kendra and Taplin (2004, 20) agree that the use of project management methodologies alone will not guarantee overall project success. Mascia (2012, 1) notes that what all projects have in common, besides the defining elements of uniqueness and start-end times, is that all projects involve people. Personal and professional growth of an individual is a desirable outcome resulting from team work. Ideally, the process of social awareness in a team situation is also an important factor leading towards creating a conductive and a stimulating team environment. Understanding this process and being aware of the social needs of team members in a team environment, is an important strategy towards the creation of a ‘team mood’. When selecting and building project teams a number of elements should be considered. For example, a strong driver for high performing teams is a conductive and a stimulating team environment. It should also be noted that while intellectual capital is a noteworthy asset, tacit knowledge should also be considered as the knowledge which is shared through a psychological connection between team members. The importance of utilising positive psychology and positive expectations

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should not be underesstimated as a strong driiver in projeect team performancee and the achievement of prroject outcomees. It has beeen found thaat one successsful strategy in collating a project team which works well towards t achieeving the projject outcomess is based on combininng compatiblee personalitiees (Good 20006, C68). Furtthermore, Good (20066) suggests thhat the best combinationss of personaliities in a project team m should combbine one or tw wo ‘leaders’, a variety of introverts i and extroverrts, those whoo are more of a spontaneouss nature and th hose who take the timee to plan, as well w as a comb bination of loggical and percceptive or intuitive thinnkers. The elem ment of humaan psychology y plays a rolee throughout the t entire project life cycle. The project p life cy ycle is the ‘s eries of phasses that a project passes through froom its initiation to its closuure’ (PMI 201 13, p554) required to ddeliver a projeect within thee set project paarameters of cost, c time and qualityy. Mascia (2012, 5) advo ocates for thhe adoption of more psychologiccal principles and a practices (the element of human psy ychology) throughout tthe project liffe cycle, as demonstrated d iin Fig. 4-13. Thus the element of human psycchology shoulld be considdered in addittion, and complementtary to the prooject managem ment process uundertaken th hroughout the project life cycle to ennsure successfful project dellivery. Project Initiatioon (Resultts supportedd by Interview w)

Pro ocurement & Execution E

Prooject Plann ning & Dessign (Results supporrted by questioonnaire)

Completion & Handover

Fig. 4-13. Staages of the Projject Life Cycle most affected by the elementt of human psychology.

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Based onn the responsses received, the t most affeected project life l cycle stages that w were also equually rated arre the ‘initiatiion’ and the ‘planning and design’’ stages (Fig.. 4-14). The interviewees were asked to select during whicch of the prroject life cy ycle stages thhe element of o human psychology is most likeely to influeence the projject team. Of the 10 intervieweess, nine agreedd that the elem ment of humaan psychology y is most likely to inffluence the prroject team during d the inittial/early stag ges of the project life cycle. Six innterviewees believed that tthe element of o human psychology is most likelyy to influencee during the pproject initiatiion stage, and three bbelieved this influence tak kes place durring the plan nning and design stagees of the prooject. One in nterviewee beelieved that while w this influence is in evidence thhroughout all of the projecct life cycle staages, it is most evidennt during the “pprocurement and a executionn stage”. Affectted Project Liife Cycle Stagges Completionn and Handover Procurement and Execution Planniing and Design Prroject Initiation 224

25

26

27

28

29

30

31

32

33

Rating of respoonses

Fig. 4-14. P Project Life Cycle C stages affected by tthe element of o human psychology.

Section V VII of the queestionnaire inccluded four quuestions relatiing to the PMBOK® G Guide area of Project Risk Managementt. The first qu uestion in this section asked the paarticipants to rate which off the PMBOK K® Guide risk manageement processses were mostt affected by the element of o human psychology.. In answer to this question, as seeen in Fig. 4-15, 4 the participants rated the highest the risk k process of ‘monitor and d control risks’, follow wed closely by b ‘plan risk response’ annd ‘perform qualitative q risk analysiss’.

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Affeccted PMBOK Risk Processses Monitor and control rrisks Plan risk responnses Perform quanntitative risk anallysis Perform quaalitative risk anallysis Identify rrisks Pllan risk managem ment 30

32

34

36

38

40

42 2

44

Rating of reesponses

Fig. 4-15. PM MBOK® Guidee Risk Manageement Processess affected by thhe element of human psyychology.

The secoond question of o Section VIII required the pparticipants to o identify to what exteent previously researched naatural cognitivve biases affecct team member’s riisk perceptionns. Based on th he result, the ffour biases aree closely related. How wever, the coggnitive bias wiith the highestt likelihood to o affect a team membeer’s risk perceeption is ‘overr-confidence’,, followed closely by the ‘illusionn of control’, as a seen in Fig. 4-16 and Fig . 4-17.

Overconnfidence/ O Optimism

Illusion of Control

Belief in the mall Law of Sm Numberrs

Cognitive Biases

Fig. 4-16. Coognitive Biasees Model. (Adaapted from Sim mon, Houghton n and Karl 1999, p. 115).

Cognitivve biases, as defined by Gudmundsson G n and Lechneer (2013, 279), are m mental simplifications wh hich allow inndividuals to connect

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perceived ittems of inforrmation info a meaningfuul whole, lead ding to a formed opinnion through an instinctiv ve and often subconsciouss process. These play a fundamentall part in influeencing projectt outcomes (F Fig. 4-12). According tto Simon, Hooughton and Karl (1999, 113) individu ual’s risk perceptions are affected by b three of th he most promi minent cognitiv ve biases: over-confideence, illusionn of control, and belief iin the Law of Small Numbers. T The Law of Small S Numberrs refers to thhe process off decision making based on limitedd available in nformation annd a small nu umber of sources/refeerences; leadinng to an exaaggerated likeelihood of prrobability based on a sshort sequencee (Rabin 2002 2b, 775). Gudm mundsson and d Lechner (2013, 278) also suggest that optimism m is a strong ccognitive bias affecting perception oof risk, as dem monstrated in Fig. F 4-17. Cognitive Biases affectiing Risk Percception Belief in the Law of Small Nuumber Illusion of ccontrol Opttimism Over-confi fidence 0

10

20

30

40

50

60 0

70

Rating of rresponses

Fig 4-17. Nattural cognitive biases b affecting g an individual’ s risk perceptio on.

These biiases have thee potential to affect how thhe individual perceives p risk, and m may result in increase or a decrease iin an individ dual team member’s overall risk perrception (Sim mon, Houghtonn and Karl 19 999, 113), thus influence the risk perrception of the other membbers of the pro oject team and affect thhe risk propennsity of the pro oject. The inteerviewees werre asked to id dentify to whaat extent a sellection of cognitive biiases affect a team memb ber’s risk perrception. These biases were listed as ‘over-connfidence’, ‘op ptimism’ and ‘illusion of control’. Similar to thhe questionnaaire results, most m interview wees agreed th hat ‘overconfidence’ can lead to members m missiing somethingg of importancce. It was also suggestted that in a group situatiion, the mem mbers can ballance this element, whhile in a soloo situation, itt would causee more issues. It was agreed that ‘optimism’, while w an oveerall positive attribute, may y lead to problematic behaviour if not managed correctly. Wh While most inteerviewees

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agreed that the ‘illusion of control’ should be managed by the project manager of the team so that the allocation of responsibility is reflected by allocated roles. Participants identified to what extent previously researched natural cognitive biases affect team member’s risk perceptions. Based on the results, the four biases are closely related. However the cognitive bias with the highest likelihood to affect a team member’s risk perception is ‘overconfidence’, followed closely by the ‘illusion of control’. All interviewees agreed that their individual risk type influences the decision making and risk perception of the team as a whole, of the questionnaire participants 27% believed that their individual risk types did not in fact influence the decision making and risk perception of the team as a whole.

Individual's risk type influencing ability No 14%

Yes 86%

Fig. 4-18. Combined results (interviews and questionnaires) - Individual's risk type ability to influence the decision making of the project group.

In order to answer the third question in Section VII, the selfcategorisation of risk type, the participants undertook some self-reflection. On the basis of all 11 participants answering the question, 73% of participants considered themselves as the ‘composed risk type’, with the remaining 27% divided amongst the ‘wary’, ‘prudent’ and the ‘adventurous’ types. The interviewees were asked to identify their individual risk types. As seen in Fig. 4-19, the ‘Composed Type’ is the highest rated personality risk type with 47% of the interviewees and questionnaire participants

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selecting thiis as their riskk type, follow wed in popularrity by ‘Prudeent Type’ at 24% and ‘Adventurouss Type’ at 14% %.

Spontaneeous Typee 5% Carefree Type

Adventuurous Typpe 14% %

Inttense Type

Wary Ty ype 5%

Risk Ty ype/ Persona ality

Composed Type 47%

Prudent Type 24% Deliberrate Typee 5%

Results of Qu uestionnaire Q18 Q and Interrview Q25 - risk type Fig. 4-19. R personality. ((Adapted from Trickey 2011, 2012a, 2012b)..

When assked if the innterviewees believed b that tthe element of o human psychology affects projecct risk manageement, all of thhe intervieweees replied in the posiitive. 60% of o the interviiewees statedd that the prrocess of identifying risk is most affected by this elementt. These resu ults differ significantlyy to those reeceived durin ng the questiionnaire stagee of this research, w where it was found that the t PMBOK® Guide proccess most affected by the element of human pssychology is ‘Monitor and d Control Risk’.

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Plan R Risk Manageement

Identify Risks R (Results supp ported by Intervieew)

Perform Qua alitative Risk Analysis

Perform Qu uantitative Risk An nalysis

Plan Risk Responses R

Control Risks R (Results supported by naire) Questionn

Fig. 4-20. Reesults of researcch: risk manageement processess affected by th he element of human psyychology. (Adappted from PMI 2013, p. 312).

The element of hum man psycholo ogy is most apparent du uring the processes oof risk assessm ment, risk id dentification, rrisk analysis and risk evaluation (Fig. 4-21), whhere the indiv vidual’s risk pperceptions, to olerances, and risk proopensity play the t greatest ro ole in influenccing the risk propensity p of the projeect team as a whole. With h the ongoingg tasks of thee process: monitoring and review, and a communiication and coonsultation, also being affected by tthe psychologgy of the indiv vidual team meember.

Risk Analysis A

Monitoring and Review

Risk Identification

Risk Assessment

Communication and Consultation

Establishin ng the Context

Risk Ev valuation

Risk Treatment T

Fig. 4-21. The Human Ellement of Psy ychology affectting Risk Management Process. (Adaapted from Stanndards Australia 2009, p. vi).

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Nicholson et al. (2005, 161) have established a correlation between the level of individual risk tolerance and the following human characteristics: conscientiousness, extraversion, and openness to experience. While further study on personality and risk has identified the structure of personality termed the Five Factor Model (FFM), outlining the individual personality characteristics that have the most potential to impact on one’s perception and tolerance to risk (Judge, Heller and Mount 2002, 530). Table 4-1. Risk Related Themes and Characteristics Correlation to Risk

Risk Related Themes and Characteristics

The element of human psychology has the ability to influence some critical individual competencies of project management required to achieve constructive team work, including:

x x x x x x x x

Problem-solving Conflict resolution Cognitive aptitude Ability to work under pressure and in stressful situations Listening skills Decision making ability Collaboration and Communication skills

Five Factor Model (FFM)— human characteristics with a direct correlation to an individual’s risk tolerance (Nicholson et al. (2005)

x x x x x x

Openness to experience Conscientiousness Extraversion Agreeableness Emotional Stability Neuroticism

Personality risk related themes (Walsh and Trickey 2012a, 12).

x x x x x x x x x

Adventurous Apprehensive Attachment Careless Compliant Confident Conforming Deliberate Emotional decision making x Excitement seeking x Focused

x x x x x x x x x x x

Forgiving Impulsive Methodical Optimistic Patient Perfectionist Reckless Resilient Sentimental Spontaneous Trusting

Macsia (2012, 1) believes that project management literature should include an appreciation of individual characteristics and behaviour leading towards established behavioural patterns and the individual’s overall

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competency. These characteristics and behavioural patterns have the potential to affect the success of a project when considered in a team environment (Macsia 2012, 1). An individual’s competency is often overestimated, especially by the individual themselves due to the subjective nature of self-assessment (Santos-Pinto and Sobel 2005, 1386). DeAngelis (2003, 60) believes that the tendency of overestimating one’s own competency arises through ignorance, not arrogance, and that this chronic self-belief of overlooking one’s own weaknesses is the strongest in the least competent performers. This overly optimistic attitude also applies to performance on social and intellectual tasks, as well as affecting professional competency (Ehrlinger et al. 2007, 99). An individual’s overall competence has the potential to affect the project team’s processes and influence the decision making in the areas of risk, cost and time management. This is further complicated by the fact that an individual’s competence and its effect may be hard to quantify due to the subjective nature of competency and the element of personal assessment. An increased understanding of how human psychology affects various areas of project management, including those of project risk management and the individual competencies listed above, will allow project management practitioners to develop appropriate expectations and mitigating strategies to control the negative impacts arising from these individual competencies.

Conclusion The human side of project management – a concept largely ignored by the formal discipline of project management, is the underlying element of all project management areas and processes. As long as people are involved in project management, the element of human psychology will play a role in project delivery. A greater degree of vigilance is required during the project life cycle stages which are the most likely to be affected by this element, namely those of project initiation and project planning and design stages. Strategies to mitigate the element of human psychology include profiling of risk personalities to allow for a greater understanding of how individual team members are likely to interact in a project team

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environment, and the probable decision making which will arise as a result of the personalities influencing the team as a whole. A review organisational risk appetite is also recommended to enable team members to tailor their individual outlook towards the expected norm within the organisation. This research established that the element of human psychology is present in the PMBOK area of risk management. And most importantly, that this element (human characteristics including personalities, traits and attitudes) has the potential to affect the project teams thus influencing the decision making processes and consequent successful project outcomes. This research also demonstrates that an understanding of the psychology of human relations in a team environment, including individual characteristics and behaviour, is essential to team decision making and consequent positive team environment.

References Aidane, S. 2013. “Risk Psychology: Understanding Risk Personality Types and their implications for project decisions” interview with Trickey, G, Guerrilla Project Management, 13 March, http://www.guerrillaprojectmanagement.com/risk-psychologyunderstanding-risk-personality-types. Becker, SA., and Bostelman, ML. 1999. “Aligning strategic and project measurement systems.” IEEE Software 13:3:46-51. Black, R. 2006. “The psychology behind true project success.” Computing Canada 32:6:19. Brooke, P. 2000. “Risk-assessment strategies.” Network Computing 11:21:21-130. Buchanan, M. 2009. “Parkinson’s law revisited.” New Scientist 201:2690:38-39. Casey, V. 2010. “Virtual software team project management.” The Brazilian Computer Society 16:83-96. Caspi, A. 2000. “The Child is Father of the Man: Personality Continuities From Childhood to Adulthood.” Journal of Personality and Social Psychology 78:1:98-172. Coleman, L. 2009. Risk Strategies. Farnham, Surrey, GBR: Ashgate Publishing Group. Cooper, D. 2003. “Psychology, Risk & Safety: Understanding how personality & perception can influence risk taking.” Professional Safety 48:11:39-45.

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Cottrill, K. and Rice, JB. Jr. 2013. “The Psychology of Risk.” Supply Chain Management Review 17:1:10-11. DeAngelis, T. 2003. “Why we overestimate our competence.” American Psychological Association,. http://www.apa.org/monitor/feb03/overestimate.aspx. Duff, A . 2011. “Rolling the dice.” Director 64:5:28-30. Ehrlinger, J., Johnson, K., Banner, M., Dunning, D., and Kruger, J. 2007. “Why the unskilled are unaware: Further exploration of (absent) selfinsight among the incompetent.” Organisational Behaviour and Human Decision Processes 105:1:98-121. Good, B. 2006. “Diversity Strengthens project Teams.” Orange County Business Journal, vol. 29, no. 11, C68. Gudmundsson, SV. and Lechner, C. 2013. “Cognitive biases, organization, and entrepreneurial firm survival.” European Management Journal 31:278-294. Humphreys, P. 2001. “Designing a management development programme for procurements executives.” Journal of Management Development 20:7:604-623. Judge, TA., Heller, D. and Mount, MK. 2002. “Five-Factor Model of Personality and Job Satisfaction: A Meta-Analysis.” Journal of Applied Psychology 87:3:530-541. Kendra, KA. And Taplin, LJ. 2004. “Change Agent Competencies for Information Technology Project Managers.” Consulting Psychology Journal: Practice and Research 56:1:20-34. Knight, K. 2010. “AS/NZS ISO 31000:2009 – the new standard for managing risk.” Keeping Good Companies 62: 2:68-69. Kuhnen, CM. and Chiao, JY. 2009. “Genetic Determinants of Financial Risk Taking.” PlosONE 4:2:1-4. Mascia, SD. 2012. Project Psychology: Using Psychological Models and Techniques to Create a Successful Project. Surrey, England: Gower Publishing. Means, R. 2012. “Risk Management Meets Psychology.” Law & Order 60:7:17. Moody, MJ. 2008. “ERM: What’s Your Appetite.” Rough Notes 151:2:106. Morris, GP. and Jamieson, A. 2005. “Moving from Corporate Strategy to Project Strategy.” Project Management Journal 36:4:5-18. Nellore, R. and Balachandra, R. 2001. “Factors Influencing Success in Integrated Product Development (IPD) Projects.” IEEE Transactions on Engineering Management 48:2:164-174.

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Nicholson, N., Soane, A., Fenton-O’Creevy and Willman, P. 2005. “Personality and domain-specific risk taking.” Journal of Risk Research 8:2:157-176. Oechssler, J., Roider, A. and Schmitz, PW. 2009. “Cognitive abilities and behavioural biases.” Journal of Economic Behaviour & Organization 72:147-152. Olson, DL. and Wu, D. 2010. Enterprise Risk Management Models. Berlin Heidelberg: Springer-Verlag. Pant, I. and Baroudi, B. 2007. “Project management education: The human skills imperative.” International Journal of Project Management 26:124-128. Pechan, P., Renn, O., Watt, A. and Pongratz, I. 2011. Safe or Not Safe: Deciding What Risks to Accept in Our Environment and Food. New York: Springer Science Business Media. Project Management Institute (PMI) 2013. A guide to the project management body of knowledge (PMBOK® Guide). Pennsylvania: Project Management Institute, Inc. 5th edn. Rabin, M. 2002b. “Inference by Believers in the Law of Small Numbers.” The Quarterly Journal of Economics 117:3:775-816. Rahman, MM. and Kumaraswamy, MM. 2005. “Assembling integrated project teams for joint risk management.” Construction Management and Economics 23365:375. Ropeik, D. 2012. “The Perception Gap: Recognizing and managing the risks that arise when we get risks wrong.” Food and Chemical Toxicology 50:1222-1225. Santos-Pinto, L. and Sobel, J. 2005. “A Model of Positive Self-Image in Subjective Assessments.” The American Economic Review 95:5:13861402. Sechrest, L. and Sidani, S. 1995. “Quantitative and qualitative methods: Is There an Alternative?.” Evaluation and Program Planning 18:1:77-87. Semple, B. 2007. “Risk Appetite: How Hungry Are you?.” Accountancy Ireland 39:3:24. Shore, B. 2008. “Systematic Biases and Culture in Project Failures.” Project Management Journal 39:4:5-16. Simon, M. Houghton, SM. and Aquino, K. 1999. “Cognitive biases, risk perception, and venture formation: how individuals decide to start companies.” Journal of Business Venturing 15:113-134. Slovic, P. and Peters, E. 2006. “Risk Perception and Affect.” Association for Psychological Science 15:6:322-325.

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Thomas, M., Jacques, PH., Adams, JR. and Kihneman-Wooten, J. 2008. “Developing an Effective Project: Planning and Team Building Combined.” Project Management Journal 39:4:105-113. Trickey, G. and Stewart, M. 2010. ‘Personality and risk tolerance’, The Risk-Type Compass Technical Manual. Tunbridge Wells: Psychological Consultancy Ltd. Trickey, G. 2010. “Understanding Risk.” Training Journal, 42-46. —. 2011. “The psychology of risk.” Professional Adviser 18. —. 2012a. “Measuring and managing risk.” Strategic HR Review 11:6:342-343. —. 2012b. “What’s in the box? The significance of risk and resilience.” Personal resilience: Rising to the challenge of project management. Paper presented at Association for Project Management, APM Conference 2012, September 18, 2012 Buckinghamshire. Van den Brink, JC. and Kohler, A. 2010. “Applying positive psychology in Project Management,” Paper presented at the 24th IPMA World congress, Istanbul, November 2010 . Walsh, G. and Trickey, G. 2012. “Understanding Risk Types for effective decision-making.” Paper presented at Risk Zone 2012 Summit, Austrian Trend Hotel Savoyen, Vienna, September 25-26, 2012. Zwikael, O. and Bar-Yoseph, AB. 2004. “Improving the capabilities of project team management using the gestalt cycle of experience.” Team Performance Management 10:7:137-144.

PART TWO METHODOLOGIES AND PRACTICE DOMAINS

CHAPTER FIVE KNOWLEDGE MANAGEMENT IN AUSTRALIAN DEFENCE PROJECTS GRAHAM CHANT, CHRIS MARTIN, ANTHONY WOOD

I have worked for many years for a major Australian Defence company and the last five as a consultant as a project manager and as a Bids and Proposals manager for Australian Department of Defence contracts. I have been surprised over time by the ad hoc way in which project knowledge was managed by some of these companies. For this reason, the subject of knowledge management (KM) in projects was worth studying. I believe it is important to identify shortcomings in the way organisations gather and reuse project information so that in the future project members will become more aware of the importance and criticality of this activity. This is important as there is nothing more time wasting and costly to an organisation than having to re-solve a problem that was encountered and solved on a project previously but not documented. The approach to my research study was to first carry out a literature review to ascertain what work earlier researchers had done on this topic. This was then used to help inform me of the specific direction my research study would take. My review of the literature revealed that a factor in the loss of knowledge in projects was due to the inability of project team members to capture tacit knowledge and convert it into explicit knowledge. Tacit knowledge is highly personal, developed from experience and hard to formalise. It dwells within people’s minds and consists of ideals, values and emotions. Explicit knowledge on the other hand is knowledge that can be communicated in a formal and systematic language and shared in the form of data, formulae, specifications and manuals. Tacit information is often considered of more value to an organisation than explicit information. An environment that is conducive to the capture of project information is

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not always in place or treated as the normal situation in some organisations. In these cases, it is not part of the culture of the organisation and project information does not freely flow. The aim of this research study was to investigate the inability of project team members to capture tacit knowledge, convert it into explicit knowledge, store it and then reuse it in future projects. A small-scale survey of elite respondents in the project management field from Australian Defence companies was undertaken to discover; when, how and what information is gathered, do they have management support, do they have a knowledge vision and do they have a dedicated person who has responsibility for knowledge management? In answering these questions this research study will contribute to the existing body of knowledge by identifying techniques to ensure that the appropriate project information is captured at the appropriate time and stored for future use.

Background Knowledge is a critical asset in organisations, as a source of generating income and as the basis for competitive advantage (Goh, 2002; Zárraga and Garcia-Falcón, 2003; Carrillo, 2004). Knowledge management is closely linked with project management. The main objective of project management is to ensure projects are completed at the required scope defined by the stakeholders, within project budget, on time and deliver a quality product or service as the result. Knowledge is created during projects and that knowledge and the project team member’s experience needs to be captured and transferred to other project team members in the form of explicit knowledge. Successful projects apply the knowledge acquired and transferred from past projects. Organisations face the challenge of how to best manage their knowledge (Armbrecht et al., 2001). Dalkir (2005, 3) defined knowledge management as: “The deliberate and systematic coordination of an organization’s people, technology, processes, and organizational structure in order to add value through reuse and innovation. This is achieved through the promotion of creating, sharing, and applying knowledge as well as through the feeding of valuable lessons learned and best practices into corporate memory in order to foster continued organizational learning.”

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A review of literature reveals several factors that leads to the inability of project team members to capture tacit knowledge, convert it into explicit knowledge, store it and then reuse it in future projects. These are: when, how and what information is gathered, is there management support and is there a knowledge vision? Team members often generate memory joggers or an aide-mémoire that capture workarounds or solutions to unusual situations. This personal knowledge is not captured in formal project documentation. It is not possible to capture this knowledge and experiences by traditional transfer methods (Disterer, 2002). Members of future project teams will not be able to get the benefit of this knowledge (Disterer, 2002). Bresnen et al. (2003) has put forward the premise that as knowledge is often tacit, social groupings and personal networks are an important way that knowledge can be transferred. Landaeta (2008, 36) stated that when considering the selection of knowledge transfer methods there should be consideration of “formal and informal knowledge transfer methods aligned to the context and content of the organization and projects”. In transferring tacit knowledge, the methods to employ include “meetings, special teams, project reviews, mentoring, written messages … and observation of deliverables and project operations” (Landaeta 2008, 36-37). Disterer (2002, 513) has stated that “companies not systematically securing knowledge gained in projects for later usage risk that some (certain) knowledge and useful experiences will get lost with the end of a project”. Hu and He (2008, 198) have stated that “though the previous project knowledge should be gathered and accumulated when the project is finished and the accumulated knowledge would be shared and reused effectively in next projects”, they then pessimistically have added that “a new project starts with nearly zero knowledge”. Often there seems to be no desire by project team members to write project reviews and assessments. As (Kasvi, Vartiainen and Hailikari 2003, 580) stated they “may not always find time or motivation” and “documenting and reporting is often not considered” a “pressing project task”. Orange et al. (cited in Kamara et al. 2003, 179) stated that a common approach “to capture the learning from projects is the post-project evaluation”. However, whilst they stated that post project evaluation “can be useful in consolidating the learning of people” on the current project, “there are indications that current practice does not provide an effective framework for the capture and reuse of learning” (Kamara et al. 2003, 179). Often there was “insufficient time for post-project evaluation to be

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conducted effectively (if conducted at all), as relevant personnel would have moved to other projects” (Orange et al. cited in Kamara et al. 2003, 179). Other reasons given is it “does not allow the current project to be improved by incorporating the lessons being learnt as the project progresses” there is a “loss of important information or insights due to the time lapse in capturing the learning” and “post project evaluation is a not very effective mechanism for the transfer of knowledge to non-project participants” (Kamara et al. 2003, 179). The gathering of project knowledge and experiences quite often cannot occur during a project because of a lack of time and budget restrictions (Disterer, 2002). There is also difficulty carrying this out after the project ends as team members quickly disperse to other projects and other team members will retire (Disterer, 2002; Kivrak et al., 2008). Kamara et al. (cited in Tan et al. 2007, 18) stated “there are problems with the loss of knowledge due to the time lapse in capturing the knowledge, high staff turnover, and reassignment of people”. Management support can have an impact on the ability to capture of tacit knowledge. Egbu (2004, 310) listed “senior management support” as a factor that promotes knowledge sharing. Storey and Barnett (cited in Carrillo et al. 2004, 55) stated that a cause of failure of knowledge management initiatives was “top management sponsorship without active ongoing involvement”. Brochner and Javidan et al., and Bresnen et al. (cited in Landaeta 2008, 31) stated that “senior management involvement”, and “knowledge transfer leadership” respectively, was a factor “of knowledge transfer that may affect the performance and capabilities of projects”. Landaeta (2008, 36) stated that “strong commitment from the senior management is a key facilitator of knowledge transfer” and can “overcome rigid organizational barriers”. For the knowledge creation process to continue to evolve there must be strong leadership from an organisation’s management. Nonaka, Toyama and Konno (2000, 23) stated that “leaders provide the knowledge vision, develop and promote sharing of knowledge assets, create, enable and promote the continuous spiral of knowledge creation”. The knowledge vision of an organisation “gives a direction to the knowledge-creating process, and the knowledge created by it … [defining] what kind of knowledge the company should create in what domain” (Nonaka, Toyama and Konno 2000, 23). Van Donk and Riezebos (2004) stated that an organisation needs to identify what information they need to capture. Egbu (2004, 310) in listing the factors that promote knowledge sharing, stated a “link to economic performance and strategy and coherent

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knowledge vision” as the top one. Egbu (2004, 307) went on to state that specifically the strategic vision “exists in the organizational culture, its embedded routines, systems, procedures and processes”. Implementing a knowledge management strategy to capture project information, and “achieve the potential benefits of KM, the critical issue is to implement a coordinated KM strategy that should be aligned with the company’s overall strategy and objectives” (Kivrak et al. 2008, 88). Whilst the capturing of project knowledge is the responsibility of all team members someone must be appointed as the person responsible for ensuring this happens (Disterer, 2002). Some projects employ a completely independent person from outside of the project to carry out this role (Disterer, 2002). Kivrak et al. (2008) proposed a conceptual framework to capture the tacit knowledge. The most important aspect of this framework is the employment of a knowledge management team with knowledge workers and a knowledge manager. Carrillo et al. (2004, 51) stated that “if KM is to achieve organizational goals, it should have a point of responsibility or a champion with responsibility for delivering objectives of the KM strategy”.

Methodology This research was based on a phenomenological approach. It has started with a literature review of the issues and continued with a smallscale survey of elite respondents in the project management field. Research using a qualitative process was used to gather the required data by way of a self-administered questionnaire. Bryman (2012, 233-234) has stated that a self-administered questionnaire was cheaper and quicker to administer, there was an absence of interviewer affects, there was no interviewer variability and it was convenient for respondents; rather than having a structured interview. The research involved, firstly, a literature review and then a survey questionnaire. Australian Defence companies were selected and telephoned and contact was made with their senior project manager. The purpose of the research study was explained to them. This aim was to obtain a sample of data and opinions from middle to senior managers, project managers and other professional managers associated with project delivery within project environments. As such they were elite interviews. Their response would then be evaluated to ascertain when, how and what project knowledge was captured, was there management support, do they have a knowledge vision and do they have a dedicated person who has responsibility for knowledge management?

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Elite respondents in the project management field were the desired respondents for this survey as they were those with, or had, proximity to power. Elites can be “loosely defined as ... those with close proximity to power” (Lilleker 2003, 207) or with particular expertise (Burnham et al., 2004). Delaney (2007, 210) has coined the term “organizational elites” and stated that “the elite status of my interview subject is a direct consequence of holding a particular position in an organization”. In that respect those who responded to the survey questionnaire could be more precisely described as “organizational elites” as they were chosen because of their organisational or occupational position. Delaney (2007, 211) has also stated that “Organizational elites, by definition, have institutional positions that are readily ascertainable.” Thirty-eight managers from thirty-eight Defence companies associated with project delivery agreed to participate and were sent the survey questionnaire package. This package consisted of a request for assistance letter, an information sheet giving the background to the study and aims and objectives, a consent form, the survey questionnaire and a reply postage paid envelope for the participant to return the signed consent form and the completed questionnaire. The survey questionnaire consisted of 14 multi-choice questions divided into three sections. Section one was designed to gather background information on the respondent and the organisation. Section two was designed to gather information on the quality management aspects of knowledge management by the respondent’s organisation. Section three was designed to gather information about when, how and what information the organisation gathers during projects.

Key Findings From the thirty-eight survey questionnaire packages sent out thirty-six signed consent forms and completed survey questionnaires were returned. This is a return of 95 per cent. One of the limitations of self-administered postal questionnaires is that they typically result in lower response rates than a structured interview. However, Mangione (cited in Bryman 2012, 235) “has provided … classification bands of response rate to postal questionnaires” where it was stated that “over 85% (is) excellent”. Section one of the survey was designed to gather background information on the respondent and the organisation. Four respondents in answering “other” described their role in their organisation as either “Managing Director”,

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“Owner”, “Operations Manager” or “Service Delivery Manager/Technical Writer”. Adding the Managing Director and Owner to those who described themselves as Senior Managers, indicates that 58 per cent of the respondents were senior managers in their organisations. Including Project managers (33 per cent) and Engineers (six per cent) the survey was responded to by 97 per cent of elite respondents in the project management field. The breakdown of the size of the organisations surveyed reveals that almost half of those organisations employed more than 501 employees. Section two of the survey was designed to focus on the quality management aspects of knowledge management. In exploring the research questions in this section five attributes were identified. Does the organisation have senior management support, a knowledge management vision, procedures for sharing knowledge, a knowledge management approach to managing projects and is there a dedicated person who has responsibility for knowledge management. More than 80 per cent of the organisations had knowledge management procedures, a knowledge management approach and senior management support but less than 50 per cent of them had a knowledge management vision and a dedicated person with responsibility for knowledge management. Table 5-1 records the survey findings of the size of the organisation in relation to these attributes.

1

x x x x

2 3 4 5

8

x

x

x x

x

x x

x x x

KM Manager

KM Approach

KM Procedures

x

x x x

x x x x x

x

x

6 7

x

KM Vision

Senior Management Support

Organisation ID

Table 5-1. Size of organisation in relation to KM attributes No of Employees in Organisation Does the Organisation have the following attributes? 501 500

x

Chapter Five

96 9

x x x x x x

10 11 12 13 14 15

x

16

x

17

x x

18 19

x

20

x

21 22

x x

23

x

24

x x

x

x x

x

28 29 30 31 32 33 34 35

x x x x x x x

x x x x x x

x

x

x x x x x x x x

x x x

x x

x

x x

x x x x x x x x x x x x

x

x

x x

27

x x x

x

36

Count % Count % Count % Count % Count % Count %

x x x

x

25 26

x x x x x x x x x x x x x x x

5 14 5 100 1 20 2 40 5 100 2 40

3 8 3 100 1 33 2 66 3 100 1 33

3 8 3 100 0 0 3 100 3 100 2 66

8 22 4 50 2 25 6 75 7 88 2 25

17 48 14 82 12 71 16 94 14 82 11 65

x x x x x x x x x x x x x x x

x x x x x

x x x x x

x

x x x x x

x x

x x x x

x x

x x x

Overall 29 81

Senior Management Support 16 KM Vision 44 29 KM 81 Procedures 32 KM Approach 89 18 KM Manager 50

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Section three was designed to reveal how each of the surveyed organisations manages the knowledge that they gain on projects. In exploring the research questions in this section three main themes were identified. These were; when is project knowledge captured by project teams, how is this project knowledge captured and what types of project knowledge are captured. The survey data in Table 5-2 suggests that there are primarily three times when their organisations recorded the knowledge gained during projects. These were as a project wrap-up at the end of a project (69 per cent of respondents), at project kick-off as a review of lessons learned from previous projects (67 per cent) and recorded continuously through the project lifecycle (64 per cent). However, only 25 per cent of organisations debriefed team members before they left a project, whilst, 25 percent of organisations gathered project knowledge sometime after the project had finished. Table 5-2. When Project Knowledge is captured When knowledge captured At project Kick-Off or Lessons Learned from previous projects At the end of each project phase

Continuously through the project lifecycle

Debrief of team member prior to their departure At project wrap-up at the end of project

Sometime after the project is finished

At some other time

Yes No Total Yes No Total Yes No Total Yes No Total Yes No Total Yes No Total Yes No Total

Number

% of participants

24 12 36 14 22 36 23 13 36 9 27 36 25 11 36 9 27 36 10 26 36

67 33 100 39 61 100 64 36 100 25 75 100 69 31 100 25 75 100 28 72 100

Table 5-3 records the survey data for the second theme in this section, how project knowledge is captured, shows that the approach of 67 per cent of participants was to capture it at formally scheduled milestone meetings and at ad hoc brainstorming sessions. However, only 42 per cent of

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participants stated that their organisations captured project knowledge by interviewing each team member. Table 5-3. How Project Knowledge is captured How captured Formally scheduled milestone meetings

Individual interviews with team members

Ad-hoc brainstorming sessions

Through other means

Yes No Total Yes No Total Yes No Total Yes No Total

Number

% of participants

24 12 36 15 21 36 24 12 36 17 19 36

67 33 100 42 58 100 67 33 100 47 53 100

Table 5-4 recording the survey data for the third theme in this section, what types of project knowledge are captured, shows that there are primarily three types of explicit knowledge that are gathered and stored during projects. These were project reviews/reports (89 per cent of respondents), risk registers and risk treatments (89 per cent) and minutes of meetings (86 per cent). Conversations and phone calls (captured by 25 per cent of participants), workarounds (captured by 28 per cent of participants) and personal generated memory joggers or an aide-mémoire (captured by 39 per cent of participants) are tacit knowledge. One participant who described them self as a “Senior Manager” from an organisation that had “more than 501 employees” stated that they used “workarounds”, “conversations/ phone calls” and “personal generated memory joggers or an aide-mémoire” in an ad hoc manner when gathering information. Table 5-4. Types of Project Knowledge captured Types captured Project reviews/reports

Minutes of meetings

Emails

Yes No Total Yes No Total Yes No Total

Number

% of participants

32 4 36 31 5 36 23 13 36

89 11 100 86 14 100 64 36 100

Knowledge Management in Australian Defence Projects Workarounds

Milestone checklists and reports

Lesson Learned reports

Risk registers and risk treatments

Conversations/phone calls

Personal generated memory joggers or an aide-mémoire Other information

Yes No Total Yes No Total Yes No Total Yes No Total Yes No Total Yes No Total Yes No Total

10 26 36 23 13 36 24 12 36 32 4 36 9 27 36 14 22 36 12 24 36

99 28 72 100 64 36 100 67 33 100 89 11 100 25 75 100 39 61 100 33 67 100

Discussion The aim of this research study was to investigate the inability of project team members to capture tacit knowledge, convert it into explicit knowledge, store it and then reuse it in future projects. A small-scale survey of elite respondents in the project management field from Australian Defence companies was undertaken to discover; when, how and what information is gathered, do they have management support, do they have a knowledge vision and do they have a dedicated person who has responsibility for knowledge management? The findings reported in Table 5-1 found that if there is not strong and visible support for knowledge management activities by senior management then employees will not engage in capturing project information and this result supports the work of Nonaka, Toyama and Konno (2000), Egbu (2004), Brochner and Javidan et al., and Bresnen et al. (cited in Landaeta (2008)). Eighty-one per cent of survey respondents from all organisations reported that they had the support of senior management for the capture of project information. The lowest figure of support by senior management of 50 per cent was from organisations that had between 101 and 500 employees. The finding of 81 per cent support by senior management is at odds with the finding that only 44 per cent of

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respondent organisations had a knowledge vision. This seems to indicate that whilst a fair proportion of organisations have strong management support for the capture of project information, most of the organisations have yet to see the wisdom to have a knowledge vision where the capture of project information can be more precisely targeted. Indeed, they may not be capturing project information that is useful for them. Another interesting finding is that whilst 81 per cent of organisations reported they had the support of senior management only 50 per cent reported they had a dedicated person who had responsibility for knowledge management. The findings provide clear evidences that the size of an organisation is a differentiating factor when considering knowledge management attributes. Organisations that had more than 501 employees had senior management support (82 per cent), a knowledge management vision (71 per cent), knowledge management procedures (94 per cent), a knowledge management approach (82 per cent) and a dedicated person who had responsibility for knowledge management (65 per cent). This may be because they have greater resources available to them to allow them to put in place the actions required to capture project knowledge. The breakup of the 36 organisations into five groups based on their size has allowed comparisons to be made between the groups. However, an open question to ascertain the job classifications of employees in each of the organisations could have eliminated numbers of employees not directly involved in the project management field. This would have provided a more accurate indication of the size of the organisations engaged in project management. The literature review on knowledge vision within organisations revealed that an incoherent knowledge vision or the lack of ownership of a knowledge vision inhibited knowledge sharing in organisations. Not having a knowledge vision an organisation could be capturing information that is not appropriate for the projects they are engaged in. The survey responses indicated that only 44 per cent of respondents had a knowledge vision. However, when this was considered in the context of organisations that had more than 501 employees, 71 per cent of those organisations had a knowledge vision. There are two other interesting findings that involve a knowledge vision. The first is to look at the organisations who have a knowledge vision and a knowledge manager. Thirty-four per cent of the surveyed organisations who had a knowledge vision stated that they had someone in the organisation who had overall responsibility for knowledge management. This low finding provides support for the work by Egbu

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(2004) that if there is a lack of a coherent knowledge vision there will not be knowledge sharing. This also supports the work of Carrillo et al. (2004) that to achieve organizational goals there must be a champion with responsibility for delivering objectives. The second finding is those who have a knowledge vision and knowledge procedures. Forty-one per cent of the surveyed organisations who had a knowledge vision stated that they had knowledge procedures. This low finding provides support for the work by Egbu (2004) that an organisation’s strategic vision exists in its procedures and processes. It is likely that if an organisation does not have a knowledge management vision then they won’t have knowledge management procedures. This is also borne out by Kivrak et al. (2008) that to achieve the benefits of knowledge management a knowledge management strategy must be aligned with an organisation’s strategy and objectives. The literature review on when project information is gathered revealed that organisations will gather project information at various stages through a project lifecycle, but invariably it will be at the end or after the project has finished. The most disturbing finding from the survey, reported in Table 5-2, was that only 25 per cent of respondents conducted a debriefing with team members before they left a project. So much project knowledge was lost. The same finding that 25 per cent of respondents endeavoured to capture project knowledge sometime after the project was finished. This research supports the work of Orange et al. (cited in Kamara et al. 2003) and Kamara et al. (2003) of the importance of post project evaluations or reviews. In fact, the findings for all timings of opportunities to capture project knowledge reported by respondents is no greater than 69 per cent. This indicates a tremendous opportunity to capture project knowledge has been lost by most of the organisations. This finding supports the work of Disterer (2002) that knowledge not gained during projects risks being lost with the end of a project. Hu and He (2008) have stated that new projects start with nearly zero knowledge however this has not been borne out by the findings. Sixty-seven per cent of the participants reported that project knowledge is captured at project kick-off or from lessons learned from previous projects. This finding could be coloured by the survey participant’s own experiences of project beginnings. These elite respondents are more than likely highly experienced project managers who would bring a lot of tacit knowledge into the project from day one. They may have confused the amount of knowledge that they personally bring to a project at project kick-off, with the amount of written knowledge

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available at that time. A survey question about the amount of experience the participant has may have clarified this finding. The findings reported in Table 5-3 list how tacit project knowledge is captured. Individual interviews with team members, a good time to capture tacit information, was only utilised by 42 per cent of organisations. An additional open question could have been added to the survey. “If individual interviews with team members were not carried out, what was the reason?” This would have allowed the works of Orange et al. (cited in Kamara et al. (2003)), Disterer, (2002), Kivrak et al., (2008) and Kamara et al. (cited in Tan et al. (2007)) to be supported or otherwise for reasons why individual interviews did not occur. These reasons could have been that personnel had moved to other projects, there was a lack of time and budget restrictions or team members had retired. However, on a positive note, 67 per cent of participants stated that their organisations captured tacit project knowledge at formally scheduled milestone meetings and informally at ad hoc brainstorming sessions. These findings support the work of Landaeta (2008) that formal and informal transfer methods should be used for the transfer of knowledge. Analysing the responses, for the “through other means” category, that 47 per cent of respondents reported for how project knowledge is captured, indicated that they were all by a formal meeting or review process by various names, except for one which was informal. The literature review on the conversion of tacit information to explicit information revealed that team member’s personal information is quite often not captured in formal project documentation. The survey responses support the work of Landaeta (2008) and Maya et al. (2005). The findings reported in Table 5-4 showed there was only a small proportion of participants whose organisations converted tacit knowledge to explicit knowledge. Conversations and phone calls, personal workarounds, personal generated memory joggers or an aide-mémoire and personal emails are examples of tacit information that must be captured and converted into explicit information. Personal workarounds, personal generated memory joggers or an aide-mémoire and emails are explicit information as they are written documents, but they have been considered tacit information for this research as they are usually informally exchanged between project participants and don’t get formally captured. The findings reported that 25 per cent of participants captured conversations and phone calls, 28 per cent of participants captured workarounds, 39 per cent of participants captured personal generated memory joggers or an aide-

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mémoire and 64 per cent of participants captured emails. Disterer, (2002) stated that it is not possible to capture this type of knowledge by traditional transfer methods and Bresnen et al. (2003) put forward the premise that as knowledge is often tacit, social groupings and personal networks are an important way that knowledge can be transferred. The findings revealed that project reviews/reports, minutes of meetings and risk registers and risk treatments, more traditional project management explicit information, was reported as being utilised by greater than 86 per cent of the participants. Surprisingly milestone checklists and reports a customary element of projects was utilised by only 64 per cent of participants. Lessons learned often considered a best practice amongst project management practitioners was only reported by 67 per cent of survey participants as being a type of knowledge that they captured. Analysing the responses, for the “other information” category, that 33 per cent of respondents reported for the types of project knowledge that are captured, indicated that they were all explicit information by various names.

Conclusion Through this research it has been demonstrated that without senior management support employees will not engage in capturing project information. The research also found that 66 per cent of organisations who didn’t have a knowledge vision didn’t have a knowledge manager and 59 per cent of organisations that didn’t have a knowledge vision didn’t have knowledge procedures in place. Not having a knowledge vision does not allow organisations to focus on capturing information that is aligned to their organisation’s strategy and objectives. Indeed, they may not be capturing project information that is useful for them. Project knowledge was being lost because it was not being captured when it was generated, it was captured too late in the process if at all. Not enough importance was put on the individual interviews with team members. But perhaps the key finding of this research was the failure of the surveyed organisations to convert more of their tacit information (conversations, phone calls and personal information) into explicit information.

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References Armbrecht Jr., Ross FM., Chapas, Richard B., Chappelow, Cecil C., Farris, George F., Friga, Paul N., Hartz, Cynthia A., McIlvaine, Elizabeth M., Postle, Stephen R, and Whitwell, George E. 2001. “Knowledge management in research and development”. ResearchTechnology Management. July-August:28-48. Bresnen, Mike, Edelman, Linda, Newell, Sue, Scarbrough, Harry, and Swan, Jacky. 2003. “Social practices and the management of knowledge in project environments”. International Journal of Project Management. 21:157-166. Bryman, Alan. 2012. Social research methods. 4th edn. Oxford University Press. Oxford. Burnham, Peter, Gilland, Farin, Grant, Wyn, and Layton-Henry, Zig. 2004. Research Methods in Politics. Palgrave Macmillan. Basingstoke. Carrillo, Patricia, Robinson, Herbert, Al-Ghassani, Ahmed, and Anumba, Chimay 2004. “Knowledge management in UK construction: strategies, resources and barriers”. Project Management Journal. 35:1:46-56. Carrillo, Patricia. 2004. “Managing knowledge: lessons from the oil and gas sector”. Construction Management and Economics. 22:July: 631642. Dalkir, Kimiz. 2005. Introduction to Knowledge Management in Theory and Practice. Elsevier Butterworth-Heinemann. Burlington. Delaney, Kevin J. 2007. “Methodological Dilemmas and Opportunities in Interviewing Organizational Elites”. Sociology Compass. 1:1:208-221 Disterer, Georg. 2002. “Management of project knowledge and experiences”. Journal of Knowledge Management. 6:5:512-520. Egbu, Charles O. 2004. “Managing knowledge and intellectual capital for improved organizational innovations in the construction industry: an examination of critical success factors”. Engineering, Construction and Architectural Management. 11:5:301-315. Goh, Swee C. 2002. “Managing effective knowledge transfer: an integrative framework and some practice implications”. Journal of Knowledge Management. 6:1:23-30. Hu, Wenfa, and He Xinhua. 2008. “Knowledge Management Strategy and Approach in Multiple Project Environments”. 2008 International Symposium on Information Science and Engineering (ISISE 2008). Kamara, John M., Anumba, Chimay J., Carrillo, Patricia M., and Bouchlaghem, Nasreddine (Dino). 2003. “Conceptual framework for live capture and reuse of project knowledge”. Proceedings CIB W078

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International Conference on Information Technology for Construction— Construction IT: Bridging the Distance. 178–185. Kasvi, Jyrki JJ, Vartiainen, Matti, and Hailikari, Milla. 2003. “Managing knowledge and knowledge competences in projects and project organisations”. International Journal of Project Management. 21:8:571-582. Kivrak, Serkan, Arslan, Gokhan, Dikmen, Irem, and Birgonul, M Talat. 2008. “Capturing Knowledge in Construction Projects: Knowledge Platform for Contractors”. Journal of Management in Engineering. 24:2:87-95. Landaeta, Rafael E. 2008. “Evaluating Benefits and Challenges of Knowledge Transfer Across Projects”. Engineering Management Journal. 20:1:29-38. Lilleker, Darren G. 2003. "Interviewing the political elite: navigating a potential minefield". Politics. 23:3:207-214. Maya, Isaac, Rahimi, Mansour, Meshkati, Najmedin, Madabushi, Deepak, Pope, Kevin, and Schulte, Meredith. 2005. “Cultural Influence on the Implementation of Lessons Learned in Project Management”. Engineering Management Journal. 17:4:17-24. Nonaka, Ikujiro, Toyama, Ryoko, and Konno, Noboru. 2000. “SECI, Ba and Leadership: a Unified Model of Dynamic Knowledge Creation”. Long Range Planning. 33:5-34. Saunders, Mark NK., Lewis, Philip, and Thornhill, Adrian. 2016. Research Methods for Business Students. Pearson Education Limited. Harlow. Schon, Donald A. 1983. The Reflective Practitioner. Basic Books. New York. Tan, Hai C., Carrillo, Patricia M., Anumba, Chimay J., Bouchlaghem, Nasreddine (Dino), Kamara, John M, and Udeaja, Chika E. 2007. “Development of a Methodology for Live Capture and Reuse of Project Knowledge in Construction”. Journal of Management in Engineering. 23:1:18-26. Van Donk, Dirk P, and Riezebos, Jan. 2004. “Exploring the knowledge inventory in project-based organisations: a case study”. International Journal of Project Management. 23:1:75-83. Zárraga, Celia and Garcia-Falcón, Juan M. 2003. “Factors favoring knowledge management in work teams”. Journal of Knowledge Management. 7:2:81-96.

CHAPTER SIX THE INFLUENCE OF PROCUREMENT PRACTICES ON PROJECT RISK IN THE AUSTRALIAN CONSTRUCTION INDUSTRY JAMES EARL-SPURR, ANTHONY WOOD, CHRIS MARTIN

Poorly managed procurement risks can lead to large project delays, cost overruns and quality defects, yet many procurement decisions do not consider risk as highly as other criteria such as cost. This contradicts directly with what some researchers believe – that procurement risk should be the prominent criterion that determines the selection of a procurement method. The aim of this research was to investigate the influence that procurement practices have on project risk to better understand their effectiveness. The study consisted of a case study of a single organisation in the construction industry with multiple, large construction projects on-going worldwide; with a supporting literature review. The case study method primarily involved interviews with procurement specialists within the case-study organisation, who were asked about the case-study organisation’s procurement and risk strategies, the practices that they use during the procurement cycle to address risk and the success or failures that they had had with the methods that they use. The research found seventeen procurement practices that had a significant influence on project risk. These practices could be broadly grouped into three main focus areas according to the purpose of the practice in influencing risk within the procurement cycle. These areas were: the supplier selection decision practices; the contractual procurement path decision practices: and, the supplier performance monitoring and

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control practices. Additionally, it was found that the practices had complex interactions with each other – beyond the groupings – and the influence that one practice could have on the project risk was heavily influenced by the implementation of other procurement practices. The findings of this research have several important findings of value to contemporary procurement risk knowledge. Firstly, the results support the contemporary literature that suggests that in construction, the selection of an appropriate contractor is the most important procurement decision to project success (Banaitiene and Banaitis 2006; Palaneeswaran et al. 2003). Secondly, that the selection of an appropriate contractor is a more effective way to mitigate project risk for the client organisation than attempting to transfer or share risk with suppliers through contractual means. Therefore an efficient transfer of risk requires first that a contracting partner be engaged that is capable of performing, before deciding on a contractual procurement route that meets the needs and preferences of the client organisation. Finally, the research found the supplier performance monitoring and control practices will have varying influences on project risk depending on the supplier in the first instance and on the contractual procurement route that was chosen in the second instance.

Background To balance the project requirements of cost, quality and time, project managers need to approach the procurement cycle holistically in regards to managing risk. Inevitably, the organisation will have to interface with counterparts who cannot be entirely controlled and who have their own risk preferences (Osipova and Eriksson 2011). It is unlikely that organisations will ever work with suppliers that have risk capabilities perfectly complimentary to their own; therefore some degree of flexibility is required in order to efficiently manage risk. In this environment, contracting methods must be compatible with supply chain risk management processes. Furthermore, any flexibility or adaptability in contracting methods must be sustained throughout the entire cycle; where risk is transferred, the cost should not outweigh the resultant reduction of risk, and where risk is accepted, the resultant cost savings must in part be channelled towards implementing tools and methods to mitigate the residual risk (Gordon 1994; Ng and Loosemore 2007).

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This leads to the discussion of how project procurement practices influence project risk. Banaitiene and Banaitis (2006, 276) contend that “in a construction project, the selection of an appropriate contractor is the most critical for project success”, furthermore de Boer, Labro and Morlacchi (2001, 86) found that “the quality of the choice phase is largely dependent on the quality of the steps prior to that phase”. One would therefore expect that procurement practices, which contribute to making an informed supplier selection decision, will have a large influence on project risk. For the purpose of the research, procurement included both equipment acquisition and subcontracting; and suppliers included both vendors and subcontractors. Subcontracting is generally defined as works pertaining to the installation of the plant, while vendors supply equipment, normally without installation obligations. The research also briefly touched on tendering and contracting interactions with the case-study organisation’s clients. Although this is not strictly considered as procurement, and the case-study organisation has a separate team to oversee tendering, the processes are the same as in procurement, albeit the relationship is the reverse. Significantly, the client normally decides the contracting route and the quality requirements, with the contracting organisation choosing to either adapt or forgo the opportunity to execute the project (Drew and Skitmore 1997). It is therefore important how the contracting organisation adapts to the risk put upon them and how the organisation copes with the different risk requirements of different clients. For example, a client may choose to transfer or share any amount or type of risk; if the contracting organisation does not want to accept the associated risk, they must then consider further transferring that risk to their suppliers or formulating risk mitigation strategies. In this respect, the relationship between the client and the main contractor is very important in determining which practices the organisation will use on any particular project. Project risk is defined by Project Management Institute (2013, 310) as “an uncertain event or condition that, if it occurs, has a positive or negative effect on one or more project objectives such as scope, schedule, cost, and quality”. In construction, finding the right partners is critical to a successful project outcome. The project partners must not only be capable of

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performing, but their knowledge and expertise should complement those of the principle partner. In fact, Banaitiene and Banaitis (2006, 276) suggest that “in a construction project, the selection of an appropriate contractor is the most critical for project success”. It therefore follows that the contractor selection decision is critical to project success and the practices that allow a principle partner to come to an informed decision, will have a large bearing on the project outcome. This study examines some of these practices, the risks of making a poor contractor selection decision and the influence of the contractor selection decision on the overall procurement cycle. Additionally this research looks at some of the contracting methods used to transfer or share risk with other parties. According to Witt and Liias (2011, 176) “procurement routes cannot be adequately defined and are not discrete as a consequence of the variables inherent in each route which may take any value while only a few of these variables are unique to any particular procurement route”. Therefore, choosing the right contractual procurement route may be more complicated than merely deciding which risks the organisation can or cannot manage and which procurement route best reflects the organisation’s risk appetite. An ideal procurement route, therefore, must be designed to match the needs of the project, allowing for the different organisations’ varied understandings, perspectives and capabilities of risk management and the unique characteristics of each project (Khazaeni, Khanzadi and Afshar 2012). It is imperative that the principle partner chooses a suitable contractual procurement route as a premium must be paid to transfer risk onto another party. In a scenario where an organisation is better positioned to accept risk, this method will be inefficient. Additionally, Osipova and Eriksson (2013) found that, in practice, different parties will often tend to their own needs, to the detriment of the project. Finally this research explored the procurement practices used to address the residual risk that remains with the principle partner once all contracts are put in place. Not all risk can be transferred or shared with subcontractors or vendors. Attempts to place too much risk on project partners will result in unreasonable costs and, where the partner is not capable of managing risks, delays and defects can occur. Also, when using different contractual procurement routes that allocate risk differently, it follows that allocating similar efforts to managing residual risk is unlikely to give the best outcome for all procurement routes.

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Methodology The objective of the methodology was to gather information regarding different procurement tactics and practices employed on a typical construction organisation’s projects and to draw parallels with how these tactics and practices address project risk. It was for this reason that the author decided to undertake the research by way of a single organisation case-study and supporting literature review. Yin (2014, 4-14) explains that the case study methodology is suitable for research that focuses on contemporary events and does not require the researcher to control behavioural events. Yin (2014, 4) also explains that the case study is most suitable for researching the “how” and “why” of the phenomena under investigation. Data was collected by way of interviews with procurement specialists in the case study organisation and then analysed by the author guided by the techniques recommended by Yin for case-study analysis. “Unlike statistical analysis, there are few fixed formulas” in guiding case study analysis (Yin 2014, 133). “Instead, much depends on a researcher’s own style of rigorous empirical thinking, along with the sufficient presentation of evidence and careful consideration of alternative interpretations”. To help analyse case study data, Yin (2014, 135) suggests “playing” with the data, “searching for patterns, insights or concepts that seem promising”. Yin (2014, 142-168) also describes five common case-study analytic techniques: 1. 2. 3. 4. 5.

Pattern Matching Explanation Building Time-Series Analysis Logic Models Cross-Case Synthesis

The technique the author chose to use would most closely follow Yin’s Explanation building, “here, the goal is to analyse the case study data by building an explanation of the case” and “in most cases, explanation building occurs in narrative form” (Yin 2014, 147).

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Key Findings Through the case-study interviews, seventeen prominent procurement practices were identified that had a large influence on project risk: Specialisation: Specialisation is performed simply by narrowing the role of the employee so one can become an expert in their field. This can be useful, but also has disadvantages, namely that specialists are not generalists. Identifying Critical Equipment and Prioritising Equipment Purchasing: Equipment can be critical for a number of reasons; the equipment may have long lead times, have a high cost, be crucial to plant operations, or may be a niche piece of equipment with a very small supplier base. Creating an equipment procurement plan is crucial to project procurement success. Multiple Subcontractor Selection: Dividing the works into packages and awarding them to separate subcontractors can help mitigate risks (Sarkar & Mohapatra 2006). However, using multiple subcontractors is not a suitable practice for every occasion. For example splitting a package between a highly capable supplier and a less capable supplier is likely to increase risk. Additionally, having too many suppliers can be difficult to monitor and control. Sourcing: Sourcing is performed prior to prequalification and this function widens the pool of potential suppliers and subcontractors. Prequalification: The purpose of pre-qualification is to identify capable vendors and subcontractors by “establishing minimal capacities below which contractors will not be considered” (Palaneeswaran and Kumaraswamy 2001, 73) according to pre-determined criteria. Subsequently the prequalification process screens out vendors and subcontractors who are high risk. Request for Quotation: The request for quotation is a standard practice across many industries as part of the tender process. An effective tender process ensures that the most suitable product is procured for the best price. Key risks arise through the submission of inaccurate documents to the tendering parties, which will inevitably lead to an inaccurate tender submission, clouding the subcontractor selection decision.

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Bid evaluation: Bid evaluation is the next step after tenders are received. Nearly all of the participants that spoke of the bid evaluation process expressed an opinion that this is probably the most important part of the procurement process. Delegation of Authority: Generally speaking, the delegation of authority practice is a risk control measure that low risk items can easily pass through with few approvals required, while high risk items, typically high cost items, must be escalated to obtain approval. Contractual terms and conditions: The contract will determine the delegation of risk amongst parties. Back-to-Back Contracting: A large element of contracting is ensuring risks, placed on the case-study organisation by the client, are in turn imparted to the subcontractors and suppliers. This practice is known as back-to-back contracting. Inspection and testing: Inspections are required to ensure quality compliance, yet the case-study organisation must concede a cost impact of further inspection and testing. Therefore, risk must be evaluated against cost in executing an inspection and test plan. Interventions: When collaborating with suppliers, the case-study may need to intervene for particular reasons, these interventions are typically related to a failure to meet either quality or time requirements. Expediting: In order to mitigate schedule risks, expediting is performed. This is closely linked with schedule monitoring and involves different parties collaborating to provide solutions, rectify and address any schedule interruptions or potential delays. Shipping/Delivery: Shipping and delivery risks are normally transferred to a third party, either a shipping company or a freight forwarding agent, who covers customs clearance. Additionally, insurance covering transport risks is held by the case-study organisation’s client or the case-study organisation itself. Transport holds a large amount of risk and is unique to each country and region. For this reason the case-study organisation has a dedicated department for shipping and logistics that is supported by local teams that have a larger focus on the customs issues associated with importing and exporting.

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Change Requests/Scope control: Scope change is inevitable, either due to design errors, building errors or the availability of new information. It is important that changes are controlled so that “scope creep” is avoided (Burke 2010, 120; Project Management Institute 2013, 137). Keeping a Risk Register: Procurement has risks which must first be identified and analysed in order to build strategies. Risk Provisioning: When risk is accepted, as a general rule, the project team will calculate a risk provision. The risk provision held will vary depending on the extent of the risk and is used to address risk through placing extra controls, for example, more frequent inspections, or held in case a risk event occurs. The size of the risk provision is often related to cost savings of choosing a more economic but riskier procurement option. In doing so, if the risk occurs but does not utilise the entire risk provision, it is viewed as more successful, than using a more expensive but less risky procurement path.

Discussion Project Procurement Management has an extensive influence on project risk. It is the perception of the case-study organisation that the largest risk that they face during project execution is subcontractor performance and that the best way to mitigate this risk is to choose the correct subcontractor. This is also what Banaitiene and Banaitis (2006, 276) found, that “in a construction project, the selection of an appropriate contractor is the most critical for project success”. Additionally, the research of de Boer, Labro and Morlacchi (2001, 86) found that “the quality of the choice phase is largely dependent on the quality of the steps prior to that phase”. So while the bid evaluation and vendor or subcontractor selection is important to project success, the practices performed prior to this – “problem definition, criteria formulation and qualification” (de Boer, Labro and Morlacchi 2001, 86) – are equally important and will determine how successful the choice phase is. In this sense the identification, categorisation and prioritisation of procurements through the Equipment Procurement Plan or Subcontracting Plan (problem definition and criteria formulation), prequalification, request for bids and bid evaluation are the critical practices performed in the procurement cycle that influence project risk.

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Problem definition is the first step towards choosing the correct subcontractor or vendor begins by creating the Equipment procurement plan (or Subcontracting Plan). The Procurement Plan “is unique for each project. A new site condition, a new client in a different country or new suppliers can lead to new project requirements” (Yeo and Ning 2002, 256). An often forgotten point of procurement is how influential the client organisation’s requirements are to project risk. The client, like the casestudy organisation, endeavours to control their own procurement risks rather than the shared project risks. This point is reflected in the conditions that the client organisation sometimes places on their partner. To control risk, often the client has its own list of approved vendors that must be used, or require that vendors and subcontractors are approved by them before the purchase order is placed. Although the intention of this is to mitigate risk for the client, it constrains the case-study organisation. The case-study organisation sees prequalification as an important project procurement practice that can have a positive influence on project risk, and it is for this reason that the organisation is prepared to commit a large amount of resources to performing this practice. According to (Palaneeswaran and Kumaraswamy 2001, 74) the objectives of prequalification are to: 1. eliminate contractors who are not responsive, responsible and competent; 2. enhance and/or assure bidding opportunities for eligible contractors; 3. encourage healthy competition among eligible contractors; 4. avoid/minimise risks of contractor failure and improve client satisfaction; 5. optimise the contractor selection in terms of achieving a better balance between price and performance parameters Palaneeswaran and Kumaraswamy (2001) also note that the purpose of the prequalification practice is to facilitate and not to replace the tendering process. The request for quotation and the bid evaluation may even have a larger influence of project risk but the prequalification will ensure that potential partners meet the minimum capability level, especially important is their financial strength. Typically in construction, payment terms are scheduled so that the payment is made upon the demonstration of performance through progress payments or milestone payments, to reduce the risk of non-performance (Sherif and Kaka 2003). This is generally how the case-study organisation structures their payments. However, payment

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after performance can cause cash flow problems for the subcontractor if they do not have enough free cash to cover the works between progress payments. While the intention is not to have the subcontractor finance the project, the reality is that the subcontractor will face the risk of insolvency if they are too reliant on the case-study organisation for cash. The prequalification is intended to mitigate this risk. The drawbacks to prequalification is that it is an expensive practice; where a procurement package holds very little risk for the project, it is inefficient to go through an expensive prequalification process. Therefore, the case-study organisation has a rigid system in place that determines when prequalification is or is not required. Generally, procurement risk is proportional to the cost of the product, so a cost value is an easy threshold to decide what are high risk and low risk procurements and whether a qualified vendor is necessary for the purchase to be made, but this is not the only criteria. Broadly speaking equipment can be put into three risk categorisations irrespective of cost. Equipment that entails a design element would normally be considered high risk, medium risk products would not need to be designed but are only manufactured upon order and, finally, low risk products are available “off the shelf”. The outcome of prequalification is that a vendor will be either qualified, qualified with conditions, or not qualified. However simply because a vendor or subcontractor is qualified does not necessarily mean they are low risk; it only means that they pass the minimum requirements for the case-study organisation to consider them for tender. In a tight market where not many unconditionally qualified subcontractors exist, or perhaps none at all, the case-study organisation will consider splitting up works, so that the smaller package will hold less risk (generally because it is cheaper) and therefore there will be more eligible subcontractors. This practice of using multiple subcontractors for similar works is therefore a convenient way of reducing project risk; however, it will have a cost impact. A single large contract would normally be able to realise some efficiencies compared to smaller packages of work, generally less money as a proportion of the works will need to be spent on site overheads and indirect labour. Also the subcontractor is likely to be willing to take a smaller profit margin for a larger package of works. Following the prequalification are the request for quotation (RFQ) and the bid evaluation practices. These practices are similar to the prequalification

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practice but, instead of examining vendor or subcontractors’ overall capability, the case-study organisation analyses the individual bid and capability to do the works tendered. These practices directly influence the choice of subcontractor or vendor, hence arguably have the most influence on project risk. The request for quotation is typically “a document that not only requests information about the price of a product/service, but that contains a clear description of the work to be completed and outlines all other customer requirements” (Liston et al. 2007, 99). It is important to ensure that this document is as accurate as possible. Often it is the case that the design is not finished when requests for quotations go out and the completeness of the design will in part influence the contractual procurement route that the case-study organisation chooses. However, it is important that the size and scope of work is clear even if the design is not complete. Inaccurate RFQ documents will inevitably lead to inaccurate tender submissions, which raises some important risks for both parties. Bid evaluation is the next step after bids are received and leads directly to the supplier selection decision. Typically the case-study organisation has several criteria that they will assess before choosing the supplier; unlike the prequalification, cost will have large influence on the decision, but is not the sole criteria that the case-study organisation uses to rank bidders. This is consistent with the current literature, that claims price is often the highest ranked criteria among clients but it is important that other criteria are evaluated (Daly and Nath 2005; Hatush and Skitmore 1998; Mahdi et al. 2002). Contractual methods and procurement routes are also significant in determining the overall risk profile of the project for the case-study organisation. Assuming the subcontractor has the capability to perform satisfactorily, the contractual procurement route will determine which party assumes specific risks. Through the interviews, it was clear that the case-study organisation prefer to use contractual procurement routes that transfer as much risk as possible onto vendors and subcontractors. As one interviewee surmised, “I would say that … the company’s position is zero risk, we always try to pass it on”. However, the contractor selection is generally the more influential practice on addressing risk, and it important to remember that there are limitations to the amount of risk transferred to other parties through

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contractual means. For example, liquidated damages are a common way of recovering costs due to delays by the subcontractor or vendor, but the maximum liquidated damages is normally capped and proportional to the overall value of the contract. If a small piece of equipment delays the entire project, the amount of risk that is transferred is relatively small. As such, it is high risk to employ a subcontractor who is unable to perform the works, despite the contractual method. In saying this, the case-study organisation does have risk mitigation measures inserted into the contract to reduce the impact of a risk event such as subcontractor and vendor non-performance or insolvency. This would be in the form of a bank guarantee, where money guaranteed by the bank can be unconditionally recovered, and also through the use of retention money. However, having these guarantees in place does have cost implications for the contracting partner, which are usually passed on by way of higher price and in the case of using retentions. This can impact on the subcontractors cash flow and hence performance. Prequalification is used to ensure that these scenarios are avoided as far as possible. When using a riskier contractual procurement route, internal risk management practices become more influential. Often when deciding on the degree of risk in the procurement route, a budget is set to manage or insure against the risk. This is known as a risk provision. If the risk provision is not depleted by the project completion, the riskier option could be considered a success, regardless of the risk events that occurred. Finally, quality control practices form a large part of the overall risk when examining measures for subcontractor performance during execution. The suitability of quality management system will be assessed during the prequalification but ensuring the implementation must be managed. Inspection and testing must also be considered. By this definition, inspection and testing cannot have a direct influence on quality risks as they are used to find mistakes. It is therefore important that the organisation monitors the implementation of the quality plan and intervenes where necessary to ensure that it is followed. The influence of inspection and testing should not be ignored though; it is in fact preferable to discover mistakes at the earliest opportunity, in order to mitigate the cost and time impacts. It can also be inferred that scheduling testing encourages success, therefore mitigating quality risks.

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Conclusion This study investigated the influence of procurement practices on project risk in the construction industry by way of a case study of a single organisation with supporting literature review. The research found seventeen procurement practices that had a significant influence on project risk that could be broadly grouped into three main focus areas, 1. The supplier selection decision practices 2. The contractual procurement path decision practices 3. The supplier performance monitoring and control practices. The findings of this research have several important findings of value to contemporary procurement risk knowledge. Firstly, the case-study organisation perceives the largest risk faced during project execution is subcontractor performance and the best way to mitigate this is to select the correct subcontractor. Secondly, although the case-study organisation’s general strategy is to transfer as much risk as possible onto the subcontractors and vendors, it appears that the selection of an appropriate contractor is more effective way to mitigate project risk than attempting to transfer or share risk through contractual means. Lastly, the research found the supplier performance monitoring and control practices will have varying influences on project risk. But is generally not as effective as the two preceding groups of practices.

References Banaitiene, Nerija, and Audrius Banaitis. "Analysis of Criteria for Contractors’ Qualification Evaluation." Ukio Technologinis ir Ekonominis Vystymas 12, no. 4 (1/01/2006): 276-82. Burke, Rory. Fundamentals of Project Management : Tools and Techniques [in English]. Ringwood: R. Burke, 2010. Daly, Shawn P., and Prithwiraj Nath. "Reverse Auctions for Relationship Marketers." Industrial Marketing Management 34, no. 2 (1/2/2005): 157-66. de Boer, Luitzen, Eva Labro, and Pierangela Morlacchi. "A Review of Methods Supporting Supplier Selection." European Journal of Purchasing & Supply Management 7, no. 2 (1/6/2001): 75-89.

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Drew, Derek, and Martin Skitmore. "The Effect of Contract Type and Size on Competitiveness in Bidding." Construction Management and Economics 15, no. 5 (1/09/1997): 469-89. Gordon, C. "Choosing Appropriate Construction Contracting Method." Journal of Construction Engineering and Management 120, no. 1 (1994): 196-210. Hatush, Zedan, and Martin Skitmore. "Contractor Selection Using Multicriteria Utility Theory: An Additive Model." Building and Environment 33, no. 2–3 (1/3/1998): 105-15. Khazaeni, Garshasb, Mostafa Khanzadi, and Abas Afshar. "Fuzzy Adaptive Decision Making Model for Selection Balanced Risk Allocation." International Journal of Project Management 30, no. 4 (1/5/2012): 511-22. Liston, Paul, James Byrne, P. J. Byrne, and Cathal Heavey. "Contract Costing in Outsourcing Enterprises: Exploring the Benefits of Discrete-Event Simulation." International Journal of Production Economics 110, no. 1–2 (1/10/2007): 97-114. Mahdi, Ibrahim M., Mike J. Riley, Sami M. Fereig, and Alex P. Alex. "A Multi-Criteria Approach to Contractor Selection." Engineering Construction and Architectural Management 9, no. 1 (2002): 29-37. Ng, A., and Martin Loosemore. "Risk Allocation in the Private Provision of Public Infrastructure." International Journal of Project Management 25, no. 1 (1/1/2007): 66-76. Osipova, Ekaterina, and Per Erik Eriksson. "Balancing Control and Flexibility in Joint Risk Management: Lessons Learned from Two Construction Projects." International Journal of Project Management 31, no. 3 (1/4/2013): 391-99. Osipova, Ekaterina, and Per Erik Eriksson. "How Procurement Options Influence Risk Management in Construction Projects." Construction Management and Economics 29, no. 11 (1/11/2011): 1149-58. Palaneeswaran, Ekambaram, and Mohan Kumaraswamy. "Recent Advances and Proposed Improvements in Contractor Prequalification Methodologies." Building and Environment 36, no. 1 (1/1/2001): 7387. Palaneeswaran, Ekambaram, Mohan Kumaraswamy, Motiar Rahman, and Thomas Ng. "Curing Congenital Construction Industry Disorders through Relationally Integrated Supply Chains." Building and Environment 38, no. 4 (1/4/2003): 571-82. Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 5th ed. Newtown Square, Pa.: Project Management Institute, 2013.

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Sarkar, Ashutosh, and Pratap K. J. Mohapatra. "Evaluation of Supplier Capability and Performance: A Method for Supply Base Reduction." Journal of Purchasing and Supply Management 12, no. 3 (1/5/2006): 148-63. Sherif, Elhadi, and Ammar Kaka. "Factors Influencing the Selection of Payment Systems in Construction Projects." Paper presented at the 19th Annual ARCOM Conference, 3-5 September 2003, University of Brighton, 2003. Witt, Emlyn, and Roode Liias. "Comparing Risk Transfers under Different Procurement Arrangements." International Journal of Strategic Property Management 15, no. 2 (1/06/2011): 173-88. Yeo, K. T., and J. H. Ning. "Integrating Supply Chain and Critical Chain Concepts in Engineer-Procure-Construct (Epc) Projects." International Journal of Project Management 20, no. 4 (1/5/2002): 253-62. Yin, R.K. Case Study Research: Design and Methods. Ca: SAGE Publications, 2014.

CHAPTER SEVEN APPLICATION OF AGILE PROJECT MANAGEMENT PRINCIPLES TO BROWNFIELD CAPACITY IMPROVEMENT PROJECTS IN THE AUSTRALIAN MINING INDUSTRY NICHOLAS KYOBE, DOUG LARDEN, ANTHONY WOOD

In the paper “Project Management Approaches for Dynamic Environments”, Collyer and Warren (2009) investigate the nature of projects in fast changing environments. Particularly, they look at how issues of planning, experimentation, controls, communication, leadership style, and lifecycle affect the project. However, what remains of most interest to the authors is the further research questions that were raised. In their paper, Collyer and Warren propose a possible approach to dynamic projects, which while having some validity, appears to be far from comprehensive. Given that brownfield mining capacity improvement projects are also dynamic, it is suggested that Collyer and Warren’s work could be built upon. Extending this line of thinking raises the hypothesis that Agile Project Management (APM) methods could be used in mining capacity improvement projects to yield faster realisation in project value. Beck et al. (2001)’s Agile Manifesto is the cornerstone of this school of project management. Given that Agile is in its sixteenth year as a project management method, it is no longer viewed as a passing fad. Wysocki (2009) devoted a whole chapter in his book “Effective Project Management Traditional, Agile, and Extreme” to the central argument that APM methods could be employed outside of software development. Flahiff (2010) has added to this with his numerous presentations about integrating APM in a waterfall world. Debois (2008); Floricel et al.

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(2014); Jerbrant and Karrbom (2013); Weston (1998) have also advocated for the enterprise application of APM. While the project management community debates Agile verses waterfall techniques and/or product verses project development, the business community is looking at ways to increase project success. It is evident that the top down directives stipulated in the Project Management Book of Knowledge (PMBOK® Guide) and Prince 2 methods may, at times, be not the right tools. In collaborative environments such as brownfield capacity improvement projects it is possible that Agile is more suited. In a 2012 speech to the Asian Business Counsel, the CEO of Rio Tinto called for more productivity out of current operating plants. With the stage now set there is a need to run collaborative crossdiscipline brownfield capacity improvement projects, particularly in the operational phase of the investment cycle of mining projects. In response to these issues and questions, Söderlund and Geraldi (2012) suggest that we must revisit the past in order to create the future. A key element of their argument is to apply innovative organisational structures and/or innovative project management structures. This will allow greater flexibility in the way project problems are dealt with. Consequently, this leads to the contention of this research investigation on how APM principles can be applied to brownfield capacity Improvement projects in the Australian mining industry?

Background The study of APM dates back to the work of Takeuchi and Nonaka (1986). In their paper “The New Product Development Game”, these authors believed that a new product development process should resemble a game of rugby. They coined the term “scrum” to describe a product development team working collaboratively just as a rugby team would do to win the ball after there has been an interruption in the game. This holistic approach to new product development had six characteristics; (1) Built-in instability, (2) Self-organising project teams, (3) Overlapping development phases, (4) "Multi-learning", (5) Subtle control, and (6) Organisational transfer of learning. Sutherland and Schwaber (1995) presented the ideas of Takeuchi and Nonaka (1986) at the Object-Oriented Programming, Systems, Languages and Applications (OOPSLA) Conference in 1995 and later Beck et al. (2001) used these same ideas as the basis for the Agile Manifesto.

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Beck et al. (2001) recounted that software executives would put forward proposals for large software development projects. These projects would take up to two years to complete, however, by the time the project value was released to the market the customer requirements had changed, resulting in the project failing to deliver its impact. In order to change these occurrences, the authors of the Agile Manifesto suggested that software development companies should become flexible by using adaptable, empowered and communicative tight-knit teams resembling rugby “scrums”. These teams would complete small chunks of work in short periods. Cohn (2010) reports that instead of the project sponsor requesting that project teams “go away for two years and deliver a mobile phone or social media network”, it was proposed that they “go away and deliver one element of the mobile phone or social network in two weeks”. The result would then be discussed and adapted. Using this method, the project team would succeed or fail quickly. Beck et al. (2001) formalised these ideas when they met in Utah in 2001 to write the 12-point Agile Manifesto which has been used by software developers such as IBM, Apple, and Samsung.

Fig. 7-1. The Agile: Scrum Framework at a Glance (reproduced with permission of Agile For All, LLC)

More recently, Agile techniques have been applied outside of software development by CH2M Hill, one of the largest engineering construction

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and consulting companies in the world and Boeing Aircraft Manufacturing Company (Davis 2012, p. 302). These two organisations have implemented Agile-style mega projects which validates the contention that APM has a place outside of software development. Moreover, Wysocki (2013, p. 327) writes that “extensive testimonial data suggests that more than 70 percent of all projects should have used some type of Agile Project Management model but did not. More particularly, this research study has proposed the application of APM in brownfield capacity improvement projects in the mining industry. The Agile scrum framework is illustrated in Figure 7-1. To better understand the outcomes it is necessary for all concepts of the research to be defined and this was achieved by conducting a thorough literature review. In addition, the findings gained by other studies that are closely related to this study will help inform this research work (Evans, Gruba & Zobel 2011; Rudestam & Newton 2001). The literature review has shown the application of APM in other industries but there was still an existing gap for the mining industry. The examples provided of project structures, teams and artefacts showed some relationship but there was further scope for APM to be applied in the mining sector. The gap or unresolved question from the review is how can APM be used in the mining sector? Davis (2012, p. 303) adds that project management practitioners should move beyond looking for Agile practices (tools) and also look for Agile philosophies and principles. When these practitioners take this approach, they will find that APM is consistent with other organisational tools such as Lean enterprise management. In the Lean enterprise management system, the belief is that expenditure of resources that do not contribute to the creation of value for the end customer are wasteful. Additionally, Liker (2004) affirms that there are two central principles to any great organization; (1) continuous improvement, and (2) respect for people. Both these principles are central to the underpinning of APM where a solution is developed through Adaptive/ Iterative processes by subject matter experts working in collaborative respectful environments. Cobb (2011) advances this view by suggesting that APM is, in fact, Lean project management as it aims to reduce waste. In this context, waste is identified as any project artefact that does not add value to the outcome. Drew, McCallum and Roggenhofer (2004) contend that Lean project management can be applied to any industry. Smith (2012) and Voss, Witthaus and Junker (2013) report that mining companies across the world

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are employing Lean production tools across their businesses which may suggest that APM tools could be employed as well. This is because APM embodies Lean philosophies and practices and thus its adoption will aid in the faster realisation of project value for brownfield capacity improvement projects in the mining sector. There is a significant amount of literature that promotes APM in software development. In addition to this there is also some literature that promotes APM for infrastructure projects; however, very little can be found that promotes APM for mining projects. Therefore, this research should contribute to the closing of this gap. Furthermore, since the mining industry has adopted business-wide continuous improvement practices through Lean principles, it is not unreasonable to expect that APM could be considered as a natural extension of the continuous improvement culture to gain project value sooner and more effectively.

Methodology This research adopted a mixed method approach incorporating both quantitative and qualitative methods. The qualitative method was used to develop the conceptual or theoretical framework which was based upon the observations of industry practitioners and a literature review of the body of knowledge on the subject. Following this review a quantitative questionnaire survey was conducted to see if there were correlations between the current practices of project practitioners and APM. Once this was completed, an analysis was carried out to interpret the quantitative survey findings. Next, practitioners were interviewed to elicit their understanding of Agile versus traditional project management methods. This helped build an understanding of how to structure the case study to avoid inappropriate or a complicated approach. Lastly, a qualitative case study that included an interview of a project practitioner running an APM style project was carried out to detail APM in practice. Boynton (2005) suggests that this type of triangulation process can guard against any biases in the research work.

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Table 7-1. Research Process Overview Research Objective

Research Method

Identify and critically evaluate common APM literature outside of software development in terms of application to brownfield capacity improvement projects in the mining industry

Literature Review

Investigate and analyse how collaborative teams currently operate as experienced by mining industry practitioners

Survey Questionnaire

Synthesise, evaluate and analyse the results of the survey and case study interview to identify correlations and contradictions with current literature

Individual Interviews and Case Studies

Key Findings One of the key objectives of the questionnaire survey was to investigate and analyse how collaborative teams currently operate as experienced by mining industry practitioners. The questionnaire survey contained three principal parts: firstly, general information about the participants, which aimed to give an overview of the sample population; secondly, questions about stakeholder value, validation and involvement; and thirdly, questions about team practices such as self-organisation and reflective improvement. The survey was adopted from Ambysoft Inc. (2014) who conducted a survey into Agile project management in the IT industry. The differentiating factor was that the focus of this survey was the Australian Mining Industry/Sector. The survey title was “How Agile are you and your Organisation?: An Inquest into the Australian Mining Sector”. There were twelve responses, mainly from Western Australia.

Stakeholder value, validation and involvement Responses dealing with stakeholder value, validation and involvement indicated that 83% of respondents believe that they adequately communicated to stakeholders, 73% of respondents believed that some testing is being carried out while developing the design solution, and 58% of respondents have close relationships with experts who help them develop specifications.

Team practices Responses dealing with team practices, such as, self-organisation and reflective improvement indicated that 72% of respondents believe that

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their teams follow development standards and work towards common infrastructure, and 72% of respondents believe that their teams are reflective of their processes and they leverage on past experience to perform better in future design solutions.

Case studies The case study interview looked at an APM style project performed by a mining industry practitioner. The case study was presented to demonstrate what APM practices look like in a mining setting. In the case study, the term “Break-through” project is used instead of APM project— which is the subject of this research—although the two can be treated as identical in meaning as the two have similarities. The project case study can be summarised as follows: at an iron ore port in Western Australia a mining company used a method of project management called “Break-through” project in order to alleviate supply chain bottlenecks. The supply chain components consisted of iron ore train loading, overland rail hauling of that ore, bulk material stocking at a port facility, reclaiming from a bulk stock yard and ship loading of bulk material ore on to ships to be dispatched to customers around the world. At the port facility there is a car dumper 5 (CD5C) which underwent a 180 minute challenge. The aim of this initiative was to drive the car dumping time down to 180 minutes for 200 plus ore cars for any train consist that presented to the car dumper within 90 days. At the start of the challenge, the cycle time was 280 minutes, as seen in Figure 7-1. In order to drive this time down, a multi-disciplinary team was selected based on what roles would be required. These were “people that had good knowledge of the dumper”. The roles included an electrical and control systems engineer, a mechanical engineer, trades level fitters and electricians, plant supervisors and shut coordinators. At the start of the project the engineers went away and analysed the causes of down time on the CD5C car dumper. They then formulated a shortlist of defects in no particular order, which was addressed in an opportune maintenance time when the car dumper was vacant of ore consists. They also scheduled monthly shut-downs to enable large chunks of work to be carried out by contracting resources. The sprint period went for a week and at the end of this period the team would meet for review. The weekly reviews went through what work was done, what was going to get done the following

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week, what were the obstacles, what other resources were needed to complete the project, and what were the successes of the previous week. A more detailed reflective review was also carried out by the engineers and co-ordinators to update the project info-centre and provide information at pre-starts to other stakeholders. In addition, the cycle times were presented to the general managers to give them feedback on successes or failures of the project. Although this project was successful, it was noted that break-through projects are limited by the availability of the right resources, difficult to maintain the momentum once everyone goes back to their normal roles and a risk of incomplete change management. The practitioner also advised that break-through projects should not be run concurrently as they are a drain on business resources.

Discussion Many traditionalists use the question "where is the proof?" as a reason not to adopt Agile techniques. In response, this research work provides evidence of a range of organisations who have adopted these methods. Furthermore, the mining industry practitioners that were surveyed agree that there is also some Agile thinking within their industry which provides further evidence that that experienced collaborative teams are currently operating in the mining industry using APM methods. In the background section of this paper, a project management framework was established by describing the configuration of an Agile scrum team as first described by Takeuchi and Nonaka (1986). It then placed this team in either Iterative PMLC or Adaptive PMLC model as indicated by Huang, Darrin and Knuth (2012) . The survey focused on finding Agile practices in current project teams in the mining industry. It was found that the greater majority of these teams (above 60%) worked closely with their stakeholders. These teams modularised their work through the development of standards during implementation and reflected on the work through daily/weekly stand-up meetings to influence improvements during implementation. Learning that Agile practices were somewhat established in the mining industry, a case study interview was conducted with a mining practitioner who completed a break-through APM-style project.

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Consideration of the findings in light of existing literature In the case study interview, the practitioner described a break-through project which at close examination could be deemed to be an APM style project. The objective of conducting this interview was to identify correlations and contradictions with current literature. The break-through project took on an Adaptive PMLC model as proposed by Huang, Darrin and Knuth (2012) and Wysocki (2013) in the literature review. During the APM style project, the equipment on the CD5C car dumper was reconfigured to achieve a train consist unloading cycle time of 180 minutes. At the start of the break-through project in the context setting session, a Requirements Breakdown Structure (RBS) was developed at a high level. This was consistent with Binder, Aillaud and Schilli (2014) and Huang, Darrin and Knuth (2012) who suggested that the scoping phase of an Adaptive PMLC model should be done at a high level because not much is known about the solution. The work was planned on a weekly basis and an information centre was used which agrees with Conforto and Amaral (2010)’s suggestion that tools such as Gantt charts, Program Evaluation and Review Techniques (PERT), and Critical Path Methods (CPM) are commonly used in this phase of Iterative or Adaptive projects. However, not all the above-mentioned tools were used as the breakthrough project did not intend to burden the team with over reporting. The scope bank was also tracked and often new resources were negotiated in the break-through project to complete the backlog intended to drive the 180 minute cycle time. Although the 180 minutes was achieved in some weeks, the monthly average only decreased down to 190 from 280 minutes as seen in Figure 7-2. This result is aligned with Debois (2008)’s argument that an APM project might close if it has exhausted its budget or schedule allowance. It was found that the team reflected on their work, often completing trials of possible solutions throughout the breakthrough project. Waters (2011) advocates this trial process suggesting that, in closing each cycle the teams should, firstly, review the work completed in the iteration/cycle and secondly, review the progress against the overall plan, and finally, reflect on how the iteration/cycle went.

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2014-02

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Average Dump Cycle

Fig. 7-2. Average Train Consist Dump Times – Monthly

Implications of the study for current theory As highlighted, many traditionalists subscribe to the theory that APM is a software development methodology. This thinking is misguided because APM has been shown to be a powerful tool that can deliver infrastructure projects. This was demonstrated by Davis (2012)who cited two examples involving the CH2M Hill’s Rocky Flats project and the Boeing 787 Dreamliner super commercial jet. Moreover, APM has a place

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in the mining industry and the research from the case study has provided the circumstances for which this type of project management could apply in a brownfields break-through project. In APM and break-through projects, a solution is developed through Adaptive/Iterative processes by subject matter experts working in collaborative and respectful environments. These collaborative environments are part of the Lean production tool set and it is contended that if Lean has been employed widely in the mining sector then APM should also be employed. Cobb (2011) also notes that APM is a form of Lean project management as it aims to reduce waste. The findings support the hypothesis outlined in the study that APM can be used in brownfield capacity improvement projects to produce project value while the project is still in the implementation stage. This in turn reduces waste and increases project delivery efficiency.

Limitations of the research As stated earlier, APM has only been applied to brownfield capacity improvement projects in the Australian mining industry/sector. This is because it was assumed that mining companies would apply APM principles to functioning plant which are capacity restricted for some reason or another. This means that new Greenfield projects would not be suited to this type of project management. Due to constraints of budget and access to plant for maintenance improvement, mining companies would use an incremental or adaptive approach as it would see them gain project value while the project is under implementation. Although the study could apply to other infrastructure projects, it was limited to the Australian mining industry/sector as the information gathered had only come from this setting.

Implications of the research for professionals in an applied setting The implications of this research in a professional setting are as follows: APM requires individuals who are self-managed, driven and open to change. This often means APM requires the most talented and hardworking employees in the mining business. These individuals are normally likely to drive the value that this type of project management promises. In the case study interview, the following response was given in reference to the above.

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Phillipy (2014) suggests that APM requires experienced team/scrum members in order to make it work. However, Mersino (2007) revokes Phillipy’s view by advocating that in order to succeed the project team/scrum has to be comprised of members with the right attitude towards the project. This research work tends to favour Phillipy’s view. It was found in the break-through project that the team members had experience with car dumpers and had performed improvement projects on this type of equipment before. In addition to the above, the case study interviewee suggested that the mining company should not run concurrent APM projects as they are a drain on the business’s operational resources. There is a need for at least four to five people to be taken out of their normal role in order to run an APM project effectively. If the mining company had four or five APM projects running they would lose focus and you would not get undivided attention from management/sponsors. Stettina and Hörz (2014) state that most of the adoptions of agile practices occur from a bottom-up perspective and so it is advisable to find a top management sponsor who supports the adoption. Given this scenario it becomes extremely difficult for any organisation to run a portfolio of APM projects and have top management supporting them concurrently.

Broader implications of findings In summary, the research has identified and critically evaluated common APM literature outside of software development to find that APM is in use on other infrastructure projects. Therefore, this method can also be used by brownfield capacity improvement projects. The use of APM results in flexibility in the project management approach and involves a learning process which requires participants, sponsors and host organisations to

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think through the culture, routines and structures of their project teams. The survey questionnaire investigated and analysed how collaborative teams currently operate as experienced by mining industry practitioners. The results of the survey indicate that Agile thinking is very much a part of this industry. The case study interview demonstrated an APM project in practice, showing that these projects are likely to require an Iterative or Adaptive approach to project management. It also highlights the correlations and contradictions with current literature. It takes time to overcome the view that APM is not a software methodology only. However, if mining companies want to be more effective, learn fast and integrate entrepreneurial spirit into their operations they might want to address these challenges and reflect upon the underlying routines in context. This can be achieved by following a set of management guidelines which will allow the replication of APM methods across the mining industry. If traditional approaches to project management are not working in brownfields capacity improvement projects, perhaps Agile Project Management is the answer.

Recommendations for Further Research The results of this research point to a number of recommendations and opportunities for further research. These include:

Expansion of the study to other project based industries The boundary of this research limited the study to brownfield capacity improvement projects in the Australian mining industry and so it is emphasised that uncertainties may arise if the results were applied in different political, cultural, and economic settings. As such, an opportunity exists to expand the study to other project based industries that may benefit from APM.

Increasing the sample population in another study The questionnaire survey focused on collecting data from practitioners accessible to the primary author. In order to build on this work, a larger more representative study of the whole of Australia could be completed. This would use a representative sample extracted from an industry database or the telephone directory. This survey had twelve respondents and ideally a future study should involve at least thirty respondents.

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A study on how to educate apm in the mining sector Since this research was novel it was difficult to find participants who were familiar with some of the concepts. Hence, there is opportunity for a future study on how to educate mining practitioners about Agile concepts.

A study on running portfolios of apm projects The research recommends that APM projects should not be run concurrently. A future study could look at how a portfolio of APM projects could be run by a mining company.

A study on how to get commitment from top management in apm Given that commitment to APM from top management in some industries is an issue, a future study on how to secure this commitment for an APM mining industry brownfield capacity improvement project might be beneficial.

Conclusion This chapter reflects on the findings of the research in light of existing literature on the topic. It has looked at the implications of the study and has suggested that the traditionalists carry a cautious view that APM is only a software development methodology. It has examined the findings that support the hypothesis that APM can be applied in the Australian mining context, discusses the limitations that may affect the generalisation of the results, and considers the implications for professionals in a mining setting.

References "Introduction To Agile | Agile For All". 2017. Agile For All. http://agileforall.com/resources/introduction-to-agile/. Ambysoft Inc. 2014. "How Agile Are You? 2013 Survey Results." accessed 20 August. http://www.ambysoft.com/surveys/howAgileAreYou2013.html. Beck, Kent, Mike Beedle, Arie van Bennekum, Alistair Cockburn, Ward Cunningham, Martin Fowler, James Grenning, Jim Highsmith, Andrew Hunt, Ron Jeffries, Jon Kern, Brian Marick, Robert C. Martin, Steve Mellor, Ken Schwaber, Jeff Sutherland, and Dave Thomas. 2001.

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"Manifesto for Agile Software Development." accessed 15 March 2014. http://agilemanifesto.org/. Binder, Jean, Leon I. V. Aillaud, and Lionel Schilli. 2014. "The Project Management Cocktail Model: An Approach for Balancing Agile and ISO 21500." Procedia - Social and Behavioral Sciences 119 (0):182191. doi: http://dx.doi.org/10.1016/j.sbspro.2014.03.022. Boynton, Petra M. 2005. The research companion a practical guide for the social and health sciences, BUSS 5295: Project Dissertation 1; Reading 04. Cobb, Charles G. 2011. Making Sense of Agile Project Management: Balancing Control and Agility. Hoboken, NJ, USA: Wiley. Cohn, Mike. 2010. Succeeding with agile: software development using Scrum. Upper Saddle River, NJ: Addison-Wesley. Collyer, Simon, and Clive M.J. Warren. 2009. "Project management approaches for dynamic environments." International Journal of Project Management 27 (4):355-364. Conforto, Edivandro Carlos, and Daniel Capaldo Amaral. 2010. "Evaluating an agile method for planning and controlling innovative projects." Project Management Journal 41 (2):73-80. doi: 10.1002/pmj.20089. Davis, Barbee. 2012. Agile Practices for Waterfall Projects: Shifting Processes for Competitive Advantage. Plantation, USA: J. Ross Publishing. Debois, Patrick 2008. "Agile Infrastructure and Operations: How Infragile are You?" Agile 2008 Conference, Toronto, Canada. Drew, John, Blair McCallum, and Stefan Roggenhofer. 2004. Journey to Lean: Making Operational Change Stick. Gordonsville, VA, USA: Palgrave Macmillan. Evans, D. G, Paul Gruba, and Justin Zobel. 2011. How to write a better thesis. Edited by Paul Gruba and Justin Zobel. 3rd ed. Carlton, Vic.: Melbourne University Press. Flahiff, Joseph 2010. "Integrating Agile in a Waterfall World:PMI Global Congress Dublin, Ireland." accessed 10 March http://www.youtube.com/watch?v=kaZkCOVJ5qM. Floricel, Serghei, Claudine Bonneau, Monique Aubry, and Viviane Sergi. 2014. "Extending project management research: Insights from social theories." International Journal of Project Management 32 (2):202-217. doi: http://dx.doi.org/10.1016/j.ijproman.2014.02.008. Liker, Jeffrey K. 2004. The Toyota way: 14 management principles from the world's greatest manufacturer. New York: McGraw-Hill.

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Mersino, Anthony. 2007. Emotional Intelligence for Project Managers: The People Skills You Need to Achieve Outstanding Results. Saranac Lake, NY, USA: AMACOM Books. Project Management Institute (PMI). 2013. A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Fifth Edition. Pennsylvania: Project Management Institute Phillipy, Mark. 2014. "The Great Agile Debate." accessed 8 April http://www.sensiblepm.com/agiledebate/. Rudestam, Kjell Erik, and Rae R Newton. 2001. Surviving your dissertation: a comprehensive guide to content and process. 2nd ed. Thousand Oaks, Calif.: Sage Publications. Smith, Paul. 2012. "Sam Walsh addresses the ANZCCJ on Lean Mining." accessed 15 April. http://shinkamanagement.com/rio-tinto-lean-management-mining/. Söderlund, Jonas, and Joana Geraldi. 2012. "Classics in project management: revisiting the past, creating the future." International Journal of Managing Projects in Business 5 (4):559-577. Stettina, Christoph Johann, and Jeannette Hörz. 2014. "Agile portfolio management: An empirical perspective on the practice in use." International Journal of Project Management 13 (1):na. doi: http://dx.doi.org/10.1016/j.ijproman.2014.03.008. Sutherland, Jeff, and Ken Schwaber. 1995. " Object-oriented programming systems, languages, and applications (Addendum) " OOPSLA '95. Takeuchi, Hirotaka, and Ikujiro Nonaka. 1986. "The new new product development game." Harvard Business Review 64 (1):137-146. Voss, Heinz-Werner, Holger Witthaus, and Martin Junker. 2013. "Plough longwall operations under challenging geological conditions." Mining Report 149 (1):5-16. doi: 10.1002/mire.201300421. Waters, Kelly. 2011. "Agile Project Management – Extending PMBOK." accessed 15 April. http://www.allaboutagile.com/agile-project-managementextending-pmbok/. Weston, R. H. 1998. "Integration infrastructure requirements for agile manufacturing systems." Proceedings of the Institution of Mechanical Engineers 212 (6):423. Wysocki, Robert K. 2009. "Effective project Management: Traditional, Agile, extreme." (5th Edition). Somerset, NJ, USA: Wiley.

CHAPTER EIGHT THE USE OF MOBILE TECHNOLOGY BY PROJECT MANAGERS MELISSA OGDEN, ANTHONY WOOD, RAUFDEEN RAMEEZDEEN

In the past 10 years there has been a significant leap in information and communications technology that now allows people to access data instantly and communicate with other people from virtually anywhere at any time through the use of mobile technology. Devices such as smart phones and tablets allow for information to be portable and accessible from almost any place with access to real time on demand information through a wireless link into the internet or a shared network (Nicoletti 2012). In addition to the accessibility of information, there is a new wave of management tools available to project managers that allow for team collaboration, online video-conferencing and more flexibility in task management (Kelly 2013). Project managers are responsible for the preparation, collation, storage and communication of project information (Burke 2007) using information systems designed to manage communication and project information. Flexible work practices that allow employees to work outside of the office in a virtual work environment (Brockmeier 2013) require project management systems to be accessible anywhere and anytime by all project team members. To meet this demand, software developers are releasing products with versions that are compatible with mobile technology (Kelly 2013). Recent studies into the use of technology by project managers have either focused purely on the communication benefits that technology brings to projects (Thomas et al 2007; Quashie 2009; Sidawi 2011) or knowledge management benefits (Desouza & Evaristo 2004). A small number of studies that have focused on the use of mobile technology by

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project managers, have found that whilst there was a high interest in using mobile technology the uptake by project managers has been quite low (Marin 2011; Atalah & Seymour 2013). This research aims to build on previous studies that have examined how project managers use technology to aid the communication process for the project team (Thomas et al 2007; Desouza & Evaristo 2004; Quashie 2009; Sidawi 2011) and further explore the motivators for the adoption of mobile technology by project managers to gain an understanding of how mobile technology influences project management methodology. This research is developed on the basis of the existing gap in literature. The research provides further insight into how mobile technology is used by project managers to allow for development of project management methodologies and standards that incorporate the use of the technology. Additionally, by gaining an understanding into what project management knowledge areas are currently being supported by the use of the mobile technology, it creates a potential opportunity for the development of the software and hardware technology to better support these project management processes to be enhanced.

Background The growth of the use of mobile technology has influenced the increased availability of project management applications for all types of mobile operating environments (Kelly 2013). Whilst there has been a significant focus in project management research on the use of project information management systems and mobile technology for the improvement of project communication and the management of project information (Thomas et al 2007; Desouza & Evaristo 2004; Quashie 2009; Sidawi 2011), these research works have not specifically focused on the use of mobile technology. This growing popularity of mobile technology has led to a concern that there is insufficient information available to explain the impact that these changes have had on project management and whether this technology will improve efficiency and effectiveness of project managers (Atalah & Seymour 2013). One of the core responsibilities of a project manager is the preparation, collation, storage and communication of project information (Burke 2007). Project managers have several tools available to assist in the management of these activities, including email, social media, databases, data repositories

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and Project Management Information Systems (PMIS’s). As projects use, develop and collate significant amounts of data (Anantatmula 2008), the PMIS and other technology can become an important aspect of the project management processes. There are various types of PMIS available to project managers, ranging from simple spreadsheets to complex systems that integrate all project data and provide intelligent reporting capabilities (Meredith & Mantel 2010). These systems have been developed to allow project managers to collate, store and retrieve project information, including schedules, costs and project activities. As the technology has improved, so has the complexity and accessibility of these tools, with more focus on integration of information and the ability for all project members to update the system from any location (Ali et al 2008). Virtual or geographically dispersed teams appear to be the key focus of studies in the use of technology by project managers and their teams (Thomas et al 2007; Desouza & Evaristo 2004; Quashie 2009; Sidawi 2011; Nicoletti 2012). Whilst some studies have indicated that the same principles may be applied for the use of PMIS within a co-located team, Anantatmula (2008) also recognises that project management technology is just as important for project teams that are co-located as well as those teams that are dispersed. The challenges of managing a virtual or remotely dispersed team have also led to discussion of the implementation process of information systems and the importance to project success that all team members adopt the technology (Sidawi 2011; Thomas et al 2007). Up until recently, many of the studies in the use of information systems for project information management and project communication activities have provided little or no discussion around the role of mobile technology for PMIS. Although the recent study conducted by Atalah & Seymour (2013) provided some insight into the use of mobile technology within the construction industry to access PMIS, this did not specifically target responses from project managers. Mobile technology is the hardware, software and network services for handheld information technology items (Jarvenpaa & Lang 2005). The software used on mobile devices is commonly known as applications (Apps), which are used to access mobile data services, including web information services, social networking services, commercial transactions, database services and communication services (Lu et al 2005). The

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changing dynamics of the work environment to allow for more flexible working arrangements have provided an opportunity for the use of mobile technology by employees that work from home, remotely from the office or in virtual work teams (Brockmeier 2013; Dell 2004). With the growth in mobile technology several studies have been undertaken to determine what factors influence the adoption of mobile technology by end users. Jarvenpaa & Lang (2005) and Lu et al (2005) both found that social influences play a significant role in the adoption of the technology, including the perception provided by social networks in relation to ease of use and usefulness of the mobile technology. From an organizational management perspective, businesses that adopt mobile technology consider it to be beneficial asset with tangible measurable outputs such as increased profit or significant cost savings through efficiencies (Sheng et al 2005). From a project management perspective, the use of mobile technology allows project managers to access data quickly, lead teams and make decisions all from any part of the world (Hendershot 2013). To understand the impact of adopting mobile technology in a project management office, case studies have been conducted in by Marin (2011) on the use of mobile technology amongst project managers (Marin 2011; Atalah & Seymour 2013). The small sample sizes in both studies did not allow for any significant conclusions to be reached, but highlighted that further investigation is required to understand the uptake of mobile technology by project managers. Neither Marin’s (2011) nor Atalah and Seymour’s (2013) studies include a review of project management applications that are available to project managers on mobile devices, rather both studies chose to focus on the ability to use the technology to access project information and documents remotely from the office. PMIS developers are now ensuring that the project management tools that were up until recently only available through organisational on-site business networks are now available through applications tailored for most mobile operating environments including Apple and Android (Kelly 2013; Bram 2010; Makar 2012). Furthermore, PMIS developers are now providing a new generation of tools only available on mobile devices which are designed to assist business in team collaboration activities and task management, activities that are not possible on non-mobile technology (Kelly 2013; Bram 2010; Yanocha 2011).

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The growth of applications for mobile devices indicates a demand in the market. However, to date there have been minimal studies conducted to review the use of the PMIS through mobile applications that change how project managers conduct their management activities.

Methodology This research adopted a mixed methods approach, applying both a qualitative (document review) and quantitative (questionnaire to project managers) concurrently to gather and review data. As the research aims to understand how project managers use mobile technology, it used the project as practice methodology to obtain a bottom-up understanding of the impact of mobile technology on project management. The main research tool used to disseminate the questionnaire was LinkedIn, which is a social media application available through mobile technology. The document analysis has been employed to investigate and evaluate mobile technology developments and associated software applications. The types of documents reviewed in this research include: journal articles in project management and information technology, product reviews that are published by project management websites and other documents providing insight into technology developments, such as product specific websites. For the purposes of this study, all of the articles were selected from publications within the past 5-10 years, to ensure that the information related to this research is current (Boynton 2005). The questionnaire survey was developed as an online survey to reach many project managers in various locations and enable the collection of large volumes of data that described how mobile technology is used by project managers. The survey was developed using SurveyMonkey and recruitment of respondents was through distribution on the professional social networking tool, LinkedIn. As LinkedIn is available worldwide, publication of the survey using this medium allowed for the data to be collected from a broad range of respondents with a purposive sampling technique targeting project managers to collect information from a random pool of recipients without any specific selection criterion applied. The questionnaire was designed to capture information on 5 key topics: basic respondent information; the use of mobile technology; types of hardware and software used and mobile technology used to manage project information and communication.

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Key Findings There were 42 valid responses received to the questionnaire. Responses came predominantly from Australian participants, with one response from the United Kingdom. The project managers that responded to the survey had a wide range of experience, with half of the respondents having 10 to 20 years of experience as a project manager, 19% 5 to 10 years, 14% over 20 years and the remaining under 5 years of experience. The respondents were from a range of industries including Information and Communication Management, Aviation, Public Sector, Defence/Aerospace, Engineering, Education, Finance, Business Management and various other sectors, including construction, events and consulting management. Unfortunately, not data was collected in relation to age and gender of project managers involved in the survey. Project managers like to use mobile technology and 29 of the 42 respondents indicated that they used mobile technology to undertake their role. Most of the project managers that indicated that mobile technology was used advised that this technology was provided by their employer. The remaining project managers used their own mobile device. Interestingly, in teams where the project manager used a mobile device, almost 60% of the project managers indicated that not all members of their project management team use mobile devices as part of their role. Mobile technology is used for many reasons. The most popular reason for using mobile technology is the instant access to data, which was cited by 79% of project managers. This was closely followed by the convenience that it provides (76% of respondents). Just over half of the project managers (55%) found that mobile technology provided work efficiencies and 52% indicated that the technology provided ease of access to systems. Cost effectiveness was the least popular reason for using mobile technology, with only 17% of project managers citing this reason. Respondents that indicated that they did not use mobile devices for project management activities were asked to provide the reasons for not using mobile technology. Of the 13 project managers that did not use mobile technology, 55% of these indicated that there was insufficient organizational interest to use mobile technology for project management activities. In addition to this, 38% claimed that there were security concerns with the use of the technology and 31% did not have the technology available to them. Some project managers also indicated that

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their organizational information services team did not support the use of this technology. Project managers use a variety of mobile devices. Over half of the respondents (54%) used a smart phone (this includes devices that operate iOS, Windows and Android) and 44% used an iPad or tablet. There was also a respondent that used a mini tablet. Software products were examined as 2 key product types: general business applications and project management applications. Email was the key general application used, followed closely by pdf reader, address books and search engines. Half of the respondents indicated that the mobile device was used to access PMIS. Most of these accessed an organizational bespoke project management application (53%) and 47% used other commercial off the shelf products. Project managers use their mobile technology regularly for work activities, with the majority using it between 5 and 10 hours per week. Some project managers (28%) used mobile technology for more than 10 hours per week. Project managers that used their mobile device to access PMIS accessed this system regularly, with the majority accessing it between 1 and 5 hours per week. A large group of respondents (44%) used the PMIS via mobile technology for more than 5 hours per week. The use of mobile technology is challenging standard project management practices and respondents provided an indication of the types of project management activities that mobile devices were used to support. The most popular activity that mobile technology is used for by project managers is the management of meetings, with over 80% indicating this as the key activity undertaken. Stakeholder communication is another activity that is strongly supported by the use of mobile technology with over 60% claiming to use mobile technology to do so. Other project management activities supported by mobile technology included professional development, financial management and schedule management A small number of project managers used mobile technology to manage procurement, resources and risk.

Discussion The survey results presented above confirm that project managers use mobile technology for work purposes and are using mobile technology to

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undertake many key project management activities and in doing so, are using various hardware types and software applications. The study explored the various factors that would influence a project manager to adopt mobile technology, including industry type, technological and organisational factors. A key outcome of the survey was confirming that mobile devices are being used by project managers for work related purposes. Of the 42 responses received, 69% of respondents indicated that they used mobile technology for project management activities. This outcome is supported by reports that the use of mobile technology in the work place is growing (CIO Magazine 2013; Zamfiroiu & Despa 2013). However, the research findings were found to be significantly different from the results of the study conducted by Marin (2011) which indicated that only 31% of the project managers surveyed used mobile technology. The difference in outcomes from the study conducted by Marin (2011) may be a result of the different sample group, with the majority of survey respondents in this study located in Australia and from a wide variety of industries. Additionally, the timing of the study may have also influenced the result, as the growth in use of mobile technology to access the internet within Australia has increased significantly in the past couple of years (ACMA, 2013). This research explored whether the industry type of the project manager also has an influence on whether a project manager uses mobile technology for work purposes. Figure 8-1 provides an overview of the industries in which a project manager works and the number of respondents from each industry that indicated that mobile devices were used for project management purposes. The strong use of mobile technology by the aviation and construction industries is most likely due to their mobility requirements. Whilst there have been studies conducted to determine the benefit of mobile technology for project managers in the construction industry (Atalah & Seymour 2013; Sidawi 2012) these did not demonstrate a strong trend for the use of the technology. The Information and Communication Management industry had a mixed uptake of mobile technology, including a large proportion of users that indicated that they did not use mobile technology. All Information and

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Communication Management respondents that did not use mobile technology cited insufficient organisational interest in the use of mobile technology was a key reason for not using this technology in the workplace.

Fig. 8-1. Use of Mobile Device by Industry

Almost 60% of the respondents indicated that the mobile device used for project management activities was provided by their employer. Although there is a strong trend towards growth of Bring Your Own Device (BYOD) in most organisations (Fiorenza 2013; Rose 2013) the results of this study indicate that it is more likely that the technology is provided to the project management teams. Project managers want instant access to project management data wherever they are located. This was the key reason that 79% of the survey indicated as the reason that mobile technology was used. Mobile technology allows data to be accessible wherever the project manager is located and does not require them to be in the office in order to do so, an

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important consideration in an increasingly flexible and mobile work environment (Brockmeier 2013). Equally important to project managers is the convenience that the use of a mobile device poses. Three quarters of the respondents indicated that convenience was a significant driver in the use of this technology. Whilst most studies in the use of mobile technology focus on dispersed teams (Thomas et al 2007; Desouza & Evaristo 2004; Quashie 2009; Sidawi 2011; Nicoletti 2012), there is also a growing use of mobile technology within the workplace to allow accessibility to data away from the user’s desk. This premise is supported by only 45% of respondents indicating that they use mobile technology for remote access to systems. The number of years served as a project manager does not appear to influence the uptake of mobile technology As age demographic data was not collected, there was no way to determine if this may have been a factor in determining if mobile devices are used. Social influence has been indicated as a driver for the adoption of mobile technology (Lu et al 2005). This is evident in the sample of respondents that did not have a mobile device provided by their employer, where 44% of these project managers indicated that other project managers within their organisation also used mobile technology. On the other hand, in the respondents who mentioned that the mobile device was provided by their employer, 60% of them advised that other project managers within their organisation did not use mobile technology. The organisation in which the project manager works can have a strong influence in determining when mobile devices are not used for work purposes. The majority of respondents indicated that there was insufficient organisational support for the use of mobile devices. Minimal organisational support has been highlighted in previous studies as a significant reason for technology not to be used by project managers (Besner & Hobbs 2012). Other respondents indicated that there were security concerns or restrictive IT policies within their organisation. This finding was similar to other related studies as a strong deterrent for the use of mobile technology and specifically BYOD technology (Rose 2013; Fiorenza 2013). Availability of technology was also considered a strong prohibiting factor for the use of mobile devices. Respondents indicated that either lack

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of network connectivity or available technology determined the reason for their non-use of mobile technology. This is aligned with the outcomes from the study conducted by Sidawi (2012) and Atalah & Seymour (2013) that although the benefits of mobile technology for project managers in remote regions would be great, the availability was a considerable constraint on the adoption of the technology. For the respondents that indicated that they did use mobile technology, 62% indicated that they used more than one device. Of this group, 41% stated that they had at least 2 mobile devices (as shown in Figure 8-2). Of the user group that indicated the use of more than one device, the combination of devices used varies. Of the multiple device users, 55% indicated that they used at least one mobile telephone and one tablet for project management purposes. The respondent that used 4 devices worked in the Information and Communication Management industry.

Fig. 8-2. Proportion of Project Managers that use more than one mobile device

Smart phones are the most popular device used by project managers, with 85% of respondents indicating that they use one or more for work related purposes. There were four respondents, all from different industries, that indicated that they did not use a smart phone. Tablets were used by 65% of the respondents, with the iPad being the most popular device used. There are many applications for the use of mobile technology for work purposes. These can be divided into two key categories: general management applications and project management specific applications. General

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management applications, such as email and web browsers are readily available for mobile devices and make it easier for the information normally available in the office to be accessible whilst travelling or away from the desk.

Fig. 8-3. Percentage of Project Managers that use more than one application

The most popular application for use on mobile technology by project managers is email. All of the respondents to the survey indicated that they use their mobile device to access email. Other applications that have a communication function were also popular, including instant messaging and internet browsing tools. All project managers used more than one general application for work projects, with the majority of project managers using an average of six applications. The use of multiple general applications demonstrates that project managers are adopting mobile technology to undertake general administration management tasks. This technology has an important role in managing projects more effectively and efficiently (Anantatmula 2008) as it allows for instant access to data and the ability to communicate this in many ways to the various project stakeholders. In comparison, the number of project managers that indicated the use of a PMIS on their mobile device was significantly lower than those that used general administration management applications. Just over 50% of the respondents indicated the use of PMIS on their mobile devices. The

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PMIS used were varied, but over half of the respondents indicated that an organisational bespoke system was used on their mobile device. All other users indicated that they used commercially available products from a variety of sources. Most project managers use their mobile device for work purposes between 5 and 10 hours each week predominantly to manage meetings and for stakeholder communication. Of the various mobile applications available, email was the one application that was used by all project managers. Although email is considered as a communication tool, only 62% of project managers indicated that mobile technology was used for project communication management. Professional development is another key project management activity that is undertaken through the use of mobile technology. Of the 29 respondents that reported their use of mobile technology, 34% of them indicated that the mobile device is used for professional development. In this group of project managers almost all of them indicated that they used mobile technology for either instant access to data or convenience. Project managers that don’t use a PMIS on their mobile device are more likely to use the mobile technology for meeting management and stakeholder management activities. Conversely, those project managers that do use a PMIS on their mobile devices are more likely to use the mobile technology for a broader range of project management activities.

Fig. 8-4. Comparison between PMIS User and Non-PMIS Users

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As most of the project managers indicated that mobile technology is used to obtain instant access to information, it is clear that the use of mobile technology is influencing standard project management practices. In addition to the instant access to data, 55% of the project managers perceived the use of mobile technology as providing additional efficiency for their work. This supports other studies that have demonstrated that the use of technology allows project managers to be more efficient and effective in their work activities (Ali et al 2008; Jarvenpaa & Lang 2005). Communication and stakeholder management are two of the key project management knowledge areas set out in the guidelines for project managers (PMI 2013). As communication management activities were another key aspect for the use of mobile technology, this could be seen as a shift away from more traditional face to face types of communication. All project managers use their mobile device for email and 72% of respondents manage their contact lists on their mobile device. Whilst around 30% of project managers use other types of communication, such as instant messaging and video-conferencing on their mobile device. This demonstrates that mobile technology provides project managers with several options for communication tools, the full range of which are being applied by project managers in their day to day management activities. It is interesting to note that only 3 of the 10 project managers who specified the use of mobile technology to manage virtual teams used videoconferencing facilities on their mobile device, indicating a shift away from face to face communication between dispersed project teams. Further investigation should be undertaken to determine the drivers for the use of written communication over technology that allows for communicators to see each other. Whilst other studies tended to focus on the use of mobile technology to improve communication and connectivity between project team members (Atalah & Seymour 2013; Quashie 2009; Sidawi 2011), this research has demonstrated that the project managers are not only using mobile technology for project communication activities, but are also using the technology to have instant access to information wherever they are located. A reasonable number of project managers are also using mobile technology for real time data access (41% of users) and real time data gathering purposes (31% of users).

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In addition, the research findings support other studies that indicated the project managers who are using technology to manage dispersed teams (Thomas et al 2007; Desouza & Evaristo 2004; Quashie 2009; Sidawi 2011; Nicoletti 2012), although the results shown in this study have not proven to be relatively strong in the use of the technology as it was initially believed. Whilst 34% of the project managers indicated that they use their mobile technology to manage virtual teams, the outcomes of this study clearly demonstrate that mobile technology is also used to communicate with project team members and stakeholders that are normally co-located with each other.

Conclusion Despite the small sample size, the research determined that while there were various drivers that influence the adoption of mobile technology by project managers, the most prevalent factors were the ease of access to data wherever they may be located as well as convenience and easy access to systems. Organisational factors such as the provision of the hardware by the employer and access to organisational project management software tools also have an influencing role. Importantly, if there is insufficient organisational support for mobile technology then it is unlikely to be used by project managers. Project managers use a diverse range of mobile devices to access a large range of applications, predominantly communication and PMIS tools. These are accessed frequently and often for more than 5 hours per week for a large variety of project management activities. Further investigation needs to be undertaken to determine how the use of this technology is driving changes in project management methodology.

References Ali, A., Anbari, F. & Money, W. 2008. “Impact of Organizational and Project Factors on Acceptance and Usage of Project Management Software and Project Success.” Project Management Journal. Volume 39. No 2. 5-33

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Anantatmula, V S. 2008. “The Role of Technology in the Project Performance Model.” Project Management Journal. Volume 39. No 1. 34-48 Atalah, A. and Seymour, A. 2013. “The Current State of Wireless Information Systems in the Construction Industry.” The Journal of Technology Studies. Volume 30. No 1. Accessed 9 May 2014: http://scholar.lib.vt.edu/ejournals/JOTS/v39/v39n1/atalah.html Besner, C. and Hobbs, B. 2012. “The Identification of Project Management Toolsets and Comparison Among Project Types.” Project Management Journal. Volume 43. No 5. 24-46 Boynton, P. 2005. The Research Companion: A Practical Guide for the Social and Health Sciences. New York: Psychology Press Bram, T. 2010. “4 Project Management Apps that Will Rock Your Mobile Device.” GIGAOM. Accessed 3 May 2014: http://gigaom.com/2010/11/11/4-project-management-apps-that-rockyour-mobile-device/ Brockmeier, A. 2013. “Virtual Work: Pros and Cons, Projects at Work.” Accessed 30 March 2014: http://www.projectsatwork.com/content/articles/280163.cfm Burke, R. 2007. Project Management Techniques. China: Burke Publishing Everbest. CIO Magazine. 2013. “CIO Magazine Tech Poll/ Tech Priorities Survey.” CIO Magazine. Accessed 29 April 2014: http://www.cio.com/documents/pdfs/CIOTechPrioritiesFeb2013.pdf Dell. 2004. The Dell Guide to Manageable Mobility in Europe, Middle East & Africa (EMEA). Dell Corporation Limited. Accessed 2 May 2014: http://www.dell.com/Downloads/emea/general/Dell_Mobility_in_EME A.pdf Desouza, K. C. and Evaristo, J. R. 2004. “Managing Knowledge in Distributed Projects.” Communications of the ACM. Volume 47. No 4. 87 – 91 Fiorenza, P. 2013.” Mobile Technology Forces Study of Bring Your Own Device.” The Public Manager, www.thepublicmanager.org Hendershot, S. 2013. “The Mobile Mindset.” PM Network. Volume 27. No 5. 46 -49 Jarvenpaa, S. L. and Lang, K. R. 2005. “Managing the Paradoxes of Mobile Technology.” Information Systems Management. Fall 2005: 723 Kelly, W. 2013. “6 Tools for Distributed Teams.” Projects at Work. Accessed 29 March 2014:

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http://www.projectsatwork.com/content/articles/280910.cfm Lu, J. Yao, J. E. & Yu, C. 2005. “Personal Innovativeness, Social Influences and Adoption of Wireless Internet.” Journal of Strategic Information Systems. Volume 14 (2005): 245-268 Makar, A. 2012. “Tool Shop: Microsoft Project 2013.” Projects at Work. Accessed 3 May 2014: http://www.projectsatwork.com/content/articles/274793.cfm Marin, A. 2011. “On Innovation Through Access to Technology in Project Management. Case Study.” Managerial Challenges of the Contemporary Society. June 2011:169-172 Meredith, J .R. and Mantel, S. J. 2010. Project Management A Managerial Approach. Seventh Edition. Asia: John Wiley & Sons Nicoletti, B. 2012. “Project Management and Cloud Computing.” PM World Today. Volume XIV. Issue 1. 1-11 Project Management Institute (PMI). 2013. A Guide to the Project Management Body of Knowledge (PMBOK Guide). Fifth Edition. Pennsylvania: Project Management Institute Quashie, S. 2009. “Systems of Communication and Management in the Construction Industry.” Proceedings Of The European Conference On Management, Leadership & Governance. 212-221. Rose, C. 2013. “BYOD: An examination of Bring Your Own Device In Business.” Review of Business Information Systems – Second Quarter 2013. Volume 17. No 2. 65-70 Sheng, H., Nah, F. and Siau, K. 2005. “Strategic Implications of Mobile Technology: A Case Study Using Value-Focussed Thinking.” Journal of Strategic Information Systems. Volume 14 (2005): 269 - 290 Sidawi, B. 2011. “Potential Use of Communications and Project Management Systems in Remote Construction Projects: The Case of Saudi Electric Company.” Journal of Engineering, Project and Production Management. Volume 2. No 1. 14-22 Thomas, D. M., Bostrom R. P. and Gouge M. 2007. “Making Knowledge Work in Virtual Teams.” Communications of the ACM. Volume 50. No 11. 85 -90 Yanocha, M. 2011. “PM Apps on the Rise.” Projects At Work. Accessed 3 May 2014: http://www.projectsatwork.com/content/articles/266708.cfm Zamfiroiu, A. and Despa, M. L. 2013. “Reasons, Circumstances and Innovative Trends in Mobile Environments.” Informatica Economică Volume 17. No 2. 109 - 118

CHAPTER NINE IMPROVING PROJECT PERFORMANCE BY ADOPTING CONTROL THEORY METHODS BAHRAM BAYAT SARMADI, DESIREE BEEKHARRY, ANTHONY WOOD

This research aims to determine whether it is possible to improve control of project performance by adopting methods used in control theory. The main control methods used in project management are based on task breakdown and task estimation that would provide a baseline for comparison with actual progress. This often involves breaking down the project requirements into tasks, using estimation methods such as PERT or Monte Carlo, developing project schedule by using Gantt chart, sequencing tasks by using critical path method while considering the effect of critical chain management, and so on. However despite the increase in using these techniques, project performance has remained unsatisfactory. It can be seen that poor project performance in relation to expected outcomes, the complexity of understanding project behaviour due to mixture of internal and external factors, and the need for underlying theory remains a concern. In addition reasons of project failure continue to vary based on perceived understanding of project behaviour. As a result conclusions reached from previous research supports the need for developing new models to improve controlling the project performance. However investigating existing diverse approaches in modelling and describing project behaviour through its variables has revealed some limitation. Control theory provides several methods to represent a system such as transfer function model, block diagrams, and state space matrix. The first step is to construct a model of the system based on its dynamic and variables. An example of variables in a business system are disturbances such as the lack of personnel or material, interruption of communication, human errors, and the like (Ogata 2010). However when system

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configuration and components are not immediately available, the necessary transfer functions can be obtained through application of system identification. Once a system can be represented by its transfer function other methods can be used to assess its behaviour and design a necessary compensator. By comparing the controlled and uncontrolled model it can be seen that application of control theory can have a positive effect on performance of the project. Significance of this approach can further be realised in comparison with existing models. Some of the key terms used in following discussions include transfer functions, stability, and cost break down structure (CBS). The transfer function of a linear system is defined as the ratio of Laplace transform of the output variable to the Laplace transform of the input variable, with all the initial conditions assumed to be zero (Dorf and Bishop 2011). Stability is the status of a system where bounded input will result in a bounded output. Adding stability margin to the project results in a robust design and better performance against disturbance. And finally CBS refers to allocating cost to the tasks at lowest level of work break down structure within a project.

Background Project performance remains questionable despite using the wellrecognised best practices in project management. The PMBOK® Guide’s recipe for success (Project Management Institute 2013) is based on best practice and its techniques are considered valuable. They are used in several sectors, industries and organisations having different project management maturity levels (Polkovnikov and Iina 2014; Besner and Hobbs 2008; Fernandes, Ward and Araujo 2013). However unfortunately track record of successful project implementations has not been strong (Pinto 2013; Wright and Capps 2011). Williams (2003) provides several references where projects are commonly observed to fail due to cost overruns of up to 400%, unexpected project performance, or cancelled projects prior to completion. Similarly Wright and Capps (2011) report of poor project performance in retail sector, financial sector, manufacturing and government, when it comes to execution of information system (IS) projects. They predict that most large IS projects will exceed allocated time and budget by 50%. It can be seen that poor project performance in relation to expected outcomes, the complexity of understanding project behaviour due to mixture of internal and external factors, and the need for underlying theory remains a concern.

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Reasons of project failure also continue to vary based on perceived understanding of project behaviour. Williams (2003) believes inadequate attention to recommended project management procedures are not the only justifications for project overrun. In fact he believes emphasis on planning and lack of equal consideration towards significance of control and execution, relying on traditional model of control, and treating the project as island of order are major shortfalls of conventional project management. Instead through application of systemic models, Williams (2003) concludes that structural complexity and uncertainty are some of the main reasons that project overruns occur. Furthermore Herroelen and Leus (2005) argue that due to project activities being subjected to uncertainty based on availability of recourse and material, incorrect estimation, changes in scope and other factors, schedule disturbance often is the consequence. As a result the effectiveness of static and determinist scheduling is considered questionable. And finally it is accepted that external factors can influence project progress but project failure due to poor performance can even be seen during initial planning phase (Pinto 2013; Wright and Capps 2011). Moreover conclusions reached from previous research supports the need for developing new models to improve project control. Williams (2003) regards uncertainty, complexity, and time limitation as contrasting underlying philosophy of project management. He believes there is a need for having a mix of approaches and a need for finding an answer to how project managers should mange projects differently. Similarly Hazir (2015) argues that there is a need for modelling and addressing the complexity of real life instances. He states integrated models of scheduling, control function, resource allocation, and information sharing must be researched. He goes further on to emphasize the benefits of such new models as a foundation of decision support system (DSS) and its integration with relevant interfaces. Likewise Söderlund (2004) believes that diversity of approaches could be beneficial to project management and the new approaches should not only rely on established methods based on empirical findings but also to be driven by a particular theoretical perspective. For example Herroelen and Leus (2005) consider mathematical modelling as an option and argue that despite evidence of uncovering project management problems by using mathematical models, there has still not been sufficient research on project monitoring and control from mathematical modelling perspective. Furthermore there is a need for a new approach based on limitations of the existing project control methods. For instance Hazir (2015) declares despite the fact that earned value analysis

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(EVA) is one of the most commonly used monitoring and control tools in project management it has some limitations in practice. One of those limitations is what Rozenes, Vitner and Spraggett (2004) refer to as two dimensional control system that is only focused on cost and time. They argue that various dimensional measures and an integrated control system would be required. However investigating existing diverse approaches in modelling and describing project behaviour through its variables reveals other shortfalls. GN&C theory by Hill (2011), Last planner by Ballard and Howell (2003), Fuzzy logic by Gonzalez (2007), many system dynamic models that have been surveyed and reviewed by Lyneis and Ford (2007), they all show that each model has unique characteristics and limitations. Some offer detailed mathematical model while others are more descriptive and conceptual (HazÕr 2015). Some models have been developed based on empirical data from specific industry such as models based on system dynamics in information systems or construction industry. However they lack the necessary generalisation to improve underlying theory of project management. Other models provide parametric representation of the project but they fail to provide a method that could be used to choose the best corrective action. Few other models are also complex and incorporate structural assumptions that could cause unpredictable behaviour of the model itself. Reasons discussed above with regards to project performance and limitations of other approaches demonstrate the need for further research in project control and potentially a new approach. As a result, new research direction based on field of control theory and control engineering is proposed in order to understand and control project performance. In a similar attempt White (2011) relies on simplified system dynamics model and successfully uses stats-space equations to develop a control system model. State variables and state space descriptions are used in modern control theory to describe and control dynamic systems. Work done by White (2011) demonstrates that by obtaining state-space equations it is possible to assess controllability, observability, and stability of the project as a control system. In general the purpose of the mathematical representation is not to try to model human resources since admittedly they are the main part of the project dynamics and its execution. But rather the intention is to provide the decision makers with means of finding the best course of action through application of a suitable model. Systems can be built without the use of analytical model however should problems

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occur, undeerstanding thee cause and effect relatioonships in a complex system withhout a suitable model would d be difficult.

Method dology nce could be improved by adopting To invesstigate if project performan methods useed in control theory, t a quan ntitative methood based on siimulation was chosenn. By simulatting the mod dels with andd without a designed controller annd comparingg the output values v from eaach simulated d model it was possiblee to assess if there t has been n any observabble improvem ment in the sample projeect’s performaance. To beginn with, a sampple project witth a duration oof 30 days waas created with a produuct breakdow wn structure (P PBS) and worrk breakdown structure (WBS) as peer Fig. 9-1.

Fig. 9-1. Sam mple project an nd work breakd down structurre

In order to demonstraate how a tran nsfer functionn could be obttained for the above ssample project, it was deecided to loook at the rellationship between plaanned CBS and a an actual CBS that reeferred to an assumed actual spendding. To simuulate the planned CBS, alloocated budget per day was chosen such that thee cost level across a the sam mple project life l cycle exhibited thhe same behaaviour as a typical t cost llevel across a generic project life ccycle. Subseqquently the asssumed ‘Actuaal CBS’ was calculated c based on thhe allocated nuumber of day ys per each w work package, the total percentage oof completionn allocated ov verall to the eexecution phaase of the project, and an estimated variation of th he planned CB BS.

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The Planned and actual CBS values from the sample project was imported into Numerical computing software called MATLAB as input and output signals. Fig. 9-2 shows how the estimated output varies in comparison with the actual input due to assumed behaviour of the sample project.

Fig. 9-2. Input vs output signal of the sample project

MATLAB and it’s built in functions related to control theory as well as several other applications such as control system design and system identification app was used to obtain the required results. System identification app provided a platform to obtain modelled mathematical representation from selected input and output signals. Moreover to test the identified model, graphical programming environment called SIMULINK was used to import the data and simulate the different models.

Key Findings Mathematical modelling in control theory provides an important representation of system dynamics in the form of a so called transfer function. However to construct the transfer function based on dynamics of

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a project, ssystem configguration and all variable sspecifications must be identified annd their relatioonship undersstood. Instead an input and output of a sample prroject could be b recorded an nd subjected tto data analyssis that is called system m identificatioon. Then a sett of models arre chosen and d assessed against the aactual output in i order to fin nd the best fit model. Fig. 9-3 9 shows the relationsship between input and output of a projject such as cost c when using system m identificatioon approach.

Fig. 9-3. Projject dynamics seen as a black k box

As part oof the estimatiion process, a different num mber of poles and a zeros can be speciified for a trannsfer function. Seventeen ddifferent estim mates have been obtained, and the tw wo transfer functions fu calleed tf2 and tf3 3 had the highest best fit percentagee as per Fig. 9-4 9 and Tabless 9-1, 9-2.

m for samp ple project Fig. 9-4. Estiimates of transsfer function model

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Table 9-1. Transfer function model for tf2i Transfer function model tf2i Number of poles: 2

Number of zeros: 6

Fit to estimation data: 80.61%

Discrete-time identified transfer function (represented by z^-1 DSP convention): 1.313 - 1.472 z^-1 + 2.163 z^-2 - 1.013 z^-3 - 1.181 z^-4 + 2.261 z^-5 - 1.009 z^-6 1 - 1.221 z^-1 + z^-2 Discrete-time identified transfer function (represented by z variable): 1.313 z^6 - 1.472 z^5 + 2.163 z^4 - 1.013 z^3 - 1.181 z^2 + 2.261 z - 1.009 z^2 - 1.221 z + 1 Discrete-time zero-pole-gain model: 1.3133 (z-0.6515) (z+0.9189) (z^2 - 1.278z + 0.7382) (z^2 - 0.11z + 1.738) (z^2 - 1.221z + 1)

Table 9-2. Transfer function model for tf3i Transfer function model tf3i Number of poles: 7

Number of zeros: 4

Fit to estimation data: 82.62%

Discrete-time identified transfer function (represented by z^-1 DSP convention): 1.949 - 1.008 z^-1 + 1.73 z^-2 + 2.47 z^-3 - 2.73 z^-4 . 1 + 0.1545 z^-1 + 0.08879 z^-2 + 0.9897 z^-3 - 0.4423 z^-4 + 0.2449 z^-5 + 0.3014 z^-6 - 0.7322 z^-7 Discrete-time identified transfer function (represented by z variable): 1.949 z^4 - 1.008 z^3 + 1.73 z^2 + 2.47 z - 2.73 . z^7 + 0.1545 z^6 + 0.08879 z^5 + 0.9897 z^4 - 0.4423 z^3 + 0.2449 z^2 + 0.3014 z - 0.7322 Discrete-time zero-pole-gain model: 1.9494 (z+1.041) (z-0.705) (z^2 - 0.8528z + 1.908) . (z-0.7678) (z^2 + 1.972z + 1) (z^2 - 1.126z + 0.9716) (z^2 + 0.07616z + 0.9815) Continuous-time transfer function: -2.635 s^6 + 6.385 s^5 - 25.08 s^4 + 26.06 s^3 - 27.62 s^2 + 10.64 s + 8.438 . s^7 + 0.3117 s^6 + 12.38 s^5 + 3.779 s^4 + 33.66 s^3 + 9.671 s^2 + 21.46 s + 5.614

Furthermore if we consider the difference between the actual spending in a project and the planned budget as well as the reaction to that change as an influence to a decision making element, then the project environment could be presented by using a bock diagram as per Fig 9-5. The dotted box is an indication of a need for a type of decision making or a controller that must be used in order to react to the identified variations. This type of system is also called a closed loop system.

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Fig. 9-5. Clossed loop repressentation of a project p

By usingg the methods from control theory we waant to find a sttrategy to change an iinput to a syystem in a way w that a deesired output could be obtained. If the output off the system iss not suitable then it is neccessary to either changge the process or design a controller c that would cause a desired transient ressponse. There arre many approoaches to dessign a controlller such as phase-lead and phase-laag designs, leaad and lag con ntrollers, and PID controlleers which are all comm monly used within w controll theory domaain. Howeverr the first step is to innvestigate thee stability of the feedback system. Therefore an impulse or a step input siggnal is often used u to characcterise the performance of the system m. Fig. 9-6 shhows the response of the saample project to a step function by using a funcction called sttep in MATL LAB. It showss that the output of tthe project is oscillatory and thereforre the final value is undefined as it was expeccted. That is to t say a suddden change in spending within an uuncontrolled project p will haave an ongoinng ripple effeect on its expenditure..

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Fig. 9-6. Step response of the sample project

In order to design a suitable controller for the sample project, firstly its transfer function has been imported into Control System Designer app in MATLAB as a representation of the plant for a feedback system architecture. Then Linear-quadratic-Gaussian control has been chosen as the optimal control solution. This type of controller is the combination of linear-quadratic estimator and a linear-quadratic regulator which is used for cost minimisation. Then a Root locus method has been used to fine tune the controller. The outcome was a significant improvement in the stability of the sample project. Figures 9-7, 9-8, and 9-9 show the final model in SIMULINK, Root locus drawing and the step response. The design configuration includes transfer functions F and H which has been set to one.

Fig, 9-7. SIMULINK model of the sample project including the controller C

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Fig. 9-8. Root locus drawing of closed loop controlled sample project

Fig. 9-9. Step response of the controlled sample project

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In order to realise the effect of the designed controller on the project’s performance, the output of the sample project with and without the controller in a closed loop configuration has been simulated in SIMULINK. Figures 9-10 and 9-11 show the simulated models, while figures 9-12 and 9-13 show the associated output for each configuration.

Fig. 9-10. Model of the sample project without the controller

Fig. 9-11. Model of the sample project with the controller

Fig. 9-12 shows that the output of the sample project is unstable and every time that the output value is compared with the input set point, the reaction of the sample project to the resulting error signal is amplified. In contrast Fig. 9-13 shows that the output of the sample project is stable and its output can follow the input set point quit well. A delay of 7 to 8 days can be observed for the output of the controlled project to reach the initial value of 200 however the shape of the output curve that represents the actual CBS has a good agreement with the input curve which is the planned CBS.

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Fig. 9-12. Plot of the planned CBS vs the output of the sample project; the xaxis shows the number of days and the y-axis shows the $ values

Fig. 9-13. Plot of the planned CBS vs the output of the controlled sample project; the x-axis shows the number of days and the y-axis shows the $ values

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It is also beneficial to look at the output of the controller compared to the output of the error signal in order to see why the model without a controller is unstable. Fig. 9-14 shows the comparison between the two values.

Fig. 9-14. Plot of the error signal (called Sum3) vs the output of the controller; the x-axis shows the number of days and the y-axis shows the $ values

In Figure 9-14 the output of the controller shows that it is able to maintain the desired shape of the input set point curve irrespective of the plus and minus variations in the value of the error signal.

Discussion A set of baselines for cost, scope, schedule and other variables of interest are usually prepared as part of project management planning. Then the actual progress during the project execution is monitored and controlled against the established baselines. This is simply the comparison

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of actual progress against the estimated baselines. For example in case of controlling the cost it involves comparing the actual spending with planed budget. However what would be the appropriate course of action if it is desired to bring the spending as close as possible to the established baseline? Would it be sufficient to reduce the gap instantly or should it be adjusted gradually? Furthermore what would be the effect of increasing or decreasing the spending on the rest of the project? Will the process continue to follow the baseline sufficiently for the rest of the project or will the lag in actual spending (or lead in overspending) continue regardless of the taken actions? These scenarios can better be answered when using control theory. Understanding limitations of how the proposed models could be used in project management and having clarity on what the constructed models should be used for, ensure usefulness of these methods. Since control engineering is mainly concerned with controlling a physical system such as mechanical or electrical systems, it benefits from using the mathematical models that can be easily obtained from well recognised physical laws. These systems have dynamic characteristic that are often described by using differential equations (Dorf and Bishop 2011). This raises a question that what are the principles of project management or are there any observable rules that can be interpreted within project environment? Unfortunately the answer is that in project management the relationship between project variables in mathematical form or any other form is not immediately available. For example cost of a project is influenced by labour, material, inflation and the work to be completed as per work break down structure. However it might be difficult to express this relationship in a mathematical form. Instead by studying the characteristics of variety of project variables it is possible to categorise them as input or output variables. And to some extent it is also understood which variables have influence over the other variables of the project. However it has not been clear whether their relationship is observable and repeatable across different types of projects. In addition if a complete representation of project variables and their relationship could be incorporated into a generic model of projects, still there would be a consideration of the compromise between complexity and accurate prediction. For example SD models attempt to capture as many project variables as possible in order to produce the most accurate predictions. However some believe that complexity of the SD model in combination with project dependent structural assumptions would not be

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beneficial unless it could be simplified. As a result it is inevitable to ask what level of detailing would be sufficient for developing a model for a project. And the appropriate answer is that it should depends on how the model is intended to be used. For example is it intended to obtain an insight into the structure of a project or is the goal to facilitate a better controlling of it? In other words if it is intended to modify configuration of a project rather than using a separate compensator, then each component that influences project dynamics and its outputs, must be identified. Project managers might rely on a mental model when controlling the project’s behaviour or they might use mathematical and graphical models to check the status of a project. Similarly representing dynamics of a project by using transfer functions may not be a true and accurate description of all project processes however our acceptance of them should be guided by their usefulness (Ljung 1999). When there is a difficulty in representing all variables of the project and their relationship, the transfer function model is capable of representing the project and its components by using the system identification approach. Therefore the transfer function model can be the representation of the relationship among certain project variables chosen for a given purpose, and in this case that would be suitable for controlling the project outputs. Furthermore the potential benefits of adopting methods used in control theory includes being able to analyse stability of a project, expressing characteristics of the project in a mathematical form, and providing decision makers with guidance on how to improve performance of the project. For example some models such as last planner approach attempts to stabilise the project through recognition of disturbance and by avoiding variability propagation and associated penalties. This is achieved by means of measuring the realisation rate and eliminating causes of nonrealisation. In contrast control theory model recognises that disturbance cannot be eliminated but instead attempts to control the output of the project by analysing the stability of the closed loop system. Then it is able to reduce the effect of the total error between the set point and the actual output by using a compensator or a controller. Furthermore the control theory uses a mathematical model of the project in order to examine its behaviour. But where other models such as GN&C model can only explain the performance of the project at conceptual level, the control theory and its application to the sample project has been able to go much further. It has been able to demonstrate how a transfer function can be obtained, and what methods can be used to examine and quantify stability of the project.

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Closed loop or feedback configuration that is used in controlled system simulation is also commonly used in other project control models such as parametric project modelling. However in parametric models, the decision maker has not been given a set of instructions on how to choose the best corrective action. The decision maker only can become aware of the error by comparing the baselines with the actual outcomes but taking a best course of action is not part of the model. Whereas a closed loop model that is developed based on control theory is capable of incorporating a suitable compensator and simulating both output of the controller and output of the project. No matter how output of the controller would be interpreted in a project, the decision maker is able to observe not only effect of the error but also the reaction or output from the controller and therefore would be able to take the best course of action accordingly. What’s more the proposed model not only is capable to simulate performance of the project but it can potentially have physical implications for professional practice. For example when using the fuzzy logic model computers are used to process complex fuzzy models and generate alternatives in order to improve decision making. Similarly since the control system has a mathematical form it is possible to use computers for both execution and simulation. Since the transfer function can be obtained and analysed in discrete-time format it is also possible to use digital controllers to automate controlling parts of the project processes. In addition the nature of the methods used in control theory as well as its variety is able to address concerns with regards to estimations that are associated with the proposed model. In the proposed model it is possible to use different estimated variation percentages when calculating the actual CBS. For example by using two sets of actual CBS it is possible to assign one set as a working data and the other set as a validation data during system identification process. With this approach the working data will be used to construct the model while the validation data can be used to evaluate and confirm its validity. Furthermore it has been evident that the simulated output of the modelled sample project does not 100% fit the expected actual CBS. However it is important to keep in mind that the actual CBS is only an estimation which is used for obtaining a transfer function. The aim is to design a control system that can successfully follow the input signal or the set point. Therefore even if the simulated output is slightly different compared to the estimated actual CBS, still it can be used to demonstrate how a control system could improve controlling an output of the project.

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It also might be the case that common behaviour among different types of project is not observable and hence it might be taught that application of transfer functions must be limited. However it is important to notice that transfer functions and block diagrams are the result of system identification which includes components that are unique and dependent to the project itself. The relevant components must be selected for each type of project during planning phase of its life cycle. This enables assessment of stability of the project configuration and optimisation of processes as part of designing a suitable controller or control process. In other cases where the transfer function cannot provide a suitable model, other modelling techniques from control theory can be used instead. For example a transfer function can only be defined for linear and time invariant system. Stationary or time invariant system means all the parameters describing the system are constant and does not change with time. In a project environment it means dynamics of the project would have to remain constant, which may not always be the case. Additionally the transfer function does not include the internal status of a process and it is based on forced response or an input. For this reason a state space matrix would be a better choice since it is based on initial states as well as internal status of the system while it can also be used to describe time varying none linear systems. For example White (2010) have used a simplified SD model to construct his state space model in order to illustrate the basic behaviour of a project. Furthermore the proposed model based on control theory provides an insight as to what the effects of variations are to the project performance while also it provides guidance on how they should be controlled. The simulated output of the sample project includes the rework cycle that has also been identified by the SD models, and it is considered as one of the main features of the model (Lyneis and Ford, 2007). Fig. 9-15 shows the connection between Original Work to Do and Work Done in a closed loop SD model. The simulated output of the sample project from the transfer function model clearly demonstrates how the error signal is fed back to the plant causing an ever increasing oscillation in the system, making it unstable. Although the sample project is based on planned and actual CBS, the same recycle behaviour also effects the actual spending. However while controlling feedback models emphasise importance of minimising rework cycle and avoiding the ripple effects, they fail to offer specific guidance or

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support. Whhereas the controller designed for thee sample pro oject can specify how w the input to the project must m be changeed in order to o improve performancee of the projecct as per desireed baseline.

Fig. 9-15. R Rework cycle in i SD model (reproduced ffrom Lyneis and a Ford, 2007)

After alll it can be saidd that a modell based on conntrol theory reecognises that disturbaance cannot be b eliminated but instead aattempts to co ontrol the output of thee project by analysing a its sttability. In anoother word it is able to examine andd quantify stabbility of the prroject. Furtherrmore it can reduce the effect of the total error between the set point andd the actual output o by designing annd using a coompensator. Itt is also capaable of incorp porating a suitable com mpensator andd simulating both b the outpuut of the contrroller and output of tthe project inn order to facilitate f deciision making g. Finally comparison between the output of a controlled m model and unccontrolled model has shhown improveement in the output o of the pproject.

Conclu usion Reasons of project failure contiinue to varyy based on perceived p understandinng of project behaviour b duee to mixture oof internal and d external factors whille the need forr underlying theory t remainns a concern. Based on

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the outcome of this research it has been hypothesised that if a controller that has been designed based on control theory is used to control the output of a project to follow a desired input set points then the performance of the project that has a closed loop configuration will be improved. Furthermore it is possible to create a model of a project by obtaining transfer functions through system identification, assessing stability of project, designing a controller, and simulating the project’s behaviour in order to evaluate the effectiveness of the proposed control method. The outcomes of this research can contribute to understanding project behaviour, project modelling, and more importantly to provide new ways of controlling project performance. Benefits of applying control theory to project management includes new ways to assess and predict performance of the project. It also provides a new perspective in modelling characteristics of the project through relevant mathematical representations which can then be used to adopt other methods used in control theory.

References Ballard, Glenn, and Gregory Howell. 2003. “Lean project management.” Building Research & Information pp. 119-133. Besner, Claude, and Brian Hobbs. 2008. “Project management practice, generic or contextual: A reality check.” Project Management Journal 16-33. Dorf, Richard C., and Robert H. Bishop. 2011. Modern control systems. Boston: 2011. Fernandes, Gabriela, Stephen Ward, and Madalena Araujo. 2013. “Identifying useful project management practices: A mixed methodology approach .” International Journal of Information Systems and Project Management 5-21. Gonzalez, Julian Santiago. 2007. “Using Fuzzy Mathematical Models for construction project scheduling with time, cost and material restrictions.” Ohio University: Russ College of Engineering and Technology. Hazir, Oncu. 2015. “A review of analytical models, approaches and decision support tools in project monitoring and control.” International Journal of Project Management 808-815. Herroelen, Willy, and Roel Leus. 2005. “Project scheduling under uncertainty: Survey and research potentials.” European Journal of Operational Research 289-306.

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Hill, Terry R. 2011. “Project management using modern guidance, navigation and control theory.” Aerospace Conference, 2011 IEEE. 114. Ljung, Lennart. 1999. System identification: theory for the user. Upper Saddle River, NJ: Prentice Hall. Lyneis, James M., and David N. Ford. 2007. “System dynamics applied to project management: a survey, assessment, and directions for future research.” System Dynamics Review 157-189. Ogata, Katsuhiko. 2010. Modern control engineering. Boston: Pearson. Pinto, Jeffrey K. 2013. “Lies, damned lies, and project plans: Recurring human errors that can ruin the project planning process.” Business Horizons 643-653. Polkovnikov, Alexei V., and Olga N. Iina. 2014. “The Reality of Project Management Practice in Russia: Study Results.” Procedia - Social and Behavioral Sciences 805-810. Project Management Institute. 2013. A guide to the project management body of knowledge (PMBOK® guide) Fifth Edition. Newtown Square, Pa.: Project Management Institute. Rozenes, Shai, Gad Vitner, and Stuart Spraggett. 2004. “MPCS: Multidimensional Project Control System.” International Journal of Project Management 109-118. Soderlund, Jonas. 2004. “Building theories of project management: past research, questions for the future.” International Journal of Project Management 183-191. White, A. S. 2011. “A control system project development model derived from System Dynamics.” International Journal of Project Management 696-705. Williams, Terry. 2003. “The contribution of mathematical modelling to the practice of project management.” IMA Journal of Management Mathematics 3-30. Wright, Keith, and Charles Capps. 2011. “A Survey of Information Systems Development Project Performance.” Academy of Information and Management Sciences Journal 87-105.

CHAPTER TEN PROJECT RISK MANAGEMENT PRACTICES IN SMALL TO MEDIUM ENTERPRISES IN THE AUSTRALIAN DEFENCE INDUSTRY ANDREW SKINNER, DOUG LARDEN, ANTHONY WOOD

In 2016, the Australian Government released a Defence White Paper, outlining future commitments to Defence capability, and representing an investment of over $195 billion in the decade to follow. A significant portion of this is to be spent on complex capability acquisition projects, characterised by high levels of technical and programmatic risk. This research sought to investigate and analyse the current risk management practices within Small to Medium Enterprises (SMEs) that contribute to major projects in the Australian defence industry. These SMEs employ half of all Defence industry workers and receive around one third of total acquisition spending (AIG 2013, p. 1), making them a significant contributor to project performance and capability outcomes. A prerequisite for the management of defence projects is the effective allocation of risk between the prime contractor and Defence. This is based on the guiding premise that risks should be managed by the organisation best able to manage them. The emphasis of this approach has been evidenced by the development and use of the Australian Standard for Defence Contracting (ASDEFCON); a suite of procurement guidelines and documentation designed to ensure both tender and contract performance, as well deliver overall value for money in the procurement process. Recently, the importance of this type of strategy was highlighted by a British report (National Audit Office 2008, p. 4) linking successful project outcomes with effective risk allocation between contract parties, and is generally

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considered good practice. However the implication of this strategy is that risk transferred must be effectively managed by the prime contractor and in turn its subcontractors, often being SMEs. Typically, major defence projects have international companies as prime contractors; however a significant portion of this work is then subcontracted to SMEs (Nash 2010, p.10). SMEs need to execute project work such that risk is managed sufficiently, particularly since they normally have limited resources and do not always follow recognised project management standards (Marcelino-Sádaba et al, 2013), while larger organisations are more likely to have project risk management processes aligned with recognised frameworks such as the PMBOK® Guide or PRINCE2. For this research, survey data collection and analysis was used, in addition to a review of defence project performance data, to examine SME risk management practices (both by design and ad-hoc) and present these in the context of project outcomes specific to the Australian defence industry. Undoubtedly, a higher level of project risk management maturity amongst defence SMEs would benefit those businesses, their prime contractors, and the national interest more broadly. These potential benefits are manifested by increased likelihood of project success leading ultimately to better value for money, enhanced Australian Industry Capability (AIC), and improved on time and within budget delivery of nationally significant infrastructure and capabilities.

Background Australia faces regional and global, security and humanitarian challenges which require the response of a defence force that is well prepared for, and equipped to meet them when required. Inside the Department of Defence, the Capability Acquisition and Sustainment Group (CASG) - formerly the Defence Materiel Organisation (DMO) - has the responsibility to acquire, support and sustain systems and capabilities that enable the Australian Defence Force (ADF) to carry out its mission. This process occurs in a complex stakeholder landscape involving multiple internal Defence entities, as well as the wider defence industry.

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Acquisition projects for defence are often expensive, complex and of national significance, which justifies the high level of scrutiny they receive. All complex projects - but particularly defence projects of a developmental nature - are susceptible to poor project performance in terms of budget and schedule (ANAO 2013, p. 11). This was highlighted by the findings of the Kinnaird Review which showed the need for “rigorous assessment of technology, cost and schedule risks” (Kinnaird et al 2003, p. 10) to ensure the desired project outcomes are achieved. Defence has been the subject of several wide-ranging reviews over the past decade including the Audit of the Defence Budget (the Pappas Review 2009) and the Review of the Defence Accountability Framework (the Black Review 2011). A common theme from these reviews may be summarised as “deficiencies in Defence’s management systems” resulting in “a structure in which decisions are poorly integrated” (Ergas 2012, p.63). The latest First Principles Review into Defence was tasked with “ensuring that Defence is fit for purpose and is able to deliver against its strategy with the minimum resources necessary” (Peever et al 2015, p. 5). A timeline of the multiple reviews is show in Fig 10-1, demonstrating the frequency with which they have taken place in recent years.

Fig. 10-1. Timeline of Defence Reviews (Peever et al, 2015 Annex C)

The need for CASG to act as a procurement agent along with its relative scale and operational budget have been widely debated, with the focus generally on the costs associated with large projects that are required to deliver complex capabilities. Frequently facing such examination in the past, DMO has reasoned the “complexity of DMO projects, which were more specialised than private industry programs, and so it faced constant allegations of cost blowouts, inefficiency and high operating costs” (Thomson, 2014) provided some justification for its expenditure and resource levels.

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A common finding in these reports is that technical risk is critical and should be clearly and consistently assessed and communicated to government, that technical risk is a major factor in the acquisition of new defence capabilities, and that it is a major cause of both post-approval project slippage and cost escalation. An emergent theme in explaining past project performance is the management of risk, illustrated in Table 10-1, which shows the recurrence of this topic in multiple independent reviews. Table 10-1. Technical Risk in Defence Reviews (Peever et al, 2015 Annex C) Review Source

Date

Synopsis

Defence Governance, Acquisition & Support Review

Apr 2000

Notes the “apparently endless succession of episodes of “reform” of the (Australian) Defence Acquisition Organisation”

Defence Procurement Review (Kinnaird Review)

Aug 2003

Shows the need for “rigorous assessment of technology, cost and schedule risks to ensure project outcomes are achieved”

Defence Procurement and Sustainment Review (Mortimer Review)

Sep 2008

States that “recent examples highlight that significant problems still exist within the defence procurement process”

Audit of the Defence Budget (Pappas Review)

Apr 2009

Summarised prior reviews as “deficiencies in Defence’s management systems” resulting in “a structure in which decisions are poorly integrated”

Review of the Defence Accountability Framework (Black Review)

Jan 2011

Critical of “delivery failures for capability projects”

CASG seeks to ensure that risk is effectively managed in defence acquisition projects and thus makes sure that capabilities are delivered to the ADF, however the way it does business, particularly with industry, has been subject to past criticism. The role that industry plays in terms of helping to deliver projects also needs to be considered, and of specific interest to this research is the role that local SMEs perform in those projects.

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While government ensures that Australian defence businesses are able to access work in the defence industry via initiatives such as the Australian Industry Capability (AIC) program, there is a general movement away from industry protection and tariff style arrangements towards free trade and globalisation. In this global marketplace Australian SMEs find themselves competing and operating as part of a larger supply chain, therefore they need to constantly “identify opportunities and enhance their productivity, skilling and innovation” (Department of Defence, 2010) to be effective. The importance of risk management in defence acquisition projects has been shown as necessary to mitigate the uncertainty created by complexity and scale. Developmental or research-based projects are particularly vulnerable to unknowns, since the ultimate product is not always well defined at the initiation stage. Australian defence projects are not unique in this way; however, the scale of acquisition, processes used by, and structure of Defence means that Australian projects often face distinctive challenges, especially when compared to other sectors as in Fig. 10-. These acquisition processes, designed ultimately to mitigate risk to Defence and ensure value for money, may result in a substantial project overhead to the prime contractor, which ultimately flows to subcontractors, generally SMEs. That burden, and its inherent risk transfer, may add to the cost of doing business in defence. Defence industry SMEs require robust risk management processes to mitigate and manage programmatic and technical risk. Contemporary risk management literature goes some way to addressing this (e.g., Henschel 2008), as do high level guides such as the AS/NZS ISO 31000 standard for risk management, however little reference material is available that is tailored to these particular challenges, therefore industry experience and expertise is required to fill this void. Furthermore, by nature, SMEs do not benefit from the resources and maturity of larger contractors, which disadvantages them in terms of risk management practice and makes them more susceptible to the effects of project uncertainty. Industry pressures and the need to win business may also contribute to SMEs taking on risk through subcontracts which are not commercially optimal, nor fully apparent when negotiated. Specialised risk management texts applicable to the defence industry (e.g., Cooper et al, 2007) are based on the UK or US defence experiences that involve equally complex yet different challenges and procurement

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structures than those adopted by the CASG here in Australia. In any case, these are generally focused on prime contractors and neglect the management of risk flowed down through subcontracts.

Fig. 10-2. Defence Project Complexity Compared to Other Sectors (Helmsman n.d., p.4)

This research sought to better understand the state of risk management practice in Australian defence SMEs, and to understand the implications that state has on their ability to effectively manage the risks transferred to them by large prime contractors in the delivery of large and complex materiel projects. By shedding light on this topic, the deficiencies uncovered can more readily be identified and addressed efficiently by organisations with limited resources. The benefits of better risk management in these SMEs are twofold; firstly the individual businesses can better manage and execute defence project work to achieve improved commercial outcomes, and secondly, the prime contractors and Defence benefit from improved delivery and project performance overall, helping to redress the cost and schedule blowouts that typify such projects.

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Methodology Investigation of project risk management practices was undertaken by using a survey methodology in combination with a review of published major defence project performance data to provide context. This research methodology was chosen to help establish the context within which the analysis of collected data was conducted and to answer the research questions borne out. The methodology facilitates the study of risk management within defence SMEs to ascertain the current state of maturity, measured using a Risk Management Maturity (RMM) model (shown in Table 10-2) and reporting this in the context of defence project performance in general. The RMM model has four levels, assessed by using five separate dimensions or aspects of risk management practice, the lowest aspect of which corresponds to the overall maturity level of the organisation. Table 10-2. Risk maturity level definitions (Hopkinson 2011, pp. 4-5) Risk Maturity Level

Definition

Level 1: Naïve

Although a project risk management process may have been initiated, its design or application is fundamentally flawed. At this level, it is likely that the process does not add value.

Level 2: Novice

The project risk management process influences decisions taken by the project team in a way that is likely to lead to improvements in project performance as measured against its objectives. However, although the process may add value, weaknesses with either the process design or its implementation result in significant benefits being unrealised.

Level 3: Normalised

The project risk management process is formalised and implemented systematically. Value is added by implementing effective management responses to significant sources of uncertainty that could affect the achievement of project objectives.

Level 4: Natural

The risk management process leads to the selection of risk-efficient strategic choices when setting project objectives and choosing between options for project solutions or delivery. Sources of uncertainty that could affect the achievement of project objectives are managed systematically within the context of a team culture conducive to optimising project outcomes.

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The research methodology is the key to successful research, and the methods must be sound, justifiable, and implemented correctly to ensure quality research outcomes. As detailed below, the use of surveys and published performance data provides a sound basis for the collection and analysis of data used to answer the research questions and achieve the stated objectives. Primarily, surveys were used to collect the data required from industry participants for analysis, and the design of such techniques was planned in a way to minimise the impact on participants as well as ensure the quality of the data gathered. The survey was of mixed method; containing both a quantitative part to assess organisation demographics and contracting types, and a qualitative part that allowed for exploration of organisational maturity against the RMM and its five individual maturity dimensions. Analysis of quantitative literature and public domain data were also used to understand the climate of defence industry project performance, and generate information relating to project performance metrics across the industry.

Key Findings As part of the survey questionnaire, two demographic questions were used to qualify participants before completing further research questions. The first related to the respondents’ participation in defence projects within Australia or New Zealand, which is directly related to the scope of the research. The second demographic question related to the size of the respondents’ organisation, which is the criterion used to classify organisations as SMEs or otherwise. Participants who either did not provide a response, or answered negatively, to these two questions were disqualified after completing the demographic section and no further responses were collected from them. Despite the targeted survey distribution, 11% of respondents identified their organisation as employing greater than 200 people. As a result, these responses were classified as not related to SMEs and thus were excluded from answering further questions. The remaining participants were asked to answer questions relating specifically to project risk management practices within their organisation. The risk maturity of each respondent’s organisation was then determined

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by using the survey questions and mapping responses to the RMM model to determine the indicative maturity level. This is presented in Fig. 10-, and shows the proportion of organisations that were identified in each maturity level, and against each of the five dimensions of the model.

Fig. 10-3. Surveyed Risk Maturity Levels by Risk Maturity Dimension

Overall, the results indicated that SMEs most commonly rated as level three, with the highest percentage of results in this range across all five model dimensions. Level two was the second most frequently identified maturity rating. An overall risk maturity level is established by analysing all individual dimensions and then assigning a level that corresponds to the lowest individual dimensional level for that organisation. This method of analysis is based on the premise that an organisation’s risk maturity is only as good as its least favourable model dimension. Thus for an organisation to achieve level four (the highest level of maturity) it must achieve this level across all five risk model dimensions. The findings showed that smaller organisations tended to have a lower risk maturity level, particularly in the smallest size range of 1 to 14 employees. However it was also observed that the only two organisations to report answers consistent with the level 4 rating had fewer than 50 employees.

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To put the findings in context, Defence project data was gathered from annual reports published by the Australian National Audit Office (ANAO) into major projects, prepared for government review. Four key performance measures were extracted from the reports, two relating to the budget or cost performance and the other two relating to schedule performance. Data related to these four key metrics was taken from five years of consecutive major project reports starting from 2008 and concluding in 2013. The format of the reports allowed for the same metrics to be extracted across all years providing a sound basis for analysis of overall defence project performance. The data showed that the task to manage these major projects has grown with the number of projects increasing from 15 in 2008 to 29 in the final year for which data was analysed. The budget metrics examined reflect both the variation in planned versus actual expenditure each year (Total Change in Expenditure) as well as the change in budget (Total Increase in Budget) resulting from requests to increase project funding. Schedule performance metrics are related to slippage based on original project timelines and represent cumulative delays. This is presented in total as well as an average per major project for analysis. Fig. 10- displays the project expenditure change and average slippage graphically across the surveyed years of data. The project expenditure data found that in all but one year (2008-09) projects failed to expend the planned value for that period, correlating to a schedule delay. The average project schedule slippage also indicated consistent delays, with about 30 months’ delay across all years. ANAO typically attributes these delays to “technical factors such as design problems, difficulties in integrating different systems to achieve the required capability, or emergent work associated with upgrades” (2009, p.31).

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Fig. 10-4. Defence Project Performance Trends

The project performance data reports also link the technical complexity to performance, particularly in terms of the project type. Military-off-theShelf (MOTS) type projects are considered the least complex, with “Australianised” MOTS more complicated, and Developmental projects the most technically complex. It was found that the majority of slippage results from an accumulation of projects initiated pre-2005, and includes a higher proportion of Developmental and Australianised MOTS projects than those shown post2005. These post-2005 projects may be referred to as post-Kinnaird projects, with second pass approvals gained after the implementation of the Kinnaird Review recommendations. The ANAO notes that “closer examination of the reasons for schedule slippage demonstrates the importance of initial assessments of the purchase type, i.e. MOTS, Australianised MOTS or Developmental” (2013, p.66). Overall, the research found that most SMEs in defence demonstrate mid-range project risk management maturity when compared to the RMM;

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however the survey results are not conclusive, leading to a recommendation for further research.

Discussion Analysis of the survey results highlighted the fact that SMEs within the Australian defence industry do engage with defence and tier one contractors to facilitate the delivery of projects, often via fixed price contracts that transfer appreciable risk to their organisations. In the context of the strategic importance of defence projects, and their inherent complexity, the benefit of effective risk management is emphasised. Significantly, the research data shows that despite the relative importance of effective risk management, the vast majority of SMEs do not employ best practice in this area; the majority achieving only Novice or Naïve maturity levels against the RMM model. The breakdown of risk practices by dimension, in accordance with the RMM model, allowed for analysis of these risk practices to be individually identified, showing that SMEs require more focus on the processes and application aspects of risk management in particular. It is evident that whilst many SMEs have partial best practice risk management aspects, however as a complete approach they almost universally do not operate at the higher levels of maturity, with smaller organisations found to fare worse than large ones in particular. Interpretation of these results must also be conducted through the prism of the research data collection methods. In this case, survey respondents were asked to self-evaluate their organisations’ risk practices which include inherent subjectivity between different individuals’ interpretation of both the questions and the potential answers. In addition, the design of the survey questions mirrored the language of the risk maturity model. This is intended to ensure that the results align with the model, however the language used in the RMM model requires some interpretation and application by the respondent to their own organisation which may have caused confusion. It is not possible to quantify the impact of these factors; however they are noted in the context of this discussion. The review of literature in this area showed a considerable gap, particularly with respect to Australian studies in defence, thus it is not possible to relate or cross-reference the

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results against existing literature and highlights the need for further research to be conducted before any unilateral conclusions are presented. The first objective of the research was to identify a community of organisations within Australia and New Zealand that could be categorised as SMEs with defence project involvement. This was largely achieved through the appropriate industry association which yielded an extensive survey distribution list. The response rate was less than expected however, with fewer than 15% of those recipients actually responding, and of these another 20% not fitting the demographic. The implication for the research is a smaller sample size and hence a lower confidence level. Statistical analysis of this was not within the scope of the research. The findings borne out indicate a generally low to midrange level of project risk management maturity among Australian defence SMEs. Significantly, the results showed that many SMEs did demonstrate considerable capability in individual aspects or dimensions of risk management, however very few were able to demonstrate the high level across all levels that are required to achieve best practice in this area. The survey also highlighted that smaller SMEs are typically less mature than larger ones, with the areas of risk management processes and application being the least well developed among this group, which was expected. The findings for all organisations are important because of the empirical link between project risk management and ultimate performance outcomes established via literature, in particular the work of Rabechini and De Carvalho. For this reason the research did address the key objective of seeking to understand the current state of play in defence SME risk management. Analysis of both survey data and ANAO reports revealed several key issues and a general trend regarding project performance and the effect of technical complexity increasing uncertainty. Contracting models and the distribution of SME work between them showed that fixed price models are often a project reality. The transfer of risk between government and tier one contractors via ASDEFCON contracts is often then flowed down to tier two subcontractors, and SMEs indicated that this type of contract was the most common model. The breakdown of maturity based on the RMM dimensions showed that both the process and application aspects were most difficult to achieve best practice in. Typically SMEs identified that processes were present and

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in most cases formalised, however they were seldom supported by risk metrics that could be used for continuous improvement activities. A high proportion of survey respondents (63%) also identified that risk processes are either not present or uniformly applied, indicating a need for greater emphasis and consistency in this area. The application of risk management tools and processes to projects also emerged as an issue for many SMEs, with over 44% indicating that application is unstructured or varies between projects, and just 11% reporting that the required tools and methods were always available when required for risk management. The nature of SMEs is that they employ fewer resources and are less likely to have dedicated subject matter experts in risk management, however this does not remove the imperative to achieve as close to best practice as possible. Hopkinson identifies the “intelligent application of principles and the selection of techniques” (2011, p. xiv) as fundamental to this goal, therefore SMEs need to understand and implement appropriate tools and processes consistently to achieve project performance improvements. The theme of technical complexity and its implications for project uncertainty was clearly identified in the literature review, and also highlighted in the review of ANAO reports and data. Major defence projects categorised as either developmental or “Australianised” MOTS were shown to be most prone to schedule slippage. This underscored the review findings previously illustrated by Mortimer, shown in Fig. 10 below, of the relationship between technical complexity and impact to cost, schedule, and risk. Overall the results did shed light on the underpinning and common issues that correlate to poor project delivery but highlighted several trends associated with risk management maturity amongst defence SMEs. Linkages between project risk management and performance are clearly established in literature and occur as regular explanations in ANAO reports to expound cost and schedule variances. The defence environment is naturally complex and the effect of this complexity to cost and schedule outcomes is clearly linked in research such as that by Shenhar and Dvir (2007). In this context the need to manage risk effectively becomes of greater importance to project outcomes and forms the basis of the justification for this research.

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Fig. 10-5. Im mpact on cost, schedule s and riisk of Requirem ments (Mortim mer 2008, p. 18)

The government recoggnises the imp portance of riisk as a projecct success factor and highlights thee need to manage risk efffectively, paarticularly technical rissk. To assesss technical riisk the assignnment of a Technical T Readiness L Levels (TRL L) is often used u to desccribe how co omplex a developmenntal program will w be, with lower TRLs coorresponding to higher technical rrisks. Anecdootal evidencce seems too show thatt greater understandinng of techniccal risks (posst-Kinnaird reeview) leads to better performancee, although it is not possib ble to empiricaally link the outcomes o with the avaailable data. This subj bject was also canvassed in the 2008 Morrtimer review,, and lead to recommenndations relatted to defence contracting m models, with DMO D and industry agrreeing on sevven principless designed to improve pro ocurement practice. Thhe first of thhese seven is worth of noote in relation to this research (Mortimer 2008,, p. 37);

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Chapter Ten Principle 1: Risks should be allocated to the party best able to manage those risks. To achieve this, each party should take responsibility for its actions (including the actions of its agents, subcontractors, and third party contractors).

The results of the survey identified in the data trends above showed that the allocation of risk via fixed price contracts to SMEs is commonplace and this may in some cases not align with the principle articulated by Mortimer. This is not to say that risk shouldn’t be transferred, rather it should be shared in a way that allows for best management. Further to this, the maturity results of risk management within SMEs confirmed that processes and tools required to effectively manage risk are less common within smaller organisations, and in these cases fixed price contracting may incur a greater risk to project performance. Findings from both the survey and data analysis activities indicated common issues amongst SMEs and trends toward poor project performance on large and technically complex projects, however there were no direct links established from empirical data, and a case exists for further investigation in this area. Generally, SME risk management is not aligned with best practice; however this is expected from organisations with more limited resources. Analyses of individual risk maturity dimensions were insightful and helped to both focus areas of particular need for improvement, and also provide confidence in the results by virtue of the absence of any unexplained anomalies or gaps. The response rate was lower than desirable and this could have been improved if the survey questionnaire completion was in some way sponsored or incentivized, or if additional response time was offered. Additional statistical analysis of the sample size to determine confidence would have also supported the interpretation of the results. In addition to this, the method of data collected required subjectivity on the part of the respondent to self-analyse their organisation which may predispose the results to bias in some cases. A more robust methodology may have involved expert assessment or auditing of risk practices, however this would not be compatible with the anonymity required to protect individual and organisation privacy. The application of tools and consistent implementation of risk procedures and processes became a clear area for potential improvement,

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with integration of these functions to project methodologies and business systems the most desirable state. The use of risk metrics was likewise uncommon and thus leads to a lack of data available to organisations looking to improve continuously in line with best practice. Review of project performance data supported the review findings of both Kinnaird and Mortimer, who advocated a more commercial approach to procurement for DMO (now CASG), particularly with respect to SMEs who struggle to handle the administrative and cost burden of overly complex and onerous contract models. The premise of risk allocation to those best able to manage it remains sound, however this may be incompatible with the current practice of direct contractual flow downs from the government to tier one, and on to tier two subcontractors via fixed price ASDEFCON type arrangements. The findings outlined above do contribute to the establishment of areas for further investigation via academic research, particularly with respect to empirical linkages between risk management maturity and project performance. Another beneficial outcome of the survey was the snapshot of current risk management practices, through the prism of the RMM, and the subsequent findings of areas for improvement within SMEs. The implication of this research for small to medium enterprises in Australia is that when contracting for defence projects, particularly those of a technically complex nature, serious consideration needs to be given to risk management as this directly correlates with project performance and outcomes.

Conclusion The research presents the current state of risk management practice within Australian SMEs contributing to defence projects. A significant factor in the successful delivery of projects is the management of uncertainty, reflected in all common project management methodologies and frameworks, such as PMBOK® Guide and PRINCE2. Academic research shows a clear link between project risk management and performance outcomes, and further evidence leads to theories that technical complexity is a major driver of uncertainty. Risk Management Maturity levels within SMEs are generally in the level two to three categories of the maturity model, with more below

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median levels than above. This is mostly because whilst some risk aspects are well covered, the collection of the five model dimensions of risk management showed that few if any SMEs scored highly across all of them, thus not achieving best practice. Defence project performance analysis showed that cost and schedule overruns are endemic among large and complex defence projects, but most of the cumulative delays in current large projects date back to projects that received second pass approval pre-2005. The research concludes that there is scope for improvement in SME risk management practices, and that increased maturity of these would be likely to improve the performance of the defence projects to which they contribute.

References Australian Industry Group (AIG) 2013, Submission by the Australian Industry Group Defence Council to the 2013 Defence White Paper process, AIG Defence Council, Accessed 10 March 2014,

Australian National Audit Office (ANAO) 2013, The Auditor-General Report No. 12 2013-14 Assurance Report: 2012-13 Major Projects Report, Defence Materiel Organisation, ANAO, Canberra. —. 2009, The Auditor-General Report No. 13 2009-10 Assurance Report: 2008-09 Major Projects Report, Defence Materiel Organisation, ANAO, Canberra. Cooper, D, Raymond, G & Greg, S 2005, Project Risk Management Guidelines: Managing Risk in Large Projects and Complex Procurements, John Wiley & Sons, New Jersey Department of Defence 2010, Building Defence Capability: A Policy for a Smarter and more Agile Defence Industry Base, Department of Defence, Canberra, Accessed 25 March 2014, < http://www.defence.gov.au/dmo/id/dips/dips_2010.pdf> Ergas, H 2012, Australia’s Defence: A Review of the ‘Reviews’, University of Wollongong and Deloitte Access Economics, Accessed 10 April 2014,

Helmsman Institute, The n.d., A Comparison of Project Complexity between Defence and other Sectors, Accessed 10 May 2014,

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Henschel, T 2008, Risk Management Practices of SMEs, Erich Schmidt Verlag, Berlin Hopkinson, M 2011, The project risk maturity model measuring and improving risk management capability, Gower, Farnham, Surrey, England ; Burlington, VT Kausal, T, Markowski, S & Va, DS 2000, A Comparison of the Defense Acquisition Systems of Australia, Japan, South Korea, Singapore and the United States, Defense Systems Management College, Belvoir, VA Kinnaird, M, Early, L & Schofield, B, 2003, Defence Procurement Review 2003, Defence Procurement Review Committee, Canberra Marcelino-Sádaba, S, Pérez-Ezcurdia, A, Echeverría, AM & Villanueva, P 2013 Project risk management methodology for small firms, International Journal of Project Management, vol. 32, no. 2, pp. 327340 Mortimer, D 2008, Going to the Next Level: the report of Defence Procurement and Sustainment Review, Defence Procurement Review Committee, Canberra Nash, K 2010, Small firms think big, SA Defence Business, Issue 5, May/June 2010, pp. 10-11 National Audit Office (NAO) 2008, Allocation and management of risk in Ministry of Defence PFI projects, National Audit Office, London Peever, D, Hill, R, Leahy, P, McDowell, J & Tanner, L, 2015, First Principles Review of Defence, Department of Defence, Canberra Rabechini, JR & de Carvalho, MM 2013 Understanding the Impact of Project Risk Management on Project Performance: an Empirical Study, Journal of technology management & innovation, vol. 8, Special Issue ALTEC, pp. 6-6 Raz, T, Shenhar, AJ & Dvir, D 2002 Risk management, project success, and technological uncertainty, R&D Management, vol. 32, no. 2, pp. 101-109 Shenhar, A & Dvir, D 2007, Project Management Research - The Challenge and Opportunity, 28 July 2007, Accessed on 9 May 2014,

Thomson, P 2014, DMO chief Warren King jumps to his staff’s defence, Canberra Times, 7 April, Accessed 13 April 2014,

PART THREE ISSUES IN APPLICATION

CHAPTER ELEVEN PROJECT MANAGEMENT IN THE ARTS: INTEGRATION, APPLICATION AND BENEFITS MELANIE SELWOOD, HEIDI METCALFE, ANTHONY WOOD

Imagine the Globe Theatre in William Shakespeare’s day. The world’s most renowned plays were being produced leaving a lasting impact on western culture. Shakespeare’s productions involved the management of time, money, people and resources to produce art that engaged audiences with a continuing legacy. Today the arts industry continues to produce shows, exhibitions and festivals that impact society and culture. As “temporary endeavours” with a specific goal they can be defined as “arts projects” (Project Management Institute (PMI) 2013, 3). In today’s political and economic climate, it is increasingly difficult for arts organisations to rely on ongoing funding to resource arts projects (Boon 2016), creating a need to make improvements to manage projects with fewer resources. Arts projects may be able to learn from other sectors who have found that organisations with a mature, tailored project management methodology can improve effectiveness and efficiency more than those practicing ad-hoc project management (Khoshgoftar and Osman 2009). With unique characteristics, such as scarce resources, creative demands and immovable deadlines (Chong 2010), there is a perception that arts projects with high creativity require chaos (Lindgren and Packendorff 2007). However, do arts projects need to be chaotic to create successful outcomes? We can speculate; if formal project management methodologies were applied to arts projects, could a high level of creativity remain while imposing some order on chaos? Until now, considerable research has focused on the two fields of project management and arts management separately with only a limited

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number of attempts linking the two. There has been little discussion about whether project management tools are adaptable or appropriate for arts projects. Consequently the following questions are explored: x Are formal project management methodologies being practiced in arts projects? x Can project management methodologies be adapted to suit arts projects? x What benefits could there be in applying project management methodologies to arts projects? The data gathered in this research revealed that while some formal project management methods are being utilised in the arts, there is room for further application, particularly in the management areas of cost, time risk and communication. By exploring where improvements can be made, we discuss which project management tools and techniques are applicable to arts projects and what areas could be targeted for maximum optimisation. The outcomes of this research may assist arts organisations in understanding the benefits of formal project management, while creating a path for future interdisciplinary research opportunities between project management and arts management. Finding alternative methods for managing projects might enable artists to maximise their potential, and create lasting pieces of work contributing to our society and culture.

Background Management in the Arts Arts projects have existed as early as 500 BC; in Greece, artists were organising play festivals that possibly required a similar level of management skill as a festival would today (Byrnes 1999). During the twentieth century, the context of capitalism required arts management to focus on financial viability and accountability (Byrnes 1999; Chong 2010), however arts projects have unique and individual drivers that didn’t suit those models resulting in the emergence of arts management as a separate field in the 1960s (Chong 2010; Ebewo and Siriyani 2009).

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Although many arts management influences came from the commercial world, debate ensued as to whether business management techniques were suited to managing art and culture (Chong 2010, Preece 2005). The argument was that usual business drivers, such as financial return and market conditions, could stifle creativity (Chong 2010). Definition of arts management: “The application of the five traditional management functions – planning, organising, staffing, supervising and controlling – to the facilitation of the production of the performing or visual arts and the presentation of the artists’ work to audiences.” (Martin cited in Chong 2010, 5) The field of arts management takes into consideration the attributes of arts that differ from other sectors. Immovable deadlines, scarce resources and creative demands are distinct from the usual parameters of projects in commercial environments – as art is highly subjective, there is an emphasis on product quality, as opposed to market demands (Chong 2010). In the current economic and funding climate, such creative demands can lead to organisations experiencing conflict between the ability to remain financially viable, whilst still producing work with a high level of artistic integrity. Improving management of arts projects may be one avenue to maximise successful output with limited resources. Arts management has assimilated many tools and techniques from business management however project management tools and techniques may provide new learning for the management of arts projects.

Project Management At the same time as arts management was emerging as a discipline, standardised models for project management were being designed (Burke 2010). As with arts management, projects have been managed since the beginning of combined human endeavour, but it wasn’t until standard models became widely used that project management became an academic discipline in the mid 20th century, predominantly for managing engineering projects (Garel 2013). Definition of project management: “The application of knowledge, skills, tools and techniques to project activities to meet the project requirements.” (PMI 2013, 5)

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Since then, numerous models have emerged to standardise project management. They aim to provide a way for project team members and project managers to interact in a structured way with common terminology, using a set of processes, tools and techniques. One widely recognised model is the Guide to the Project Management Body of Knowledge (PMBOK® Guide, PMI 2013), which claims that using standardised processes, tools and techniques can benefit project outcomes and asserts that the model applies to “most projects, most of the time” (PMI 2013; Rankins 2009, Zwikael 2006) — supposedly this includes arts projects.

The Intersection of Arts Management and Project Management The Project Management Institute defines a project as a “temporary endeavour undertaken to create a unique product, service or result” (PMI 2013). This definition fits arts projects; visual art exhibitions and live performance productions are both temporary and unique (Lapierre 2001). In theory the lessons learned in project management and tenets such as the “The Iron Triangle” (Atkinson 1999) could apply to arts projects. The complicating factor is that arts projects have characteristics and requirements distinct from those found in projects from other sectors. The question then remains; are project management methodologies flexible enough to be applied to arts projects? Some perceptions within creative arts projects preclude the application of a formalised project management methodology. Arts projects are driven by a creative need, a conversation about society, escapism, or for pure entertainment (Evard and Colbert 2000). In order to satisfy this creative scope where creativity and quality are seen as the main measures of success, projects in arts organisations are often managed in an ad-hoc way, leading to the perception that a level of chaos is the natural state for successful arts projects (Lindgren and Packendorff 2007). The moment that art becomes a business enterprise, an inevitable conflict is born within the organization (sic)—that of art versus commerce (Lapierre 2001, 5).

We can then speculate; if arts projects were to apply the tools and techniques project management models provide, could arts projects be less chaotic, but still maintain a high level of creativity? It has been argued that rigid processes suppress creativity, and thus project management techniques may need adaptation, or perhaps a lighter hand when being applied to arts projects (Hartman, Ashrafi and Jergeas 1998).

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Methodology Using the PMBOK® Guide as the framework, a two-fold approach was taken to gather data about which project management tools were currently being applied, and to discuss the application and potential benefits of applying project management tools to arts projects. Invitations to an online survey were sent to 35 South Australian arts managers in visual art, music, theatre, opera, festivals and circus, as well as funding bodies. 20 responses were received (a 57% response rate), however not all respondents answered all questions. Survey questions were designed to uncover the level of project management being implemented and project management maturity. Four in-depth interviews with managers from theatre, visual arts and festivals were conducted to discuss with arts managers where project management tools may be suitable and adaptable for arts projects, given the circumstances of their projects and what obstacles may prevent application. The research was limited in only sampling South Australian arts organisations using only one project management methodology. The small sample from one locality should be viewed as insufficient to extract strong statistical relationships and results are only indicative arts in South Australia and may not accurately reflect arts industries elsewhere. Only applying one project management model overlooks other widely used project management models, which may apply to arts projects in different ways from the PMBOK® Guide model, and this has not been explored in this research. Terminology used in project management may not be fully understood by arts managers, influencing the way in which survey respondents and interviewees may have responded. This research is limited by the constraints of a small sample, a single project management model and some external biases. Potentially, future studies could look into a wider array of methodologies and collect data from larger samples to provide a more comprehensive view.

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Key Findings The Nature of Arts Projects The unique constraints of arts projects have an impact on project management application. The research confirmed what is described in the literature; project work is done in parallel, quality is a driver for success and having a fixed deadline determines most operations (Evard and Colbert 2000, Hartman, Ashrafi and Jergeas 1998, Lindgren and Packendorff 2007). All the surveyed organisations had a lifecycle with a long initiating and planning phase (up to two years) and a short execution phase (weeks or days). Survey respondents were asked to assign management priority to each knowledge area, and what level of impact each area had on project success. Fig. 11-1 plots these two variables to demonstrate which PMBOK® Guide knowledge areas may provide the most benefits to arts projects. The traditional “iron triangle” areas of time, cost and quality were found to be of highest priority and impact, therefore would be key areas to implement increased project management skills. Usually in projects, meeting scope is a key success criteria, however scope rated very low on both impact on success and on priority. This maintains what is shown by previous research: that scope must remain flexible to support creativity.

Fig. 11-1. Impact of knowledge area to success vs. management priority

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Current Practices in Arts Projects The data demonstrated that cost management, time management, quality management, communication management and procurement management were areas where formal project management was not commonly practiced, and further improvements could be made. Human resource management proved to be a strength in arts organisations and is therefore not discussed further in this chapter. The nature of arts projects complicate the integration of scope management, as scope is not always clear until the delivery phase. 60% of organisations had standard processes to ensure project scope is satisfying the creative need or the organisational business need (such as increasing subscriber numbers), although other scope planning tools were less used. However, a large number of survey respondents specified using scope change and control methods during project execution. The likely explanation for these results is the difficulty in defining scope until the short execution phase. With cost management rated the highest priority with the biggest impact on success, it was found that arts organisations were using the most suitable tools for their projects, however cost planning was limited by lack of scope definition. Most respondents did not use cost control measures, also a consequence of being time poor during short execution phases. Quality management in arts projects is highly subjective, and endproduct artistic merit is often the fundamental value of an arts project, where quality is inherent in the commodity for sale (Ferres, Adair and Jones 2010). This differs from other industries, where quality is also viewed as product consistency. The study produced unpredicted results, showing minimal management of quality within arts organisations, although it was described as an intrinsic part of the project’s artistic value (see Table 11-1). Table 11-1. How arts organisations measure success Most common success measures described by respondents x High Quality Product x Critical Response x Quality of performance x Assessment of artistic quality x Critical feedback

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Even though a lack of project quality management was being practiced, no respondents answered that it could be improved in their organisation. It can therefore be extrapolated that arts managers feel that quality is an area of strength within their organisations, possibly due to the nature of an artistic process, where individuals are always striving for quality. 60% of respondents believed improvements could be made in time management although most organisations used schedule tools. Resource levelling and sequencing tools were used by less than a third of respondents. Risk identification tools and risk analysis tools were commonly used; 70% of surveyed organisations applied at least one risk management tool in their organisation, predominantly in risk identification. A smaller percentage of respondents (40%) plan risk responses, an area where more formal process could apply. Less than 50% of survey respondents apply communication management techniques to their projects with only 30% of survey respondents describing it as an area they could improve. Many procurement issues described were beyond the control of the arts organisation, meaning that improving procurement processes may not be possible without changes to external factors. Very few PMBOK® Guide integration tools were used by arts organisations in the survey data. This may also be a consequence of project requirements being unknown as the project evolves through its creation.

Discussion How project management techniques apply to arts projects is determined by how the unique characteristics influence each project area. While some research suggests knowledge areas with most impact on success should be targeted to maximise improvements, it has also been acknowledged that the most lacking areas of project management maturity should be the priority (Papke-Shields, Beise and Quan 2010; Rankins 2009). Smaller organisations can find it difficult to implement new project management techniques due to resource and time constraints, but benefits can be

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maximised if project management improvements are focused in the areas with the biggest impact (Bu-Bushait 1988; Rankins 2009).

Organisational structure All of the interviewed organisations sit within a larger, more structured parent company. Two interviewees indicated that a portion of challenges their projects face come from organisational processes imposed by their larger organisation or government department, particularly in financial management, risk management and human resource management. They both indicated that these imposed processes were not compatible with their arts projects.

Life cycle The life cycle of arts projects often consists of a long planning phase and short execution phase (see Fig. ). This has implications on the level of project management that can be applied to arts projects. Planning tools are more applicable, as that is when there is the most time and resources available. However, the short execution phase means project control methods are difficult to implement. At that stage, time becomes scarce and resources stretched.

Fig. 11-2. Life cycle of a theatre project measured in days

Having a short execution phase means planning must be careful and precise, so unexpected circumstances within the execution phase are minimised. Over time arts project managers have fine-tuned planning processes to account for this short execution phase. One interviewee said

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the life cycle is so ingrained in the project that all areas are managed to take it into account.

Scope management Scope management is fundamental to understanding what needs to be done to successfully meet project objectives, providing a framework defining what will be included and excluded (Burke 2008). In arts projects, scope can be unclear until the project is close to or within the execution phase. Consider an example of a theatre project; the company might specify a Shakespearean tragedy, with 7 actors, in the Globe Theatre, in October, within a set budget. This defines the project constraints, however the project scope is still unclear. Decisions about where and when the play will be set, what the set and costumes comprise of and how the characters be divided amongst the actors will be made throughout rehearsals and can change up until final delivery on Opening Night. Where scope is unclear, scope management processes are difficult to implement. Fig. 11-3 describes the variation between the PMBOK® Guide standard flow of scope management and how scope management processes in arts projects sometimes occur. PMBOK® Guide Scope Management Process Arts Projects Scope Management Process

Planning Phase

Execution Phase

• Plan Scope Management • Collect requirements • Create Work Breakdown Structure (WBS)

• Validate Scope • Control Scope

Planning Phase

Execution Phase

• Collect requirements

• Define scope • Verify Scope • Control Scope

Fig. 11-3. Differences between Scope Management Processes (adapted from PMBOK® Guide, 2013)

While broad project requirements might be known, a large proportion of the scope cannot be defined or verified until the execution phase is underway, thus reducing the ability to manage scope within a standardised framework. Therefore, scope management can be applied in some arts projects, but is limited in situations where scope cannot be made clear until late in the lifecycle.

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Cost management One key influential characteristic of arts projects is the tenuous nature of arts funding. Difficulties arise from uncertain sponsorship or funding not being approved after budgets have already been set. One interviewee commented that her organisation’s internal funding cycles don’t match the deadlines of her projects, meaning they create budgets with a blind estimate of potential funding. This results in control measures being hurriedly applied if funding ends up lower than anticipated. As scope is not always defined, a project cost baseline is not always possible, leading to less accurate estimates and larger contingencies to cover accuracy tolerances. Time and human resources can limit the level at which cost control methods can be implemented. The survey data showed cost control tools were applied less than cost planning tools, possibly due a lack of time and personnel resources available during project execution. Cost control tools may not be suited to arts projects, as time spent on analysis takes time away from other critical activities during the last minute push to delivery. Interviewee 1 agreed that project management software might assist in automatically generating reports and analysis without investing too much time. An initial outlay of time to set up the project management software may be large, but would diminish over time.

Quality management When asked how quality of a project is measured, interviewees noted artistic merit, aesthetic, cultural value and the significance of the project to audiences. All of these measures are highly subjective and difficult to quantify. Therefore quality management of arts projects is challenging and renders some PMBOK® Guide tools and techniques impractical. It is often the case that planning in arts projects is meticulous. Quality planning at the initiation phase ensures the best quality artists are selected, and the best available components within budget are used, reducing the need for quality control during the execution phase. This is not to say quality control is unnecessary or not practiced. Components not adding to project quality are often discarded at the last moment.

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Time management The fundamental constraint for time management in arts projects is the immovable deadline. Interviewee 4 described the impact of not meeting deadlines as follows: The loss of one performance can be significant, and the loss of multiple performances becomes something that can put the organisation back a long way, both in terms of financial impact, but also reputational impact.

Projects operating within larger parent organisations could benefit from resource levelling in the early planning stage to align functional departments’ workflows with each project. Interviewee 2 described how her organisation is experimenting with organising work packages to be completed earlier to avoid conflicts with a larger project within the parent organisation’s portfolio. External resources also dictate other project management areas. For example, at the initiation and planning phases, the availability of a particular artist may create a constraint that increases the cost of other resources. Similarly, venue availability can have considerable financial implications. Given that time is critical, project management software could provide the benefits of resource planning and analysis without seriously impacting managers’ time. Some merit could be found in using project time management tools, but the question needs to be asked; are there enough benefits from these tools to outweigh the effort involved to apply them? Arts organisations need to assess whether they have the available resources and time to apply such techniques.

Risk management The uncertainty of arts project scope creates a larger capacity for uncertain events, or risks, to occur. It is perhaps for this reason that risk management was widely used for both opportunities and threats in the surveyed organisations. Interviewee 2 indicated that earlier analysis of opportunities could take place, as opportunities were discovered too late, when there is no time to capitalise on them. Early analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT) was suggested as a tool to aid in identifying opportunities and the interviewee agreed it would prove beneficial.

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The level of uncertainty in a creative project can mean arts organisations must accept a larger level of risk. A number of risks can arise from the collapse of, or changes to agreements made with other parties, such as coproducers, artists, or venues. In these instances, risk strategies can be mitigated where possible, but sometimes must be accepted to ensure the project can go ahead. Applying project risk management tools to arts projects is possible, but needs to be a pre-emptive action with strong risk planning.

Communication management Creative stakeholders such as artists, often have a strong individual and highly personal interest in a project. Consequently, a higher level of active communication is required to ensure stakeholder expectations are managed. The main limiting factor to how communication management can be applied in arts projects is the time and resources it takes away from other areas of project management. Interviewee 1 described how reporting to the board was so detailed that core duties were compromised. Mapping internal and external stakeholder communication requirements to determine stakeholder interest level versus their power over outcomes enables project managers to prioritise communication with stakeholders (Burke 2008; Newcombe 2003; PMI 2013). The interviewee agreed such tools could be beneficial to concentrate communication in the highest priority areas. As described by the PMBOK® Guide, the key is flexibility, where project managers must decide the level of attention paid to each project management knowledge area to ensure the right areas are being prioritised (PMI 2013).

Procurement management Although scoring low on the impact/priority chart (see Fig. 11-1), procurement can have a large impact on project viability. Procurement management can have significant influence on the feasibility of arts projects where the availability of a venue or an artist can influence all other areas of a project, or even lead to project cancellation. The main challenge for arts projects is managing procurement to minimise the impact of external uncontrollable variables, or risk, on their projects. For example a performance tour may be feasible where the venues and dates

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all line up, until one venue pulls out of the agreed performance. This may result in the tour becoming much more expensive, and either dates with other venues may need to be renegotiated or the tour cancelled if no longer viable. In such cases, procurement management needs to concentrate on minimising impacts from external risks through careful contract negotiation. This was found to be an area of strength in the arts organisations in the study.

Project management integration The best outcomes are achieved when management of all knowledge areas are integrated, with an understanding of interdependencies between knowledge areas and trade-offs among competing objectives. The research showed that time management and creativity are vital and therefore inform the way all other activities are undertaken. Without defined scope at the planning stage, an overarching Project Management Plan (PMP) is difficult to generate. Additionally, PMPs may be a non-critical process that does not provide enough benefits to justify the extra resources or time to develop them. There was a mixed response about whether there were benefits in standardising processes to increase project management maturity. While some agreed standardising processes could be beneficial, most remarked that flexibility is essential within a management framework. Standard processes are a good framework if you are…free to let them go. When you’re on the ground…knowing a standard process…is very useful…but you have to be free to let it go (Interviewee 3).

Increasing competency in arts practitioners is a key way to integrate project management into organisations (Eskerod 2010). Educating arts managers in project management would provide them with additional tool and techniques that they can tailor for their individual projects.

Conclusion The application of project management to arts projects needs a selective approach; implementing techniques that will maximise benefits while minimising added outlay of time, money and resources.

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Some PMBOK® Guide areas are more applicable to arts projects than others, particularly in cost, time, risk and communication. The areas that may be less beneficial to arts projects are in the areas of human resource management, quality management and scope management. Time pressures, creative factors and unique lifecycles are major limiting factors to integrating project management methodologies into arts projects. By targeting areas the most applicable areas with the highest impact, arts managers may be able to implement project management without spreading resources too thin. I think we’re always trying to look at more effective, more efficient ways to … manage projects (Interviewee 2).

If the principles and formal methodologies of project management can be successfully integrated into arts production and practice, individuals, companies and the sector more broadly will experience the benefits that could arise from a more efficient and structured delivery of projects.

References Atkinson, R. 1999. “Project Management: Cost, Time and Quality, Two Best Guesses and a Phenomenon, it’s Time to Accept Other Success Criteria.” International Journal of Project Management 17 (6): 337342. Boon, Maxim. 2016. “Black Friday: Australia Council Cuts Defund Dozens of Arts Companies,” Limelight Magazine, (13 May), http://www.limelightmagazine.com.au/news/black-friday-australiacouncil-cuts-defund-dozens-arts-companies. Bu-Bushait, K.A. 1988. “Relationships Between the Applications of Project Management Techniques and Project Characteristics.” International Journal of Project Management 6 (4): 235-240. Burke, R. 2010. Fundamentals of project management. USA: Burke Publishing. Byrnes, W. 1999. “Evolution of Arts Organisation and Arts Management.” Management and the Arts. 2nd ed. Boston: Focal Press, 16-36. Chong, D.2010. Arts Management. 2nd ed. Oxon, UK: Routledge. Ebewo, Patrick. and Mwo Sirayi. 2009. "The Concept of Arts/Cultural Management: A Critical Reflection." [In English]. Journal of Arts Management, Law, and Society 38 (4): 281-95. Eskerod, P. 2010. “Action Learning for Further Developing Project Management Competencies: A Case Study From An Engineering

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Consultancy Company.” International Journal of Project Management 28 (4): 352-360. Evard, Y. and F. Colbert. 2000. “Arts Management: a New Discipline Entering the Millennium?” International Journal of Arts Management 2 (2): 4-13. Ferres, K., D. Adair. and R. Jones. 2010. “Cultural Indicators: Assessing the State of the Arts in Australia.” Cultural Trends 19 (4): 261-272. Garel, G. 2013 “A history of project management models: From premodels to the standard models.” International Journal of Project Management 31 (5): 663 - 669. Hartman, F., R. Ashrafi, and G. Jergeas. 1998. “Project Management in The Live Entertainment Industry: What is Different?” International Journal of Project Management 16, (5): 269-281. Khoshgoftar, M. and O. Osman. 2009. “Comparison of maturity models.” IEEE International, Computer Science and Information Technology: 297-301. Lapierre, L. 2001. “Leadership and arts management.” International Journal of Arts Management 3 (3): 4-12. Lindgren, M. and J. Packendorff. 2007. “Performing Arts and the Art Of Performing - On Co-Construction of Project Work and Professional Identities in Theatres.” International Journal of Project Management 25 (4): 354-364. Newcombe, R. 2003. “From Client to Project Stakeholders: a Stakeholder Mapping Approach.” Construction, Management and Economics 21 (8): 841-848. Papke-Shields, K.E., C. Beise and J. Quan. 2010. “Do Project Managers Practice What They Preach, and Does it Matter to Project Success?” International Journal of Project Management 28 (7): 650-662. Preece, S. 2005. “The Performing Arts Value Chain.” International Journal of Arts Management 8 (1): 21-32. Project Management Institute (PMI). 2013. A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 5th ed. Newtown Square: Project Management Institute. Rankins, G.J. 2009. “Comparing PMBoK and PRINCE2 in 2009.” OGC Conference, Goal Professional Services Pty Ltd. http://goalgroup.com.au/conferencepapers/.aspx%3E. Zwikael, O., 2009. “The Relative Importance of the PMBOK® Guide’s Nine Knowledge Areas During Project Planning.” Project Management Journal 40 (4): 94-103.

CHAPTER TWELVE EFFECTIVE MANAGEMENT OF INFRASTRUCTURE PROJECTS IN REMOTE NORTHERN TERRITORY HENRI SUSANTO, ANTHONY WOOD, OLIVIA NUNN

There is a lack of study undertaken in the area of managing infrastructure projects in remote communities in the Northern Territory (NT) that can inform project managers who are new to the NT or decision makers from federal government of the challenges in delivering projects in remote NT and strategies that can be utilized to overcome the challenges. A study by Blainey (cited in Fien and Charlesworth 2012) identified the following challenges: x Increased price of materials as a result of the distance from the sources of building materials and a lack of competition in the supply x High cost of transporting materials and equipment to remote sites including island communities. In wet season, a lot of the roads to inland communities in northern region are cut off and the communities are only accessible by air. x Shortage of skilled labour in remote communities, and the high cost of employing external labour in the form of additional allowances, accommodation in the community and transportation between major centres and the communities. x Lack of competition in tender processes due to the scarcity of contractors who are willing to work in the community and have the experience in delivering remote community projects

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x Poor economies of scale in purchasing materials and in the cost of labour x Higher labour costs from having only a 6-7 month construction “season” due to inaccessibility in the long wet monsoon season in northern regions or desert summer heat in central Australia Additionally, there are other challenges that are often mentioned, including: x Anecdotal evidence that completion of projects at the end of government’s funding cycle is not ideal for NT’s Top End due to the seasons and causing risks with reduced quality of work. x Additional costs to take heavy machineries to Darwin in wet season and transport back project site when work resume in dry season. x Confusion and lack of clarity on the processes involved in obtaining the leases over the land required as part of the project. x Lack of motivation from traditional owners who do not live get direct benefit from the project. Additionally, there are often levels of initial cynicism or mistrust both within communities, and directed at outsiders, especially governments (Eversole, cited in Campbell and Hunt 2012) which makes securing land tenure a lengthy process. This research is aimed at providing recommendations to project managers on strategies that enable effective management of the delivery of infrastructure projects in remote communities in NT. The study focuses on the projects delivered by government agencies as opposed to private entities which have been the focus of most previous studies.

Background The NT is by far the most sparsely populated state or territory in Australia with a population of only around 236,000 spread over 1.3 million square kilometres (ABS, 2013). NT also has a much higher proportion of Indigenous population compared to the rest of Australia at 30% compared to only around 3% nationally. There are around 72 communities and outstations throughout the NT (Power and Water, 2012). Most infrastructure projects in NT remote communities are undertaken by NT Government departments to service the communities. The typical main stakeholders are the local Power and Water Corporation (PWC), NT

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Government, Community, Traditional land owners, Land council, Contractors, Australian Government, local suppliers and transport companies The dispersed and remote locations of the communities, the complex social issues and the highly political nature of the development of remote communities present massive challenges in delivering infrastructure projects in those communities. Project managers who deliver government infrastructure projects in remote communities are faced with multi-facetted challenges that include logistics, cultural, politics, funding and climate. Most previous studies in Australia and internationally, discussed challenges of remote construction projects based on projects undertaken by mining companies. Hence, there is limited in-depth case study analysis of successful or unsuccessful remotely managed projects (Herbert, 2013). In addition, no study has been conducted to clearly measure the effectiveness of the strategies to overcome the challenges.

Logistics Logistical challenges due to remoteness and isolation of project location have been discussed by a number of authors (Blainey cited in Fien and Charlesworth, 2012; Sidawi, 2012 and McAnulty and Baroudi, 2010). The challenges include skills shortages, resource availability and allocation, high material and transportation costs, scarcity of contractors who are willing to work in the community and who have the knowledge and experience in delivering remote community projects. Furthermore, Deng et al (2001) identified the extensive distance between project participants as the primary cause of delays in decision making in remote projects. Nutley (2003) stated that transport in remote areas with scattered and low-density population, like in Australia, often is not viable. Many remote areas are located at the end of a lengthy supply chain of the government services from the national capitals (Walker, Porter and Marsh, 2012, p.30). Delays and or shortages within materials and equipment often create concerns for project success (Sambasivan and Soon, 2006).

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Climate NT Department of Lands and Planning (n.d., p.8) indicated that many people who live in remote areas in NT have minimum standard road access, and links to the wider road network are closed or are weight restricted during wet season. In the northern part of NT, the intensity of the rain in wet seasons prevents most constructions activities from occurring and cuts access to the communities (NT Department of Lands and Planning, n.d., p.8). Sidawi (2012) found that the absence of contractors makes the sites vulnerable to thefts therefore.

Political and cultural Martin (2006) highlighted that Aboriginal affairs are highly political and involve the need to understand and recognize the Aboriginal culture to solve problems in Aboriginal communities. Around 45% of the land in NT is owned by Aboriginal people (Reconciliation Australia, 2009) and the process of getting land tenure can be complex and time consuming to negotiate (FaHCSIA, n.d., p.2). Fuller, Bandias and Pfitzner (n.d.) argued that the political polarisation within Land Councils who administer Aboriginal Land Rights Act (NT) 1976 meant that it is difficult to obtain Land Council’s approval to utilise aboriginal land for commercial purposes. Safety is one of the major concerns that are prevalent in most remote communities (Young, 2014). Young further stated that there is overrepresentation of Indigenous victims and offenders.

Funding Typically, funding from both Australian and NT Governments are short in nature (i.e. yearly) and are usually application based as highlighted by CGRS (2009). The budget cycle usually start on 1 July in line with the Australian Government budget cycle (Blondal et al, 2008). According to Martin (2013), unstable funding can result in inefficient management practices that contribute to poor cost, schedule, and performance outcomes. Overcoming the challenges of delivering infrastructure projects in remote communities

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Remote project management requires knowledge of the context of the environment, people, infrastructure, asset management, in which the facility is to be located and effective strategies for delivering quality services in remote areas (Centre for Appropriate Technology, n.d.). There is no literature that specifically addresses the challenges in delivering remote community infrastructure projects. However, there are previous researches that study solutions to the challenges in different settings.

Experienced project manager Because coordination of planning, design, materials, contractors, commissioning, certification, client requirements and asset maintenance is complex and often expensive in remote areas, experience and expertise in remote area project management are needed to ensure delivery of projects in a timely, cost effective and sustainable way. Furthermore, an understanding of the critical stages in project implementation in remote areas and deploying tried and tested risk management approaches are also important aspects in ensuring that new or upgraded facilities meet client’s expectations and cost constraints (Centre for Appropriate Technology, n.d.; Rumane, 2011).

Good communication Bandias and Vemuri (2005) stated that a study on remote communities in Northern Australia indicates that the government believes that infrastructure and communications play a key role in the development of the remote communities. This is supported by Brilakis (2007) who indicated that project communications are crucial to project success. Further, Kestle (2009) identified that the misinterpretations and miscommunications of the project needs and objectives act as hindrances to achieving project success.

Right governance structure Haney (2011) questioned whether the current highly centralised and locally fragmented governance arrangements can respond adequately to the pressures that resource developments are creating in remote regional locations. He believed a more contextualised governance structure is required to provide authority, legitimacy and capacity at the appropriate level to achieve outcomes in regions of remote Australia.

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Utilise local labour and businesses Sidawi (2012) has identified that shortage of skilled labour in remote communities, and the high cost of employing external labour due to additional allowances, accommodation in the community and transportation between the communities and major centres, have contributed to the increase of the overall project cost. In line with Sidawi’s findings, Productivity Commission (2011, p.181) concluded that workers who are recruited from, receive training in, or otherwise have experience with rural or remote areas are generally more willing to work in those areas.

Actively engage and involve the community In order to overcome social issues and gain support from the land owners and the community, Mick Gooda suggested that it is crucial to listen, work and include the Indigenous people in developing solutions (Australian Human Rights Commission, 2012).

Negotiating better funding arrangement The government should eliminate application based funding and streamline the acquittal processes to enable project managers do their job properly (Department of the Chief Minister, 2009). A multi-year funding will enable project managers to properly manage their projects by focusing on design and plan works during wet season when construction work is inefficient and focus on construction in dry season.

Methodology Data in this research were collected from voluntary participants who have been involved in infrastructure projects in remote communities in NT. Collection of data was done through online survey questionnaire as well as through one-on-one interviews with invited participants. Interview participants were project managers with a range of experience (between 3 and 5 years, between 6 and 10 years and more than 10 years) in delivering remote community projects. Data from the survey were analysed quantitatively and interpreted to identify the challenges, impacts and strategies in managing remote projects. The outcome of the analysis is used to rank the challenges in delivering projects in remote communities and their impact on the

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achievement of balanced time, cost and quality outcomes. The strategies that were implemented to overcome the challenges are ranked according to the frequency of implementation and effectiveness of the strategy in achieving project success. Qualitative analysis of the interview data allows the researcher identify the challenges that project managers face in undertaking projects in remote communities and the strategies they take to overcome these challenges. The two project case studies obtained during the interviews are presented to provide direct examples of the challenges faced in remote community projects and highlight the effectiveness of selected strategies. The survey and interview questions were divided into three parts: background information, challenges in managing projects in remote NT and strategies to overcome the challenges. Questions in background information are aimed to identify the role, level of experience and typical project value of the participants in remote community infrastructure projects. In the next part, the participants were asked to indicate whether the challenges that were identified in the literature are faced in their projects. It also gathers their views on the impact of the challenges in the successful completion of the projects based on the success of the projects. In the last part, questions were designed to verify if the strategies that were identified in literature review are implemented. The participants are further asked to determine whether the strategies were effective in overcoming the challenges they faced in managing remote community infrastructure projects.

Key Findings During the data collection process, 52 responses to the online survey were received. In addition, eight interviews were conducted where participants provided further information on their experiences in managing infrastructure projects in remote area of the NT. During the interviews, two case studies were obtained.

Survey Questionnaire Figure 12-1 shows a breakdown of survey respondents’ roles into respondents’ experience and typical project values.

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Fig. 12-1: Breakdown of su urvey respondeents

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More than 50% of the respondents consider the following challenges always or often occur in remote NT projects: lack or absence of skilled labour in the community, lack of skilled labour willing to work in the remote area, escalation of transport costs, lack of tools and materials in remote area, long and uncertain delivery of materials to remote area, poor road and infrastructure conditions to remote area, extreme climate and short funding cycle resulting in lack of planning. On the impact of the challenges on project delivery, more than 50% of the survey respondents view that lack of skilled labour willing to work in remote areas, lack of contractor willing to work in remote areas, escalation of transport cost, lack of tools and materials in remote areas, long and uncertain delivery times, poor road and infrastructure condition, extreme NT climate, difficulty in securing land lease, lack of external stakeholders support, inadequate funding in project planning and short funding cycles have either catastrophic or major impact on project delivery if not resolved. Risk scores for the challenges were determined by analysing the frequency and impact of challenges presented in the survey responses, using the matrix shown in Figure 12-2. Frequency

Never

Rarely

Sometimes

Often

Always

Catastrophic

5

12

15

20

25

Major

4

10

12

16

20

Moderate

3

8

9

12

15

Minor

2

4

8

10

12

Insignificant

1

2

3

4

5

Impact

Fig. 12-2. Risk frequency/impact matrix

The product of frequency of occurrence and impact in the delivery of the project are categorised as either Low, Medium, High or Extreme in accordance with Table 12-1; subsequent risk scores are shown in Table 12-2.

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Table 12-1. Risk Score categories Risk Score

Category

Between 1 and 4

Low

Between 4 and 12

Medium

Between 12 and 20

High

Between 20 and 25

Extreme

Table 12-2. Risk score of challenges in delivering remote NT projects Challenge

Overall

Project Consultant Manager

Project Independ. Contractor Sponsor Certifier

Lack or absence of skilled labour in remote area

10.11

11.92

11.07

11.01

10.95

4.47

Lack of skilled labour willing to work in remote area

15.52

16.48

14.24

19.15

17.95

9.39

Lack of contractor willing to undertake projects in remote area

11.17

13.93

13.23

9.51

10.01

6.67

Escalation of transportation costs

17.59

19.41

15.02

13.32

21.75

14.52

Lack of tools and materials available in remote area

15.21

15.22

17.27

14.68

17.32

10.8

Long and uncertain times in the delivery of project materials to remote area

15.38

15.27

15.95

12.75

18.06

12.93

Poor road and infrastructure condition to remote area causes delay in procuring materials

14.38

13.88

13.87

15

14.32

15

Extreme climate conditions affect productivity

15.36

16.48

14.68

9.51

19.83

12.52

Poor safety and security in remote area increases cost and reduces productivity

12.68

13.2

13.47

9.99

16.58

7.89

Difficulty in securing land leasing

11.78

15.51

12.62

12

7.56

10.14

Lack of support from external stakeholders causes project delay

11.66

11.96

7.73

16

9.76

16.02

Inadequate funding in project planning phase causes inefficiency in project delivery

14.4

17.66

15.95

14

15.97

15.44

Short funding cycle results in lack of time to properly plan projects

15.74

18.18

15.54

16.68

16.31

15.98

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In the survey, participants were asked to rank the challenges in the order of importance. The results show that the rankings differ significantly among respondents with different roles in projects. A general trend is unable to be established from the result. Therefore, this study only focusses on the results for overall respondents. The challenges in ranked order are: 1. 2. 3. 4.

Escalation of transportation costs Short funding cycle results in lack of time to properly plan projects Lack of skilled labour willing to work in remote area Long and uncertain times in the delivery of project materials to remote area 5. Extreme climate conditions affect productivity 6. Lack of tools and materials available in remote area 7. Inadequate funding in project planning phase causes inefficiency in project delivery 8. Poor road and infrastructure condition to remote area causes delay in procuring materials 9. Poor safety and security in remote area increases cost and reduces productivity 10. Difficulty in securing land leasing 11. Lack of support from external stakeholders causes project delay 12. Lack of contractor willing to undertake projects in remote area 13. Lack or absence of skilled labour in remote area The average frequency for each strategy is presented in Table 12-3; in this table, the higher the value, the more often the strategy is implemented by the respondents.

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Table 12-3. Frequency of application of strategies to overcome challenges Strategy

Overall

Project Consultant Manager

Project Independ. Contractor Sponsor Certifier

Utilise a project manager who is experienced in delivering infrastructure projects in remote area

4.33

4.47

4

4.17

4.92

3.63

Ensure good communication between site personnel and main office by employing appropriate systems, tools and processes

4.63

4.82

4.44

4.5

4.92

4.13

Employ local labours and businesses to reduce cost and support regional growth

3

3.47

2.56

4

2.83

2

Actively engage locals where project is being undertaken by informing and educating them about the project

3.73

4.35

3.44

4

3.25

3.25

Negotiate more flexible funding arrangement (i.e. multi-year funding arrangement)

2.67

3.53

2.67

3

2.08

1.5

Plan projects prior to funding being secured

3.4

3.94

3.11

4.33

3.5

1.75

Engage stakeholders early

3.52

4.35

4.22

3

2.17

3.38

The effectiveness of strategies in overcoming challenges in delivering projects in remote NT is quantified using the criteria outlined in Table 12-1; the resulting effectiveness is shown in Table 12-4.

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Table 12-4. Effectiveness of strategies to overcome challenges Strategy

Overall

Project Consultant Manager

Project Independ. Contractor Sponsor Certifier

Utilise a project manager who is experienced in delivering infrastructure projects in remote area

3.67

2.76

4

3.67

4.92

3.38

Ensure good communication between site personnel and main office by employing appropriate systems, tools and processes

3.67

3

3.89

3.83

4.92

2.88

Employ local labours and businesses to reduce cost and support regional growth

2.9

3.29

2.67

2.5

2.67

3

Actively engage locals where project is being undertaken by informing and educating them about the project

3.38

3.18

3.11

4.17

3.33

3.63

Negotiate more flexible funding arrangement (i.e. multi-year funding arrangement)

2.73

2.71

2.11

3.5

3.08

2.38

Plan projects prior to funding being secured

3.15

3.12

3.22

4.33

3.25

2.13

Engage stakeholders early

3.06

2.76

3.78

1.83

3.83

2.63

Interviews There were eight interview participants with various project roles and experience in the delivery of remote NT infrastructure projects. Based on roles, participants consist of three project managers, two consultants and one consultant each whose roles were project sponsor, contractor and independent certifier. Five participants have more than ten years of experience, one with six to ten years of experience and two with three to five years of experience.

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Table 12-5. Summary of interviews Challenge

Description of Challenge

Strategy

Lack or absence of skilled labour in remote area

There is generally no skilled labour in remote areas. Labour from other centres requires accommodation availability of which is generally limited.

Use existing labour from major centres. Attempt to liaise with local shire or business to secure accommodation or liaise with PWC to use their accommodation.

Lack of skilled labour willing to work in remote area

There is lack of "social life" in remote areas. Restrictions on consumption of liquor in some communities.

Keep workers' morale by providing sufficient breaks from work, e.g. 3 weeks on, 2 weeks off

Meals are usually prepared by contractor themselves, hence, slowing down progress. It can also cause resentments from workers if they dislike the meals prepared by contractor. However, there is limited or no alternatives available.

Where available, use local motel/hotel. Although they cost significantly more than in major centres, they allow workers to focus on getting work done by working long hours.

Lack of contractor willing to undertake projects in remote area

Sometimes contractor are unwilling to work in remote areas due to their past unfortunate experiences.

Keeping steady flow of work for contractor while in the area to maintain their motivation and engagement. Sharing of contractors’ risks.

Escalation of transportation costs

Remoteness and poor access add significant costs to projects especially for projects requiring large and bulky items.

Planning ahead on transport. Where possible, use land transport rather than barge (ie. Transport in dry season). When barge is required, coordinate with possible other users of barge so that the barge can be chartered (ie. coordinate at program level)

Lack of tools and materials available in remote area

There are no materials and tools in most areas. If hire of tools is possible, there is a great deal of uncertainty on availability

If hire of plants are to be done, sufficient time should be allowed for uncertainty.

Sometimes there are no local materials that are suitable for construction. Even if there are, obtaining the materials is not as simple as purchasing from shop just like in urban settings.

Investigation on the availability of local materials to be done in planning stage. If suitable materials are available locally, process to acquire the materials should be initiated early.

Poor road and infrastructure condition to remote area causes delay in procuring materials

Many roads can only be accessed by road train in the middle to end of dry season, hence there is little window of construction

Correct timing of delivery where possible.

Extreme climate conditions affect productivity

Magnitude of tides impact delivery to areas on islands

Allow sufficient contingency of time for unknown factors

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Poor safety and security in remote area increases cost and reduces productivity

Fuel theft and vandalism occur frequently

Secure fuel, plant and material properly. Inform local authority upon arrival. Report if incidents occur

Lack of support from external stakeholders causes project delay

It is often difficult to build relationship with local residents.

Actively engage residents of the project objectives, benefits and progress.

Inadequate funding in project planning phase causes inefficiency in project delivery

There is insufficient fund for development of project before its funding confirmation.

Allocate fund for project development. This fund can be recovered from project funding when confirmed.

Short funding cycle results in lack of time to properly plan projects

Poor state of existing documentation causes uncertainty on location or existence of services. It would be lengthy and costly to ascertain these unknown services.

Move away from possible location of existing services whenever possible. Allow sufficient contingency for uncertainty.

Funding is often provided at the beginning of dry season with completion expected within the financial year. This causes problem if design has not been done as there is insufficient time to design and procure materials and services.

Plan projects early including design even though only to concept stage. Sometimes, it is also beneficial to break down large projects into stages.

Case Studies Two case studies of remote NT projects were collected from interview participants. Both case study projects fall within the value range between $200k and $5 million. The interview participants provided an estimate that 25% to 40% of the total project cost is due to the project location being in remote NT. The challenges faced were x Short period to undertake the project which follows government’s annual funding cycle x Difficulty in obtaining land tenure in short period x Poor information on existing services causing uncertainty in the design. x Unclear outcome of the funding Strategies utilised by the project team included: x Structured the contract to pass on the risks to contractors

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x Informing tenderers during tender process of the risks and instructing tenderers to allow for the risks in their tenders. x Engaging the stakeholders in the community including Traditional Owners in the design process and adjust the design to avoid culturally sensitive areas.

Discussion Survey Questionnaire The survey respondents have had different roles in the delivery of remote NT projects. All respondents have had more than 3 years experiences, with most having more than 6 years experience. Therefore, they should be able to deploy appropriate project management approaches that ensure successful delivery of the projects (Centre for appropriate Technology, n.d; Rumane, 2011). All respondents agree that the costs of remote projects are significantly higher than similar projects in urban setting, which confirms existing literatures that state that cost in delivering services in remote areas are higher (New South Wales (NSW) Department of Community Services, n.d.; NT Department Land and Planning, n.d.; Huey, et al, 2011 and Martin, 2013).

Challenges in Delivering Remote NT Projects Lack of skilled worker willing to work in remote area: The responses from the participants indicated that this issue is one of the major concerns when delivering remote NT projects. Overall, survey respondents score this challenge at high risk. This finding corresponds with that reported by Kliger (2007) and Shah& Burke (2003) which agreed that the likes of workforce skills are of more difficult to attract and retain in remote areas. Escalation of transport costs: This challenge has the highest risk score as far as overall participants’ responses are concerned. All respondents score this challenge as either High or Extreme. This finding is consistent with that reported by Huey, et al (2011) who concluded that costs for projects in the NT are higher than the estimated cost of projects in other jurisdictions which face similar climatic and remoteness conditions.

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Lack of tools and materials available in remote area: The difficulty in accessing tools and materials in remote areas is ranked fifth in the survey. Long and uncertain times in the delivery of project materials to remote areas: Delays in delivering project materials to remote areas was ranked fourth and carries high risk in project delivery. This is consistent with Walker, Porter and Marsh (2012) and Sambasivan and Soon (2006) who stated that many remote areas are located at the end of a lengthy supply chain of the government services from the national capitals. The remoteness of the locations means transport is often not viable (Nutley, 2003) and results in lack of transport companies servicing remote areas. Poor road and infrastructure condition to remote area causes delay in procuring materials: Poor condition of roads to remote areas and their related infrastructure is ranked eighth in the risk score. The ranking by different roles vary, however, all respondents consider this challenge as high risk. This finding is consistent with NT Department of Lands and Planning (n.d.), which stated that many roads to remote areas are often closed or weight restricted during the wet season forcing contractors to either barge the materials to site resulting in higher costs and longer delivery time. Extreme climate conditions affect productivity: Overall, extreme climate is considered high risk in remote NT projects with contractors ranking this challenge in second place. Extreme climate impacts workers’ productivity and access to remote areas in wet season, when rain prevents most constructions activities from occurring (NT Department of Lands and Planning, n.d.). The challenge can cause further problem such as contractors having to leave the project sites and take their heavy machineries back to Darwin as the absence of contractors makes the sites vulnerable to thefts (Sidawi, 2012). Poor safety and security in remote area increases cost and reduces productivity: The respondents agreed that safety and security in remote areas has contributed to the additional cost and scored the risk as high.The finding confirms the finding by Young (2014) who stated that community safety is a major concern for most of the Aboriginal people in remote communities. Inadequate funding in project planning phase causes inefficiency in project delivery: All respondents, especially Project Managers consider this challenge as high risk. The finding is in line with Martin’s (2013)

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concern that inadequate funding in project planning decreases the ability to identify and manage project risks. Short funding cycle results in lack of time to properly plan projects: This issue is placed second of the high risk issue when delivering remote NT projects. The finding confirms the hypothesis that the short funding cycle is considered too short to properly plan projects. The annual funding cycle that follows the government budget cycle (Blondal et al, 2008) combined with the seasonal cycle does not provide the project team to ensure proper planning of projects prior to constructions.

Ranking of the challenges in delivering remote NT projects The ranking provided by the respondents was slightly different from the ones derived from the risk scores. As stated earlier, this study focusses on the ranking provided by the respondents. Furthermore, the different roles rank the challenges differently and no general trend was able to be drawn. Therefore, this section only discusses the ranking from overall respondents. The ranking of the nine challenges with either high or extreme risk scores can be established: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Escalation of transportation costs Short funding cycle results in lack of time to properly plan projects Lack of skilled labour willing to work in remote area Long and uncertain times in the delivery of project materials to remote area Extreme climate conditions affect productivity Lack of tools and materials available in remote area Inadequate funding in project planning phase causes inefficiency in project delivery Poor road and infrastructure condition to remote area causes delay in procuring materials Poor safety and security in remote area increases cost and reduces productivity

Strategies to overcome challenges in delivering remote NT projects The finding suggests that respondents believe that ensuring good communication between project site and main office is the most effective

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strategy to ensure successful projects in remote NT. This finding is in line with the study by Bandias and Vemuri (2005) that stated that communication plays a key role in the development of remote communities. Furthermore, it is consistent with studies by Brilakis (2007) and Kestle (2009) who state that clear communication is crucial to project success. The study found that the having a project manager who is experienced in managing remote NT projects is the second most effective way to ensure project success. This finding is supported by Centre for Appropriate Technology (n.d.) and Rumane (2011) who found that an understanding of the critical stages of project implementation is crucial in ensuring project success. The third ranked strategy is active engagement of locals throughout the project. It the third most frequently applied strategy in the delivery of remote NT projects. The strategy was suggested my Mick Gooda to overcome social issues and gain support from land owners and the community (Australian human right Commission, 2012). The engagement involves listening, working and including the local people in developing solutions. The fourth and fifth most effective strategies in remote projects delivery include planning projects early even before funding for the project delivery is confirmed and engaging stakeholders early. This finding proves that the respondents acknowledge the benefits of properly planning projects including engaging all the stakeholders early as stakeholders are the most important element in an organization (Covey cited in Voge, 2007). The sixth ranked strategy that is often applied by respondents is employing local labours and businesses. This seems to be consistent with previous study by Sidawi (2012) that employing local labour has the potential to reduce cost by minimising allowances, accommodation and transportation that are payable to external resources. However, the respondents are also aware of the challenges in employing local labour and business due to their lack of capability to undertake the required tasks (Olander and Landin, 2005) and their lack of ability to cope with changes (Walker et al, 2012). The strategy that is least implemented by the respondents is negotiating flexible funding arrangement for which the effectiveness is considered

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relatively low. Although if successful, this strategy can result in better planning of project (Department of The Chief Minister, 2009), it is not as frequently applied as other strategies.

Interviews Over half of the interview participants have more than ten years experiences which suggests that the respondents have the experience and understanding to deploy strategies in undertaking such projects as suggested by Rumane (2011). The interviews provided the opportunity to link between challenges in delivering remote NT projects and the strategies to overcome particular challenges.

Lack or absence of skilled labour in remote area The issue caused by this challenge generally relate to the need to provide accommodation to external labours that increase the cost to deliver projects in remote area, which is in accordance with Sidawi (2012). This can be mitigated by employing local labour, however, the participants state that no local skilled labour is available. This finding is consistent with Olander and Landin (2005) that the local resources are not capable of undertaking the required tasks. Therefore, contractors generally utilise labour from major centres rather than training local labour as training of local labour is costly and the low enrolment hindering the success of training programs (NT Implementation Plan, NP on skills Reform, 2012; NSW DET, 2007).

Lack of skilled labour willing to work in remote area The issues include restriction on consumption of alcohol which is major part of Australian mainstream culture and lack of social life in remote areas. The strategies used in overcoming this challenge include providing regular and sufficient breaks to the workers to return to their normal lives. The absence of restaurant or other food outlets means that contractors must be self-sufficient including preparing the contractor preparing meals for their workers. Sometimes, this can cause resentment for the workers which affect relationship and productivity. For this reason, where local accommodation and meal is available, the contractors prefer to use those services at premium rate.

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Lack of contractor willing to undertake projects in remote area Some contractors refuse to work in remote areas due to their previous bad experiences. The strategy that can be applied to overcome this challenge is by the principal taking some of the contractors’ risk and keeping a steady flow of work for contractors to maintain their engagement and motivation.

Escalation of transportation cost This challenge is especially true for projects that require movement of large or heavy items such as cranes and excavators. Where possible, the project team should plan ahead by locking in barge prices and sharing of barge with other projects.

Lack of tools and materials available in remote area To overcome this challenge, the availability and acquisition of local plants and materials should be investigated early in the planning stage. It must be noted, however, that sufficient contingency need to be allowed for uncertainty.

Poor road and infrastructure condition to remote area causes delay in procuring materials The only way to overcome this challenge is by ensuring correct timing of the delivery of materials to avoid transport in wet season.

Extreme climate conditions affect productivity This challenge includes the inability to load and unload the barge during low tide and that barges do not operate in severe weather. The strategy that can be applied to overcome this challenge is by allowing sufficient time for unknown weather related factors.

Poor safety and security in remote area increases cost and reduces productivity Some of the common complaints from participants are fuel theft and vandalism. This is consistent with the study by Sidawi (2012) who found that the absence of contractors makes the sites vulnerable to thefts. To

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overcome this challenge, the contractors usually secure fuel, plant and material properly, sometimes at the local police yard. It is also wise to engage locals straight away by informing local authority and leaders about the contractor’s arrival and the purpose. If incidents occur, report the incidents as soon as practicable.

Lack of support from external stakeholders causes project delay Some participants expressed that in some areas, it is often difficult to build relationships with local residents. This view is consistent with Eversole (cited in Campbell and Hunt, 2012) that there are often cynicisms within the communities which are directed toward outsiders. The strategy that respondents apply is to continually engage the local residents on the benefit of the project, what is involved, listening to the residents and providing up to date information so the residents provide their support as suggested by Gooda (Australian Human Rights Commission, 2012).

Inadequate funding in project planning phase causes inefficiency in project delivery The participants informed that generally, there is no funding allocated specifically for project development. This practice contradicts Martin (2013) who suggested that the inadequate funding at project planning decrease the ability to identify and address key risks at the project commencement. In order to ensure that projects are properly developed, some funds should be allowed to develop the project early.

Short funding cycle results in lack of time to properly plan project Participants reiterated that funding for projects is usually confirmed at the beginning of dry season with projects expected to be completed by the beginning of subsequent dry season. This is consistent with the annual budget cycle as stated by CGRS (2009). The strategy to ensure proper planning of project is to allocate fund to develop project prior to funding confirmation.

Case Studies The two case studies provide the context of the challenges in delivering infrastructure projects in remote NT. The estimated cost premium due to remoteness (25-40% of project value) is consistent with

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literature that cost in delivering services in remote areas are higher (NSW Department of Community Services, n.d.; NT Department Land and Planning, n.d.; Huey, et al, 2011 and Martin, 2013). In addition to the obvious challenge of increased transport costs due to large distances from major centres, there are also challenges relating to accessibility of the project site, lack of time to properly plan projects, culture related issues and extreme climate. The case studies show different strategies that were employed to overcome the challenges, some of which were effective while some others were less effective. The strategies include structuring the contract to use lump sum contract, therefore transferring risks to contractors and early engagement to identify land tenure issues and modify the design accordingly.

Conclusion The challenges identified from literature were confirmed to be faced in remote NT projects. All of the projects had medium risk score or higher. However, out of the thirteen challenges presented in the research questions, the survey found that nine challenges have either high or extreme risk scores. The challenges with high or extreme risk score are ranked as follows: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Escalation of transportation costs Short funding cycle results in lack of time to properly plan projects Lack of skilled labour willing to work in remote area Long and uncertain times in the delivery of project materials to remote area Extreme climate conditions affect productivity Lack of tools and materials available in remote area Inadequate funding in project planning phase causes inefficiency in project delivery Poor road and infrastructure condition to remote area causes delay in procuring materials Poor safety and security in remote area increases cost and reduces productivity

The findings suggest that although the strategies to overcome challenges in delivering remote NT projects vary, all of those strategies fall under the strategies identified in literature. These strategies ordered by their effectiveness are:

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1. Ensure good communication between site personnel and main office by employing appropriate systems, tools and processes 2. Utilise a project manager who is experienced in delivering infrastructure projects in remote area 3. Actively engage locals where project is being undertaken by informing and educating them about the project 4. Plan projects prior to funding being secured 5. Engage stakeholders early 6. Employ local labours and businesses to reduce cost and support regional growth 7. Negotiate more flexible funding arrangement (i.e. multi-year funding arrangement)

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Nutley, S, 2003, “Indicators of transport and accessibility problems in rural Australia”, Journal of Transport Geography, vol. 11, issue 1, p.55-71 Olander, S and Landin, A 2005, “Evaluation of stakeholder influence in implementation of construction projects”, International Journal of Project Management, vol. 23, issue 4, pp. 321-328. Power and Water Corporation 2012, Essential Services Annual Report 2012, viewed 5 April 2013,

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Rumane, AR 2011, Quality Management in Construction Projects, Taylor and Francis Group, Florida, USA Sambasivan, M and Soon, YW, 2007, “Causes and Effects of Delays in Malaysian Construction Industry”, International Journal of Project Management, vol. 25, issue 5, pp.517-526. Shah, C and Burke, G 2003, Skills shortages: concepts, measurement and implications, Centre for the Economics of Education and Training, Monash University, Melbourne, Victoria, viewed 7 May 2013

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Sidawi, B 2012, “Management problems of remote construction projects and potential IT solutions; The case of kingdom of Saudi Arabia”, Journal of Information Technology in Construction (ITcon), vol. 17, pp. 103-120 Voge, W 2007, Stakeholder Commitment: Why Is It Important?, Executive Brief, viewed 15 April 2013, . Walker, BW, Porter, DJ and Marsh, I 2012, “Fixing The Hole in Australia’s Heartland: How Government needs to work in remote Australia”, Desert Knowledge Australia, viewed online 23 April 2013

CHAPTER THIRTEEN INTEGRATED PROJECT DELIVERY IN LARGE-SCALE RESIDENTIAL ARCHITECTURE IN AUSTRALIA DANIELA WOLFF, DESIREE BEEKHARRY, ANTHONY WOOD

This research investigates integrated project delivery (IPD) as an alternative project delivery method (APDM) for large scale residential architecture projects in Australia, such as new developments of multi-unit, high-rise apartment buildings or hotels that require significant preconstruction involvement from multiple design professionals and consultants. It identifies the level of IPD awareness, knowledge and experience amongst project stakeholders. In recent years, APDM have become a topical theme in the desire to improve the performance of construction projects (Jorgensen and Emmitt 2009, 255). There is an abundance of construction delivery literature comparing the performance of all kinds of project delivery methods (PDM) (Asmar, Hanna and Loh 2013, 2). However, many of the projects under investigation are not the kind that architects focus on. Moreover, the limited available literature of those relating to the multi-housing residential architecture industry, where design quality plays an important role, has been left widely unnoticed (Volker and Klein 2010, 39). Set alongside the literature on APDM is the evolving field of IPD. The definition of IPD continues to generate considerable debate and controversy. This study looks at IPD being carried out through a collaborative team of owner, architect, constructor and major consultants who share goals, liabilities, and rewards (Asmar, Hanna and Loh 2013, 1; Novitski 2008, 59). Within the IPD system, as considered within this research context,

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traditional barriers separating the design process from construction activities are removed. Several professional organisations and researchers are supporting the advancement of this PDM (CMAA 2009; Ilozor and Kelly 2012, 23), however, although several projects have demonstrated its benefits (Asmar, Hanna and Loh 2013, 12) and a huge interest in IPD has been reported, the current adoption status by the construction industry remains relatively small (Baiden and Price 2010, 129; CMAA 2012, 8; Ilozor and Kelly 2012, 28; Kent and Becerik-Gerber 2010, 815). This research aims to contribute towards the limited existing pool of knowledge of APDM within the area of large scale residential architecture projects, where design quality and innovation is of utmost importance. The goal is to investigate whether IPD can be considered a prospective APDM for large scale residential projects in Australia, and whether project stakeholders believe that it has the potential for enhanced project efficiency, competitive advantage, design and innovation. To gather data about participants’ attitudes towards currently applied PDM and IPD, as well as participants’ knowledge and experience levels with IPD, structured and anonymous web-based questionnaires were used to conduct a survey of project stakeholders throughout Australia. Accordingly, this research may encourage organisations within the Australian AEC industry to move away from “traditional” project procurement towards a more integrated approach.

Background The idea for this research and for looking into IPD, originated mainly through four key issues associated with large scale residential architecture projects: 1) the reduction in fees and leadership position for architects; 2) the highly competitive architecture industry; 3) the inefficiency and fragmentation of construction projects; and 4) the reduction in design and construction quality. As buildings have become more complex, the construction industry has become more specialised, segregating a process that was formerly directed from inception to completion by one master builder (Kent and BecerikGerber 2010, 815; Yates and Battersby 2003, 636). This change in project delivery since the early 20th century has been reported to have led to a continuous reduction of the role of the architect, moreover into tasks that are restricted to delivering the design only and consequently to a reduction

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in fees (Volker and Klein 2010, 45). Activities such as briefing and supervision on the construction site have been mostly taken over by other parties (Lourens, cited in Volker and Klein 2010, 45), and builders have garnered status as the most appropriate leader of the project team (Jauregui 2010, 8; Solomon 2005, 4). In addition, to the above, a rise in building requirements and regulations over the years has resulted in further decreases in fees, as well as scope for the architects, due to the involvement of various other design professionals and consultants. Cornelis (cited in Volker and Klein 2010, 45) goes a step further and speaks of the “erosion” of the role and position of the architect and considers it a worrying trend in relation to the future existence of the profession. Hence, the search for a PDM that has larger potential for increased profits and opportunities to regain the leadership. It has been suggested that architects could improve their competitive and financial position by taking on an active role in IPD (Volker and Klein 2010, 39). The above mentioned issues are however not the only ones associated with the industry. In general, it can be said that time has become the most precious element in project delivery (Kessler and Bierly, cited in Elvin 2007, 30) and as a result the ongoing marketplace mandates for buildings to be designed and constructed a lot faster and at lower cost (Bilbo et al. 2014, 1; Pressman 2007, 116). This however, has not only led to a decrease and lack of innovation, but reportedly also to a reduction in design and construction quality (Everett and O’Neill 2013, 9; MollaogluKorkmaz, Miller and Sun 2014, 19; Renier and Volker, cited in Volker and Klein 2010, 45). Furthermore, construction projects have become under scrutiny, because they frequently suffer from adversarial relationships, low rates of productivity, high rates of inefficiency and rework, as well as frequent disputes, resulting in too many projects that cost too much and/or take too long to build (Baiden, Price and Dainty 2006, 13; Furst 2010, 24; Peterson 2012, 558), which justifies the research for a more effective PDM. The aim to better guarantee the successful delivery of construction projects is of course not a new concept and had previously instigated a variety of APDM, including Design Build (DB) and Construction Management at Risk (CMAR) (Bilbo et al. 2014, 1; Furst 2010, 20). Each method involves a unique set of contractual relationships between the owner, the designer and the builder, and each have their advantages and

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disadvantages (CMAA 2012, 1). But despite the growing interest for APDM, especially within the commercial, public and infrastructure sector, most large scale residential architecture projects in Australia are still being delivered through “traditional” procurement methods, such as Design-BidBuild (DBB). However, Thomas (cited in Solomon 2005, 1) states that owners are increasingly “fed up” with DBB, and are demanding DB instead, because it saves time and money and reduces conflict. DB has long been adopted as a PDM in hopes for improved performance, in particular within the commercial, public and infrastructure sector (Chang, Shen and Ibbs 2010, 1525). The concept of the DB project delivery is that the contractor has the responsibility for both the design and construction stages (CMAA 2012, 21; Jolly et al. 2005, 397). This however brings the architect several disadvantages, including lower profits and reduced levels of control. Furthermore, the quality level offered by this PDM remains a concern. Reduced quality has also been reported to be an issue within large scale residential developments (Everett and O’Neill 2013, 9), even under traditional DBB project procurement. Everett and O’Neill (2013, 9) for example, found in their study on multi-residential housing in Brisbane, that the general consensus from industry professionals was that developments are cheap and of poor quality. Overall, the underlying problem with PDM is said to be that of fragmented project teams and the separation between the design and production, which adds to the long list of project inefficiencies (Bouchlaghem, cited in Jorgensen and Emmitt 2009, 225; Furst 2010, 20; Kent and Becerik-Gerber 2010, 815; Yates and Battersby 2003, 637). “The historical reasons for this dysfunctionality are many, including a multiplicity of participants with conflicting interests, incompatible cultures and limited access to necessary information” (Noble 2007, 65). The desire to maximise profit is often the main focus of individual project team members, which consequently leads to conflicting goals (Baiden and Price 2010, 130). Pressman (2007, 116) also states that the problems and inefficiencies inherent in the process of design and construction are necessitating a shift towards greater multidisciplinary collaboration and information sharing among project team members. IPD is said to support this theory. Furthermore, research into IPD suggests that it has also significant potential for increased competitiveness (Baiden and Price 2010, 131).

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Overall, the literature on balance is overwhelmingly positive regarding the future of IPD and the many benefits it promises to deliver (Ilozor and Kelly 2012, 31). From research it appears that IPD has not only the greatest potential to encourage innovation but also to increase competitive advantage, which makes it a very attractive PDM for architecture practices. This is also the view of Volker and Klein (2010, 39), who state that “architects could improve their competitive position and project portfolio by taking on an active role in innovative integrated projects”, which is why IPD has been selected for this research.

Methodology Firstly, a critical literature review was to outline the depth and breadth of the existing body of knowledge in the area of IPD and other commonly applied PDM. Secondly, empirical research was conducted through structured anonymous web-based questionnaires. Because of the nature of the research in that it relates not only to a PDM where not much quantified research data exists and but also specifically to large scale residential architecture projects in Australia, the questionnaire survey was used as choice of data collection “due to its ability to cover a large number of respondents” (Arditi and Gunaydin, cited in Oyedele 2013, 346). The objectives of the research limit the types of respondents to those who are merely involved in large scale residential architecture projects and who have an interest in APDM and IPD in particular. The targeted professionals were architects. The invitation to complete the survey was send out to the members of the Australian Institute of Architects through their monthly newsletter. The main survey questions were developed to investigate satisfaction with current PDM, current status of PDM adoption, awareness, knowledge and experience levels of the project participants regarding IPD, and attitudes towards and perceptions of IPD adoption and its advantages. Fifty-two submitted questionnaires form the basis of the subsequent analysis. This number of responses is considered acceptable for this research given that the survey topic is very specific and includes a relatively new PDM, and therefore does not suit everyone in the chosen survey population. Moreover, considering Australia is a relatively small country in regards to its number of citizens, realistically only a small

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percentage of architects would have had the opportunity to work on large scale residential projects in Australia.

Key Findings Responses to the survey were received from 5 states of Australia. Queensland (46%), Victoria (27%), New South Wales (21%), South Australia (4%) and Tasmania (2%). The results below were analysed through comparative analysis and also categorised into groups such as occupation, age and experience levels, however, due to the limited amount of submitted questionnaires no statistically significant differences between the different groups were identified. To determine whether a shift from “traditional” PDM towards IPD can be expected for large scale residential architecture projects in Australia in the near future, project stakeholders were asked a series of nine key questions. Starting with 3 questions relating to general PDM, the participants were asked if they believe that large scale multi-housing projects are delivered in an efficient manner. The purpose of this question was to test Hypothesis No. 1 (that project stakeholders are dissatisfied with current PDM). Data analysis, however, reveals that 60% of respondents do believe that large scale multi-housing projects are delivered efficiently, compared with 29% that don’t, while 11% were undecided. To test hypothesis No. 2 (that most large scale multi-housing developments are still delivered through “traditional” PDM such as DBB), respondents were asked to state what they believe is the most common PDM for large scale multi-housing developments in Australia. The results show that overall 71% believe that DBB is the most common PDM, followed by DB (15%) and CMAR (6%). No other PDM was mentioned by any of the survey respondents, however, 8% of the respondents were unsure. In the last question relating to general PDM, respondents were asked what they believe is the most effective PDM for large scale multi-housing projects in Australia. Figure 13-1 shows that nearly two-thirds of the respondents (61%) rate IPD as the most effective PDM followed by DBB with 23%. In third place comes DB (10%) and fourth place is occupied by CMAR (4%). A total of 2% of respondents were undecided.

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2% 23%

DBB DBB

10% 61%

4%

CMAR IPD Not Sure

Fig. 13-1. Most effective PDM for large-scale multi-housing projects

To test how much knowledge, experience and actual involvement the participants have with IPD, three more core questions were asked. The first question asked whether respondents were familiar with the term “integrated project delivery” (IPD). Overall, more than three-quarters (79%) of total respondents answered in the affirmative; only 21% of respondents indicated that they are not familiar with the term. In the second question, participants were asked to rate what they believed reflects their knowledge/experience levels with this PDM on a scale of 1 to 5, where 1 represents very low levels, and 5 represents very high levels. It was found that despite the continuing popularity of IPD, project stakeholders have limited experience of working with this type of PDM. Although more than three-quarters of the respondents indicated familiarity with the term IPD, only 8% rated their knowledge and experience level as high. Most respondents (40%) had only moderate experience with this PDM, while over half indicated low (29%) or even very low (23%) knowledge/experience levels. None of the respondents indicated a very high level of experience with this PDM, as shown in Figure 13-2. In the last question related to this sub-section, participants were asked if they had been involved in a project that utilised IPD or some other form of collaborative agreement. The results show that a majority of the consulted respondents (48%) have never been involved in IPD or some other form of collaborative agreement, while one-third (31%) have actually engaged in these PDM. The remaining 21% indicated that they are not sure.

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dge/experience levels of respoondents with IP PD Fig. 13-2. Geeneral knowled

The nextt part of the survey findings related to the potential future of IPD associaated with large scale resideential architeccture projects.. Overall, an overwhellming 71% believe that th here is a needd for a more integrated i approach, ccompared to 10% of respo ondents who believe the opposite. Here, a totall of 19% weree undecided. Responddents were alsso asked if theey see IPD ass a possible APDM A for large scale multi-housingg projects in Australia inn the near futture. The results show w that 69% of the responden nts do see IPD D as a possiblee APDM, compared too 6% who do not. n A total off 25% were unndecided. The last question of thhe survey was concerned w with the perceeptions of participants regarding thee advantages of IPD. Resp ondents were asked to choose from m a serious off multiple choice answers w what they thin nk are the benefits andd advantages that t could resu ult from the iimplementatio on of IPD in general. The results show that the respondeents were in n general agreement aabout the addvantages of IPD resultingg in enhanceed design quality withh a total of 699% of respond dents selectinng this option.. Another majority seelected enhannced innovattion (54%), closely follo owed by enhanced coonstruction quuality (52%) and a enhanced competitive advantage a (44%). Shorrter project deelivery receiv ved 38% of thhe votes, enhaanced job satisfaction 27%, price-ccertainty 13% % and better ccompensation n 13%. A total of 17% % were unsurre, other 4%. Figure 3 sum mmarises thee answers given.

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Fig. 13-3. Ad dvantages of IP PD

Discusssion The goaal for the queestionnaire ou utput was to vverify whetheer IPD is considered a possible AP PDM amongstt project stakeeholders for laarge scale residential aarchitecture projects, p and whether a shhift from “traaditional” PDM towards IPD can be expected in n the near futuure. In order to t answer the researchh question, the t survey was w to test w whether three selected hypotheses aare correct (seee table 13-1).. Table 13-1. R Research Hypootheses Hypothesis 1:

Project stakeholders are dissatisfied d withh current PDM of large scale residential architectu ure developmennts and prefer a more integrated approach.

Hypothesis 2:

Despite thee growing interest for APDM w within the commercial, public and infrastructure sector, s most larrge scale residen ntial architecturre projects in Au ustralia are stilll being delivereed through DB BB.

Hypothesis 3:

Project stakeholders are willing w to move away from “traditionaal” project procu urement towardds a more integrrated approach inn view of enhan nced design quaality, efficiency y, profits andd competitive ad dvantage.

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Hypothesis 1 The assumption that project stakeholders are dissatisfied with current PDM of large scale residential architecture developments and prefer a more integrated approach has been found to be only partially true. Data analysis revealed that nearly two-thirds (60%) of respondents do believe that these projects are delivered efficiently, compared with 29% that don’t. These results are in agreement with two studies conducted on architects in the Netherlands (Volker and Klein 2010, 55) and on architecture, engineering and construction professionals in San Francisco (Yates and Battersby 2003, 641), where the authors came to the conclusion that designers and non-designers were still very satisfied with the “traditional” DBB system. This might be one of the reasons for the slow adoption of IPD and the limited amount of projects executed under this type of PDM. However, this result is in disagreement with the work produced by Kent and Becerik-Gerber (2010, 815) who stated that a total of 65% of their respondents believed that these construction projects in the United States were not delivered efficiently. There are of course multiple factors that have to be taken into consideration when looking at the differences in the results from various studies including the profession of respondents, the type of projects under investigation, the country of origin as well as the year the study was done. For example the assertion made by Thomas (cited in Solomon 2005, 1) that “owners are increasingly ‘fed up’ with DBB” might well be correct given the fact that this study has predominantly investigated the opinions of architects and designers and not of owners. Furthermore, data analysis also revealed that although participants seem to be satisfied with current PDM, nearly two-thirds of the respondents (61%) also rate IPD as the most effective PDM, followed by DBB (23%), DB (10%) and CMAR (4%). This result is underpinned by an overwhelmingly 71% of respondents who do believe that there is a need for a more integrated approach in the industry, compared to 10% of respondents who believe the opposite. Although, this result is statistically significant and indicates that a more integrated project delivery approach in general is regarded as more suitable than “traditional” project procurement by a majority of the architecture professionals, one would have expected for more survey participants to regard the current delivery of large scale architecture projects as inefficient. In this respect, it might

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have been particularly helpful to differentiate between the various stages of projects, such as concept design, design development and construction phase etc. to analyse whether some project phases are regarded as being delivered more efficiently than others. Also, even though the majority of respondents believed that projects are delivered efficiently, the support for a more integrated project delivery approach also corroborates the evidence from earlier surveys (Kent and Becerik Gerber 2010, 822), where a majority of respondents preferred IPD over traditional contractual agreements to avoid adversarial relationships and to ensure more efficiently delivered projects. This finding is also in agreement with Jones’s (2014, 536) study, where all survey participants preferred greater levels of collaboration, to review and resolve design and construction problems, at much earlier stages of the projects than usually occurs.

Hypothesis 2 The assumption that most large scale residential architecture projects in Australia are still being delivered through DBB despite the growing interest for APDM within the commercial, public and infrastructure sector, has been found to be true. When respondents were asked to state what they believe is the most common PDM for large scale multi-housing developments in Australia, 71% stated DBB. This finding not only confirms and supports the impression that the majority of large scale residential projects in Australia are still delivered through DBB but also that the large-scale multi-housing construction sector is firmly wedded to the use of “traditional” procurement methods. This finding corroborates evidence from a survey conducted by the American Institute of Architects Centre for Integrated Practice (AIACC 2011, 3) in the United States, where DBB remained the most common PDM, and where nearly 60% of respondents reported completing projects through this PDM. Interestingly, and although the performance of DBB as a procurement method has been widely criticised by industry professionals, it is not only the most common PDM for large scale residential developments in Australia, but it is also still regarded as an efficient PDM by a majority of the survey participants. The reasons for this could be many, including a lack of knowledge and experience with other PDM, a lack of empirical comparison of large scale

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architecture projects executed under different PDM, fear of change, including the unwillingness of owners to move away from this PDM because of the attitude “we have always done it this way for many years”. As mentioned by Hellmund, Wymelenberg and Baker (2008, 41) “change always comes with great effort and several challenges”. Because owners are the ones that award contracts, it is the most important project stakeholder group to educate regarding the benefits of IPD and design (Hellmund, Wymelenberg and Baker 2008, 42). In this respect, again, it would have been helpful to have had a large number of owners participating in the research to be able to analyse patterns and differences between the occupation group owner and architect. Despite the continuing popularity of IPD, project stakeholders have limited experience of working with this type of PDM. Firstly, although more than three-quarters (79%) of total respondents indicated that they are familiar with the term IPD, only 8% rate their knowledge and experience level as high, while most respondents (40%) have only moderate experience with this PDM. Moreover, over half indicated low (29%) or even very low (23%) knowledge/experience levels, while none of the respondents indicated a very high level of experience with this PDM. Based on these results it can be argued that to date, employees have not had the necessary training and that most companies are consequently insufficiently prepared to implement this type of PDM on their projects. It is also reasonable to argue that the lack of knowledge and experience with IPD needs to be overcome before this APDM can become widely embraced in the future. This is also the view of Mollaoglu-Korkmaz, Miller and Sun (2014, 20), who suggest that “to achieve IPD’s intended benefits, AEC project teams first need to comprehend how to effectively implement this administrative innovation”. This assertion is also in accordance with Ghassemi and Becerik-Gerber (2011, 41), who state in their research paper that “IPD training played an important role on most of the projects investigated and proved to be a crucial element in overcoming cultural barriers”. The above assumption is also underpinned by the fact that only 31% of the consulting respondents indicated previous involvement in a project that utilised IPD or some other form of collaborative agreement. Here it would have been interesting to differentiate between true IPD and various other forms of collaborative agreements. This finding also corroborates with a

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survey conducted by the AIACC (2011, 3), where only 12% of respondents indicated previous engagement with this type of PDM. Overall, the continuous use of traditional PDM and limited experience of project stakeholders with IPD undermines and confirms the assumption that IPD in Australia is still in its infancy.

Hypothesis 3 The assumption that project stakeholders are willing to move away from “traditional” project procurement towards a more integrated approach in view of enhanced design quality, efficiency, profits and competitive advantage has been found to be only partially true. When respondents were asked if they see IPD as a possible APDM in the near future, in particular for large scale multi-housing projects in Australia, 69% answered with yes. This shows that over three-quarters of respondents are not opposed to a potential shift from “traditional” project procurement towards IPD, in particular for these type of projects. However, again it would have been interesting to have had a large number of responses from owners to analyse if this can also be said for the main group of project stakeholders that ultimately award the contracts. This finding is also statistically significant, although the results do contradict with the study findings outlined by Kent and Becerik-Gerber’s (2010, 820). Their results inferred that, although IPD is believed to work best on projects that are large, unique or that require substantial coordination, only 11.9% of respondents thought that residential projects would work well with IPD (Kent and Becerik-Gerber 2010, 820). It could however be argued that the problem with their result was that their study did not differentiate between small housing developments and large-scale residential projects. In this respect, it is reasonable to argue that large scale residential construction projects, due to their complex and unique nature could be very well suited for IPD. Moreover, the results also show that several survey participants believe that there are several advantages associated with IPD in comparison with “traditional” project procurement. Most of the respondents (69%) believe that an improvement in product quality can be achieved through the introduction of an IPD model. It could be argued that these responses tallies with the results of the study by Everett and O’Neill (2013, 9), who

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found that the general consensus from industry professionals in regards to multi residential housing in Brisbane was that developments are cheap and of poor quality. This is also underpinned by a majority of respondents selecting enhanced innovation (54%) and enhanced construction quality (52%) as the resulting benefits of IPD. Interestingly, only 13% of the participants voted for better compensation. It is reasonable to assume that one of the reasons for this low result could again be the limited understanding of the contractual side of the IPD system. This assertion corroborates with study findings from Azhar (2014, 212), where it was found that, although project owners had a positive perception about IPD in general, some key characteristics, including the contractual side of IPD were not well understood. Overall, it can be argued that participants do see some advantages in using IPD instead of traditional procurement methods for large residential architecture projects, although there is still some disbelief at present about some of the benefits it promises to deliver. Generally, although initial results are promising as there seems to be a genuine interest in IPD, it can be argued that the lack of IPD knowledge and experience needs to be overcome before this APDM can become a widely embraced PDM in the future. Project stakeholders and in particular owners are unlikely to transition to a new PDM if they don’t clearly understand the advantages and disadvantages. Furthermore, it is suggested that the current curriculum of professional education, such as that of architecture studies may need to be adjusted or extended to include integrated project management practices in the future. Moreover, although the architecture professionals that have participated in this study were overwhelmingly positive of a potential shift from “traditional” project procurement towards IPD, the owner’s should not be forgotten when evaluating the future of IPD. Because owners are the ones that award the contracts, it is the most important stakeholder group to educate regarding its advantages and disadvantages. All in all, because the drivers for change usually result out of a need, it is questionable whether all project stakeholders, and in particular owners currently see the delivery of large scale architectural projects as inefficient or problematic enough to take the next steps towards implementing IPD.

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Conclusion The analysis of 52 survey responses confirmed that the majority of survey participants (69%) does see IPD as a potential APDM for large scale residential architecture projects in Australia in the near future. Interestingly, findings from the assessment also showed that two-thirds of participants believe that major DBB projects are currently delivered efficiently, although this procurement method has been widely criticised by industry professionals and scholars. Nevertheless, 71% of the participants also believed that there is a need for a more integrated approach within the industry in general. However, some disbelief about some of the advantages of IPD could be seen in the analysis of the responses, in particular regarding the contractual side of IPD. Moreover, experience levels with this APDM remain relatively low. 52% of professionals indicated limited knowledge/experience levels and only 31% of respondents indicated previous involvement in IPD projects. Overall and although industry professionals do see a need to move away from “traditional” project procurement towards a more integrated approach and also see IPD as a possible APDM, it can be concluded that the lack of knowledge and experience with this APDM needs to be overcome before IPD can become widely embraced in the future.

References AIACC (American Institute of Architects Centre for Integrated Practice). 2011. “Integrated project delivery awareness survey.” Accessed October 2014. . Asmar, Mounir El, Awad S. Hanna and Wei-Yin Loh. 2013. “Quantifying performance for the integrated project delivery system as compared to established delivery systems.” Journal of Construction Engineering and Management 139 (11): 1-14. Azhar, Nida. 2014. “Integrated construction project delivery system in the U.S. public sector: an information modelling framework.” PhD diss., Florida International University.

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Baiden, Bernard K., and Andrew D.F. Price. 2010. “The effect of integration on project delivery team effectiveness.” International Journal of Project Management 29 (2): 129-136. Baiden, Bernard K., Andrew D.F. Price and A.R.J. Dainty. 2006. “The extent of team integration within construction projects.” International Journal of Project Management 24 (1): 13-23. Bilbo, David, Ben Bigelow, Edelmiro Escamilla and Christa Lockwood. 2014. “Comparison of construction manager at risk and integrated project delivery performance on healthcare projects: a comparative case study.” International Journal of Construction Education and Research 1-14. Chang, Andrew S., Fang-Ying Shen and William Ibbs. 2010. “Design and construction coordination problems and planning for design-build project new users.” Canadian Journal of Civil Engineering 37 (12): 1525-1534. Construction Management Association of America (CMAA). 2009. “Managing integrated project delivery.” Accessed August 2014. https://cmaanet.org/files/shared/Managing_Integrated_Project_Deliver y_Final.pdf. Construction Management Association of America (CMAA). 2012. “An owner's guide to project delivery methods.” Accessed August 2014. https://cmaanet.org/files/Owners%20Guide%20to%20Project%20Deli very%20Methods%20Final.pdf. Elvin, George. 2007. Integrated practice in architecture: mastering design-build, fast-track, and building information modelling. Hoboken: John Wiley & Sons. Everett, Daniel and Justin O’Neill. 2013. “Alternative delivery and procurement method: medium density multi-residential housing, Brisbane QLD Australia.” Paper presented at the QUThinking Conference, Brisbane, November 8. Furst, Peter G. 2010. “Constructing Integrated Project Delivery.” Industrial Management 54 (4): 19-24. Ghassemi, Reza and Burcin Becerik-Gerber. 2011. “Transitioning to integrated project delivery: potential barriers and lessons learnt.” Lean Construction Journal 32-52. Hellmund, Amy J., Kevin G. Wymelenberg and Kenneth Baker. 2008. “Facing the challenges of integrated project delivery.” Energy Engineering 105 (6): 36-47. Ilozor, Benedict D. and David J. Kelly. 2012. “Building information modeling and integrated project delivery in the commercial

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construction industry: a conceptual study.” Journal of Engineering, Project and Production Management 2 (1): 23-36. Jauregui, Luis. 2010. “Architects should be leading design/build projects” Residential Design + Build, October. Jolly, Lesley, David Radcliffe, Michael Nycyk and Janthea Andersen 2005. “An evolving model of design culture.” Paper presented at the ICED 05, 15th international conference of engineering design, Melbourne, August 15-18. Jones, Barry. 2014. “Integrated project delivery (IPD) for maximising design and construction considerations regarding sustainability.” Procedia Engineering 95 (1): 528-538. Jorgensen, Bo and Stephen Emmitt. 2009. “Investigating the integration of design and construction from a “lean” perspective.” Construction Innovation 9 (2): 225-240. Kent, David C. and Burcin Becerik-Gerber. 2010. “Understanding construction industry experience and attitudes towards integrated project delivery.” Journal of Construction Engineering and Management 136 (8): 815-825. Mollaoglu-Korkmaz, Sinem, Vernon D. Miller and Weida Sun. 2014. “Assessing key dimensions to effective innovation implementation in interorganizational project teams: an integrated project delivery case.” Engineering Project Organization Journal 4 (1): 17-30. Noble, Christopher. 2007. “Can project alliancing agreements change the way we build?” Architectural Record 195 (7): 65-66. Novitski, B.J. 2008. “New AIA agreements support integrated project delivery.” Architectural Record 196 (7): 59. Oyedele, Lukumon O. 2013. “Analysis of architects’ demotivating factors in design firms.” International Journal of Project Management 31 (3): 342-354. Peterson, Zach. 2012. “One small step in mindset, one giant leap for the construction law industry: how the judicial stage is set for IPD and the only thing is missing is willing participants.” Northern Kentucky Law Review 39 (3): 557-587. Pressman, Andrew. 2007. “Integrated practice in perspective: a new model for the architectural profession.” Architectural Record 195 (5): 116120. Solomon, Nancy B. 2005. “The hopes and fears of design-build.” Architectural Record 193 (11): 1-6. Volker, Leentje and Robert Klein. 2010. “Architect participation in integrated project delivery: the future mainspring of architectural design firms?” Gestão & Tecnologia 5 (3): 39-58.

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Yates, J.K. and Leslie C. Battersby. 2003. “Master builder project delivery system and designer construction knowledge.” Journal of Construction Engineering and Management 129 (6): 635-644.

PART FOUR CONTINUOUS IMPROVEMENT AND BENCHMARKING

CHAPTER FOURTEEN ESTABLISHING AND BENCHMARKING PROJECT MANAGEMENT MATURITY ANDRIES DU PREEZ, ANTHONY WOOD, CHRIS MARTIN

The primary objective of this research was to provide a baseline of project maturity assessment for ABC Corporation1, a publicly-listed energy and resources company, to identify key gaps and make recommendations for improvement. A survey was conducted with a sample of employees at ABC Corporation by using the Kerzner’s Project Management Maturity Model (2014) or KPM3. The results established a benchmark for the organisation and provided a relative assessment compared to companies of similar size. Gaps in project management maturity at ABC Corporation were identified and recommendations were made for improvement, which ultimately is anticipated to improve the probability of success of ABC Corporation’s project pipeline. The resultant “case study” provides a useful model by way of example for other organisations undertaking project management maturity assessment. The first focus of this research was to explore project management maturity models that may be best suited for use or to be adapted for use in assessing project management maturity in the resources and energy sector in Australia. Particular interest is placed on models that may be well suited to be used to assess the primary objective in this study, namely: What is the project maturity level at ABC Corporation?

1

“ABC Corporation” is a pseudonym used to protect the anonymity of the actual organisation.

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In order to compare the future survey outcome of ABC Corporation to similar organisations, a summary of maturity levels of global companies from relevant studies are also presented. “Organisational Project Management Maturity” is defined in the PMBOK® Guide as “the level of an organisation’s ability to deliver the desired strategic outcomes in a predictable, controllable and reliable matter” (PMI 2013, p.548). However research shows at a survey of 220 respondents conducted by the National Integration of Brazilian PMI Chapters that 94 percent of surveyed companies see the value of improving their project management maturity (Ellis 2008, p.37). This is further supported by research by Anderson and Jessen (2007, pp.4-5) conducted with 59 middle managers in Norway and 56 managers in China that companies with high maturity levels have improved project success rates and should prioritise its resources to improve project maturity to achieve better project results. This hypothesis that “the greater the overall project management maturity, the greater the impact on overall project performance”, is also supported by research from Andersen and Jessen (2007, p.1; 2003 p.458) and Mullaly (2006, p.64). ABC Corporation is a large public organisation listed on the Australian Stock Exchange and within the 100 largest companies by capitalisation. Its turnover is approximately $700 million dollar per year with a strong balance sheet. The company is embarking on a large project investment portfolio totalling over one billion Australian dollars. The company’s project maturity is not well understood, placing the company at risk of poor performance of projects without the right level of project processes and organisational structures in place. It is the objective of this research to provide a baseline of project maturity for the company, identify key gaps and make recommendations for improvement.

Background Maturity models have evolved from the first Capability Maturity Models (CMM) by the Software Engineering Institute (SEI) to assess practices against set standards as originally conceived by Watts Humphrey in 1989 (Humphrey 1995, p.82). The CMM model purports that organisations must measure, monitor and control processes if they want to achieve improvement and predictability in their process. The SEI/CMM maturity principles have become a basis for most maturity models and are captured in Table 14-1.

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Table 14-1. Process Maturity Principles in SEI/CMM (Adapted from Kasse 2008, p.20) Maturity Level

Description

1 - Initial

The process is informal and ad hoc. Few processes are defined, poorly controlled and success depends on individual effort.

2 - Repeatable

Project management processes are basic to track cost and schedule and is often reactive. The necessary process discipline is in place to repeat earlier successes on projects with similar applications.

3 - Defined

Technical practices and processes are documented, standardised and integrated into a standard process for the organisation. All projects use an approved version of the organisation‘s standard process.

4 - Managed

Products and process are quantitatively controlled. Detailed measures of the processes and product quality are collected.

5 - Optimising

Process improvements are institutionalised.

These principles were adapted by the Project Management Institute in developing a generic description against the nine knowledge areas (as current at the time), as depicted in Table 14-2. Table 14-2. Project maturity assessment for PMBOK® Guide knowledge areas (from Burns & Crawford 2002) Levels of Project Management Maturity Project Integration Management

Level 1

Level 2

Level 3

Level 4

Level 5

Initial Process

Structured Process and Standards

Organizational Standards and Institutionalized Process

Managed Process

Optimized Process

No established practices, standards, or Project Office. Work performed in ad hoc fashion.

Basic, documented processes for project planning and reporting. Management only involved on high-visibility projects.

Project integration efforts institutionalized with procedures and standards. Project Office beginning to integrate project data.

Processes/standards utilized by all projects and integrated with other corporate processes/systems. Decisions based on performance metrics.

Project integration improvement procedures utilized. Lessons learned regularly examined and used to improve documented processes.

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268 Project Scope Management

General statement of business requirements. Little/no scope management or documentation. Management aware of key milestones only.

Basic scope management process in place. Scope management techniques regularly applied on larger, more visible projects.

Full project management process documented and utilized by most projects. Stakeholders actively participating in scope decisions.

Project management processes used on all projects. Projects managed and evaluated in light of other projects.

Effectiveness and efficiency metrics drive project scope decisions by appropriate levels of management. Focus on high utilization of value.

Project Time Management

No established planning or scheduling standards. Lack of documentation makes it difficult to achieve repeatable project success.

Basic processes exist but not required for planning and scheduling. Standard scheduling approaches utilized for large, visible projects.

Time management processes documented and utilized by most projects. Organization wide integration includes inter-project dependencies.

Time management utilizes historical data to forecast future performance. Management decisions based on efficiency and effectiveness metrics.

Improved procedures utilized for time management processes. Lessons learned are examined and used to improve documented processes.

Project Cost Management

No established practices or standards. Cost process documentation is ad hoc and individual project teams follow informal practices.

Processes exist for cost estimating, reporting and performance measurement. Cost management processes are used for large, visible projects.

Cost processes are organizational standard and utilized by most projects. Costs are fully integrated into project office resource library.

Cost planning and tracking integrated with Project Office, financial, and human resources systems. Standards tied to corporate processes.

Lessons learned improve documented processes. Management actively uses efficiency and effectiveness metrics for decision-making.

Project Quality Management

No established project quality practices or standards. Management is considering how they should define “quality”

Basic organizational project quality policy has been adopted. Management encourages quality policy application on large, visible projects.

Quality process is well documented and an organizational standard. Management involved in quality oversight for most projects.

All projects required to use quality planning standard processes. The Project Offices coordinates quality standards and assurance.

The quality process includes guidelines for feeding improvements back into the process. Metrics are key to product quality decisions.

Project Human Resource Management

No repeatable processes applied to planning and staffing projects. Project teams are ad hoc. Human resource time and cost is not measured.

Repeatable processes in place that defines how to plan and manage the human resources. Resource tracking for highly visible projects only.

Most projects follow established resource management processes. Professional development program establishes project management career path.

Resource forecasts used for project planning and prioritization. Project team performance measured and integrated with career development.

Process engages teams to document project lessons learned. Improvements are incorporated into human resources management process.

Project Communications Management

There is an ad hoc communications process in place whereby projects are expected to provide informal status to management.

Basic process is established. Large highly visible projects follow the process and provide progress reporting for triple constraints.

Active involvement by management for project performance reviews. Most projects are executing a formal project communications plan.

Communications management plan is required for all projects. Communications plans are integrated into corporate communications structure.

An improvement process is in place to continuously improve project communications management. Lessons learned are captured and incorporated.

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Project Risk Management

No established practices or standards in place. Documentation is minimal and results are not shared. Risk response is reactive.

Processes are documented and utilized for large projects. Management consistently involved with risks on large or highly visible projects.

Risk management processes are utilized for most projects. Metrics are used to support risk decisions at the project and the program levels.

Management is actively engaged in organizationalwide risk management. Risk systems are fully integrated with time, cost and resource systems.

Improvement processes are utilized to ensure projects are continually measured and managed against value-based performance metrics.

Project Procurement / Vendor Management

No project procurement processes in place. Methods are ad hoc. Contracts managed at a final delivery level.

Basic process documented for procurement of goods and services. Procurement process most utilized by large or highly visible projects.

Process and organizational standard and used by most projects. Project team and purchasing department integrated into the procurement process.

Make/buy decisions are made with and organizational perspective. Vendor is integrated into the organization’s project management mechanisms.

Procurement processes reviewed periodically. Ongoing process improvement focus on procurement efficiency and effective metrics.

Scholars agree (Kerzner 2005, Schlichter 2014, Khoshgoftar and Osman 2009) that project management maturity models are effective in quantifying the level of project systems and processes. Universal scales of 1 to 5 are commonly used, as summarised by Khoshgoftar and Osman (2009, p.299). It is further agreed in general that project maturity does not progress to an end state, but culminates in a continuous improvement process (Andersen and Jessen 2003, p.457; Skumolski 2001, p.11, Grant & Pennypacker 2002). There are over 40 Maturity Models in circulation according to Iqbal (2005, p.2) and each addresses specific aspects of an organisation, ranging from organisational maturity, risk, earned value, programme and many more. Khoshgoftar and Osman (2009, p.297) assessed these models and found that they are different from each other in terms of their factors and characteristics and also that there is no standard related to these models. Khoshgoftar and Osman (2009, pp.297 – 300) selected and assessed nine most commonly used and recent maturity models against 27 variables that gives an insight into the most appropriate assessment model for different industries. Table 14-3 provides the overview of this assessment and form the basis for this study to further select an appropriate model for the resource and energy sector. The first key consideration for the author is to select a model that is aligned with the Project Management Body of Knowledge (PMBOK® Guide). The PMBOK® Guide is recognised as one of the world standards in project management and describes established norms, methods, processes and practices (PMI 2013, p.1) This requirement

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narrows the available project management maturity models down to only three namely OPM3, Kerzner and Berkley. Table 14-3. Comparison of Maturity Models

OGC

IIL

Ibbs

SEI

OMG

PM

PM

PM

PM

PM

Software

Business

Maturity Level

FAA-CMM

OGC

PM

BPMM

PMI

Scope

CMMI

PRINCE

Anderson

P3M3

Publisher

SubCriterion

Kerzner

OPM3

Barkeley

(after Khoshgoftar & Osman 2009, pp. 299-300)

SEI

------

1-5

1-3

1-5

1-5

------

1-5

1-5

1-5

Discreet and Continues Details

Continues

Discreet

Discreet

Discreet

Discreet

Continues

Discreet

Discreet

Discreet

Date of Issue

2003

2006

2004

2005

2000

2003

2001

2007

2001

PMBOK

MSP

Prince

PMBOK

PMBOK

Definition of Maturity

Yes

Yes

Medium

Medium

Medium

Medium

Medium

Yes

Medium

Organisation Strategic

Yes

Yes

Medium

Yes

Medium

Yes

Yes

Medium

Medium

Project Management Process

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Program Management Process

Yes

Yes

Yes

No

Yes

Yes

Yes

Yes

Yes

Portfolio Management Process

Yes

Yes

No

No

No

Yes

No

No

No

Coverage Assessment

Medium

Low

Low

High

Medium

Low

Medium

Medium

Medium

Assessment Difficulty

Low

High

High

Low

Medium

Unknown

High

High

High

Assessment Cost

Low

High

High

Low

High

Unknown

Medium

Medium

Medium

Quantitative Results

Yes

No

No

Yes

Yes

Yes

Tangible of Results

Yes

Unknown Unknown

Yes

Yes

Yes

Yes

Identifying weakness and strengths

Yes

Unknown Unknown

Yes

Yes

Yes

Yes

Yes

Yes

Continuous Assessment

Yes

Unknown Unknown

Medium

Yes

No

Yes

Yes

Yes

Refer to Standard

Unknown Unknown Unknown Unknown Unknown

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Training Difficulty

Low

High

High

Medium

High

Extremely High

High

High

High

Commitment for Continuous improvement

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Suggestion of Alternative for Improvement

Yes

Yes

Yes

Yes

Unknown

No

Yes

Yes

Yes

Priority of Improvement

Medium

Low

Low

Medium

Unknown

No

Medium

Medium

Medium

Support by Publisher

High

High

High

High

Low

No

High

Medium

Medium

New Edition

Yes

Yes

Yes

Yes

Unknown

No

Yes

Yes

Yes

Easy for Execution

Yes

Yes

Yes

Yes

No

No

Yes

Yes

Yes

Simple and Understandable

Yes

Medium

Medium

Yes

No

Medium

Medium

Medium

Medium

The Kerzner Project Management Maturity Model (KPM3) was selected as an ideal model to assess project maturity at ABC Corporation based on its universal acceptability, capability to benchmark against other organisations, and continuous improvement opportunities that can be readily deduced from the results. Employees were invited to take the assessment through a survey consisting of multiple-choice questions. The resulting scores provide a look at project management within the organisation. The tool also gives a professional analysis of the scores and offers specific suggestions for what the company needs to do differently. The following key attributes (Kerzner 2014) provide further motivation for selection of this model including: • • • • • • •

Instant and objective analysis of the organisation’s strengths and weaknesses as they relate to each level of the PM maturity model. Scoring provides accurate comparison with objective industry standards. The tool is fully aligned with the PMBOK® Guide. Password protected and secure, results are kept strictly confidential. Allows comparisons with companies of similar size, with others in the same industry, or with everyone who has taken the assessment. Helps recognize competitive strengths & weaknesses. Identifies goals to feed into the organisation’s strategic planning for project management.

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Methodology The assessment of ABC Corporation’s project management maturity was conducted with a single targeted survey questionnaire based on the Kerzner Project Management Maturity Model online tool from the International Institute for Learning Incorporated (IIL). The five levels of project management maturity were assessed with 183 targeted and structured questions to determine the participant’s opinion of project management application at the organisation. The five levels of maturity were assessed on three different scoring methods appropriate to the topic being presented. These methods included the selection of a correct answer from a list of potential solutions to test participant’s knowledge, a sliding scale method whereby participants can provide their opinion on a level of agreement or disagreement to a stated position on a project management or process topic, and the allocation of points for the answer selected to a specific topic. IIL provided a private web portal to be used only by the participants. This gave the researcher secure and confidential access to the assessment and to the results. In Kerzner & Ebrary (2005) where this model is described, each maturity level is equipped with explanations about “roadblocks”, “risks”, “advancement criteria” and an “assessment instrument”. The first three concepts represent things an organisation need to know before it can achieve that level and advance to the next level. Each level is accompanied by an assessment instrument in the form of a questionnaire that organisations can use to assess the degree to which it has achieved that level. The online version of the assessment instrument offered by International Institute of Learning (2014) was selected for this research, in preference to using the book (Kerzner & Ebrary, 2005), which is better suited to organisational self-assessment and thus does not readily lend itself to empirical research. A further advantage of the online assessment tool is that it can compare the assessment scores with scores of other organisations that is stored in the Institute of Learnings “benchmarking database”.

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Key Findings The Kerzner Project Management Maturity Model has been used widely across many industries over several years and a database of over 400 companies and more than 3500 individuals have participated. The KPM3 attributed numerical values for each of the five assessment levels in order to quantify a level of maturity. The results in Table 14-4 represent the average results for the participants from ABC Corporation compared to the resource industry in the KPM3 database. Included also is the possible minimum and maximum scores that can be achieved theoretically. These scores were used determine a relative level of maturity for each of the five levels of project maturity. Each level of KPM3 scores were converted to a five-level scale with each level achieving a score out of maximum score of 1 as depicted in Table 14-4. A cumulative score is summed for all five levels and provides a holistic project management maturity score out of a maximum achievable score of 5. Table 14-4. Summary of results Assessment Level

Company Resource Minimum Maximum Average Industry Score Score Average Achievable Achievable

ABC score

KPM3 average score

Level 1 – Common Language

488

451

0

800

0.61

0.60

Level 2 – Common Processes

10

17

-60

60

0.58

0.63

Level 3 – Singular Methodology

129

135

0

210

0.61

0.66

Level 4 – Benchmarking

0

14

-75

75

0.50

0.57

Level 5 – Continuous Improvement

-1

0

-48

48

0.49

0.65

Overall Score:

2.80

3.10

These scales are directly comparable to the universal scoring methods used by other scholars. Table 14-5 below further summarises an international assessment of organisations on a global scale (Young, Young & Zapatta 2014, p.218) of several surveys conducted with several variants

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of the SEI model including the P3M3 model (Grant & Pennypacker 2006, p.59) to which ABC Corporation’s maturity assessment has been benchmarked against. Table 14-5. Project Management Maturity International Comparison Study

Mean Project Management Maturity

Du Preez (2014) for this research

2.80

Ibbs and Kwak (2000)

3.26

Anderson and Jessen(2003)

3.34

Grant and Pennypacker (2003)

2.40

Nieto-Rodriguez and Evrard (2004)

2.00

Grant and Pennypacker (2006)

2.50

The results indicate that ABC Corporation has achieved moderate project management maturity overall with a score of 2.80, which compares well with international benchmarks. Grant and Pennypacker (2006, p.66) identified two key areas of general focus in order to progress into Level 3 overall, thus forming the primary recommendations for ABC Corporation, as follows: 1. Make the project management processes that are currently used in the organisation into an organisational standard; and 2. Expand project management with the involvement of the holistic company.

Discussion Level 1: Common Language is defined by Kerzner (2005, p.42) as an organisation’s good understanding of the basic knowledge of project management and its terminology with an emphasis on robust training and education. The first level of project maturity is also commonly referred to as being the initial step where SEI/CMM (Kasse 2008, p.20) define that organisations at this level have project management processes that is informal and ad hoc with few processes defined, poorly controlled and success depends on individual effort. Participants performed well in Scope and Risk Management areas with scores of 75% and 72% respectively as indicated in Table 14-6. This may

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be an indication of the resource industry’s focus on task definition with associated assessment and mitigation of potential risks. Kerzner (2005, p.66) recommends that scores above 60% shows that there is a reasonable knowledge of project management. ABC Corporation has achieved more than 60% for five of the knowledge areas, namely Scope, Cost, Procurement, Quality and Risk Management. Three areas showed scores lower than 60% and included Human Resource, Communication and Time Management. In particular Human Resources achieved a low score of 45% and also recorded scores as low as 20% for one individual, while 8 participants (or 62% of participants) scored 40% or less. Scores lower than 40% is an indication of a serious lack of knowledge in this area. Table 14-6. Level 1: Common Language individual results Assessment Level

Company Average

Minimum Score

Maximum Company Score score

L1: Common Language

488

420

610

61%

Scope

75

60

90

75%

Time

58

40

90

58%

Cost

61

40

80

61%

Human resources

45

20

80

45%

Procurement

62

40

80

62%

Quality

61

50

80

61%

Risk

72

50

90

72%

Communication

53

20

80

53%

Communication achieved the second lowest score of 53% and 5 participants (or 38% of participants) recorded scores of 40% or lower. In all areas, high scores of over 80% were achieved for individuals and is an indication of pockets of excellence within the organisation with strong individual knowledge of project management skills. Individual performances showed a high variance in knowledge base with example of Human Resources recording a low of 20% and a high score of 80%. The total company performance on average for Level 1 does however compare very well with other companies. In fact, ABC Corporation performed better than other resource companies, companies of similar size and the average of all 400 companies in the KPM3

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database. The average score of 488 (from a maximum of 800) for Level 1 is an indication that ABC Corporation is in fact performing better than the industry on average, however in absolute terms the company’s collective project management knowledge is only 61% (488/800=61%) and leaves a large area for improvement. In order to improve ABC Corporations modest score in project management knowledge, it is recommended that targeted training on project management be considered in order to promote a common project management language and improve the understanding of the principles of project management. Level 2: Common Processes is defined by Kerzner (2005, p.67) as an organisation’s concerted effort to use project management and to implement processes and methodologies to support the effective use of project management principles. The second level of project maturity is also referred to by SEI/CMM (Kasse 2008, p.20) as organisations that have project management processes that are informal and ad hoc with few processes defined, poorly controlled and success depends on individual effort. Project management processes are basic to track cost and schedule and is often reactive. The necessary process discipline is in place to repeat earlier successes on projects with similar applications. For this section of the survey participants provided their opinion on the level of project management recognition, training and support at ABC Corporation based on a 7 level sliding scale between Strongly Disagree to Strongly Agree, where a maximum score of 12 and minimum of -12 can be achieved for each of the five lifecycle phases, while a maximum of 60 and minimum of -60 can be recorded for Level 2. Participants had a very diverse opinion on the five lifecycles of common processes as depicted in Table 14-7. This is an indication that there may be a lack of understanding of these processes and had difficulty expressing an opinion that is consistent with a group consensus. One participant expressed an opinion with a score of less than -30, which is an indication that common processes are nearly non-existent, while two participants achieved scores between zero and -30. The overwhelming majority of nine participants had scores between zero and 30 which indicate moderately good common processes are used, while one

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participant had a score above 30 which expresses an opinion that common processes are very well established. Table 14-7. Level 2: Common Processes individual results Assessment Level

Company Average

Minimum Score

Maximum Company Score score

L2 – Common Processes

10

-33

45

58%

Executive

2

-7

9

58%

Line Management

0

-12

8

51%

Growth

3

-4

9

61%

Maturity

2

-4

9

57%

Embryonic

4

-8

10

65%

The company performance for Level 2 recorded a total score of 10 from a maximum of 60 and performed worse than other resource companies, companies of similar size and the average of all 400 companies in the KPM3 database. Scores for the individual common process lifecycle phases ranged between 0 and 4 which is an indication that maturity for common processes has not been reached. Kerzner (2005, p.76) established that individual lifecycle phase scores above 6 is required before an organisation demonstrates maturity at this level. It can therefore be concluded that ABC Corporation has not reached maturity in any of the five common process lifecycles. A common theme of a lack of training in project management processes has been identified throughout Level 2 of the assessment and also reflects similar conclusions for Level 1. Areas that have been scored lowest typically involve questions that relate to the availability of common processes and procedures and the training of these processes. Project maturity assessment for PMBOK® Guide knowledge areas (Burns & Crawford 2002) argue that organisations that demonstrate maturity for Level 2 have structured processes and standards that is basic, while management only get involved in high-visibility projects. In conclusion for Level 2, it has been identified from this study that ABC Corporation’s common processes are not well defined and understood by the majority of the employees with a low average score of 10 out of a maximum of 60. In order to improve common process at the

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company, it is recommended to (a) develop a project management methodology that is fit for purpose for the organisation and (b) develop an ongoing, all-employee project management curriculum such that the project management methodology is well understood and used by the organisation. Level 3: Singular Methodology level is defined by Kerzner (2005, p.77) as an organisation’s level of achievement in utilising a single methodology or integrated processes to execute projects. At this level, the organisation is assessed whether they consider that it will benefit from synergetic effects by combining all corporate methodologies into a singular methodology centred on project management. For this assessment level the participants provided their opinion on six different topics as they may apply or being used at ABC Corporation and were required to make a single choice of options offered with the answers given a score between zero and five for each of the characteristics. A maximum score of 35 and a minimum score of zero can be achieved for each of the 6 categories, while the overall results for Level 3 sum to a maximum of 210 and zero for a minimum score. A description of the interpretation of the scores is included in Table 14-8. Table 14-8. Level 3: Singular Methodology score interpretation Score

Interpretation

169-210

You are on the right track for excellence, assuming that you have not achieved it yet. Continuous improvement will occur.

147-168

The company is going in the right direction, but more work is still needed. Project management is not totally perceived as a profession. It is also possible that the organisation simply does not fully understand project management. Emphasis is probably more toward being non–project-driven than project-driven.

80-146

The company is probably just providing lip service to project management. Support is minimal. The company believes that it is the right thing to do, but has not figured out the true benefits yet or what should be done. The company is still a functional organisation.

Below 80

The company has no understanding of project management, nor does it appear that the company wishes to change. Line managers want to maintain their existing power base and may feel threatened by project management.

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The results depicted in Table 14-9 identified ABC Corporation’s average score for Level 3 as 129. This is interpreted by Kerzner (2005, p.97) from Table 14-8 as a low score in which the company demonstrates that project management is an important part of the business, but has not implemented common processes and procedures yet. Table 14-9. Level 3: Singular Methodology individual results Assessment Level

Company Average

Minimum Score

Maximum Company Score score

L3: Singular Methodology

129

87

151

61%

Integrated Processes

26

15

33

74%

Culture

20

13

27

57%

Management Support

21

12

29

61%

Training/Education

15

5

29

43%

Informal Project Management

23

19

29

66%

Behavioural Excellence

24

16

29

68%

The results from this study established that ABC Corporation has not reached maturity for Level 3 yet and has performed lower than the average for all companies surveyed in the Kerzner Project Management Maturity Model database. In order to improve Common Processes at ABC Corporation the following recommendations are made by Kerzner (2005, p.87) for the advancement of Level 3 namely (a) Integrate all related processes into a single methodology with demonstrated successful execution, (b) Encourage the corporate-wide acceptance of a culture that supports informal project management and multiple-boss reporting and (c) Develop support for shared accountability. Level 4: Benchmarking is defined by Kerzner (2005, p.99) as an organisation’s process of continuously comparing the project management practices of the organisation with the practices of leaders anywhere in the world. The intention is to gain information to help improve the company’s own performance in the way that processes are executed. The participants provided their opinion regarding ABC Corporation’s maturity in benchmarking against other organisations based on a 7-level sliding scale between Strongly Disagree to Strongly Agree where a

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theoretical maximum score of 45 and minimum of -45 can be achieved for quantitative benchmarking processes, while a maximum of 30 and minimum of -30 can be achieved for qualitative processes. The study assessed the four key characteristics of the benchmarking level, namely: • • • •

the presence of a project office or centre of excellence for project management; the level of dedicated project management improvement processes and personnel; benchmarking against similar and none similar industries; and the level of quantitative and qualitative benchmarking whereby quantitative benchmarking assesses processes and methodologies and qualitative benchmarking assesses project management applications.

The results of the study indicate an opinion by the participants that ABC Corporation does not have a strong focus on benchmarking with a score of 2 measured for Quantitative Benchmarking and a score of -2 recorded for Qualitative Benchmarking as depicted in Table 14-10. Table 14-10 Level 4: Benchmarking individual results Assessment Level

Company Average

Minimum Score

Maximum Company Score score

L4: Benchmarking

0

-63

33

50%

Quantitative Benchmarking

2

-33

18

52%

Qualitative Benchmarking

-2

-30

15

47%

Comparison of these low scores by the participants to the Kerzner Maturity Model scoring as depicted in Table 14-11 and Table 14-12 indicate that ABC Corporation does not place much emphasis on benchmarking and that several improvements need to be made to improve this level of the assessment. A score less than 10 for Quantitative Benchmarking means that there is a lack of commitment to benchmark or a lack of understanding how to benchmark and against whom to benchmark.

Establishing and Benchmarking Project Management Maturity

281

Table 14-11. Level 4 Quantitative Benchmarking score interpretation (after Kerzner 2005, p.109)

Score

Interpretation

>25

The organisation is mature in benchmarking and is using best practice, including a Project Office or Centre Of Excellence. Benchmarking is undertaken against both similar and non-similar industries.

11-25 12

The organisation is mature in benchmarking and executes benchmarking practices well.

6-11

Scores within this range is marginally acceptable and indicate that the organisation is moving towards benchmarking.