Project Managers and Executives the New Challenges We Are Facing with Global Projects

Project Perspectives The annual publication of International Project Management Association 2010

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WÄRTSILÄ® is a registered trademark. Editorial The World of Table of Contents 3 The World of Global Projects 4 A model of success factors for Global Project Global Projects Management Jean Binder Paul D. Gardiner James M. Ritchie 12 The Collaboratory for Research on Global Projects hile businesses and companies are increasingly multi- (CRGP) Structure, Philosophy and Activities national we are more frequently facing projects with par- Raymond E. Levitt Wticipants representing various cultures, having different Ryan J. Orr native languages, working in different time zones and locations. 15 International cooperation for development: Design In other words, this is the world of global projects. Global projects of a competence-based model for managing are practically creeping into the life of companies of all sizes from programmes and projects small enterprises to the biggest leading players. José R. Cobo At the same time the emerged era of global projects is already Isabel Ortiz now setting new requirements to the project management compe- Carlos Mataix tencies and solutions. Later on these changes shall have impacts on 20 Safety and Health Risks in International the content of industrial project management standards. Binder, Construction Projects Gardiner and Ritchie provide an example of new arising success Yu Sun factors that are named as ‘Cross-Cultural Negotiation’, ‘Global Dongping Fang Jimmie Hinze Teamwork and Team cohesion’ and ‘Workfl ow Management Sys- tems’. Already the names of these success factors are characterising 26 The Gap Between Project Managers and Executives the new challenges we are facing with global projects. Peter Wijngaard Herman Mooi In this issue of Project Perspectives we shall explore some Victor Scholten recent fi ndings regarding global projects. Researchers have spot- ted the appearances and obvious signifi cance of global projects 34 Communication and Trust in Distributed Project already several years ago and interesting research results have Teams Helgi Thor Ingason been gained from their efforts. In Standford university a specifi c Tomas Hafl idason center named The Collaboratory for Research on Global Projects Haukur Ingi Jonasson (CRGP) have been established to study fundamental phenomena 42 Overview of The Virtual Design Team (VDT): A within this kind of manoeuvres. This center is presented in the Computational Model of Project Teams paper by Levitt and Orr. Close to me has been our co-operation Raymond E. Levitt with CRGP and our Global Project Strategies (GPS) research ef- 48 Formal and informal risk management actions in fort that was fi nalised in the end of March 2009. Some results projects originating from the GPS research are presented by Murtonen in Mervi Murtonen her paper on risk management. The named research bodies and projects represent only a few 54 Use Confucius to improve project leadership in Chinese perspective examples from the variety of studies and players in the fi eld Weiping Jiang of global projects. Practically, it is a Yun Le research community with plenty of Qinghua He others who are providing valuable contributions and new important new knowledge. I hope that the papers of this Project Perspectives with the main Published by messages and references can help The Project Management Association Finland to understand as widely as pos- (PMAF) in co-operation with International Project sible the variety of efforts and Management Association (IPMA). PMAF is: - Forum and a meeting place for project gained results in the fi eld of professionals global projects. - Developer of project thinking and knowledge - Active partner within the international project community Dr. Kalle Kähkönen PMAF serves with - Two project management journals (Finnish & Chief Research Scientist English) VTT - Technical Research Cen- - Yearly Project Day conference and frequent theme events tre of Finland - Project management certifi cation http://www.pry.fi /index_eng.htm Acknowledgement to the IPMA WC 2009 conference. Several papers Editorial Board: of this issue have been picked up from the Scientifi c Research Paper Kalle Kähkönen (Editor in chief) track of the IPMA WC 2009 conference. The original papers have then Aki Latvanne been updated and or otherwise changed by the authors to meet the needs of Project Perspectives. ISSN 1455-4178 A model of success factors for Global Project Management

This study explores the project management literature and produces a novel model of success factors for global project management. Most academic papers provide partial recommendations on how to increase the success of global projects. However, to be effective, these suggestions should be applied in a holistic manner. This is a fundamental characteristic of the model presented in this article. The model is also modular, allowing an independent implementation of success factors, and scalable, able to accommodate newly discovered factors to be tested by future exploratory research studies. A global project management framework (GPMF), previously defi ned and published by the authors, is presented and compared to other studies carried out on the management of global projects. The success factors presented by these papers are used to test the validity and completeness of the GPMF as well as how this can be improved. This results in three new success factor categories and one knowledge area (global risk factors). A model is then created by adding (i) the concept of inputs-process-outputs to the framework as well as (ii) the main challenges of global projects, (iii) the success factors for their management aligned with existing bodies of knowledge and (iv) the benefi ts achieved from successful global project management. This systemic view allows the model to be used in future studies with potential research opportunities identifi ed throughout the paper. Jean Binder Intoduction Virtual projects (also called ‘distributed’ projects) Heriot-Watt University The main objective of this paper is to perform a involve team members in various locations (Ghosh structured analysis of existing academic studies and Varghese, 2004; Guss, 1998). As defi ned by Paul D. Gardiner on the success of global projects. Questions such the GPMF, global projects are a subset of virtual The British University in as ‘How well have previous studies covered dif- projects in which team members and stakeholders Dubai ferent geographies and methodologies over the are spread across countries from various cultures, years?’ and ‘Is it possible to have a consolidated speaking different native languages, working in James M. Ritchie view of all success factors for global projects?’ different time zones and belonging to different Heriot-Watt University will be addressed. The fi ndings of the paper are organizations. This defi nition forms the basis of the presented as a holistic, modular and scalable model fi ve GPMF dimensions (Binder et al, 2009), which of global project success factors which can be used determine the main challenges faced by global to help improve the effi ciency and effectiveness project managers and stakeholders: geographical of managing such projects. The steps involved in distance, multicultural collaboration, multilingual achieving the above objective and discussed here communication, asynchronous interactions and are: (i) defi ning the challenges and consequences cross-organizational relationships. Other studies of this emerging project management paradigm; refer to international (Aleshin, 2001), multicul- (ii) assessing success factors from the literature in tural (Mäkilouko, 2004), intercultural (Loosemore the light of an existing framework (Binder, 2007); and Muslmani, 1999) and cross-cultural projects (iii) classifying these factors according to the (Pheng and Leong, 2000). In previous studies, each methodological and geographical distribution of author uses a different combination of the fi ve the studies; and (iv) creating an original model of GPMF dimensions. success factors for global project management. The literature provides many examples on how these fi ve dimensions can be used to harvest Literature Review benefi ts from global projects. Geographical disper- This study builds on previous conclusions from sion allows reduced costs and access to the best the authors (Binder, 2007; Binder, 2009; Binder workers independently of their location (Binder, et al, 2009) about the characteristics and success 2007, p.11; Haywood, 1998, p.6; Rad and Levin, factors for global projects: The Global Project 2003, pp.3-5; Mayer, 1998, p.6). A multicultural Management Framework (GPMF). team increases the levels of fl exibility and innova- In this paper, the term ‘success factors’ refers tion (Binder, 2007, p.11) by bringing a variety of This is an updated version to the areas of knowledge that increase the perspectives to the project (Dubé and Paré, 2004). of a paper originally likelihood of success during the management of Team members that speak local languages have a published in the “IPMA global projects. The GPMF dimensions, challenges, more accurate picture of international custom- Scientifi c Research Paper benefi ts, knowledge areas and categories will be ers’ needs (Hofstede, 1991, p.425). Project team Series: Human Side of briefl y explained in this section before undergoing members in multiple time zones can align their Projects in Modern comparison against selected studies from other times to the stakeholders’ offi ce hours (round- Business” (IPMA, 2009) authors in the following sections. the-clock project execution) (Haywood, 1998, p.6;

4 www.pry.fi Figure 1. The research project

Rad and Levin, 2003, p.6). Different organizations in details to practitioners (Binder, 2007; Binder, supply technical experts in different domains and 2009; PMI, 2008b). This framework also innovates increase productivity (Haywood, 1998, p. 7; Mayer, by being independent from existing bodies of 1998, p.11), forming alliances and partnerships knowledge on project management, while not (Haywood, 1998, pp.2-3). duplicating the knowledge contained in these The GPMF was defi ned in a previous study by the sources, and by providing links to theories in do- authors (Binder et al, 2009) based on a thorough mains other than project management, e.g. coach- evaluation of academic studies and practitioner ing, mindmapping, emotional intelligence (Levin, books on virtual teams, virtual projects and global 2008). These factors were used by the authors in projects. The key success factors from the litera- deciding to use the GPMF as the framework for ture were classifi ed according to organizational this research. change principles into fi ve discrete knowledge areas, namely: global teams, global communica- Research Methodology tion, global organizations, collaborative tools and The research used a structured approach to evalu- collaborative techniques. Each knowledge area was ate the existing literature (fi gure 1). The fi rst step populated with fi ve categories of success factors involved the selection of articles in peer reviewed giving a total of 25 GPMF categories (Binder et academic journals; the Project Management Jour- al, 2009); these categories are listed later in this nal (PMJ) and the International Journal of Project paper (see fi gure 6). Globally oriented companies Management (IJPM) were selected since these can use the GPMF to evaluate these factors to are considered the leading project management- increase the success of their global projects and specifi c journals (Henrie and Sousa-Poza, 2005). implement and foster the application of selected The second step was to eliminate book reviews recommendations. and editorials, in order to limit the study to peer- Before proceeding with the research, the reviewed articles (Henrie and Sousa-Poza, 2005). literature was reviewed to determine if a more During the third step, each abstract was read to comprehensive framework of success factors than determine which papers provided success fac- the GPMF could be found. A number of academic tors for global projects (Henrie and Sousa-Poza, studies identifi ed success factors through analyti- 2005). The fourth step consisted of a complete cal and empirical research. While being helpful to review of each article to determine whether it validate the success factors, these models are not discussed at least one of the GPMF dimensions comprehensive and only represent a subset of and provided success factors relevant to global the GPMF. projects. A representation of the GPMF dimensions It appears that the GPMF is a pioneering con- in the 47 papers selected for analysis is shown cept (Walker, 2009, p.162) and is the only one that in fi gure 2. Most papers evaluated projects with covers both theory and practice while building multicultural stakeholders in various countries on academic research (Binder et al, 2009, p.57) and organizations. However, the effects of mul- and describing all of the relevant success factors tiple languages and time zones are not explored

Project Perspectives 2010 5 ous studies have shown that important cultural differences occur within regions (Hofstede, 1991; Trompenaars and Hampden-Turner, 2005), many countries in these 3 regions were never actually mentioned in the papers and also there are only few studies in South America, Africa and Middle- East. Therefore, the current conclusions and generalizations of the fi ndings within this paper are limited to only a few geographical areas and cultures. The table on fi gure 5 also shows the occurrence of empirical studies per year for the 8 countries with most studies. This table suggests a convergence of studies towards the same countries which might limit even more the conclusions over time. Future empirical studies can use this map to compare the geographical scope of existing studies against the spread of global project teams, defi n- ing directions for future research. (Bourgault et al, 2008, p.107; Wang and Liu, 2007, p.70). Figure 2. Representation of GPMF dimensions in the 47 papers. During the sixth step, in light of the GPMF, every success factor in the literature was classifi ed suffi ciently. Future exploratory research can aim into the following knowledge areas: global team to identify new success factors to address these management; global communication; global or- two challenges. Other studies might identify the ganisations; collaborative tools and collaborative relationships between these dimensions and the techniques (Binder et al, 2009). Whenever a suc- existing success factors. cess factor from the literature did not match any During the fi fth step, the full contents of the 47 of the 25 existing categories, new potential areas remaining papers were analysed. The geographi- were suggested and investigated. The results of this cal dispersion of the subjects participating in the step will be presented in the next section. empirical studies was also evaluated, and is represented in fi gure 3. This analysis includes all papers Research Results and Industrial Impact except three that lacked detailed information on Paraphrasing Shore and Cross (2005, p.63), culture one country studied in Eastern Europe (Aaltonen is only one piece of the puzzle that helps project and Sivonen, 2008) and 26 Sub-Saharan countries managers, this study aimed to reveal the other (Diallo and Thuillier, 2004; Diallo and Thuillier, pieces. This section reviews the main answers to 2005). The map is a novel output and suggests a the 4 research questions: the success factors in good balance between 3 regions: North America, the literature, the success factors in GPMF that Western Europe and Eastern Asia. However, previ- are validated by the literature, the new success

Figure 3. Geographical scope of the empirical studies.

6 www.pry.fi factors and the suggested changes in the GPMF structure.

Success Factors in the Literature Figure 4 shows all the 28 GPMF success factors identifi ed during the literature analysis. The fi rst 25 categories in the picture are sorted in order of appearance in the GPMF (in blue) whereas the last 3 last categories show the new success factors that have emerged from the analysis (in green). The chart also shows the percentage of papers evaluated that mentioned each category as being of benefi t to global projects.

Validated Success Factors 14 categories appear in more than 10% of the studies, these are highlighted in amber. Typical examples exist such as Cross-Cultural Collabora- tion (43%), Global Communication Techniques (30%), Global Team Leadership (26%), Confl ict Resolution (26%), Global Communication Strategy (26%) and Global Project Structures (26%). These categories show mature areas of research and strong success factors with a positive impact on the results of global projects proven by studies in different countries. Three categories were represented in less than 5% of the papers; this weakness may be derived Figure 4. Occurrence of the Success Factors in the literature. from their relatively recent appearance in the project management arena: coaching, PMO (Project Management Offi ce) and text-and-image tools, veloping country without really understanding what they want and what e.g. chats, instant messaging and web-confer- they can offer.’ These authors also found that cultural differences amplify encing. There are no papers concluding that these the negotiation challenges (idem, p.310) and recommend tactfulness and categories have no or a negative impact on global diplomacy instead of legalistic stances (idem, p.314) to deal effectively projects; therefore more studies are recommended with cross-cultural negotiation, which may involve credit terms, cash fl ow to validate the affects of these success factors arrangements and resource allocation (idem, p.311). in the project management activities instead of In terms of global teamwork and cohesion, Diallo and Thuillier (2005, suppressing them from the framework. p.248) observe that team cohesion is closely linked to trust and can make No fi rm conclusion can be made on the re- a contribution to the success of projects, and that ‘…nothing is possible maining 8 categories in the GPMF (highlighted without a well-integrated team’. Milosevic (1999, p.34) detects that in yellow). Their occurrence ranges from 6% to teamwork is the norm in country cultures that emphasise group harmony, 9% of the papers, suggesting some impact on the unity and loyalty. Bourgault et al (2008, pp.98-106) recommend project success of global projects; however, more studies managers involve key team members in the decision-making process, are required to prove their validity. create a team identity to compensate for members’ isolation, provide the team with autonomy and formalize the decision-making process. New Success Factors In terms of workfl ow management systems, Badir et al (2003, p.46) Three new categories of success factors were recommend a model that monitors and controls the execution of multiple drawn from this analysis, namely: ‘Cross-Cultural workfl ows operating synchronously between organizations, coordinating Negotiation’, ‘Global Teamwork and Team cohe- the information fl ow from creation to elimination and sharing project sion’ and ‘Workfl ow Management Systems’. information across team members. Some benefi ts of such model are the Cross-cultural negotiation techniques were part immediate electronic updating of the project status, the effi cient and easy of the confl ict management steps of GPMF (Binder, communication between all stakeholders, the immediate availability of 2007, p.64). However, other situations may exist project information and minimized project risks. that require specifi c negotiation techniques across cultures. “The Guide to the Project Management Changes in the GPMF structure Body of Knowledge (PMBOK® Guide)” (4th Edi- Pheng and Leong (2000, p.314) suggest that the management of inter- tion) considers that ‘…negotiation is an integral national projects require an understanding of key project management part of project management’ (PMI, 2008a, p.413) concepts. The relationship between basic project management principles being a key success factor during selection of and the success of global projects is also analyzed by Kendra and Taplin team members (idem, p.227) and when conducting (2004), Khang and Moe (2008), and Javed et al (2006). Most of the pa- procurements (idem, p.328). pers evaluated (77%) did not mention any body of knowledge or project Pheng and Leong (2000, p.310) identifi ed that management methodology, while 21% referenced only the “Guide to the ‘Problems at the negotiation stage can be inevi- Project Management Body of Knowledge (PMBOK® Guide)” (PMI, 2008a) table when a company from a developed country and the remaining 2% mentioned other sources. To follow this trend, the is trying to access the market in a developing new structure of the model will remain independent of existing bodies country. These problems occur because managers of knowledge, to allow use by companies adopting different standards, from the developed country tend to assume the while referencing the PMBOK® Guide for the basic project management responses and behaviour of their clients in the de- concepts.

Project Perspectives 2010 7 literature as political, legal, economical, socio- cultural and managerial (Dikmen et al, 2007, p.497; Khattab et al, 2007, p.735; Ling and Hoi, 2006, p.262; Ozorhon et al, 2007, p.800; de Bakker and Somani, 2006). Therefore, three strong links exist between the PMBOK® Guide (PMI, 2008a) and the new model, also shown in fi gure 8: (1) the success factors for human resource management in global projects (GPMF: Global Teams); (2) the factors for effective global communication (GPMF: Global Communication); and (3) the global causes of risks that might have an impact in all other PMBOK® Guide processes (GPMF: Global Risks, new area). Future research can use this model to investigate the impact of each GPMF success factor on the PMBOK® Guide knowledge areas. There is also a link between project management behavioural competences and the success of global projects. The GPMF completes the ICB (IPMA, 2006) Figure 5. Relationship between the GPMF and the PMBOK® Guide. by adding the skills required by global projects for NB The areas of the circles are directly proportional to the leadership, engagement and motivation, creativ- occurrence of each knowledge area in the literature. ity, negotiation and confl ict management. These relationships are another potential area for future research, as well as identifying global character- Figure 5 shows the percentage of papers that establish a link between istics of other competences, such as self-control, each of the PMBOK® Guide knowledge areas (PMI, 2008a) and the success assertiveness, relaxation, openness, results orien- of global projects. To identify these relationships, a contextual analysis tation, effi ciency, consultation, reliability, values was preferred to keyword search, in order to ensure relevance to the appreciation and ethics (IPMA, 2006). research topic. The high frequency of studies identifying success factors related to human resources (26%) and communications (43%) confi rms Implementation and exploitation the need for two existing categories in the GPMF (Global Teams and This study suggests a novel structure to explain Global Communication). the success factors associated with global proj- Existing studies indicate that the global project challenges impact ect management, this is highlighted in fi gure 6. the processes used to manage integration, scope, time, cost, quality and The content of each cell in the concept model is procurement. However, such a low number of studies do not allow the grounded in the conclusions and best practices generalization of this conclusion to most projects. This uncertainty sug- found during the review and analysis of the litera- gests that global project managers should identify global risks to mitigate ture and, from this, global project managers can such impacts. The high occurrence of papers covering risk management evaluate which success factors are relevant to their (38%) in comparison to the remaining six areas (averaging 12.5%) con- needs. The organizational policies, standards and fi rms this conclusion. As one example, projects having stakeholders in culture can be improved according to the recom- various countries face a range of international threats identifi ed in the mendations that emerge. This structure can serve

Figure 6. New model of success factors in Global Project Management.

8 www.pry.fi as a maturity model of the companies’ practices in global project management which can be improved based on technological choice, company culture and the different cultures of the people participating in the process. This novel model can also serve as a basis for a career development path, orienting global project managers and other stakeholders towards training modules that can JeanJ Binder, PMP, MBA improve their technical, people management and Heriot-Watt University, School of communication skills. Academic researchers can Engineering and Physical Sciences, test the model and investigate how well each Edinburgh, Scotland GPMF factor addresses the global project challenges and what types of benefi ts can be achieved [email protected] by global projects as well as extending the model JBidiittiJean Binder is an international speaker with more than 20 years of where necessary. experience working in project environments, most of them living abroad and communicating in multi-cultural and multi-language Conclusions environments. He has particular experience of managing global There are an increasing number of academic stud- projects, having implemented collaborative tools and techniques in ies suggesting success factors for global project a number of global organizations. The framework discussed in this managers, covering different geographical areas article is the foundation for his PhD research (in progress). and using various methodologies. These studies validate the success factors proposed by the Global Project Management Framework previously defi ned by the authors and indicate the existence of 3 new success factors and one new category. A new model of success factors in Global Project Management was developed from this. The implementation of a new set of practices, Paul D. Gardiner processes and skills related to this model also imply a change in the cultural mindset. Therefore, the The British University in Dubai, Faculty success factors must be applied in a holistic man- of Business, Dubai ner, according to organizational change principles. UAE; [email protected] The model presented in this study satisfi es this Dr Paul Gardiner is a senior lecturer in project management at The requirement by presenting all of the key success British University in Dubai. He studied and completed his PhD in factors present in 10 years of academic studies in project management at the University of Durham. He worked for a single structure. fi fteen years in Heriot-Watt University teaching undergraduate and Every project is unique by defi nition; the geo- postgraduate students in the areas of strategic project manage- graphical dispersion of the team members, the ment and construction management. Dr Gardiner has established, composition of country cultures and languages, designed, implemented and taught postgraduate programmes in and the organizational mix are also unique. project management at Heriot-Watt in Dubai (Academic City) and Therefore, a global project management model in universities in Italy, Sweden and the UK. He is Vice Chairman must be modular and allow an independent imple- for APM Scotland and a member of the PMI. He is also an external mentation of success factors to meet the specifi c examiner for the University of Bradford and the University of Ulster requirements from every project confi guration. and an Honorary Fellow at the University of Manchester The model presented in this study satisfi es this need since each module provides an independent set of success factors, grouped according to a logical structure. Global projects are intimately linked to technologies, tools and techniques that evolve over time. Therefore, a global project management James M. Ritchie, BSc, MSc framework must be scalable to accommodate new success factors discovered and tested by explor- Heriot-Watt University, School of En- atory research studies, as well as new collaborative gineering and Physical Sciences, Edin- technologies and tools being developed around the burgh, Scotland globe. The novel structure of the model presented [email protected] by this study satisfi es these criteria and can be easily expanded to include such developments. James M. Ritchie is a professor of Mechanical Engineering By using proven methods such as grounded specializing in design, manufacture and management. Recent theory and action research, and by evaluating funded research has investigated the use of digital tools, espe- people in various countries, future studies can cially virtual reality, for the automatic generation of design and identify relationships between: (i) the 33 areas manufacture process mapping and knowledge acquisition future of success factors; (ii) these success factors and project will include project management applications. Other existing bodies of knowledge and competency funded research projects in quality methods in the food industry, baselines; and (iii) each challenge, success factor design process analysis, logistics for SMEs and capability maturity and benefi ts. The model is also open to include new modeling. With over 130 publications, he is also Director of his categories, knowledge areas and success factors institution’s Advanced Manufacturing Unit. that might be discovered in future studies.

Project Perspectives 2010 9 References

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(2008) tures', International Journal of Project Management 16(1998), 361-385. 'Global virtual teams for value creation Management 25(8), 799 - 806. and project success: A case study', In- Walker, D.H.T. (2009) ternational Journal of Project Manage- Pheng, L. S., Leong, C. H. Y. (2000) 'Book review - Global Project Manage- ment 26(1), 51 - 62. 'Cross-cultural project management for ment: Communication, Collaboration international construction in China', and Management Across Borders', Levin, G. (2008) International Journal of Project Man- International Journal of Managing 'Cover to cover - Global Project Man- agement 18(5), 307 - 316. Projects in Business 2(1), 160-163. agement: Communication, Collabora- tion and Management Across Borders', PMI (2008a) Wang, X. and Liu, L. (2007) Project Management Journal 39(4), 115. 'A guide to the project management 'Cultural barriers to the use of Western body of knowledge (PMBOK®) 4th project management in Chinese enter- Lin, B.-W. and Berg, D. (2001) Edition', Newton Square, PA: Project prises: Some empirical evidence from 'Effects of cultural difference on tech- Management Institute. Yunnan province', Project Management nology transfer projects: an empirical Journal 38(3), 61 - 73. study of Taiwanese manufacturing PMI (2008b) companies', International Journal of 'Project Management Institute Honors Xu, T., Bower, D. A. and Smith, N. J. (2005) Project Management 19(5), 287 - 293. Local Author', Retrieved 1 February 'Types of collaboration between foreign 2009 from http://www.pmi.org/Abou- contractors and their Chinese partners', Ling, F. Y. Y. and Hoi, L. (2006) tUs/Pages/PMI-Honors-Local-Author. International Journal of Project Man- 'Risks faced by Singapore fi rms when aspx agement 23(1), 45 - 53. undertaking construction projects in India', International Journal of Project Proverbs, D. G., Holt, G. D. and Olomolaiye, Yasin, M. M. (2000) Management 24(3), 261 - 270. P. O. (1999), 'The management of labour 'An Empirical Investigation of Interna- on high rise construction projects: an tional Project Management Practices: Loosemore, M. and Andonakis, N. (2007) international investigation', Interna- The Role of International Experience', 'Barriers to implementing OHS reforms tional Journal of Project Management Project Management Journal 31(2), - The experiences of small subcontrac- 17(3), 195 - 204. 20 - 30. tors in the Australian Construction In- dustry', International Journal of Project Rad, P. and Levin, G. (2003) Zarkada-Fraser, A. and Fraser, C. (2002) Management 25(6), 579 - 588. 'Achieving Project Management Suc- 'Risk perception by UK fi rms towards cess using Virtual Teams'. USA: J. Ross the Russian market', International Loosemore, M. and Lee, P. (2002) Publishing. Journal of Project Management 20(2), 'Communication problems with ethnic 99 - 105. minorities in the construction industry', Ramaprasad, A. and Prakash, A. N. (2003) International Journal of Project Man- 'Emergent project management: how agement 20(7), 517 - 524. foreign managers can leverage local knowledge', International Journal of Loosemore, M. and Muslmani, H. S. A. Project Management 21(3), 199 - 205. (1999), 'Construction project management in the Persian Gulf: inter-cultural Shore, B. (2008) communication', International Journal 'Systematic biases and culture in of Project Management 17(2), 95 - 100. project failures', Project Management Journal 39(4), 5 - 16. Mäkilouko, M. (2004) 'Coping with multicultural projects: Shore, B. and Cross, B. J. (2005) the leadership styles of Finnish project 'Exploring the role of national culture in managers', International Journal of the management of large-scale inter- Project Management 22(5), 387 - 396. national science projects', International Journal of Project Management 23(1), Mayer, M. (1998) 55 - 64. 'The virtual edge: embracing technology for distributed project team success'. 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Project Perspectives 2010 11 The Collaboratory for Research on Global Projects (CRGP): Structure, Philosophy and Activities

Raymond E. Levitt The Collaboratory for Research on Global Projects (CRGP) at Stanford University is a multidisci- Stanford University plinary center that supports fundamental and applied research, education and industry outreach to improve the long-term economic, environmental and social sustainability of large infrastructure Ryan J. Orr development projects that involve participants from multiple institutional backgrounds. Its studies Stanford University have examined public-private partnerships, infrastructure investment funds, stakeholder mapping and engagement strategies, comparative forms of project governance, and social, political, and institutional risk management. The Collaboratory, established in September 2002, serves as the hub of a global network of scholars and practitioners—based on fi ve continents—with expertise in a broad range of academic disciplines and in the power, transportation, water, telecommunications and natural resource sectors. This brief overview summarizes the composition, philosophy and recent activities of CRGP. CRGP Structure CRGP Academic partners Collaboratory for Research on Global Projects was At Stanford University, CRGP brings together a set up as an interdisciplinary “Center” at Stanford network of academics from multiple disciplines, University. Centers at Stanford are virtual orga- including Engineering, Project Management, nizations overlaid across department and school Law, Finance, Economics, Sociology, Psychology hierarchical structures that can facilitate collab- and Political Science) interested in the fi nancing, orative research and engagement with a group of governance and development challenges of global industry and government affi liates to solve critical infrastructure projects. In addition the Collabora- societal problems. Centers do not directly employ tory links to a number of research hubs around faculty, admit students or award degrees. Rather, the world that share its interest in this domain they act as “intellectual magnets” to attract in- and that bring together groups of scholars and terested faculty, postdoctoral fellows and students industry practitioners into a local network. The from different departments to work together on fi rst, and still most active, Collaboratory partner important and challenging societal problems. network includes a group of scholars at the Hel- The industry affi liates provide problem defi - sinki University of Technology, Helsinki School of nition, access to real world projects and data, Economics, and VTT (The Finnish national research critique of research results, and a vehicle for laboratory) plus a group of Finnish companies implementing fi ndings of centers. Unlike most engaged in global project business. Other global other centers at Stanford, the focus of CRGP was Collaboratory partners include a network of schol- on global projects and infrastructure development ars in India at IIT-Madras and IIM-Bangalore, and and fi nance activities. So, in addition to the typical smaller Collaboratory hubs in Australia, China, Stanford center model of engaging with faculty Malaysia, Norway, South Africa, and UK. from multiple Stanford schools and departments, CRGP also decided to build ties to complementary CRGP Industry and government partners groups of scholars and practitioners around the CRGP maintains extensive relationships with world in order to: engage with a broader set of infrastructure experts at multilateral banks, infra- industry and government stakeholders; gain access structure funds, transaction advisors, contractors, to a more complete range of global best practices; engineering companies, law fi rms, investment and facilitate collaboration on cross-national banks, commercial banks, insurance companies, studies of the challenges facing global capital and pension consultants. Industry experts share facility development projects. their knowledge and understanding of problems

12 www.pry.fi with CRGP scholars through participation in - Developing new theoretical frameworks for research projects and regular roundtables that understanding institutional and organizational focus on specifi c topics related to infrastructure "costs" associated with global projects based fi nancing, governance and development. These on research in management, sociology, law, organizations also provide funding for CRGP seed psychology, anthropology, and other pertinent research and administration through annual affi li- disciplines and using surveys, case studies, and ate contributions. CRGP regularly submits propos- research methods to validate and calibrate the als to outside agencies for larger-scale funding emerging theoretical frameworks; based on the fi ndings of its most promising seed - Developing new models, visualizations, and research projects. predictive tools to help leaders in government and industry improve planning and manage- Visiting Scholar Program ment practices on global projects; The Collaboratory has a Visiting Scholar program - Creating formal curricula incorporating results and typically hosts three to eight industry and of CRGP research to teach principles, know- academic visitors annually for a period of three how, and tools for designing global projects, to twelve months. Visiting Scholars are required and disseminate them via the Stanford Center to have a Ph.D or to be a recognized world expert for Professional Development's SU-Online e- in their professional discipline. Industry profes- learning platform, 24/7, around the globe. sionals have used the Visiting Scholar program to stay engaged and do reading and writing during CRGP Activities in 2009-2009 career transitions. Academics frequently use the During 2008-2009, CRGP researchers and industry Visiting Scholar program as a source of new ideas affi liates continued an active program of research, and inspiration during a sabbatical year. Visiting education and outreach to industry and govern- Scholars are assigned an offi ce, participate in ment. Signifi cant activities from the most recent Collaboratory seminars and meetings, audit Uni- year are listed below. versity courses, publish research, and assist with Collaboratory projects. Research and Educational Activities CRGP researchers in Stanford's law school, busi- CRGP Philosophy ness school, engineering school and department CRGP serves as Stanford University's primary fo- of sociology were engaged in the following studies rum for systemic studies of global projects. CRGP and publications during the 2008-2009 academic defi nes "Global Projects" as projects that involve year: participants from multiple societal or cultural - White Paper on America's Infrastructure Strat- systems and/or geo-spatial locations. Its research egy (Author: Michael Garvin) Co-Published by activities primarily focus on studying the impacts CRGP and KPMG, 40 Pages of organizational and institutional parameters on - 300 Page Book on the Distribution of Chinese projects that are diffi cult to quantify and yet have Infrastructure Investors and Contractors in proven historically to have detrimental impact on Africa, by Country and by Sector (Partners: overall project effi ciency. CRGP, OECD, World Bank, Tsinghua University), CRGP studies the kinds of global projects In-Press that are large enough to have regional and - Comparative Assessment of Rationale for PPPs even national economic and social impacts, Across 7 U.S. States (Author: Sanjee Singla, that involve multiple engineering disciplines; Management Science and Engineering) In that have significant impact on our environs press. where eco-sustainability becomes critical; that - White Paper on Expanding Options for Infra- are organizationally complex with participation structure Renewal in California (Author: Ryan from multiple cultures; and that have complex Orr; Gregory Keever, CRGP Industry Affi liate) In institutional issues and concerns stemming from press. confl icts over goals, values, cultural norms, work - Major Sponsored Project of Factors Predicting practices, and technology. NGO Opposition to Water and Pipeline Projects CRGP researchers use multiple research frame- (Team: Ray Levitt, Ryan Orr, Dick Scott, Jenna works—ethnographic, case study, survey and Davis, Doug McAdam + 8 grad students) Three computational modeling—to develop, test and journal papers in press. deploy innovative theories, methodologies and - Comparative Due Diligence of 50+ Global In- tools. Results from CRGP research are disseminated frastructure Funds (Research Team: Ryan Orr + through graduate and executive education and 10+ Students from Graduate School of Business) through a variety of publication media. Published. The CRGP global network of Affi liate Members - Comparative Analysis of PPP Coordination and Collaboratory Partners is engaged in a portfo- Agencies Globally (Authors: Christine Farrugia, lio of activities aimed at developing frameworks, Tim Reynolds, Grad. School of Business) Working tools and strategies to improve the outcomes of paper published. global projects, and to educate a new "global - Ph.D Thesis on How Global Construction, Engi- project savvy" breed of professionals. These activi- neering and Project Development Companies ties include: Capture and Share Knowledge and Best-Practice - Conducting surveys, case studies, other kinds Across their Organization and Supply Chain ( of fi eld research, mini-internships, and Round- Student: Dr. Amy Javernick Will, Civil & Envi- tables to understand the generalizable chal- ronmental Engineering) Published; three journal lenges that beset global projects; papers in press.

Project Perspectives 2010 13 CRGP provides - Ph.D Thesis on Comparing he Institutional Fields - Presented to Public Works Directors from across new knowledge supporting Public Private Partnerships in three California Cities at an annual conference hosted countries. (Student: Stephan Jooste, Civil & by the California League of Cities about the Environmental Engineering) Ongoing. - Submitted ideas for draft legislation for U.S. fi nancing, - Ph.D Thesis on Factors and Processes Effecting National Infrastructure Bank governance and LNG Terminal Siting Decisions in the U.S. (Stu- - Presented fi ndings of research on public private dent: Hilary Schaffer, Interdisciplinary Program partnership agencies at World Bank Institute development in Environment and Resources) Ongoing. Public-Private Partnership in Infrastructure of global - Ph.D. Thesis on Shifts in Bargaining Power Days infrastructure Over the Lifecycle of Investment Agreements. - Hosted a Roundtable on the opportunities and projects (Author: Henry Chan) Ongoing. challenges for public and private pension fund - Ph.D. Thesis on the Role of Freelance Expatri- investments in US infrastructure projects. ates on Large-Engineering Projects in China and - Professor R. Levitt and Lecturer A. Vives ap- Taiwan. (Student: ShuFang Chi) Ongoing. pointed as Commissioners of the California - Book on Governance of Global Infrastructure Infrastructure Advisory Commission (PIAC) Projects (Editor: W. Richard Scott) Ongoing. 2009. - Offered executive education program on Man- aging Global initiatives as part of The Stanford Conclusion Advanced Project Management Program. (Avail- Through this portfolio of activities, CRGP provides able online through http://apm.stanford.edu ) new knowledge about the fi nancing, governance and development of global infrastructure projects, CRGP Outreach Activities in 2008-2009 and creates a forum for the exchange of best - Hosted a Roundtable for California Governor’s practices and for an effi cient dissemination of the Offi ce new global project knowledge base. In these ways, - Assisted Assembly Woman Anna Caballero in CRGP aims to enable leaders in government and preparing draft legislation for public-private industry to analyze and design the organizations partnership center of excellence in California and institutions needed to deliver complex global - Assisted Los Angeles Metro in evaluating pro- projects more effectively, with more sustainable posals from transaction advisors outcomes - Testifi ed before the Little Hoover Commission More detailed information about CRGP activi- on bottlenecks to infrastructure delivery in ties, affi liate members, and downloadable publica- California tions is available on the CRGP website at http:// crgp.stanford.edu

Raymond E. Levitt is Professor of Civil & Environmental Engi- neering and a Senior Fellow at Stanford’s Woods Institute for the Environment. He directs Stanford’s Collaboratory for Research on Global Projects and Advanced Project Management executive program. Dr. Levitt’s early research showed how construction owners and top managers could improve their safety performance. In 1988, he co-founded Stanford’s Center for Integrated Facility Engineering. He developed organization modeling and simulation theory and tools to reduce schedule and quality risk for fast-track projects and project-based companies. His current research explores how national cultural and institutional differences affect governance and performance of multinational project teams. ASCE awarded Levitt its 2000 Computing Award; 2006 Peurifoy Construction Research Award; and elected him ASCE Distinguished Member in 2008. Dr. Levitt was co-founder and has served as a Director of: Design Power, Inc., Vité Corporation, and Visual Network Design, Inc.

Ryan J. Orr is executive director at the Collaboratory for Research on Global Projects (CRGP) and teaches Global Project Finance to engineering, law school and MBA students at Stanford Univer- sity. Dr. Orr serves on the editorial review boards of the Journal of Structured Finance, Public Works Management and Policy, and the JournalJ of International Business Studies. His current work focuses on public-private partnership agencies, infrastructure funds, and pension investment in infrastructure. Dr. Orr’s students and research assistants have been placed at Arup Engineering, Bechtel Corp., BNP Paribas, Ferrovial, Goldman Sachs, Highstar Capital, Macquarie, Parsons Brinkerhoff, and other name brand infrastructure organizations.

14 www.pry.fi International cooperation for development Design of a competence- based model for managing programmes and projects

Managing international cooperation for development projects is a complex task that involves tech- José R. Cobo nical, political, socio-economic and cultural variables. The technical, contextual and performance Isabel Ortiz competences of those who manage these kinds of projects must take this complexity as their starting Carlos Mataix point and tackle it with all their accumulated experience to decide what actions need to be carried Universidad Politécnica de Madrid out. This research includes an analysis of the theory and application of the project management Departamento de Ingeniería de methodologies currently used by development organisations; an analysis that takes a critical look Organización, Spain at the success or failure of development interventions, assessing the components of competences and the essential skills for project managers. It also examines how proposals for cooperation project management methodology are drawn up, speciﬁ c training programmes in this area, the coordination between players, and knowledge management, with the purpose of enhancing the impact of development interventions.

Introduction ment have established the way to cooperate in Public sector development projects or programs recent years. This research work aims to verify the specifically designed for economic and social hypothesis that a better training in competences needs of developing countries, usually fi nanced by and skills for programme/project managers in the a donor are known as international development areas of intervention leads to a sustainable impact projects. These projects are either implemented and results based on the shared social processes by recipient governments under a bilateral agree- of empowerment and learning. The following ment with the donor country, or through an questions need answering: Do the currently used ‘implementing partner’ of the donor – frequently methodologies adapt to the new context of inter- a nongovernmental organization or professional national cooperation for development? Do project contractor (Crawford and Bryce, 2003). Interna- management training strategies adapt to the local tional development projects differ from industrial context in terms of satisfying local expectations? or commercial projects. The objectives of devel- Are currently used project management models opment projects by defi nition, concern poverty and the sustainability of long-term actions being alleviation and improvement of living standards, strengthened? To what extent do local partners, environment and basic human rights protection, counterparts and the benefi ciary population take assistance for victims of natural or people caused part in planning, monitoring and evaluating inter- disasters, capacity building and development of ventions? Do they have the necessary mechanisms basic physical and social infrastructures (Khang to be able to meet the requirements for control, and Moe, 2008). monitoring and evaluation? The Millennium Declaration with its ensuing This paper reports on research that sets out to defi nition of objectives, goals and common indi- identify the competence profi le of effective man- cators represents an attempt to internationalise agers of cooperation for development projects, a Management Model for Development Results with the purpose of promoting an improvement (MfDR) in International Cooperation programmes in development interventions within the new and projects, indicating the path to be followed framework of cooperation through the training by the countries in the world as a whole and in, and strengthening of competences and skills putting forward the importance of partnership adapted to local contexts. This is an updated version for development. This is a unique and extremely of a paper originally novel experience within the sphere of public policy The evolution of project management published in the “IPMA which sets a simple, easily communicable action models for development and the new Scientifi c Research Paper framework that is highly suited to mobilising framework Series: Human Side of resources. Beyond having realistic and achievable The gradual introduction of results-oriented man- Projects in Modern goals, the Objectives of the Millennium Develop- agement techniques has helped many public sector Business” (IPMA, 2009)

Project Perspectives 2010 15 Internal Risks External Risks

Area of Control Outputs Area of Influence Internal Reach External to the Direct

Med-Term Inputs Short Term Long Term Activities Outputs Outcomes (resources) Outcomes Impact (indirect)

Direct Indirect Project Delivery Partners Society Beneficiaries Beneficiaries

Efficiency Effectiveness

Figure. 1. Results chain for the Development Results Management Model.

and development agency managers to adopt a developing countries reaffi rmed their commit- more systematic approach to all aspects of project ment to policies and actions to promote economic and programme management. growth and reduce poverty, and the developed Many institutions and agencies in both devel- countries supported them with more effective oped and developing countries now use a variety aid and trade policies. In this context of shared of practical MfDR techniques. These include responsibility, world attention has moved towards results-based strategic planning, the use of logic management strategies in order to achieve re- models or project results frameworks, results- sults. At the international round table on results based budgeting, risk management and results- in Marrakech (February 2004), the development based evaluation and monitoring (Fontaine, 2004). agencies gave their backing to fi ve central prin- Management in the public sector used planning, ciples for management by results. More recently, programming and cost control models in the at the High Level Forum on the Effectiveness of 1960s, placing an emphasis on fi nancial plan- Aid in Paris (March 2005), the member countries ning and cost accounting. ‘Input’ management and the donors backed the Paris Declaration, (human resources, operating costs…) became which contains specifi c commitments related to more important demonstrating control over the Managing for Development Results: actions to be management, distribution and use of fi nancial taken both separately and jointly to “administer resources (Osborne and Gaebler, 1993). and implement aid in a way that is focused on Programme management by activities (PMBA) the desired results and uses the information to reached its peak between the seventies and the enhance decision-making”. eighties when donor organisations got involved in Development results-based management is cen- infrastructure and industrial development projects. tred on a strong notion of causality. It is supposed This combined with different activity planning that certain inputs and activities logically lead to tools and techniques (project structure break- certain results (Binnedijk, 2001). The relevance of down, Gantt diagrams, the Critical Path Method, these results follow an increasing order: the most Programme Evaluation and Review Technique) basic results (the ‘products’ or outputs) contribute boosted the implementation of activities in line to the success of the most complex results (‘effects’ with a programming framework that became or outcomes) and fi nally lead to getting ‘impact’, extended to management systems in the building which is the most far-reaching result. Therefore, industry and engineering (Hailey and Sorgenfrei, attention must be paid to achieving results at every 2003). In the fi eld of international cooperation stage of the management process, from planning the introduction of management methods by to monitoring and evaluation, since every level of objectives goes back to this period Such methods development of every process is affected. were the Logical Framework Approach (LFA) at the For those working on this incipient programme, United States Agency for International Develop- however, it is sometimes diffi cult to know how ment (USAID) and the Objective Oriented Project and where to begin, who to include and where to Planning methods (GTZ). seek aid. There are no black and white answers to The 2002 Monterrey Conference called for these questions because every country and agency creating a new partnership for development: the has its own unique situation. Notwithstanding,

16 www.pry.fi as certain agencies and countries advance in this Technical Competences Importance work, they have begun to mark out a path that M SD can be useful to others. Out of the search for this balance certain Parties involved 3,11 0,78 recent proposals have arisen aimed at improv- Risk and opportunity 4,78 0,68 ing the quality of participation of all the parties interested in the life cycle of an intervention and Quality 4,31 0,69 in making planning models more ﬂ exible so that Project Organisation 2,98 1,28 they better interact with their surroundings and thereby re-guide activities and results according Teamwork 2,88 1,44 to how the context evolves. This work takes ac- Project Coordination 2,86 1,69 count of all the theories on development, as well Scope and deliverables 3,93 0,75 as the management approaches used: the logical framework approach (Gómez Galán and Cámara, Time and project stages 1,97 1,18 2003), results-based management, the process Resources 2,74 1,00 approach to learning (Korten, 1987), projects as experiments (Rondinelli, 1993) and organisational Cost and ﬁ nancing 3,04 0,89 learning-based processes approach (Chambers, Supplies and contracts 1,51 0,93 1994). In addition, we have studied how international organisations plan, evaluate , and manage Changes 2,56 1,18 development projects: UK Department for Inter- Control and reports 2,77 1,41 national Development (DFID), Japan International Information and documentation 4,25 0,42 Cooperation Agency (JICA), Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ), Canadian Project Completion 1,53 1,02 International Development Agency (CIDA).

Research project Behavioural Competences Importance Adapting the system of International Cooperation M SD to MfDR, involves a profound change in methodol- Leadership 3,21 0,89 ogy, but, above all, a medium and long-term effort that means a change in organisational culture, in Commitment and motivation 4,62 0,76 management and in actions for cooperation. It is Creativity 1,74 0,64 for these reasons that new technical, personal and Results-oriented 4,81 0,88 contextual skills have been identifi ed in this area. Development programme/project managers work Effi ciency 2,04 0,50 in a rapidly changing context, with many parties Consultation 2,15 1,25 involved and external infl uencing factors. Proj- ects are more numerous, complex and of a more Negotiation 3,47 1,31 varied nature. The demand on managers and their Confl icts and crisis 3,65 0,87 teams’ personal and contextual skills has become Reliability 2,98 1,08 more pronounced and exacting in the last decade (IPMA, 2007). The need for a broad, real descrip- Ethics 4,71 0,71 tion of the skills needed to manage development projects and programmes in this changing context is top priority. Contextual Competences Importance The methodology used to support this research M SD programme took its lead from the established Project-oriented 4,01 1,31 McBer job competence assessment process initially developed for industrial psychology by McClel- Programme-oriented 4,04 1,08 land (1973). Over the last 30 years, a number Continuous improvement of projects and pro- 4,82 0,65 of studies have demonstrated the effectiveness grammes and validity of the McBer job competence as- Coordination with the parties involved 3,71 0,78 sessment methodology which comprises: (i) The identifi cation of those criteria defi ning effective Personnel management 3,53 0,71 performance; (ii) the identifi cation of a criterion Safety, health and environment 2,98 0,46 sample group of performers; (iii) data collection through behavioural event interviews; (iv) the identifi cation of core competences; (v) the valida- Table 1. Most important technical, behavioural and contextual tion of the competence model. The participants competences for cooperation for development programme and were 24 International Cooperation programme project managers. and project managers specialised in all the human development sector areas (UNPD, 1997): rural development, education, health, water and sanita- tion, environmental sustainability, technology and innovation, culture, gender, migration and peace- building. A variety of data were collected from the managers selected. Initially, they were asked to describe their job tasks and key responsibilities

Project Perspectives 2010 17 in order to identify competence requirements of manager must be convinced that the project re- their roles. sults satisfy the parties involved. Next, behavioural event interviews were used Ethics. Ethics allows the people to carry out to assess the behaviours underlying effective per- the project and deliver the results satisfactorily. formance in their role. Interviewees were asked to They represent personal and professional freedom recount an occasion where they had to manage a as well as limits. Ethics must be respected so that complex or problematic situation or event. Each people work with no moral confl icts concerning informant was asked to describe a range of critical the project, the parties involved or society. situations they had encountered, what events led Continuous improvement of projects and up to them, who was involved, what they thought, programmes. To improve project and programme felt or wanted to do in that situation and fi nally, management skills, as well as to increase the what they actually did and what they thought the organisation’s success in implementing its stra- outcome was. Later a workshop was set up with the tegic plan, continuous improvement is required. participants so that experiences concerning Devel- Implementing project, programme and portfolio opment results management could be shared. The management in an organisation involves designing group worked to identify what MfDR parameters the best possible processes, methods, techniques were managed by the organisation up to present and tools, it also involves changing attitudes and and which not in order to get to know the diffi cul- applying organisational changes in a continuous ties and the requirements needed to implement exercise of improvement. this management model in the sector. Conclusions Results and discussion The MfDR reform process must allow building on Taking account of all the variables considered existing foundations without this leading to un- previously, the results of the interviews were as necessary confl ict. The effort put into planning in shown in the following table. recent years is noteworthy. The general, country, After the study undertaken, it is clear what the thematic and sector documents produced are high development project manager’s profi le is within quality, in some cases refl ecting the “state-of-the- the new framework of international cooperation. art” of the issues analysed (the ability to govern, This study will enable specifi c training programmes gender, environment …). However, quite often they to be designed in this area, to coordinate players are more often ideological reports that give the and manage knowledge so as to enhance the im- broad outline - undoubtedly necessary - rather pact of development interventions. Therefore, it than authentic management tools. can be considered that the essential competences The way processes and monitoring mechanisms for project management are: have evolved has also been important. In this case, Risk and opportunity. The project manager what is needed is to capitalise on the investment is responsible for keeping themselves and the made in order to focus the tools on the results team members working actively, be aware of risks and transform them into more useful manage- and opportunities, and be committed to the risk ment tools. management process in order to involve the par- The most diffi cult change will undoubtedly be ties in this process. Having made a quantitative cultural change. This involves MfDR development assessment of risks and opportunities, they are strategy going hand-in-hand with a spirit to com- classifi ed according to the importance, impact and municate and train that involves the persons and probability of their occurring. This classifi cation is groups that are most able to infl uence their peers used to decide what strategy to use to deal with in the process. each risk and opportunity. The framework of competences presented in this Quality. Project quality management embraces work clearly defi nes the parameters deemed to be every stage and part of the project, from its initial most important by experts in the area of interna- defi nition up to the processes of the project, its tional cooperation for development. The develop- team management, its deliverables and its comple- ment of training programmes in this direction tion. The functionality demanded of the product will make it easier to confront the organisational must be validated against its real functionality (at change that will be seen in this sector in the next appropriate stages in the course of a project) with few years. With this paper we hope to be able the customer in order to ensure compliance with to contribute to the improvement of the quality product requirements. of actions for International Cooperation in third Information and documentation. Information world countries, so that interventions will be more management includes modelling, compilation, effective, and the process monitoring and follow- selection, and project data storage and retrieval. up system will be in closer contact with the project. A documentation system must have rules as to It is hoped that programmes and projects will be what information it contains, in what sort and easier to assess through indicators that can truly type of document and what format this informa- measure the impact of actions in the fi eld. tion should take in the document. Commitment and Motivation. Commitment References is a project manager’s personal contribution to a Abraham, S.E., Kams, L.A., Shaw, K. and Mena, M.A. project and the contribution of the people inside (2001). Managerial competencies and the mana- the project or connected with it. gerial performance appraisal process. Journal of Results-oriented. The team’s attention must Management Development, 20(10), 842-52. be focused on key objectives to obtain optimum Aune, J. (2000) results from all the parties involved. The project Logical framework approach and PRA – mutually

18 www.pry.fi exclusive or complementary tools for project plan- International Project Management Association ning? Development and Practice, 10 (5), 687-690. (2007), Project Management competence baseline, version 3.0. The Netherlands. Binnedijk, A. (2001) Results based management in the development Khang, DB., Moe, TL (2008) co-operation agencies: a review of experiences, Success criteria and factors for international de- CAD-OCDE, París. velopment projects: a lifecycle-based framework. Project Management Journal, 39(1):72–84. Chambers, R. (1994) The origins and practice of participatory rural ap- Korten, D. (1987) praisal. World Devolopment, 22 (7), 953-969. Third generation NGO strategies: a key to people centered development. World Development, 15, Coordination NGO for Development Spain (2008). 145-159. The NGO for Development Code of Conduct. www. congde.org. McClelland, D.C. (1973) Testing for competence rather than for intelli- Crawford L, Bryce P. (2003) gence. American Psichologist, 28, 1-14. Project monitoring and evaluation: a method for enhancing the efﬁ ciency and effectiveness of aid Osborne, D. and Gaebler, T. (1993) project implementation. International Journal of Reinventing Government: How the entrepreneurial Project Management, 21:363–73. spirit is transforming the public sector. Fontaine, E. (2004) Rondinelli, D. (1993) Implementation of results-based management Strategic and results based management in CIDA: in the United Nations organizations, Inspection reﬂ ections on the process’. Strategic Management. Departmen, Ginebra. Canadian International Development Agency. Ottawa. Gómez Galán, M. y Cámara, L. (2003) Logical Framework Orientations. Cideal. Madrid. UNDP (1997) Measuring and Managing Results: Lessons for Hailey, J. and Sorgenfrei, M. (2003) Development Cooperation. Measuring Success? - Issues in Performance Management. Keynote Paper 5th International UNDP (2008) Evaluation Conference on Measurement, Manage- Human Development Report 2007/2008. ment and Accountability. KDKConference Centre, The Netherlands. Williams, R.S. (1998) Performance Management, Thomson, London.

José R. Cobo is a lecturer in Project Management at the Higher Technical School of Industrial Engineers at Madrid Technical University. He is a member of the Group of Cooperation in Or- ganisation, Quality and the Environment (www.gocma.com) at this university and his lines of research are focused on educational innovation in engineering, project management and cooperation for development. E-mail: [email protected]

Isabel Ortiz, PhD lectures in Project Management at the Higher Technical School of Industrial Engineers at Madrid Technical Univer- sity. She is director of the Innovation Education Group (GIE Project- UPM). She is a Project Manager Professional (PMP), Master in Total Quality Management, and European Master Degree in Quality of Complex Integrated Systems (EFQM). Her line of research is educational innovation in engineering, project management and quality in cooperation for development. E-mail: [email protected]

Carlos Mataix, PhD lectures in Industrial Management at the Higher Technical School of Industrial Engineers at Madrid Technical University. Their lines of main investigation are logistics, strategic planning and international cooperation. It has published diverse articles and books related to cooperation for development. He was an associate Founder and President of the Spanish Confederacy of Associations of Engineering without Borders (ISF), being at present vice President of ISF-ApD. E-mail: [email protected]

Project Perspectives 2010 19 Safety and Health Risks in International Construction Projects

Yu Sun The international construction market is more Introduction Dongping Fang risky than its domestic counterpart. Numerous The Engineering News Record (ENR) reported that Jimmie Hinze studies have examined many risk management the top 225 international contractors generated Tsinghua University aspects of international construction projects, $310.25 billion in 2007 revenues from projects China including joint venture risks, bidding risks, fi - outside their respective home countries. This rep- nancial risks and political risks. Despite this, few resents a dramatic increase of 38.3% over 2006. efforts have analyzed the safety and health risks The top 225 had total contracting revenues of for different international construction regions. $826.96 billion in 2007, a 27.1% increase over Based on 13 safety and health risk factors iden- 2006 (Reina and Tulacz 2008). At the same time, tifi ed in the literature and through interviews, the international construction market presents a survey was conducted to collect information greater risks than its domestic counterpart. After a and make an assessment on the safety and thorough review of the literature on international health risk factors in three different geographic construction from 1987 to 2004, Dikmen and Bir- regions, namely developed regions, developing gonul (2006) concluded that risk management was regions and the Middle East. Statistical analysis one of the most important factors for the success investigated the criticality of the 13 risk factors of international projects. for the different regions. The risk factors were There have been a considerable number of grouped into three categories, namely high risk, studies pertaining to risk management on many medium risk and low risk. Findings show that: aspects of international construction projects, 1) the developing regions have the riskiest situ- including joint venture risks (Bing et al 1999), ations with 8 high risks and 5 medium risks; bidding risks (Han and Diekmann 2001), political 2) the developed regions have much less risky risks (Wang et al 2000a) and fi nancial risks (Wang situations with 10 risk factors (76.92%) falling et al 2000b). A few studies have focused on the into the medium and low risk categories; 3) the safety and health risks in international construc- Middle East has 6 risk factors categorized as tion projects, including safety and health issues in high risk and low risk respectively; 4) the six developing countries (Gibb 2006), the infl uence of risk factors were found to be critical risks for the different laws and regulations on safety and all the three regions. health in international construction (Koehn et al 1995; Mahalingam and Levitt 2007), language barriers and cultural issues (Dong and Platner 2004; Escobar 2006; Kartam et al 2000; Mahalingam and Levitt 2007; Trajkovski and Loosemore 2006). It is recognized that the safety and health risk situation may vary between regions in international construction markets, but few efforts have addressed safety and health risks for different international construction regions over the world. This paper presents the results of a questionnaire survey aimed at making an assessment on the safety and health risk factors for the projects This paper has been fi rst in different international construction regions. published in the pro- This provides a better understanding on the safety ceedings of the CIB W99 and health risks in international construction conference. projects.

20 www.pry.fi Survey Description n = number of people surveyed The survey was based on 13 safety and health risk i i i i = evaluation of the criticality of the ith risk factor by the factors (Table 1) identifi ed through a literature Rj=P j I j Rj jth person surveyed review on construction risk management. The 13 i = evaluation of risk occurrence level by the jth person n risk factors were categorized into 4 groups, namely i P j surveyed Rj political & economical risks, social risks, environ- i j=1 i = evaluation of risk impact level resulting from the ith risk R = I j factor by the jth person surveyed mental risks, and project risks. Because the safety n i and health risk situation may vary from region to R = criticality index of the ith risk factor. region, the international construction market was divided into six geographic regions, namely: - Region 1 (West & North Europe, Australia Category Risk Factor Code and North America) - Region 2 (Latin America/Caribbean) War WA - Region 3 (South Asia, Southeast Asia and Civil Unrest CU East Asia) Political & Eco- - Region 4 (Central Asia, Russia and East nomical Risk Terror Attack TA Europe) Bad Economical Situation BES - Region 5 (Africa) - Region 6 (Middle East) Crime CR The respondents were asked to assess the risk Language Barrier LB occurrence level and the risk impact level of the Social Risk Cultural Difference and Confl ict CDC 13 risk factors for the international construction regions with which they were most familiar. Simi- Difference in Laws & Regulations DLR lar to previous studies (Zhu 2007, Sun et al 2008), Natural Disaster ND the Likert scale ranging from 1 to 5 was assigned Environmental Disease DI to both the risk occurrence level and the risk im- Risk pact level (Table 2). The questionnaire survey was Extreme Natural Condition ENC distributed via email to three groups of targeted Lack of Infrastructure Facilities LIF respondents, consisting of 1) the top 225 inter- Project Risk national contractors listed by ENR in 2008; 2) the Labor Risk LR academic research networks (e.g. CIB W99, CIOB, GloNIC); and 3) the work partners of Tsinghua Table 1. Safety and health risks identifi ed for University and the University of Florida. By the end international construction of June 2009, 58 valid responses were received. The estimated response rate is about 10%. The low response rates were insuffi cient to Occurence Value Impact Level Value conduct viable statistical analysis for each region. Level Assignment Assignment As a result, the six regions were re-categorized as three regions according to the regional level Impossible 1 Almost None 1 of social and economic development and the Not Likely 2 Minor 2 construction safety and health performance. Regions 2, 3, 4 and 5 were re-categorized as the Possible 3 Moderate 3 developing region because most countries located Very Possible 4 Severe 4 in these regions were developing countries; the Almost Defi nite 5 Very Severe 5 Region 1 was re-categorized as a developed region because all the countries in this region were Table 2. Likert scale of risk occurrence and risk impact developed countries with the best construction safety and health performance in the world; the 30 Middle East was re-categorized as an independent region because of its distinct oil-motivated inter- 28 national construction. The amounts of responses 25 for above re-categorized three regions are shown in Figure 1. 20 Data Analysis and Findings 19 In this research, the risk criticality index was used to prioritize the risk factors for the three 15 international construction regions. The risk criticality index was intensively adopted by previous researchers to extract the critical risks from a risk Number of Responses 10 11 checklist (Shen et al 2001; Fang et al 2004; Sun et al 2008; Zou and Zhang 2009). Formula (1) and (2) demonstrate how to calculate the risk criticality 5 index according to the experts’ assessment on the risk occurrence and the risk impact. The statistical analysis was conducted to inves- Developed Developing Middle East tigate the differences between the risk criticality Region indices of different risk factors. The major statisti- Figure 1. The amounts of responses for the three regions

Project Perspectives 2010 21 cal methods employed were Paired-samples T test high risk category; and Wilcoxon test (for comparison between two 2. For the ith risk factor with the criticality risk factors in a matched-pair set). In this analysis, index less than 9, if the statistical analysis the comparisons were all conducted between two showed that there was no statistically risk factors in the matched-pair set. As suggested signifi cant difference between the two in the literature (Huang and Hinze 2006), if the criticality index values of the ith risk means and medians revealed the same prioritiza- factor and the last risk factor with the tions between the two compared risk factors, a criticality index no less than 9, it should be one-tail test was conducted. Because this research grouped into medium risk category; was an exploratory study, a signifi cance level of 0.1 3. For the ith risk factor with the criticality was established to detect the differences between index less than 9, if the statistical analysis the criticality index values of different risk factors. suggested that there was a statistically Based on the results of statistical analysis, the 13 signifi cant difference between two criti- risk factors were categorized into three groups cality index values of the ith risk factor (high risk, medium risk and low risk) in accordance and the last risk factor with the criticality with the criteria as follow: index no less than 9, it should be grouped 1. As the literature suggested (Zhu 2007; into low risk category; Sun et al 2008), if the risk criticality index 4. If the parametric and non-parametric tests of the ith risk factor was no less than showed the opposite results, which meant “P(3)×I(3)=9”, it should be grouped into one test showed there was a statistically

Risk Factor Mean Median Risk Category

Labor Risk 9.55 9 High Extreme Natural Condition 9.36 9 High Natural Disaster 9.00 9 High Terror Attack 8.27 8 Medium Language Barrier 8.18 8 Medium Bad Economical Situation 8.09 9 Medium Crime 7.91 6 Medium Cultural Difference and Conﬂ ict 7.91 9 Medium Difference in Laws & Regulations 7.82 9 Medium Disease 7.82 8 Medium Lack of Infrastructure Facilities 6.27 6 Low War 6.00 5 Low Civil Unrest 6.00 8 Low

Table 3. Risk criticality indices for the developed regions

Risk Factor Mean Median Risk Category

Labor Risk 12.89 12 High Lack of Infrastructure Facilities 11.54 9 High Cultural Difference and Conﬂ ict 10.96 10.5 High Crime 10.93 11 High Disease 9.86 9 High Language Barrier 9.39 8.5 High Difference in Laws & Regulations 9.39 9 High Bad Economical Situation 9.11 9 High Civil Unrest 8.50 9 Medium Extreme Natural Condition 8.25 7.5 Medium Natural Disaster 8.18 9 Medium Terror Attack 7.79 8 Medium War 7.71 8 Medium Table 4. Risk criticality indices for the developing regions

22 www.pry.fi signifi cant difference while the other test Middle East showed none, the risk factor would be The risk criticality indices were computed for the grouped into the medium risk category 13 risk factors for the international construction according the conservative point of view projects in Middle East (Table 5). There are 6 risk of “never underestimate the risk”. factors with criticality indices greater than 9 so that they are grouped into the high risk category, Developed Regions including bad economical situation, extreme natu- Risk criticality indices of the 13 risk factors for the ral condition, labor risk, language barrier, cultural international construction projects in developed difference and confl ict, and difference in laws & regions were then computed and the results were regulations. The last risk factor in this group is listed in Table 3. Three risk factors (namely labor the risk factor “difference in laws & regulations”. risk, extreme natural condition and natural disas- The comparison of the criticality indices were ter) were in the high risk category with criticality conducted between the risk factor “difference in indices greater than 9. The risk factor “natural laws & regulations” and the risk factors with the disaster” is the last risk factor with its criticality criticality values less than 9. The statistical analysis index value more than 9. Based on the statistical shows that only 1 risk factor (lack of infrastruc- comparison of the criticality indices between ture facilities) should be grouped as medium risk “natural disaster” and the risk factors with the category and 6 risk factors would fall into the low criticality values less than 9, seven risk factors risk category, including terror attack, war, natural were in the medium risk category (e.g. terror at- disaster, disease, crime and civil unrest. tack, language barrier, bad economical situation, crime, cultural difference and confl ict, difference The Critical Risk Factors of the Three in laws & regulations and disease) and three risk Regions factors were in the low risk category (e.g. lack of The most important risk factors of concern are infrastructure facilities, war and civil unrest). those with high criticality index values in all three international construction regions. These critical Developing Regions risk factors can serve as a means for developing The risk criticality indices of the 13 risk factors an effective risk management strategy that should for the international construction projects in de- be implemented in an effi cient way. A score rang- veloping regions were computed (Table 4). Eight ing from 1 to 3 was given to qualitatively explore risk factors, e.g. labor risk, lack of infrastructure the critical risk factors of the three regions. For facilities, cultural difference and confl ict, crime, a specifi c region, 1, 2, or 3 was assigned to a risk disease, language barrier, difference in laws & factor respectively if the risk factor was in a low, regulations and bad economical situation, had medium or high risk category (Table 6). The labor criticality indices greater than 9. The risk factor risk received an average score of 3, meaning that “bad economical situation” is the last risk factor it was high in each of the three regions. Five other with its criticality index value more than 9. The risk factors had average scores of 2.67, including comparison of the criticality indices were con- bad economical situations, cultural differences ducted between the risk factor “bad economical and confl icts, differences in laws & regulations, situation” and the risk factors with the criticality extreme natural conditions and language barriers. values less than 9. The results indicate that all the These fi ve risk factors were categorized as high 5 risk factors with less than 9 criticality values risk in 2 regions and medium risk in one region. should be categorized as medium risks. Along with the labor risk factor, these should be regarded as the critical risk factors on safety and

Risk Factor Mean Median Risk Category

Bad Economical Situation 12.95 12 High Extreme Natural Condition 12.11 12 High Labor Risk 10.42 9 High Language Barrier 9.74 9 High Cultural Difference and Conﬂ ict 9.53 9 High Difference in Laws & Regulations 9.47 9 High Lack of Infrastructure Facilities 8.53 9 Medium Terror Attack 6.89 8 Low War 6.84 6 Low Natural Disaster 6.74 8 Low Disease 6.68 6 Low Crime 6.47 6 Low Civil Unrest 5.74 5 Low Table 5. Risk criticality indices for the Middle East

Project Perspectives 2010 23 Risk Code Developed Region Developing Region Middle East Average Score Risk Score Risk Score Risk Score

BES Medium 2 High 3 High 3 2.67 CDC Medium 2 High 3 High 3 2.67 CR Medium 2 High 3 Low 1 2.00 CU Low 1 Medium 2 Low 1 1.33 DI Medium 2 High 3 Low 1 2.00 DLR Medium 2 High 3 High 3 2.67 ENC High 3 Medium 2 High 3 2.67 LB Medium 2 High 3 High 3 2.67 LIF Low 1 High 3 Medium 2 2.00 LR High 3 High 3 High 3 3.00 ND High 3 Medium 2 Low 1 2.00 TA Medium 2 Medium 2 Low 1 1.67 WA Low 1 Medium 2 Low 1 1.33

Table 6. The critical risk factors for all the three regions

health issues in international construction proj- 3. The Middle East has the distinct feature ects. In summary, the large number of high critical that differs from the developed and devel- risk factors (6 of 13 or 46.15%) confi rms that the oping regions. There are 6 high risk factors safety and health issues in international construc- and 6 low risk factors, with 1 medium tion projects are serious problems from a global risk factor. The 6 high risk factors are bad point of view and warrant serious consideration economical situations, extreme natural to properly address them. conditions, labor risks, language barriers, cultural differences and confl icts, and dif- Summary and Conclusions ferences in laws & regulations; The objective of this paper was to provide a bet- 4. Six critical risk factors were identifi ed ter understanding of the safety and health risks through further analysis, which were cat- in international construction projects. According egorized as high risk in at least 2 regions to the risk criticality index and statistical analysis, and were not marked as low risk in any four criteria were developed to categorize the risk regions. These critical risk factors comprise factors as high risk, medium risk, and low risk. The labor risks, bad economical situations, cul- detailed outcome of this paper is summarized as tural differences and confl icts, differences follow: in laws & regulations, extreme natural 1. Of the three international construc- conditions and language barriers. tion regions, the developing region has the greatest risk situation on safety and Acknowledgement health issues in international construction This research effort was a part of project 70772013 projects. In the developing region, all the supported by the National Natural Science Foun- risk factors are in the high and medium dation of China. The authors gratefully acknowl- risk categories. The high risk category for edge the National Natural Science Foundation the developing region consists of 8 factors, of China for providing funding for this research. namely labor risks, lack of infrastructure Appreciation is also given to the Program for Key facilities, cultural differences and con- International S&T Cooperation Projects of Ministry fl icts, crime, disease, language barriers, of Science and Technology, China (Project No. differences in laws & regulations, and bad 2003DFB00015). The support for questionnaire economical situations. survey from Mr Kavin Berg, the global vice presi- 2. Compared to the developing region, the dent of Bechtel Group, is also greatly appreciated. developed region is less risky with 10 risk The work of this research was ever presented at factors (76.92%) falling into the medium the CIB conference in Melbourne Australia and and low risk categories. There are three appreciation is given to the CIB conference for risk factors in the high risk category for providing opportunity to share the results of our the developed region, including labor risks, research. extreme natural conditions and natural disasters.

24 www.pry.fi References Zou, P.X.W. and Zhang, G.M. (2009) Bing, L., Tiong, R.L.K., Fan, W.W., Chew, D.A. (1999) “Comparative study on the perception of con- “Risk management in international construction struction safety risks in China and Australia.” joint ventures.” Journal of Construction Engineer- Journal of Construction Engineering and Manage- ing and Management, 125(4), 277-284. ment, 135(7), 620-627. Dikmen, I. and Birgonul, M.T. (2006) Zhu, D.F. (2007) “An analytic hierarchy process based model for “Risk Measurement for Construction Program: A risk and opportunity assessment of international Case Study on the Olympic Venue Construction.” construction projects.” Canadian Journal of Civil Ph.D. Dissertation (in Chinese), Tsinghua Univ, Engineering, 33(1), 58-68. Beijing, China. Dong, X.W., and Platner, J.W. (2004) “Occupational fatalities of Hispanic construction workers from 1992 to 2000.” American Journal of Industrial Medicine, 45, 45-54. Escobar, J. (2006) “Managing Hispanic construction workers.” Mas- ter Thesis, the Univ. of Florida, Gainesville, FL, USA. Fang, D.P., Li, M.E., Fong, P.S. and Shen, L.Y. (2004) “Risks in Chinese construction market-contractors’ perspective.” Journal of Construction Engineering and Management, 130(6), 853-861. Gibb, A. (2006), “Construction health and safety in developing countries.” European Construction Institute, Britain. Han, S. H. and Diekmann, J. E. (2001) Yu Sun , Ph.DPh D Candidate “Making a risk-based bid decision for overseas construction projects.” Construction Management Department of Construction Management and Economics, 19, 765-776. School of Civil Engineering Tsinghua University Huang, X.Y. and Hinze, J. (2006), “Owner’s role in construction safety.” Journal of Construction Engineering and Management, 132(2), 164-173 Kartam, N.A., Flood, I. and Koushki, P. (2000) “Construction safety in Kuwait: issues, procedures, problems, and recommendations.” Safety Science, 36, 163-184. Koehn, E., Kothari, R.K. and Pan, C.S. (1995) “Safety in developing countries: professional and bureaucratic problems.” Journal of Construction Engineering and Management, 121(3): 261-265. Mahalingam, A. and Levitt, R.E. (2007), “Safety issues on global projects.” Journal of Construction Engi- neering and Management, 133(7), 506-516. Reina, P. and Tulacz, G.J. (2008) Dongping Fang, Professor “The top 225 international contractors.” Engineer- ing News Record, 261(5), 32-37. Department of Construction Management School of Civil Engineering Shen, L.Y., Wu, G.W.C. and Ng, C.S.K. (2001) Tsinghua University “Risk assessment for construction joint ventures in China.” Journal of Construction Engineering and Management, 127(1), 76-81. Sun, Y., Fang, D.P., Wang, S.Q., Dai, M.D., and Lv, X.Q. (2008). “Safety risk identiﬁ cation and assessment for Beijing Olympics venues construction.” Journal of Management in Engineering, 24(1), 40-47. Trajkovski, S. and Loosemore, M. (2006), “Safety implications of Low-English proﬁ ciency among migrant construction site operatives.” Internation- al Journal of Project Management, 24, 446–452. Wang, S.Q., Tiong, R.L.K., Ting, S.K. and Ashley, D. (2000a), “Evaluation and management of political risks in China's BOT projects.” Journal of Con- struction Engineering and Management, 126(3): 242-250. Jimmie Hinze, Professor Wang, S.Q., Tiong, R.L.K., Ting, S.K. and Ashley, D. M. E. Rinker, Sr. School of Building Con- (2000b). “Evaluation and management of foreign struction, College of Design exchange and revenue risks in China's BOT proj- Construction and Planning ects.” Construction Management and Economics, University of Florida 18, 197-207.

Project Perspectives 2010 25 The Gap Between Project Managers and Executives

Peter Wijngaard, Atos Consulting Herman Mooi, Delft University of Technology, The Netherlands Victor Scholten, Delft University of Technology, The Netherlands

Researchers and practitioners have drawn attention to the differences in thinking and acting between the project managers and executives in project management. These differences - also called the gap in this paper - may negatively impact project results. However, knowledge about this gap is lacking in current research. This study aims to investigate this gap and quantifi es the different perceptions that project managers and executives have. The research consisted of a literature study followed by a survey among project managers and executives to gather the experiences, and to identify the size and the impact of this gap. The result made clear that the gap is caused by the differences in perspectives, in strategic insight and in understanding of each others behaviour. If the gap is present, it was perceived by both project managers and executives that it had a negative impact on the project results. Introduction project managers and executives if both Recognizing the different perceptions In today’s organizations the role of of them do not fully understand the towards project management may help projects is evident. Many organiza- other’s perception. In this research we to prevent the gap from occurring. tions implement their innovations and investigate this gap. re-organizations through projects. Research on project management Literature Review Projects are considered to have a strong has extensively investigated the rela- To identify and to bridge the gap be- contribution to the strategic goals of an tionships between project managers tween project managers and executives, organization, however, the benefi ts from and their team, the project sponsors or it is necessary to give a clear defi nition a project for an organization may differ the steering committee. Relatively few for this gap in this research. A differ- from one project compared to another studies have focused on the relationship ence in thinking and acting between project. This may be partly due to the between project managers and execu- the project managers and executives different views that executives and proj- tives. Their relationship, differences in may always be present. A large portion ect managers have on projects. On the perceptions on project management, of this difference is most probably due one hand, executives tend to view a cer- way of thinking and behaviour may to their different position in the organi- tain project with respect to the strategic impact not only the project success but sation and their different roles in the direction of the organization. On the also the overall organizational success. organisation and in projects. But when other hand, project managers empha- In order to get a better understand- this difference has a negative impact on size to focus on the success of a certain ing on the presence and perceptions of results, we talk about a gap (Wijngaard project. They are directly involved in the a gap between project managers and et al., 2008): execution of the project and in that way executives we formulated the following A gap in project management is they contribute to the overall strategic research questions: the distance between the project direction of the company. - To what extent project managers and manager and the executive in the Hence, both executives and project executives have different perceptions work process – as a result of the managers contribute to developing the on the presence of a gap in project difference in perspective caused strategy of the organization but their management? by their different roles – with a approach may differ. Executives have - What are the causes for this gap negative impact on project results an overall view of the projects and according to project managers and and with that on the organization make decisions based on high-level executives? goals. information of all the projects in the - How do views between project man- portfolio. Project managers focus on the agers and executives differ concern- A gap between project managers and performance of their project and try to ing the business case? executives in project management give their project the best position in The results of this study can be used Open culture and co-operation is ideal the organization. These different roles to improve the relationship between but in practice this does not always of executives and project managers project managers and executives. They happen. Especially, in situations where can lead to different perceptions about can improve their understanding of executives delegate to the project man- the management of projects. Different the views and perceptions they both ager the authority for taking decisions perceptions can lead to a gap between have regarding project management. to execute the project. During the ex-

26 www.pry.fi ecution of the project, the information tion can be an important factor infl u- results of the questionnaire that were that project managers and executives encing the size of the gap. Shenhar et al. addressed to the project managers and have can be a-symmetric. This might (2001) made clear that well-performing the executives. We asked both project bring the executive in a state of insecu- projects are characterized by close co- managers and executives the same ques- rity. A reaction of the executive might be operation and less structure. Also the tions that allow for comparisons be- the introduction of many controls which way of communicating is important; tween the two groups. Out of the 3032 factually decrease the decision-making (only) written reports have a negative questionnaires that were sent to the authority of the project manager. In his impact, personal communication a project managers we received 299 useful turn, the project manager might inter- positive. Communication can both be questionnaires in return, representing a pret these controls as a lack of trust by formal (reports) or informal (day-to- response rate of about 10%. With re- which the gap is enlarged (Müller and day talks). spect to the response by the executives Turner, 2005). we received 56 useful questionnaires out The research of Shenhar et al. (2001) Specifi city of the business case of the 1134 that were sent, representing clarified that project managers and As is well-known, the roles of the execu- about 5% response rate. The distribution executives are working according to a tive and project manager are different of the respondents among sectors, size different timescale. The project manager per defi nition, which also explains the of company, and experience are given leaves the project when it is fi nished existence of the gap between them. The in the following tables. but the executive is faced with the extent to which a project is translated Following the descriptive data of our long-term results – both positive and into a clear business case can be deter- response, we analyzed the extent to negative – of this project. This differ- mined by how realistic project budget which project managers and executives ence can result in a confl ict situation, is, or its schedule. Discussion about this experienced a gap and the perceptions and therefore enlarges the gap. between the executive and the project they have with respect to the causes manager will help decreasing the gap. of the gap. We furthermore focused Impact on the project results As also the explicitness of the quality on specific elements as hierarchical Various factors may infl uence the gap requirements and the possibilities to differences, the impact of skills and and have a positive or negative impact discuss issues related to the project. knowledge, the strategic alignment and on the project results. An example of a Therefore we expect that a more specifi c the role of the business case. positive impact is the fact that a certain business case will diminish the existence tension is probably needed between the of a gap in project management. Experiencing the gap project manager and the executive to In Figure 1 we present the different views achieve an effi cient project execution. The Research Project that project managers and executives On the other hand, a negative example To get an actual view on the gap and have on the gap. The majority of project could be that if the project manager is to verify the different statements in managers (66%) often experience that unaware of the strategic relevance of a literature, Atos Consulting and the compared to their executives they have project. This could have been prevented Delft University of Technology initiated different views with respect to project by exchange of information about the a practice-oriented research strategic relevance from the executive study. The practical approach Sector Project Executives to the project manager. allows to get a more realistic Managers understanding of the presence Interaction between the executive of a gap between executives Consultancy 51% 30% and project manager and project managers and Financial Sector 15% 15% The interaction between project man- moreover can help extracting agers and executives can be the source managerial. Governmental auth. 15% 15% to the gap. We investigated three main The research consisted of a Telecommunications 10% 12% areas of the interaction between project literature research, a quantita- managers and executives. tive and qualitative analysis. Industry 9% 28% For the quantitative analysis, Table 1. Division respondents among sectors. Hierarchical differences a questionnaire was sent to With respect to the hierarchical dif- 3032 project managers and Size of Company Project Executives ferences it is important that there is 1134 executives. A regression Managers mutual recognition and coaching. Both analysis was applied to extract executive and project manager should conclusions about which vari- > 250 employees 67% 70% value each others skills and personal- ables infl uence the creation of ity. If the executive judges the project problems within a project, and 50-250 employees 15% 17% manager in a positive way, this will which can therefore explain < 50 employees 18% 13% result in rising support and confi dence the distance between project towards the executive. This can improve managers and executives. Table 2. Size of company. the chance of success of the project. On The qualitative analysis con- the other hand, if the project manager sisted of an in-depth study Years of Experience Project Executives has confi dence in the executive, he will of a few projects, and several Managers have less reluctance to report bad news, interviews. Both executives as and therefore give the executive a bet- project managers were inter- > 10 years 52% 15% ter possibility to steer. Based on this we viewed to get the two points 5-10 years 33% 30% expect that the gap can be narrowed. of view regarding projects and possible distances. < 5 years 15% 40% Communication No experience 0% 15% Communication is an essential element Results of the Research for project success. Lack of communica- In this section we present the Table 3. Experience in Project Management.

Project Perspectives 2010 27 Figure 1. Perceived different views on the gap by project Figure 2. Perceived causes of the gap. managers and executives. management. This experience of a gap gap. It is remarkable that, compared to indicate that they know the strategy of is also perceived by approximately 62% project managers, about 35% of the the company. Similarly a large number of the executives. When it comes to the executives think that they are respon- of executives (88.7%) agree and state consequence of the gap they both have sible for the gap. Next we identifi ed that project managers are aware of a strong feeling that it negatively affects the role of executive involvement as a the strategic goals of the organization the outcome of the project. About 90% cause to the gap. The results in Figure 2 and the role of project management to of the project managers think this has a show that more than two-third of the achieve the strategic goals. We also ran negative impact and about 82% of the project managers (68.6%) agree to the correlation analysis between strategic executives agree on that. With respect statement that gap could be smaller alignment and the perception of a gap to bridging the gap we found that if executives pay more attention to for the project managers. We found approximately three-quarter of both project management. Executives agree that higher levels of strategic align- the project managers (74.1%) and the even more to the statement and almost ment was associated with lower levels executives (74.3%) claim a necessity to three-quarter (73.5%) of the executives of gap experience (r= -0.161; p <0.05). mitigate the gap. signify that their attention to project The correlation was not signifi cant for management could decrease the gap on the executives. Hierarchical differences project management. We analyzed the role of hierarchical dif- Perceived realistic budget, time and ferences as causes to the gap, see Figure Communication and alignment quality 2. This hierarchical difference between In Figure 3 we present the findings With respect to the different views project managers and executives can from the different views that executives on the expectations we analyzed the manifest as political, managerial or and project managers have on project project criteria that were set by execu- organizational, or directly caused by managers. In the fi rst place this differ- tives for the project. It can be seen in executives or by lack of executive in- ent view can manifest in disagreement Figure 4 that the expectations on the volvement. More than half of the project between project managers and ex- budgets, planning and quality level were managers (55.1%) think that political ecutives on the management approach perceived as quite realistic and on the aspects have an infl uence on the gap. that is adopted in a certain project. same level by project managers and ex- Almost a similar amount of executives Compared to project managers (53.8%) ecutives. Time planning was perceived as (47.1%) agree to that observation and a slightly larger amount of executives the least realistic by both parties (68% say that political issues indeed affect (58.8%) indicate that they disagree with and 65% only agreed to that). Also, the the gap in project management. For project managers on the management perceived necessity of and expectations the management and organization of approach. Concerning the acceptance met on the amount of discussions on project we found that only about 37% of criticism, a large amount of project project issues were (comparably) high of the project managers and 27% of managers (even 98%) think that they are between project managers and execu- the executives indicate that it infl u- open to it, however, executives thinks tives. The agreement on these items is ences the gap. Even a smaller amount that project managers are less open at least striking: from sounds heard in of project managers (27.9%) suggests to criticism (though still about 85%). practice a much larger gap on these that executives are responsible for the Quite a lot of project managers (94.0%) items was expected.

Figure 3. Alignment of executives and Figure 4. Perceived realistic budget, time, quality and project managers. interaction.

28 www.pry.fi Conclusions Although the results of the research do Dr.D Peter Wijngaard studied Forestry at the Wagenin- not give a completely new understand- geng University, the Netherlands, and did his PhD in Op- ing and insight of the gap, it certainly erationse Research at the same university. After that he contributes to our knowledge about the workedw mainly in IT- and project management func- gap in project management and pro- ttions at the Corus Steelplant IJmuiden and Agricultural vides a scientifi c base for this phenom- RResearch Institute. Since 13 years he is working as enon. Overall, the response from both pproject and program manager for Atos Origin and - executives and project managers were tthe latter 6 years - for Atos Consulting and has broad relatively comparable, which in its own eexperience in (inter)national projects in industry. Peter right is already a remarkable result. The hhas an IPMA-B certifi cation. major fi ndings from our literature search and survey among project managers and executives reveals that: Dr. Victor Scholten is Assistant Professor at the Delft - There is a difference in be- University of Technology, the Netherlands, where he haviour between the project joined in 2007 the research group on Technology, manager and the executive, and Strategy and Entrepreneurship. His current research this causes a gap. focuses on high-technology-based start-ups in aca- - The gap was shown to have a demic and corporate environments. His is particularly perceived impact on the project interested in high technology based entrepreneurship, results (signifi cant for project new business projects and business networks. In 2006 managers). he completed his PhD research on the early growth of - Understanding for each others Dutch academic spin-offs at the Wageningen Univer- behaviour and actions reduces sity, the Netherlands. the gap. - Strategic understanding by the Dr. Herman Mooi studied and did his PhD in Mechani- project managers improves the cal Engineering at the University of Twente, The Neth- performance. erlands. After that he worked for 10 years as project - Informal communication reduces and line manager at TNO, a Dutch research institute, the gap, as opposed to formal in the fi eld of Crash Safety. Since 3 years Herman is communication (reports). Director of the Delft Centre for Project Management and associate professor Project Management at the Most striking survey results are: Technical Univeristy of Delft, The Netherlands. - The perceived cause of the gap was according to most respondents (60-75%), not the organisation nor the executives. Ap- proximately half of the respondents blamed internal politics as References a cause of the existence of the Bergeron, Francois, Raymond, Louis and Kerzner, Harold (2006) Project manage- Rivard, Suzanne (2003) ‘Ideal patterns gap. ment best practices: achieving global of strategic alignment and business excellence, John Wiley & Sons, Inc. - On the other hand, a small performance’, Information & Manage- majority of the respondents ment, vol. 41, pp. 1003-1020. Kliem, Ralph L. and Ludin, Irwin S. (1992) (68-74%) had the opinion that The people side of project management, the gap could be decreased by Cleland, David I. (1994) Project manage- Gower Publishing. an increased attention of the ment: strategic design and implementation, 2nd edition, McGraw-Hill. Kloppenborg, Timothy J., Stubblebine, Pat- executives for project manage- rick C. and Tesch, Debbie (2007) ‘Project ment. Cooke-Davies, Terence J. (2005) ‘The ex- manager vs. executive perceptions of - There was a remarkable align- ecutive sponsor - The hinge upon which sponsor behaviors’, Management Re- ment in answering of both organizational project maturity turns’, search News, vol. 30, pp. 803-815. PMI Global Congress Proceedings. groups (project managers and Müller, Ralf and Turner, J. Rodney (2005) executives). Crawford, Lynn (2005) ‘Senior manage- ‘The impact of principal-agent relation- ment perceptions of project manage- ship and contract type on communica- By giving insights in the source of ment competence’, International tion between project owner and man- the existence of the gap, the fi ndings Journal of Project Management, vol. 23, ager’, International Journal of Project of this research can contribute to giv- pp. 7-16. Management, vol. 23, pp. 398-403. ing handles to project managers and Dinsmore, Paul C. (1999) Winning in busi- Morris, P.W.G., Patel, M.B. and Wearne, S.H. executives to optimize the use of project ness with enterprise project manage- (2000) ‘Research into revising the APM management in an organisation by bet- ment, Amacom. project management body of knowledge’, International Journal of Project ter project results might be obtained. Englund, Randall L. and Graham, Robert Management, vol. 18, pp. 155-164. J. (1999) ‘From experience: linking projects to strategy’, Journal of Product Shenhar, A.J., Dvir, D. and Levy, O. (2001) Innovation Management, vol. 16. ‘Project success: a multidimensional strategic concept’, Long Range Plan- Johns, Thomas G. (1998) ‘On creating This is an updated version of a paper originally ning, vol. 34, pp. 699-725. published in the “IPMA Scientifi c Research organizational support for the project management method’, International Wijngaard, P.J.M., Mooi, H. and Scholten, Paper Series: Human Side of Projects in Modern Journal of Project Management, vol. 17, V. (2008) De kloof, Atos Consulting Business” (IPMA, 2009) pp. 47-53. Trends Institute.

Project Perspectives 2010 29 Managing Stakeholders in Large Engineering Project: Harmonious Together-development Between the Project Department and Peripheral Community

Ma Liang, Le Yun, Li Yong kui of harmonious together-development School of Economics and Management, Tongji University, Shanghai, China (HTD) which is also the vivid refl ection of Bureau of Shanghai World Expo Coordination, Shanghai, China the theme of Shanghai 2010 Expo“better This is an updated version of a paper originally published in the “IPMA Scientifi c Research Paper city, better life”during the preparation Series: Human Side of Projects in Modern Business” (IPMA, 2009) of the Expo. In the Expo project construction process, PD and PC may plays Managing stakeholders in large engineering project (LEP) is signifi cant because of games on many confl icting problems for the great infl uence to society. The paper analyses the social impact and interaction the self-interest, especially in the begin- of LEP choosing construction project department (PD) and peripheral community ning, the two sides may encounter the (PC) as two study objects. The game theory model is used for process simulation challenge of “prisoner's dilemma”. of harmonious together-development (HTD) during construction stage. By the analysis of the dilemma may be occurred in the together-development process, The “PRISONER’S DILEMMA” in the paper advises awards setting and guarantee funding system which improves the HTD Process earnings matrix for the harmonious together-development activity. Case study We hypothesize the game of HTD during of Shanghai 2010 Expo China is applied including the evaluation mechanism the construction process between PD for the “outstanding” project department and peripheral community. and PC can be analyzed by complete information source static game model. Introduction many stakeholders during the construc- The prerequisite for complete infor- In recent years, engineering project tion stage which is a gambling process mation source static game model becomes more and more complicated by different interests groups. Not only 1. PD and PC in the game are supposed and large-scale, the interaction to ex- LEP itself has a more and more infl uence to be rational. ternal environment becomes stronger on the peripheral community (PC), but 2. PD and PC in game each has suffi cient than before, and interaction between also the people in PC have become a information for itself and the other. the stakeholders especially during con- more important stakeholder to project 3. In the above analysis, we don’t construction stage is increasingly promi- construction, and the methods for this sider other restriction in the initial nent. Therefore, one key factor to large in the study and practice area are at- stage. engineering project (LEP) success is to tracting more and more attention, which make the stakeholders collaborate well has become an important issue for LEP The static game model for HTD with each other for effective project manager to deal with. The HTD needs two sides’ action. On the progress. As a LEP, the construction project of one hand, PD must take measures to In PMBOK (2000), PMI considers Shanghai 2010 Expo China covers two decrease bad effect on nearby residents stakeholders consist of people and main components of municipal & auxil- and solve their problems actively, on the organization which participate project iary projects and pavilion facilities with other hand, PC should put necessary actively or their interest will get positive 2 million square meters both in Pudong human resource, material, and money or negative impact during the project and Puxi area of Shanghai core city. They into HTD activities including comforting implementation stage. Wang Yingluo are sixteen styles of municipal & auxil- migrant workers, giving medical service, (2008) considers that contemporary en- iary projects, and about forty new-built books, movies and so on. PD and PC are gineering concept refl ects new tendency & rebuilt pavilions, and total investment keeping on bargaining for insurance of of the cross fusion and coordinate con- including large municipal & supporting self-interest when interacting together, struction between engineering science service projects and self-built pavilions the process is suitable for static game & technology and society, economic, is about 23 billion RMB yuan. Therefore, model analysis. culture and ecology, he proposes the the project construction of Expo 2010 1. Game participants: i, making i equals concept of engineering society and has a very large scale, and it concerns to 1or 2, 1 means PD, 2 means PC. theory of engineering philosophy. BENT many construction PDs, and also many 2. Strategy set of both sides: Si, B.(2003)considers LEP has the risk of PCs nearby. i=(1,2). society, economic and environment, so For the successful achievement of the Treasures for decreasing bad effect it should be mainly analyzed by more project’s goal, it is necessary to maintain from construction to residents and macro perspective. good relationship between the two providing convenience for them taken Practically LEP is always concerning stakeholders and realize a good state by PD actually are to maintain physi-

30 www.pry.fi cal and mental health of them. So we can do analysis easily by changing all PD PC Active attending Inactive attending treasures to paying health subsidies to fi t the game model’s need. From this Timely payment H, M+B1 DH, M+B2+C way, there are two choices for PD, one is to take treasures actively which can Deferred payment H+B , M-B DH+B , M-B +C be interpreted as paying timely health 1 2 1 2 subsidies, the other take no treasures or take treasures inactively which can be H HTD project; interpreted as paying deferred health DH Disharmonious together-development project; subsidies. Then the strategy set is S1= M Health subsidies; (timely payment, deferred payment). B1 PD earnings by using health subsidies money to invest for other usage; They are two kinds of strategies for B2 Interest of health subsidies for PC (the interest corresponds to the additional PC, one is to do HTD actively, assuring earnings by the effective treasures); quality and effect. The other one is to C Cost saved under inactive attending condition by PC. do HTD inactively. From the standpoint of PC, attending HTD actively, carrying Table1. Earnings matrix of both sides in the complete information out activities and putting into resource source static game model will raise cost, however, attending HTD inactively, decreasing human resource, So the Nash equilibrium of the game guarantee funding, these two treasures material, and money will bring down model is: (deferred payment, inactive are as follows: corresponding cost. Then the strategy attending). 1. Positive incentive treasures——awards set is S2=(active attending, inactive The above game equilibrium is ana- setting. the third-party awards the attending). lyzed from game earnings matrix. If PD timely payment PD the title of “out- 3. The earnings of two sides doesn’t pay the health subsidies in good standing PD”, and award the active The earnings of two sides can be ex- time, the PC surely will not do the HTD attending PC the title of “outstand- pressed as earnings matrix by table 1. actively, and they will delay or cancel ing PC” ,and these titles can only be many kinds of HTD activities deliberately occurred when PD and PC both do 1. The project can obscure the harmony and force the PD to pay the health sub- good in HTD. These awards include during construction stage or not is sidies. If the PD pays the health subsidies money and reputation, which can mainly decided by active extent of in good time, the PC will control the bring about positive values for PD HTD activities and support extent by devotion of human resource, material, when bidding in the later and PC’s PC residents. If positive, the project and money to a certain extent for the future development. can be recognized as harmonious best choice, and this will decrease many 2. Negative stimulus treasures——guar- one named H, otherwise, it will be kinds of cost. antee funding. Before the project recognized as disharmonious one In the Nash equilibrium for this beginning and HTD activities, PD and named DH. model, it is absolutely rational choice PC must have some guarantee fund, 2. B1 means PD earnings by using money for each side, but fi nally the choices or security of the issue by relative for due health subsidies to invest for have brought on the worst result for the fi nancial institution. PD and PC both other use, B2 means interest of health collectivity, that means PD and PC both need enough guarantee fund to force subsidies for PC. It is can be inter- have gone into “prisoner's dilemma”. them to do HTD, including timely preted like this: B1 means earnings payment for PD and active attend- by paying health subsidies delayed Going Out of the “PRISONER’S ing for PC. In a word, the security of by PD, and B2 means earnings for PC DILEMMA” in HTD During the performance bond for PD is assurance by health subsidies. Construction Stage for payment of health subsidies, and 3. C means cost saved under inactive There are no good for both PD and PC if security of performance bond for PC attending HTD condition by PC, in- they went into prisoner's dilemma. The is assurance for active HTD activi- cluding expenses on human resource, main reason for occurrence of this is ties. If contract breach has occurred, money and material for kinds of both sides not cooperating. The solution the credit level of PD and PC will be activities and service. It is sure that treasures are including non-mandatory decreased and they will be punished there would be much adverse infer- positive incentive like awards setting by severe sanctions in the following ence for the normal carrying out of and mandatory negative stimulus like awards and undertaking follow-up HTD and the goal achievement for project process. harmonious project if PC has saved C, just like taking a indifferent attitude, Active attending Inactive attending doing HTD inactively and so on. PD PC

The Nash equilibrium of the game Timely payment H+A1, M+B2+A2 UH, M+B2+C-I2 model for HTD It is can be seen from earnings matrix Deferred payment H+B1-I1, M-B2 UH+B1-I1, M-B2+C-I2 that: If there is no other restriction, PD will A1 Incentive awards of outstanding PD; choose deferred payment as optimal A2 Incentive awards of outstanding PC; strategy in no matter that PC do HTD I HTD guarantee fund of PD; actively or not. PC will choose inactive 1 I HTD guarantee fund of PC. attending HTD strategy in the case of no 2 other restriction in no matter that PD Table 2. The earnings matrix after the adding of incentive do timely payment or deferred payment. awards and guarantee fund

Project Perspectives 2010 31 Thus, after adding and considering Treasures taken in the process of HTD gradually built deep feelings. For ex- of HTD incentive awards and guarantee During the implementation of HTD ample, PD invite PC residents always fund, the game matrix earnings will process, the general Shanghai Expo to visit construction site in Expo, and be changed into the following form of organizer use evaluation mechanism to the PC provided medical service for PD table 2. select “outstanding PD” and “outstand- workers in the weekend, such kind of It is can be seen from earnings matrix ing PC”, which connects the positive in- actions do direct good to people in each that PD earnings by using the money centive and negative stimulus together side, and project construction could go for due health subsidies to invest for to let the two sides see the prospect of on smoothly. Some activities organized other usage B1 minus the guarantee cooperation and do HTD. The “outstand- by the two to enhance cooperation are fund I1 is negative when we keep HTD ing PD” has three indexes: project objec- showed in Figure 2 and 3. guarantee fund on a reasonable level, tive achievement, security and stability, and the incentive awards may be lost, in civilization in construction, and the Discussion this case the action of deferred payment “outstanding PC” also has three indexes: The above study is just the consideration by PD will be more a loss than gain. By amity and cordiality, publicity and edu- under onetime game model between the same token, HTD guarantee fund of cation, service to Expo, each index has 3 PD and PC, and both stakeholders just PC adjusts the interest for themselves sub-indexes. The evaluation exports are focus on the best result in the onetime , which makes earnings of active HTD from there sides: the general Shanghai of the process game. If the game model become larger than the inactive HTD. In Expo organizer, PD and PC. PD and PC becomes many-time type, both sides the above earnings case, the equilibrium that gain a high score will get award will consider more than short-time of the game will be: (timely payment, of “outstanding PD” and “outstanding earnings, and the long-term earnings active attending). PC” which will play a active role for will be the important focus point. After their later development both in money the accomplishment of onetime game, Case Study: HTD between PD and and reputation, and some PD and PC if the action, payment and earnings of PC in the Construction Stage of gaining a lower score would be punished each stakeholder will be understood by Shanghai 2010 EXPO China mainly by detaining guarantee fund. the other side, and this will become the reference to the next round game. PDs and PCs in Shanghai 2010 Expo The effectiveness of HTD If the long-term earnings become China Up to today, Expo practice has proved more important, it will become decisive There are many contractors in Expo site, that under this kind of mechanism, factor for the game decision, and in the each of these contractors has several PDs and PCs provide active service and following game, the action of the last PDs in the site of Expo. And there are mutual understanding during Expo time of one side will become reference also several PCs near site. Totally, there construction, they have gone out the in this game round. The side will be are 27 PDs consists of 1.5 million work- “prisoner's dilemma” in HTD during the trusted in the following if it is honest ers and 6 PCs consists of more than 3 Expo construction stage hands in hands. and trustworthy and do HTD activities million residents. Because of strong in- Take PD of Expo VIP village hotel and PC actively in the last time game round, and terference by project construction to the of South Wharf Street which both have this will make it some receive allowances environment nearby, especially much been selected as one pairs of “outstand- in the following; But if there was some earthwork in foundation construction ing PD” and “outstanding PC” in 2008 action by one side of breach of HTD stage, the residents are angry about as an example, the two separated by a in the previous game round, it will be dust pollution, even some actions to wall, so the inﬂ uence of construction to punished in the following. During this prevent construction has been occurred PC residents’ daily life in the beginning kind of rules, no matter PD or PC will by some PC residents, which is not good is serious, and PD sometime confronted always stick to credit strictly and choose for social stability. disturbance from residents. To realize wiser decision for future development We can see the diagrammatic of the win-win result, the two made agree- to build harmonious Expo construction Shanghai 2010 Expo site and PCs with ment for HTD, did many activities for project together instead of considering different colors in Figure 1. increase mutual understanding which the immediate interests.

Conclusions The LEPs are facing complex and changeable construction environment, long-term, close relevance and strong interaction between stakeholders, which have signiﬁ cant impact on society, environment, and budget, and these have been concerned by the public, and unsuitable treatment may bring about serious society problem. LEP like Expo has been obviously bear- ing the construction of harmonious society in current environment. Under great background of market economy, many sides having relationship with construction containing and inferring with each other should be analyzed as stakeholders, and it is necessary to convert contradictions and optimize solution plans to the problems using Figure 1. The construction site and PCs of Shanghai 2010 Expo China. the game theory. The general Shanghai

32 www.pry.fi Figure 2. Visiting the Expo site by the invitation of PD Figure 3. Medical service provided by PC for PD workers. for PC residents.

Expo organizer converts the “prisoner's Wang Yingluo (2008) Overall project management team for dilemma” which may be occurred into Contemporary Engineering Values and EXPO2010 construction of Tongji harmonious development and win-win Engineering Education, Engineering Sci- University (2007), The construction pro- situation for PD and PC using awards ences, 10 (3),pp17-20. gramme management plan of Shanghai 2010 Expo China. setting and guarantee funding system. BENT B. FLYVBJERG et al (2003) This exploration may vividly be one of Megaprojects and Risk: An Anatomy Overall project management team for the exhibits for Shanghai 2010 Expo of Ambition ,Cambridge: Cambridge EXPO2010 construction of Tongji Uni- China, and it’s one of the methods to University Press, pp1–5. versity (2008), The project management managing the stakeholders in LEP which administrative working handbook of Xie Shiyu (2002) Shanghai 2010 Expo China. may be used for reference in other proj- Economic game theory, Shanghai: ects or social events relating to different Fudan University Press. Guo Wen (2007) stakeholders. Establishing Engineering Ethics and She Zhipeng, Ma Liang, Xu Huixuan (2008) Building the Harmonious Society, Study on the Harmonious Together-de- Journal of China University of Petro- References velopment Manner Between the Build- PMI Standards Committee (2000) leum (Edition of Social Sciences), 23(4), ing Construction of World Expo 2010 pp26–29. A guide to the project management Shanghai China and the Peripheral body of knowledge, Project Manage- Community, One of granted project of ment institute. the Harmonious Society Theory Study Bureau of Shanghai World Expo Coordina- of Tongji University,pp88-97. tion, 2006, Summary of Registration HE Qinghua, MA Liang, LU Yujie (2008) Report for Shanghai 2010 Expo China, Study On The Construction Programme http://www.expo2010.gov.cn/zlzx/zcbg/ Management Of World Expo 2010 new_zcbgzy.htm. Shanghai China,iccrem2008, pp29-37.

Ma Liang Le Yun Li Yongkui PHD candidate of Tongji University Head of the Department of Lecturer of the Department of of China. Economics and Management Economics and Management in Assistant supervisor of The Con- in Tongji University of China; Tongji University of China. struction Headquarters Ofﬁ ce of Professor; Doctoral Advisor. Vice Leader of General Project Shanghai World EXPO. Leader of General Project Man- Management Team to Expo con- Expo 2010 construction manage- agement Team to Expo construc- struction Shanghai China 2010. ment engineer in Bureau of Shang- tion Shanghai China 2010. hai World Expo Coordination.

Project Perspectives 2010 33 Communication and Trust in Distributed Project Teams

Virtual teams are a part of modern globalized business environment. They have their own unique problems for managers when members meet rarely and communicate through computer mediated forums, across space, time, and many different cultures. This paper addresses communication and trust in virtual teams. A survey was done amongst the members of the social networking site of the Association for Information and Image Management (AIIM). Approximately 300 people from over 50 different countries participated in this survey. Problems regarding trust in virtual teams are typically associated with the beginning of the project. Groups that meet face to face have fewer incidents where lack of trust becomes a problem. No correlation was found between the type of media used and lack of trust. Intense communication with different types of media seems to lead to reduced trust. A prediction model for risk factors in virtual teams was designed, based on the fi ndings. Helgi Thor Ingason Introduction where communication is through information Tomas Hafl idason During the last 20 years, a tremendous technical technology. Some defi ne distributed teams as Haukur Ingi Jonasson evolution has taken place with increased access those who never meet whilst others defi ne them School of Engineering and to high-speed internet connections, internet as teams which meet very rarely (Maznevski and Natural Sciences connected mobile phones and visual commu- Chudoba, 2000). Some scholars also differentiate University of Iceland nication through the internet. Communication between globally distributed teams and those who Iceland technology has never developed as quickly and work within the borders of one country. Typical organizations have had to adjust themselves to problems in globally distributed teams may be this rapid development, amongst other means by different than in teams who work within the same using dispersed teams.. Dispersed teams they offer borders; language problems, different cultural various opportunities but they are also fraught backgrounds and large distances (Jarvenpaa og with danger. These teams are often put together Leidner, 1999, Binder, 2007). without the members knowing each other. They The development of information technology need to break through a communication barrier and organizations’ needs for increased competi- often created by the fact that the team members tiveness has resulted in the use of distributed rarely or never meet. They are often manned with teams in various types of projects such as product individuals from many different countries and development, design and software development, therefore with very varied cultural backgrounds, engineering and construction (Duarte and Snyder, which can create considerable problems. 2001). Globalization is another reason for orga- The aim of this research was on one hand to nizations to use distributed teams (Cascio, 2000). look into different communication media and Organizations constantly have to shorten product what effect they have on the building of trust and development time to stay competitive and one cooperation within the project, and on the other way to achieve this is by using distributed teams hand to investigate how it is possible to evaluate (Edwards and Wilson, 2004). Distributed teams can possible problems distributed project teams may create an environment where the knowledge can encounter, before the work starts. The idea is that be reached where it is needed, and it is possible to by evaluating the risk beforehand, project manag- acquire knowledge which is not available within ers can systematically reduce it. the organization or in proximity to the project execution. These individuals need not be a part of Literature Review the organization (Lau, 2004, Edwards and Wilson, Distributed project teams 2004). Working time can also be increased by In the IPMA competence baseline ICB 3.0 (2006), moving a project from one area to another, thus a team is defi ned as a "group of people who work gaining around-the-clock work on the project This is an updated version together to realize specific objectives." Many (Edwards og Wilson, 2004). of a paper originally defi nitions exist for distributed teams. Most of Niedeman and Beise (1999) categorize distrib- published in the “IPMA these defi ne distributed teams as teams where uted teams by their communication methods. Scientifi c Research Paper the bulk of the communication is done with the Teams who rarely meet and have little electronic Series: Human Side of aid of information technology. Lipnak and Stamps communication, are called inactive. Teams who Projects in Modern (1997) defi ne distributed teams as groups which meet regularly, but do not use much electronic Business” (IPMA, 2009) work across space, time and organizations and communication, are called traditional. Jarvenpaa

34 www.pry.fi and Leidner (1999) categorized teams according and Kraut, 1994, Hightower and Sayeed, 1995, to three variables; how long the team worked Handy, 1995). together, what sort of communication was used and whether the team members worked in prox- Trust in distributed project teams imity to one another - or dispersed. Kimble, Li Mayer, Davis and Schoorman (1995) defi ne trust and Barlow (2000) proposed another model to in terms of the faith and belief in another indi- categorize distributed teams. Their model also vidual or group that the relevant party will fulfi ll categorizes teams according to three variables; expectations in the future. Trust can depend on whether all the team members work within the situations and have its limitations. In some rela- same time zone, whether they work in the same tionships, trust is only dependent on simple basic location or in several locations, and whether they variables but as relationships mature and members all work for the same organizations or for various get to know each other, individuals learn to trust organizations. or distrust the team members according to their Binder (2007) uses fi ve variables to compare characteristics (Lewicki, McAllister and Bie, 1998). teams - the number of locations, the number of According to this, it is possible both to trust and organizations, the number of nationalities (cul- distrust the same individual. tures), the number of languages used in the teams Trust develops with understanding and knowl- and the differences in time zones. This information edge of people who communicate, including real is then set up in a pentagram, yielding a graphical experiences with the people in question, and representation. Of the various ways to compare common opinions and values which unite a team distributed teams, Binder’s model addresses the (Blois, 1999, Iacono and Weisband, 1997). Building largest number of variables. On the other hand, trust is not an easy task. It is probably the most it does not address communication media nor complicated issue in forming a successful and ef- how long the teams work together. None of these fective team (Zaheer, McEvily and Perrone, 1998). models takes into account the team size, which Trust and relationships between group members can have considerable infl uence on the team com- increases creativity and critical thinking, as well as munication (Stables, Wong and Cameron, 2003, creating a more positive environment (Reina and Leenders, van Engelen and Kratzer, 2003). Reina,1999). Kramer (1999) points out that trust encourages members to devote time to projects, Communication in distributed project teams keep their focus on joint objectives, help each Successful distributed teams have to be ready to other, and work harder. use diverse ways of real-time (synchronous) and Communication and trust are connected. Most delayed-time (asynchronous) communication scholars believe that individuals need to meet in through technology such as e-mail, chat rooms, person (Handy, 1995) but others have point out data meetings and other technical communication that after a long time, trust in distributed teams modes, to achieve success (Pauleen and Corbitt, becomes comparable to when individuals have 2003). Distributed teams are more prone to com- direct communication (Chidambaram, 1996). munication trouble, compared to traditional Building trust takes time, but research has also teams, mostly due to the lack of unspoken com- shown that people start to trust those whom they munication. Teams that meet face to face build meet regularly in person sooner than in an envi- up stronger relationships than those who do not ronment where communication is mainly through meet. This is particularly relevant when it comes to electronic methods. If language diffi culties and project kick-offs (Bélanger and Watson-Manheim, diverse backgrounds are added, it becomes even 2006, Hightower and Sayeed, 1995, Rocco, 1998, more diffi cult (Krebs, Hobman and Bordia, 2006, Behrend, Whelan and Thompson, 2008). Initial Duarte and Snyder, 2001). It has been pointed out team building is more important in distributed that distributed teams which use many methods teams than in traditional ones (Staggers, Garcia of social communication, manage to build more and Nagelhout, 2008). Handy (1995) stated that trust and achieve more success (Jarvenpaa og teams who do not meet face to face could not Leidner, 1999). establish the necessary trust. Creating solid relationships can be diffi cult In project management, the Tuckman model when direct communication is not used (Stein- (Tuckman, 1965 and Tuckman, Jensen, 1977) on fi eld, 2002). Trough computer communication, team development is often quoted. Tuckman di- the communication elements which individuals vides the team life cycle into four stages; forming, use to transfer trust, warmth, empathy and other storming, norming, performing and adjourning. affections can be lost, according to Duarte and Johnson and his team (2002) found out that the Snyder (2001). Handy (1995) thinks that trust Tuckman model described distributed teams quite requires physical touch and is therefore diffi cult well, but only in regard to three of the stages; to establish through computers. However, others forming, norming and performing. believe that it simply takes longer time for trust Chidambaram (1996) showed that if distributed to develop but that in the end, comparable trust teams were given enough time to develop team will be achieved to that in traditional teams (Bos, relationships and to adapt to the communication et al, 2002, Krebs, Hobman and Bordia, 2006, method, they would communicate just as well as Greenberg, Greenberg and Antonucci, 2007). Platt traditional teams. On the other hand it has been (1999) points out that one way to build trust in stated that distributed teams exchange informa- distributed teams is to create a discussion arena tion in a less effective manner than traditional in the beginning, where members can share their teams, even if distributed teams communicate expectations of each other and discuss how they quantifi ably more than traditional ones (Galegher will work together.

Project Perspectives 2010 35 Results Change Percentage Background information Of 272 participants, 190 were male and 82 female. Conﬁ rm understanding with repetition 83.3% The age distribution was from 21 years to 61 years. The largest age group was 41-50 and the Avoid slang 68.9% average age was 42. Educational level was high; Avoid Jargon 57.2% an equal number of participants had B.Sc. degree as a master’s degree, or around 100 individuals in Speak slowly 55.6% each group, and 7% of the participants had a PhD degree. The participants had great experience in Avoid metaphors 47.9% working in multicultural projects with 77% having taken part in such projects six times or more Keep sentences short 39.3% and only 15% who had taken part in multicultural projects three times or less. Most participants Avoid humor 19.5% had no multicultural training, or 62%, the others Alter tone of voice 19.1% had either received some or extensive training. Nationalities were very diverse with participants from 52 countries, the largest groups being from Table 1. How members changed their expression form the United States (103), the United Kingdom (24) in multicultural communication. and the Netherlands (21). Most participants were from North America and Europe; 77%.

Information on the projects Methodology Half of the participants were regular team mem- A survey questionnaire was sent to a large group bers in their project, 16% were managers and 31% of individuals around the world, to gather infor- worked both as managers and team members. The mation on participants’ experience from working average team size was around 10 members, with on multinational, distributed projects. The survey the most common size being 6-10 individuals. questionnaire was divided into ﬁ ve parts. 11% of the projects had 21 or more members. 1. Background information on participants was Average project time was 11.2 months but the gathered, such as age, education, gender, most common time was 3-6 months. Most of the nationality and experience in multinational projects had 3 languages and only 4% of projects projects. had eight or more languages. The average number 2. Information was gathered on the last project of organizations involved was 2.6. In most of the the participant had worked in, for example on projects, only one organization was involved but role division in the team, the team’s size, project in the case of 8% of the projects, eight or more time, team language, number of organizations organizations were involved. The average number involved in the project, number of locations of project locations was 3.2; most had two or three and the largest time zone difference between locations. On average, the largest time zone dif- localities. ference was 5.2 hours, but just under one third of 3. The frequency of communication was checked, the projects had nine hours or more as the largest what communication media was used and how time zone difference. regularly the different communication methods Most of the teams had little direct communica- were used. tion, with 60% never meeting or meeting less than 4. A list was compiled of the most likely problems once a month face to face. 16% of the participants to emerge in distributed teams and 14 different communicated with other team members at least problems were chosen as a basis for questions. once a day. The teams had great amounts of e-mail Furthermore, the project success was evalu- communication, with most communicating once ated. 5. Participants’ general comments were solicited. Was not finished, 4% This part had the role of giving participants Was not succesful, 2% Results below the chance to express themselves on problems expectations, 2% which had arisen, as well as looking for important information on how the project started and Very good how the initial communication was handled. results, 25% The research was made amongst the members of the AIIM network (Association for Information Acceptable and Image Management). The association is an results, 23% international society, one of whose functions is to certify individuals in handling electronic information and document control. There were 1008 members on the social networking site when the Good results, 44% survey was carried out. The questionnaires were sent out in the latter half of August 2008. Two weeks’ response time was given and at the end of that time, 290 answers had been collected, thereof 272 valid ones. Response was therefore 29% and Figure 1. Project success as measured valid answers 27%. in the survey.

36 www.pry.fi a day or more often, or 79%. Only 4% never had 40 e-mail communication. Very few of the teams used chat software. In fact, the teams either became 35 quite familiar with it and used it extensively, or they bypassed it entirely. Around half of the teams 30 did not use project management systems, but 28% used them once a day or more often. Most 25 teams used the telephone once a week, or 37%, % and 43% used the telephone once a day or more 20 often. Around 5.7% of the teams never used the telephone for communication. A large majority 15 never used video conferencing, or 73%. The other 27% used it at some point or other in the project 10 but only 1% used it once a day or more often. Table 1 gives an overview of the main methods 5 participants used to improve communication ef- Language difficulties Time differences Cultural differences problems Technical Inadequate managerial support Different public holidays Distance Lack of management Lack of trust Lack of commitment Conflict many organizations Too too large Teams beliefs Religious fi ciency in multicultural communication. 0 Figure 1 shows how the participants evaluated Figure 2. Problems encountered in the project teams. project success on a simple 6 step scale. Most of the projects showed acceptable, good or very good results, or 92%. On the other hand, a very low percentage of the projects were not concluded or diffi cult to speak to members who did not speak fi nished with results below expectations, or 8%. the project language well and there were delays This implies that either the projects were simply due to translation of documents into languages very successful or that the members had kept that everyone could understand. It was evident successful projects in mind when answering the that a large number of participants in the survey questionnaire. believed that cultural differences had created problems. However, some participants thought Problems that occurred in the projects that this had more to do with individual differ- Figure 2 shows the main problems encountered in ences. A difference was still believed to exist in the the project teams. Language diffi culties and time way decisions are made in different cultures. zone differences were the most common problems Table 2 shows the correlation between various by far, but cultural differences, technical problems background variables and some of the key vari- and lack of managerial support also registered. ables studied in the survey. Very few encountered problems due to the number There is a slight correlation between gender and of organizations involved, the team being too large experienced lack of management on behalf of the or because of religious beliefs. participant, where a higher percentage of women About 23% of participants had experienced have experienced this lack. Lack of management different holidays in the distributed teams as was not correlated to the number of locations a problem and as the number of participating until this number reached fi ve different project countries increases, the odds of different holidays work locations, when the number of participants, having an effect on the project increases. The who cited lack of management being a problem, survey showed some language problems; it was increased rapidly. There is also a slight correlation

Sex Age Role Experience Success Education Continent Number of locations 0.07 0.17** 0.21** 0.14* 0.10 0.03 -0.10 Number of participants 0.10 0.23** 0.15* 0.06 0.05 0.10 -0.11 Number of languages 0.03 0.02 0.23** 0.07 0.04 0.09 -0.04 Number of organizations -0.01 0.15* 0.14* 0.02 0.03 0.02 -0.09 Project time 0.10 0.20** 0.10 0.10 0.09 0.07 -0.11 Frequency of communication -0.14* -0.15* 0.09 0.24** 0.18** 0.03 -0.05 Lack of trust -0.01 0.04 0.06 0.08 -0.08 0.06 0.12* Too large project team 0.12 0.20** 0.15* 0.08 0.05 0.08 -0.10 Lack of interest 0.02 -0.13* 0.04 -0.03 -0.21** -0.13* 0.00 Cultural differences 0.01 -0.04 0.16* 0.10 0.08 0.06 -0.06 Holidays 0.08 0.04 0.15* 0.11 0.07 0.05 -0.06 Lack of management 0.17** -0.06 -0.03 -0.01 -0.19** 0.03 0.01 Disagreements 0.06 -0.15* 0.00 0.01 -0.02 0.03 0.10 Managerial support 0.01 -0.05 0.03 0.10 -0.17** -0.02 -0.03

Table 2. Correlation table by participant background variables (*p < 0,05 ** p <0,01).

Project Perspectives 2010 37 35 In the questionnaire, the frequency of the use of communication method was given a numeri- 30 cal value. If a communication method was never used, it received the numerical value of 0, less 25 than once a month received the value of 1, once 20 a month received the numerical value of 2, once a week received the value of 3, once a day received 15 the value of 4 and more than once a day received the numerical value of 5. The total frequency of 10 communication was thereafter calculated from

Lack of trust was a problem 5 all the communication means evaluated, with the theoretically highest value being 30, encompassing 0 direct communication, e-mail, web chat, project systems, telephone conversations and video con- Total communication ferencing. A slight correlation was found between Direct communication gender and total frequency of communication, Through a medion with women having less communication on average than men. A slight correlation was also found Figure 3. Frequency of communication amount within teams, between time differences and the frequency of the evaluated from none (0), little (1), and up to great (5). use of most communication means, with a negative correlation between direct communication and increasing distances. The use of e-mail, web between gender and perceived communication frequency within the team. chat and project systems, was found to increase as Women perceive less communication within the teams than men. time zone differences grew. There was no statisti- There is a slight correlation between participants’ ages and their percep- cally signiﬁ cant relation between lack of trust and tion for the project teams being too large and lacking in interest. Older the means of communication. participants also believed that different holidays between geographical The results showed that initial communica- locations had created problems. There is a slight correlation between tion had a strong effect on the building of trust. experience and the number of locations, as well as the total amount of There was only lack of trust in 11% of incidences communication. Experienced members had more communication and where project launch was carried out with direct worked in more locations than the inexperienced ones. Only 8% of the communication, as opposed to 21% of the proj- projects were not ﬁ nished, were unsuccessful or not successful enough. ects where the members did not meet but used This means that it is not possible to make a good statistical comparison electronic media. between projects which were successful and the unsuccessful ones. Still, The possible context between lack of trust and a slight correlation can be established. For instance there is a slight cor- the frequency of communication came under par- relation between success and the frequency of communication within ticular scrutiny. Figure 3 shows the main results. the team. As the team increases its communication, the success increases. Lack of trust seemed to depend little on the fre- This relation is however dependent on the type of communication, as quency of communication except when there was shown later. a high frequency, with problems regarding lack of trust increasing very rapidly when communication was through a communication medium. Lack of trust seems to depend on project time. In shorter projects, lack of trust is less common than in longer Number of languages projects. Lack of trust was greatest in projects with a duration of 12-24 months.

A prediction model for problems in distributed teams Cultural Size of group Based on the information gathered in the ques- differences tionnaire, a prediction model was designed to predict possible problems in distributed teams. The model describes particular risk factors based on variables which can be measured beforehand. The model was depicted as shown in fi gure 4. The fi gure shows how the model can represent a particular distributed team. The main groups of variables included in the model are the number of languages, the team size, the number of organizations involved, number of geographical locations of the members, time zone differences and dif- Maximum time Number of ference in members’ cultural backgrounds. In that zone differences organizations way, the model refl ects the variables which showed statistically signifi cant correlations to success and problems related to lack of trust. These variables can be measured for a particular distributed Number of locations project team and then depicted as in fi gure 4. The outcome can be used to forsee possible problems Figure 4. Prediction model for problems in distributed teams. and work out their solutions in advance.

38 www.pry.fi Conclusions the early stages is valuable for this purpose. This Certain problems are more likely to occur than corresponds to previous research. Too frequent others in distributed teams. Language diffi cul- communication through a communication median ties are a potential problem, as well as problems can lead to a lack of trust in the distributed team. caused by time zone and cultural differences. One The reason is unclear but it might be a worthy task of the benefi ts considered in employing distributed to assess weather confusion in a distributed team project management has been that it is possible is increased when the frequency of communication to work on projects around the clock and around through a median reaches a threshold. the year. The problem of different holidays in dis- It is our conclusion that a simple assessment tributed project teams is risk factor has not been of fi ve important variables can help to evaluate given much attention in previous research. potential risk in the work of distributed project Our results show that perceived lack of manage- teams. Size of group, number of languages, num- ment increases when the number of work loca- ber of organizations behind the team, number of tions reaches 5. This indicates that managers have locations and the maximum time zone difference diffi culty retaining overview on projects when the are variables that are correlated with lack of trust number of project locations reaches a threshold. in the team. These variables can be assessed in No statistically significant correlation was the beginning, the results can be represented in found between the communication means and a simple graphical tool and communicated to all trust, but fi ndings still indicated that there is relevant parties. Some actions can then be taken more trust in teams who have considerable direct to reduce the risk and thus create more favourable communication. It is however obvious that initial conditions for the building up of trust within the communication has a great deal of effect on the distributed group. building of trust and direct communication in

Helgi Thor Ingason ﬁ nished a degree PhD in process metallurgy from the Norwegian Institute of Technology, a MSc degree in mechanical and industrial engineering from the University of Iceland and SCPM degree from Stanford University. He is an associate professor at the at the School of Engineering and Natural Sciences at the University of Iceland and lectures in project management, quality management and facility planning. He is the head of the MPM - Master in Project Management - program at the university (www.mpm.is). Helgi Thor is a co-founder and senior consultant at the Nordica Consulting Group in Iceland and he is the co-founder and chairman of Alur, alvinnsla hf - a recycling company in the aluminum industry in Iceland. He is an IPMA Certiﬁ ed Senior Project Manager.

Haukur Ingi Jónasson fi nished a cand. theol. degree from the Theo- logical Department of the University of Iceland in 1994. He holds a S.T.M., M.phil., and Ph.D. degrees from Union Theological Seminary (Columbia University) in New York and has full clinical certifi ca- tions in both pastoral counseling from Lennox Hill Hospital / The HealthCare Chaplaincy Inc. and in psychoanalysis from the Harlem Family Institute in New York. Haukur has pursued economic and business management education both at Indiana University School of Business and at the Hariot-Watts, Edinburg Business School in Scotland. He is the co-founder of the Nordica Consulting Group where he works as a senior consultant. Haukur is an assistant professor in management and leadership at the School of Engineering and Natural Sciences at the University of Iceland and teaches in both the MPM (Master of Project Management) and the MBA programs of the university. Tomas Hafl idason received his BSc and MSc in industrial engineering from the University of Iceland. He is presently pursuing his PhD at the University of Iceland in industrial engineering.

Project Perspectives 2010 39 References Galvin, J., Ahuja, M. og Agarwal, R. (2006). Mayer R. C., Davis J. H. & Schoorman, Behrend, T. S., Whelan, T. J. og Thompson, Dispositional and Situational Infl uences F.D. (1995). An Intergrative Model of L. F. (2008). Kickoff Meetings for Com- on Cooperation in Virtual Teams: The Organizational Trust. The Academo of puter-Mediated Teams: Effects on Team Mediating Role of Trust. Organization Management Review, Vol. 20, No. 3, pp. Performance. 23rd annual conference of Science. 709-734. the Society for Industrial and Organiza- Greenberg, P. S., Greenberg, R. H. og Maznevski, M. L. og Chudoba, K. M. (2000). tional Psychology. San Francisco, CA. Antonucci, Y. L. (2007). Creating and Bridging Space Over Time: Global Vir- Bélanger, F. og Watson-Manheim, M. B. sustaining trust in virtual teams. Busi- tual Team Dynamics and Effectiveness. (2006). Virtual Teams and Multiple ness Horizons, 325–333. Organization Science, 473–492. 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Strathclyde Business initial face-to-face contact. Proceed- Ciancutti, A. og Steding., T. (2001). Kramer, R. M. (1999). ings of the SIGCHI Conference on Hu- Built on Trust: Gaining Competitive Ad- Trust and Distrust in Organizations: man Factors in Computing Systems (bls. vantage In Any Organization. Chicago: Emerging Perspectives, Enduring Ques- 496-502). ACM Press/Addison-Wesley Contemporary Books. tions. Annual Review of Psychology, Publishing: New York, NY. 569–598. Chidambaram, L. (1996). Stables, S., Wong, I. K. og Cameron, A. F. Relational development in computer- Krebs, S. A., Hobman, E. V. og Bordia, P. (2003). Virtual team effectiveness. In supported groups. MIS Quarterly, 143 (2006). Virtual Teams and Group Mem- P. D, Virtual Teams: Projects, Protocols – 165. ber Dissimilarity. Small Group Research, and Processes. Idea Group In. 721-741. Doney, P. M., Cannon, J. P. og Mullen, M. R. Staggers, J., Garcia, S. og Nagelhout, E. (1998). Understanding the Infl uence of Lau, R. (2004). (2008). Teamwork Through Team Build- National Culture on the Development Delivering Projects with Virtual Teams. ing: Face-to-Face to Online. Business of Trust. The Academy of Management International Engineering Management Communication Quarterly, 472-487. Review, 601-620. Conference. Steinfi eld, C. (2002). Duarte, D. L. og Snyder, N. T. (2001). Leenders, A. T., van Engelen, J. M. og Realizing the Benefi ts of Virtual Team. Mastering Virtual Teams : Strategies,. Kratzer, J. (2003). Virtuality, com- Computer, 102-107. Jossey Bass. munication, and new product team. Tuckman, B. (1965). Journal of Engineering and Technology Edwards, A. og Wilson, J. (2004). Developmental Sequence in Small Management, 69-92. Implementing Virtual Teams: A Guide Groups. Psychological Bulletin, 384- to Organizational and Human Factors. Lewicki, R. J., McAllister, D. og Bie, R. J. 399. Aldershot, UK: Gower Publishing. (1998). Trust and Distrust: New Rela- Tuckman, B.J., Jensen,M.A.C.(1977). tionships and Realitie. The Academy of Galegher, J. og Kraut, R. E. (1994). Stages of Small Group Development. Management Review, 438-458. Computer-Mediated Communication Group and Organizational Studies, and Collaborative Writing: Media infl u- Lipnack, J. og Stamps, J. (1997). 419-427. ence and Adaptation to Communica- Virtual Teams: Reaching Across, Space, Zaheer, A., McEvily, B. og Perrone, V. tion Constraints. Information Systems Time and Organization with Technology. (1998). Does Trust Matter? Exploring Research, 110-138. New York: John Wilwy and Sons. the Effects of Interorganizational and Interpersonal Trust on Performance. Organization Science, 141-159.

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Project Perspectives 2010 41 Overview of The Virtual Design Team (VDT): A Computational Model of Project Teams

Raymond E. Levitt Introduction way in which exception handling in coordination Department of Civil & The Virtual Design Team research was launched to took place within organizations assigned to do Environmental Engineering enable managers to “Design Project Organizations such project work. Stanford University as Engineers Design Bridges”—i.e., to model and Since then, we have extended the representa- USA simulate multiple alternative confi gurations to tion and reasoning in VDT step-by-step, to address predict and evaluate their performance in advance the modeling requirements of less routine work of implementing them. performed by increasingly fl exible and dynamic VDT was based on the notion fi rst articulated by organizations—non-routine product develop- Herbert Simon and refi ned by Jay Galbraith that ment, service and maintenance work (including the fi rst order determinant of an organization’s healthcare delivery), and highly non-routine success is its ability to process all of the informa- work performed in communities of practice—but tion associated with: still assuming negligible institutional cost. Since - Direct work, involved in competing as- 2002, we have extended VDT to model multicul- signed tasks by individuals or groups; tural project teams engaged in global projects to - Coordination work, arising from the need develop infrastructure, for which institutional to resolve task interdependencies and costs are signifi cant. Also, VDT has been extended handle exceptions; and as “POWER” to model highly non-routine work - Institutional work, arising from the need in extremely decentralized “Power to the Edge” to resolve differences in goals, values and organizations. cultural norms. This white paper provides an overview of the The “big idea” behind the VDT research pro- VDT research program and its evolution over the gram was that direct work, coordination work past 20 years, describes the current status of VDT, and institutional work could all be viewed as and describes our ongoing research in this area. quantities of information to be processed serially by the workers and managers in an organization. VDT in a Nutshell Jay Galbraith had proposed this idea as early as The Virtual Design Team simulation system is a the 1970s, but his formulation of the problem computational discrete event simulation model was descriptive and qualitative, and could thus of project organizations. VDT analyzes how task not be used to make specifi c predictions. VDT has interdependencies generate coordination needs progressively quantifi ed, extended and validated and how individual team members' skills and Jay Galbraith's information processing view of experience, organization design parameters and organizations over the past 20 years to encompass communication tools change team information a broad range of project-oriented work processes processing capacity, and hence project perfor- and organizations. mance. VDT explicitly models actors, activities, We began this research in the late 1980s and communication tools and organizations. VDT simu- directed our initial focus on project organiza- lates actors working on their assigned tasks and tions engaged in semi-custom engineering work the interactions between actors aimed at resolving under tight time constraints. For such organiza- interdependencies between their interdependent tions, we could assume a relatively high level of tasks, and interactions aimed at handling technical congruency of goals culture and values, so that or interface “exceptions” between subordinates institutional costs were negligible and could be and their supervisors. ignored. However, performing highly interdepen- The “information processing” view of organi- dent work under tight time constraints creates zations was fi rst articulated by Herbert Simon high coordination costs as interdependent ac- and James March in the 1950s, and elaborated tivities increasingly overlap one another in time. by Jay Galbraith during the 1970s. It asserts that Primary emphasis was on modeling the sources the fi rst-order determinant of an organization’s of interdependence in project workfl ow and the success is its ability to process and communicate

42 www.pry.fi all of the information required to carry out and Evolution of The Virtual Design Team coordinate its work processes. Galbraith’s infor- (VDT) Research Program mation processing model of project teams was The Virtual Design Team (VDT) research was initi- descriptive and qualitative, not quantitative; it ated in the late 1980s with the goal of developing could not make specifi c predictions about par- new micro-organization theory and embedding ticular organizations. Over the past two decades, it in software tools that could be used to design Levitt’s ongoing VDT research and its subsequent organizations in the same way that engineers commercial implementation have extended, design bridges, semiconductors or space stations— quantifi ed and validated Jay Galbraith's (1974) by modeling, analyzing and evaluating multiple information processing view of organizations to virtual prototypes of the system to be designed model and simulate team members’ behavior and in a computer. resulting team performance outcomes quantita- We recognized from the outset that this was a tively, with ever-increasing accuracy, for a broad signifi cant challenge. Micro-theory and analysis range of project-oriented work processes and tools for designing bridges and airplanes rest on organizations. well-understood principles of physics, and involve VDT builds on and quantifi es Jay Galbraith’s continuous numerical variables, describing materi- theories of information processing in project als whose properties are relatively uniform, and teams, and views both the direct work and result- are straightforward to measure and calibrate. ing coordination work that must be performed Thus analysis of these physical systems yielded by actors on a project as quanta of information easily to solution via sets of differential equations, to be processed by responsible actors with fi nite and subsequently numerical computing. The ap- information processing capacity—i.e., “boundedly proach used to develop this engineering science rational” actors (March & Simon 1956). It simulates and technology was to embed well-understood the project team executing tasks and coordinating micro-theory into the models, and then attempt to resolve exceptions and interdependencies. The to refl ect the interactions between elemental parts VDT simulation of a project organization executing of a model through constraints (such as constraints its tasks generates a range of outputs that predict that maintain consistency between the defl ected the emergent performance of the organization at positions of shared element edges in a fi nite ele- both the individual actor/task level and the overall ment model). The result was increasingly accurate project level: duration; production costs, coordina- predictions of both micro and macro-behavior of tion costs (communication, rework and waiting); many kinds of engineered systems. For many kinds and several measures of process quality. of buildings and bridges, stresses, strains and de- VDT takes into consideration the relative match fl ections under a variety of loading conditions can between the complexity of each task versus the now be predicted to fi ner tolerances than those to skills/experience of the assigned actor to deter- which the facility can be constructed! mine the time it would take for the actor to per- In contrast, theories describing the behavior of form the task, and the probability of exceptions organizations are characterized by nominal and in the execution of the task by the assigned actor. ordinal variables, with poor measurement repro- Actors are more likely to generate exceptions when ducibility. Verbal theories incorporating nominal confronted with a task for which they do not pos- and ordinal variables create a signifi cant degree of sess the requisite skills or experience. VDT models linguistic ambiguity, so that experimental results exception handling processes to deal with any cannot be reliably replicated and contrasting or exceptions that have been generated. Exceptions competing theories are diffi cult to reconcile or take time to resolve and result in coordination disprove. In the late 1980s, our research group costs. Actors may be required to partially or com- concluded that attempts to model organizations pletely rework activities that generate exceptions. computationally could benefi t greatly from the use Further, actors need to attend to communica- of non-numerical or "symbolic" representation and tions from other actors and may need to attend reasoning techniques emerging from computer scheduled meetings. These communications and science research on artifi cial intelligence. Early meetings generate coordination work and thus experiments convinced us —along with many other increase the amount of total work that must be researchers (e.g,. Masuch & Lapotin, 89)— that this done to complete a project. Failure to attend to was a fruitful modeling approach. However, VDT communications or go to meetings increases the took this modeling approach to the next step, probability of errors, thus leading to the possibil- which was to combine the symbolic reasoning ity of increased downstream coordination and with numerical, discrete event simulation. VDT rework costs. used symbolic reasoning about variables like skill VDT has been calibrated to make accurate levels to set parameters for numerical variables predictions of participant backlogs arising from like task processing speeds in a discrete event the combination of direct Production Work and simulation. emergent Coordination Work, and of the result- In selecting the kinds of organizations that we ing schedule and quality risks for a given project would initially model, we picked project teams organization. After being validated in multiple performing routine design or product development real world scenarios, SimVision®, a commercial work. For this class of organizations, all work is implementation of VDT, has been used commer- knowledge work so that we could fruitfully use cially in dozens of real world projects for Fortune an information processing abstraction (Galbraith 500 companies and governmental organizations to 74) of the work. For routine product development, highlight organizational risks and guide interven- goals and means are both clear and relatively un- tions aimed at mitigating them. contested, so that we could fi nesse many of the

Project Perspectives 2010 43 most diffi cult "organizational chemistry" modeling problems inherent in the kinds of organizations that sociologists have often studied—e.g., mental health, educational and governmental organizations. Our quantification and computer implementation of Galbraith's "information demand, capacity and throughput" model can be viewed as an analog to Newton's Laws in physics—a simple, and immensely useful, fi rst order ap- proximation. By operationalizing and extending Galbraith's information processing abstraction in the Virtual Design Team (VDT) computational model, and focusing in an “easy corner” of the space of organizations, we developed several versions of VDT (Cohen, Chris- Figure 1. Validation Trajectory for Computational Emulation Models, showing tiansen, Thomsen,) and validated the how we move successively from validation of reasoning, through validation of representation, reasoning and useful- representation and, fi nally, of usefulness. (Source: Thomsen et al, 1999). ness of our computational “emulation” models following the rigorous validation the predefi ned activities to be carried activities indicate needed repair activi- trajectory shown in Figure 1 (Thomsen out by the pre-assigned actors; and (4) ties, and any unplanned side effects that et al,1999; Levitt et al,1994,1999; Kunz actors are assumed to have congruent arise must be diagnosed and treated et al.,1998). goals, values and cultural norms. These contingently. To model this indetermi- Advancing through these validation conditions fi t many kinds of design and nacy, we had to relax the constraint that steps, we were able to develop suffi cient product development work. VDT-2 was all activities and assignments are rigidly confi dence in the predictions of our the- commercialized as SimVision™, by Vité prespecifi ed. This required several exten- ory and tools that managers in several Corporation through Stanford’s Offi ce sions to the VDT-3 framework. Douglas companies and governmental agencies of Technology Licensing, and is in use by Fridsma (98) extended the information are now redesigning their project work companies in a variety of industries, and processing micro-theory in VDT-3 to processes and organizations prospec- governmental organizations including include a variety of more complex tively, based on the predictions of Sim- the US Navy, NASA, and The European exceptions that can cause activities to Vision™, a commercial implementation Bank for Redevelopment and Construc- be added, resequenced, deleted or reas- of VDT-2 developed by Vité Corporation tion [ http://.epm.cc ]. signed, and actors to be dynamically and subsequently licensed by ePM, LLC VDT-3 (Thomsen, 97) extended the added to the organization and assigned < www.epm.cc >. Our VDT theory and range of work processes that could be activities as needed. This extended analysis tools for project organizations modeled, to encompass less routine framework has been implemented and have thus enabled true "organizational design or product development work, internally validated on toy problems engineering" of project teams with in which tasks are still predefi ned, but (See Fig 1). Carol Cheng Cain (Cheng 01) congruent goals and relatively routine— there can be fl exibility in how they are then extended Fridsma’s work to model albeit complex and fast-paced—design executed. Actors can have the same set context-dependent decision making or product development work. of goals, but incongruent goal prefer- (e.g., medical decision aing in intensive Our intention was always to start ences (i.e., a moderate degree of goal units where organization structure and with the "organizational information incongruency), causing them to disagree staffi ng changes as a function of time of fl ow physics" and then progressively add about how best to execute activities in day or day of week) and retrospectively elements of "organizational chemistry" the project plan. Following concepts validated VDT-4 predictions against em- to the modeling framework to extend from economic “Agency Theory”, goal pirical data in several clinical settings. its applicability to less routine tasks incongruency levels between pairs of ac- A longer-range goal of our work was and more dynamic organizations. We tors affect both their vertical and hori- to begin modeling even more fl exible have executed several steps of this re- zontal communication patterns. VDT-3 organizations that could be viewed as search vision over the past two decades. has been validated through "gedanken" dynamically shifting “communities of Completed and ongoing versions of VDT experiments—thought experiments, practice,” in which actors can commu- that progressively addressed additional in which the model's predictions are nicate with anyone they choose, either aspects of task and organizational com- compared to managers' predictions of inside or outside their local “organiza- plexity are shown in Figure 2. results. Its prospective predictions have tion.” Software development teams and The (Cohen, 91) (Christiansen, 99) not yet been tested against subsequent some consulting organizations currently VDT-1,2 framework has been fully vali- real project performance data. approximate this organizational form. dated through all of the steps shown in VDT-4 was the goal of a subsequent Theories based on concepts such as Figure 1. VDT-2 is a reasonable model of NSF Grant. VDT-4 extended the applica- public goods, homophily or reciprocity project work for which: (1) All activities bility of VDT beyond its previous limits can be used to describe how these links in the project can be predefi ned; (2) the on work process routineness and static form and persist or dissolve in cyber- organization is static, and all activities organizational structure. VDT-4 has been space. We received a NSF KDI research are pre-assigned to actors in the static applied to non-routine work involved in grant to work with colleagues from USC, organization; (3) exceptions to activi- health care delivery for bone marrow Carnegie Mellon and the University of ties are resolved through the hierarchy transplants and similar complex, multi- Illinois in this exciting new area, and and generate extra work volume for specialty medical protocols. Diagnosis made signifi cant progress in implement-

44 www.pry.fi emergence of “institutional difference exception” processing costs in global projects within VDT. The PhD research of Mahalingam (2005) and Orr (2005) found that viewing national differences in terms of Scott’s (2001) conception of “Institutions”, a concept broader than cultures and values, was far more pro- ductive in understanding and predicting cross-national exceptions in projects. A global project contending with significant institutional differences needs to be realistic about the costs that will be incurred in proceeding with the project, and the length of time it will take to begin to reduce these costs. Forewarned with this kind of prediction, planners of global projects can set Figure 2. VDT Research Trajectory realistic goals, and can begin to initiate effective institutional interventions, with a clear notion of how long they will take to implement. ing these extensions. VDT-5 was released ity (the extent to which work and social Our approach was to model institu- as POW-ER 3.3 (Ramsey et al 05), and roles are gender-stereotyped and differ- tional work in the same way that we is in use by the US Navy, US Air Force ent; Uncertainty Avoidance (the degree modeled coordination work— that is, Research Laboratory, NASA and other to which members of a culture can as additional quantities of information governmental organizations. cope with risk and ambiguity in work to be processed by actors in a project and social relations; and Time Horizon team. However institutional work may Ongoing Research on Effects of (short-term vs. long-term orientation in also have the side effect of undermin- Institutional Differences decisions and relationships). Hofstede ing the motivation of actors who fi nd Research by Geert Hofstede and his col- has collected large data sets based on themselves engaged in continual misun- leagues (Hofstede 84). Provides one clear IBM employees in > 50 countries indi- derstandings, confl ict and even sabotage point of departure for modeling how cating that differences along one or by project team members whose goals, differences in values and cultural norms more of these cultural dimensions lead beliefs and values, cultural norms and can affect the behavior of participants to predictable kinds of misunderstand- legal/regulative systems are signifi- in project teams. Hofstede identifi ed ings, confl ict and loss of motivation in cantly different than their own. Figure fi ve dimensions of culture that vary global work teams. 3 shows conceptually how we overlaid systematically between workers from Drawing on Hofstede’s work and on institutional work on the production different countries, and which affect the results of a series of workshops con- work and coordination work that we individual and team behaviors in global, ducted with Professor Douglass North (a had modeled to date. knowledge-intensive, dynami, global Nobel Laureate in Institutional Econom- Tamaki Horii (2005) designed and projects: Power Distance (the difference ics at Stanford’s Hoover Institute) and conducted an initial set of computa- in relative power across levels of the or- Professor Merlin Donald (an eminent tional experiments in which he modeled ganization); Collectivism vs. Individu- Canadian cognitive psychologist) at the US and Japanese institutions (practices alism (the degree to which individuals Institute for International Studies at and values) and simulated the perfor- pursue self-interest vs. the interests of a Stanford, we developed a set of initial mance of joint venture teams consisting larger group); Masculinity vs. Feminin- hypotheses about how to model the of US and/or Japanese managers and workers in US- vs. Japanese-style project organizations working on projects with different levels of complexity. His path breaking work won the best paper award at CASOS 2005. This line of work has continued since 2005 at the Collabora- tory for Research on Global Projects http://crgp.stanford.edu

Research to Develop Postprocessors for VDT Organizational design is a complex global optimization problem involving continuous and discrete variables. For example, an organizational designer must size functional capabilities, assign staff to tasks, and set communication and control policies. Our extended VDT system is an analysis tool that can pre- Figure 3. Direct Costs for Projects, and Additional Costs from Two kinds of Hidden dict schedule cost and process quality Work: Coordination Work and Institutional Work. performance for a baseline conﬁ gura-

Project Perspectives 2010 45 tion of an organization and work process, and help ability to model: institutional differences between to isolate the most severe risks in these three areas. participants from different nationalities (Horii However, VDT cannot suggest how to change the 2005), learning and forgetting of skills by project work process or organization to mitigate any risks team members over the course of an extended that have been identifi ed; the user must experi- project (MacKinnon et al 2007); the development ment with alternatives to fi nd better solutions. of trust between members of a project team who Searching the solution space manually to fi nd may or may not be co-located (Zolin 2004); and confi gurations that address schedule, quality, or fl exible knowledge sharing through networks of cost risks for a baseline case is thus a daunting human experts and computational support tools task. It relies on the expertise of the human user such as databases, expert systems and other com- and offers no guarantee of optimality or even puter knowledge archives (Buettner 2002). near-optimality. Because the VDT solution space is A new version of POWER, which we call POW- so large, and the interaction between its variables ID is under development in collaboration with is subtle and sometimes counter-intuitive, even the US Air Force Research Laboratory to model expert users can fail to discover many potentially command-and-control work and other kinds of superior solutions. work that is event-driven rather than task-driven Task scheduling and resource assignment is an as in our earlier versions of POWER or VDT. We important sub-problem of organizational design. expect to begin validating POW-ID in the latter Search and optimization problems have been part of 2009. studied extensively in the artifi cial intelligence This overview of a 20 year research project has and operations research communities. Global op- attempted to explain how a team of research- timization techniques include operations research ers was able to begin modeling well specifi ed, methods such as linear, nonlinear, and integer routine project tasks completed by homogeneous programming; artifi cial intelligence methods such team members, and then progressively extend the as constraint propagation; and local search. OR representation and reasoning of the initial theory techniques typically achieve high scalability, ro- and tools to address less fl exible tasks, more het- bust performance, and optimal solutions, but place erogeneous project team membership and fi nally restrictions on problem formulation. In contrast, more dynamic and decentralized organization constraint propagation offers the ability to model structures, as shown in fi gure 2. It has been a de- problems more realistically (Baptiste 2001: 8), but light to participate in this scientifi c exercise with good performance requires discovering clever heu- a remarkable team of colleagues and collaborators ristics to guide the search. Local search techniques in industry and government. can rapidly produce good results, but with no guarantee of optimality. OR, AI, and local search techniques have all been successfully applied in- Dr.D Raymond dividually to task scheduling and resource assign- LevittL is Profes- ment problems (Klein 00, Smith 93, Zweben 94). sors of Civil & However, classic task scheduling problem formula- EnvironmentalE tions were developed for capital-intensive physical EngineeringE and work operations rather than for global knowledge a Senior Fellow work. The classic formulations ignore the greater ata Stanford’s fl exibility of assignments when performing global WWoods Institute work and the options for developing alternative forf the Environ- organizations to perform the work. ment.m He directs During the last decade, researchers began SStanford’s combining AI and OR techniques to solve several, CollaboratoryC similarly complex, kinds of optimization problems forf Research (Hooker 2002). Working in collaboration with on Global Projects and AdvAdvanced Project Prof. John Koza, a pioneer in the development of Management executive program. Dr. Genetic Programming, Bijan KHosraviani (KHosra- Levitt’s early research showed how con- viani et al, 2004a and 2004b) developed a system struction owners and top managers could based on Genetic Programming that was able to improve their safety performance. In evolve VDT models that met a required set of scope, 1988, he co-founded Stanford’s Center for schedule and cost objectives more optimally than Integrated Facility Engineering. He devel- multiple teams of human users had been able to oped organization modeling and simula- do over almost a decade. His work won a silver tion theory and tools to reduce schedule medal at the GECCO conference in 2004. and quality risk for fast-track projects and project-based companies. His current re- Ongoing Research on Power to the Edge search explores how national cultural and Organizations institutional differences affect governance The POWER research has continued since 2005. and performance of multinational project This research was aimed to develop versions of our teams. ASCE awarded Levitt its 2000 Com- simulation framework that could be used to model puting Award; 2006 Peurifoy Construction some of the most decentralized and fl exible orga- Research Award; and elected him ASCE nizations existing anywhere —so-called Power to Distinguished Member in 2008. Dr. Levitt the Edge organizations Alberts & Hayes, 2000). was co-founder and has served as a Direc- POWER has now evolved through multiple tor of: Design Power, Inc., Vité Corpora- versions. As of 2009, Version 3.8 incorporates the tion, and Visual Network Design, Inc.

46 www.pry.fi References Levitt, R.E., G.P. Cohen, J.C. Kunz, C.I. Nass, T. Chris- Alberts tiansen, and Y. Jin, 1994. "The 'Virtual Design Team': Simulating How Organization Structure and Arquilla, J. and D.F. Ronfeldt, 1996. Information Processing Tools Affect Team Perfor- The Advent of Netwar, Santa Monica, California: mance," in Carley, K.M. and M.J. Prietula, editors, Rand. Computational Organization Theory, Lawrence Baptiste, P., Le Pape, C., Nuijten, W. 2001. Erlbaum Associates, Publishers, Hillsdale, NJ. Constraint-Based Scheduling: Applying Constraint Levitt, R.E., G.P. Cohen, J.C. Kunz, C.I. Nass, T. Chris- Programming to Scheduling Problems. Norwell, tiansen, and Y. Jin, 1994. "The 'Virtual Design MA: Kluwer Academic Publishers. Team': Simulating How Organization Structure and Cheng, Carol H.F., and Levitt, R.E. Information Processing Tools Affect Team Perfor- "Contextually changing behavior in medical mance," in Carley, K.M. and M.J. Prietula, editors, organizations" Proceedings of the 2001 Annual Computational Organization Theory, Lawrence Symposium of the American Medical Informatics Erlbaum Associates, Publishers, Hillsdale, NJ. Association, Washington, DC, Nov 3-7, 2001 Mahalingam, Ashwin. Christiansen, T.R., Christensen, L., Jin, Y., Kunz, J.C. "Understanding and Mitigating Institutional Costs & Levitt, R.E., 1999. “Modeling and Simulating on Global Projects." Doctoral dissertation, D#014, Coordination in Projects,” IEEE Journal of Organi- Stanford University, 2005. zational Computing, 9.(1), pp.33-56. March, J. and H. Simon. Cohen, G. P., and R. E. Levitt, 1991. Organizations. “The Virtual Design Team: An Object-oriented Masuch, M. and P. LaPotin, 1989. Model of Information-sharing in Project Design Beyond Garbage Cans: An AI Model of Organiza- Teams,” ASCE Construction Congress, Expert Sys- tional Choice. In: Administrative Science Quarterly, tems Symposium in Computer-integrated Design March pages 38-67. and Construction, Cambridge, Massachusetts, April. North, Douglass C., 1990. Institutions, Institutional Change, and Economic Galbraith, Jay R., 1974. Performance, Cambridge: Cambridge University "Organizational Design: An Information Processing Press. View," Interfaces, Vol. 4, May 1974, pp. 28-36. Orr, Ryan J. Hofstede, G., 1997. "Unforeseen Conditions and Costs on Global Cultures and organizations: Software of the mind. Projects: Learning to Cope with Unfamiliar Institu- New York: McGraw Hill. tions, Embeddedness and Emergent Uncertainty." Hooker, J. 2002. Doctoral dissertation, D#010, Stanford University, Logic, Optimization, and Constraint Programming. 2005. INFORMS Journal on Computing. 14(4) (to appear) Scott, W. Richard. Available online at http://ba.gsia.cmu.edu/jnh/ Institutions and Organizations, 2nd Ed., Sage papers.html. Publications, 2001. Horii, Tamaki, Yan Jin, and Raymond E. Levitt. Thomsen, J., Kwon, Y., Kunz, J. C., and R.E. Levitt, "Modeling and Analyzing Cultural Inﬂ uences On 1997. “Simulating the Effects of Goal Incongruen- Project Team Performance." Computational and cy on Project Team Performance.” Fourth Congress Mathematical Organization Theory, Vol 10-No.4, on Computing in Civil Engineering, ASCE, June Feb. 2005, pp.305-321. 17-19, Washington DC, pp. 643-650. Joint Staff, 1998. Thomsen, J., R.E. Levitt, J. C. Kunz, C.I. Nass, D.B. Joint Doctrine for Information Operations, Gov- Fridsma, (1999). “A Trajectory for Validating Com- ernment Printing Ofﬁ ce, Washington D.C. putational Emulation Models of Organizations” KHosraviani, Bijan and Raymond E. Levitt. Journal of Computational and Mathematical Organization Design Using Genetic Programming, Organization Theory, 5, (4): 385-401. Proceedings of North American Association for Zweben, M., Daun B., Davis E., and Deale, M. 1994. Computational Social and Organizational Science Scheduling and Rescheduling with Iterative Repair. (NAACSOS) Conference, Pittsburgh, PA, June 27- In Zweben, M. and Fox, M. (editors). Intelligent 29, 2004a. Scheduling. San Francisco, CA: Morgan Kaufmann. KHosraviani, Bijan, Raymond E. Levitt and John. R. Pages 241-256. Koza, Organization Design Optimization Using Genetic Programming. In Keijzer, Maarten (editor). Late-Breaking Papers at the 2004 Genetic and Evolutionary Computation Conference (GECCO-2004). Seattle, WA International Society of Genetic and Evolutionary Computation; July, 2004b. Klein, R. 2000. Scheduling of Resource-Constrained Projects. Norwell, MA: Kluwer Academic Publishers. Kunz, John C., Tore R. Christiansen, Geoff P. Cohen, Yan Jin, Raymond E. Levitt, 1998. “The Virtual Design Team: A Computational Simulation Model of Project Organizations,” Communications of the Association for Computing Machinery (CACM) 41 (11), November, pp. 84-91.

Project Perspectives 2010 47 Formal and informal risk management actions in projects

This paper presents the current risk management activities in projects. The fi ndings are based on a 3-year GPSII research project that was conducted in co-operation with VTT, Helsinki University of Technology and Helsinki School of Economics. The purpose of the GPSII research project was to identify and analyse interactions between cultural processes, network connections and risk management practices in global delivery projects. This paper discusses the project risk management activities from two perspectives: Firstly, the current risk management procedures in projects are briefl y summarized. Secondly, the view is broadened to include more informal risk management actions outside the formal risk management process. It is discussed whether these informal actions are actually being used to cover the areas where formal risk management lacks the fl exibility and agility required. It is argued that the informal processes and mechanisms are often hidden and their signifi cance both to the project risk management process and to the risk level of the project is not well understood. It is concluded that the effi ciency in project risk management arises from developing both the formal risk management processes and the informal activities in parallel to creating new fl exible and more interactive risk management tools. Mervi Murtonen, M.Sc. Literature Informal risk management refers to all informal VTT Technical Research Project risk management is typically presented and intuitive actions that are taken to mitigate Centre of Finland as a repetitious process that consists of a generic risks in order to reduce the uncertainties in a Tampere, Finland framework (a list of tasks to be completed) and the project, intentionally or not. A low formality level supporting tools and techniques (checklists, risk in risk assessment implies a less explicit structure, grids, risk reviews, risk registers etc). Several risk no separate phases in timely order, informal docu- management processes for projects are described mentation, and less clearly defi ned objectives and in standards (PMI, 2004; APM, 2006) and in litera- deliverables for the process (Ward, 2006). In order ture (Chapman & Ward, 2003; Meredith & Mantel, to be able to analyze risk management formality 1989; Kliem & Ludin, 1997). Traditionally, a risk is and informality, we need to differentiate the for- referred to as a combination of a probability and mal risk management practices from the informal a negative outcome. Research and development in ones. According to Li (2007) the distinguishing project risk management has focused on methods elements of formality and informality are: 1) to quantify risk and on how to manage the risk codifi cation, 2) formation, 3) enforcement, 4) after it has been quantifi ed. power, and 5) personalization (Table 1). Formality In risk management, formal procedures have refers to an objective, cognitive, task-oriented and become a symbol for effi cient information use, instrumental process, whereas informality refers rational decision-making and a willingness to act to more subjective affective, people-oriented and (Langley, 1989). Formal procedures are seen as a sentimental processes (Li, 2007). routine that helps focus attention and decrease uncertainty in decision-making (Becker & Knud- Dimensions Formal Informal sen, 2005). According to Susilo et al. (1991) the formal controls (specifi c rules and procedures to Codifi cation Explicit Implicit be followed and specifi c outcomes to be produced) Formation Exogenous Endogenous are dominant at project planning and initiation, but become less dominant over the project dura- Enforcement Tight Loose tion. Instead, the project managers rely on more Power Hierarchical Horizontal informal control elements (unwritten practice codes, social values, common beliefs and tradi- Personalization Depersonalized Personalized tions) as the project progresses. Also, when facing a new challenge, project managers approach the Table 1. Formality – informality dimensions. challenge informally. (Li, 2007)

48 www.pry.fi In recent project management studies, unex- ducted in four companies both in Finland and pected events in projects have drawn increasing in various project host countries. In addition to research attention. Making these unexpected and project-specifi c interviews, thematic interviews surprising events, their occurrence, and manage- focusing on each company’s risk sources, risk man- ment more visible within projects, is seen to con- agement practices and processes in general have tribute to our understanding of uncertainty man- been conducted. All the interviews were conducted agement in projects (Hällgren, 2007; Söderholm, by at least two researchers – they were recorded, 2008). Project uncertainties can not be categorized transcribed verbatim, and the contents analyzed. and handled as risks (Atkinson et al., 2006), and In addition to collecting research data by inter- the current formal risk management practices do views, researchers participated in case companies' not adequately address many particular features lessons learned sessions in order to analyze the of project uncertainties (Ward & Chapman, 2003; practices of effi cient risk knowledge transfer and Chapman, 2006; Pender, 2001). Instead, several utilization within and across projects. researchers agree that the formal procedures need to be complemented by more informal and fl exible Findings ways, such as continuous interaction, communica- In project risk management following the formal tion and refl ection (Hällgren & Maaninen-Olsson, identify–analyze–mitigate process, the preliminary 2005; Perminova et al., 2008). risk analysis typically takes place early in the sales and bidding or at the latest at the beginning of the Methods project execution phase (Figure 1). At this point, The research data was collected in the GPSII re- the possibilities to implement proactive measures search project by studying altogether 21 different against the identifi ed risks are not only the highest, project cases that varied in the degree of success, but when also the level of uncertainty is at its peak. network structures and cultural diversity. Both The analysis is mainly based on a predefi ned risk list turnkey and system delivery projects were studied. and the assessment of the pre-specifi ed, generic The studied project cases were geographically risk factors. In the sales and bidding phase, the distributed and involved projects from 17 coun- project manager's task in risk analysis is to assist tries – including former Soviet Union countries, sales in technical and operational issues, especially China and South American countries. The data in risk quantifi cation and pricing. At the begin- collection followed the principles of systematic ning of the execution phase, the project manager combining (Dubois & Gadde, 2002). This approach usually updates the preliminary risk analysis or, if is based on a principle of continuous back-and- that has not been done, is the main person re- forth movement between theory and practice, sponsible in carrying out the risk analysis for the between theoretical frameworks and empirical project. The further along the project proceeds, observations, each informing the other as the the more uncertainties typically are resolved and research process evolves. the smaller the need for any formal and proactive The collected data consists mainly of interviews analysis becomes. At the end of the project, the (92 interviews) with the project managers and post-project lessons learned sessions are used to other project-specifi c key personnel, as well as summarize and share the experiences from critical of project-related documentation (e.g. process events. In lessons learned sessions the preliminary descriptions, project plans, risk analyses, lessons risk analyses can be reviewed and the realized risks learned reports). The interviews have been con- can be analyzed.

Upper management and business control

Project sales and Project execution Service marketing

CM CM, PM, TE, BC, E CM, PT PT, BC PT, CM, E Risk check- Kick-off Risk review Preliminary monthly and Lessons risk list reviews meeting learned assessment Excel-based Risk handover project tools meetings meetings

PM, BC PT, E

Changes Risk log Intranet documents CM=Commercial manager PM=Project manager Risk TE=Technical engineer committee/ BC=Business control E, PM management PT=Project team E=Expert New risks

Figure 1. Risk management actions and actors in a project.

Project Perspectives 2010 49 In most of the studied companies, there were formal risk management process decreases as the many different practices for carrying out risk project progresses (Figure 2). This can also be seen management in projects and also many different in the use of risk registers: in the sales phase and tools were used. Several tailored applications, even in the early project execution phase the risk risk analysis methods and reporting systems analyses are actively documented into risk fi les had been developed and were used across the and risk registers in risk reviews, but the further entire organization, but also more fragmented the project proceeds the less risk registers are practices, where project managers had their own used and less risk reviews are arranged. As one of personal ways to handle risk information in their the interviewed project managers said: “After the projects, were found. The fi ndings indicate that project starts, I have no intentions to go back to the written form of the risk management process the risk documents.” as such is not extensively used in practice and A risk register, that is used to tabulate informa- the agreed-upon formal process breaks up into tion about identifi ed risks, their likely impacts, and several different action patterns. These differences proposed and completed actions to be taken, is the in risk management actions are dependent on most visible part of the formal risk management the project manager's own interest, the way the procedure in projects: It lists known risks, follows risk management was organized and written, the the linear indentify–analyze–mitigate process, and extent of the internal risk management expertise aims at collective information sharing and learn- (i.e. risk managers and risk management process ing from previous experiences. However, as Ward developers), the uniformity of the organization's (1999) stated, adequate supporting procedures, management practices, and the contingency fac- including training and audit controls are desir- tors of the project. able to ensure that risk registers operate as an Project managers are expected to use both their effective tool. It is argued, that the effectiveness managerial skills and competencies and the for- of the risk register is dependent on the project mal risk management practices to respond to the manager's interest to search for information about project's risks and unexpected events. The formal previous risks, their intuition to perceive possible risk management procedures are predefi ned be- risk events, and their activity in documenting havior models for project managers: what they are their own risk remarks. In addition the project expected to do in project risk management, with supervision and control affect on the use of the which tools and methods. Project milestones (e.g. risk registers. Risk register can not only be used deadlines, formal reviews, product deliveries) de- as a risk archive but also as a basis for evaluating mand that the project manager articulates the ac- and developing the risk management process and tions taken to manage the risks and decide on how practices in projects. to manage the residual risks. In this study, it was In the studied case projects where the risk noticed that if the formal procedures are absent management process is mostly centered on the or inadequate, informal controls will be adopted preliminary risk analysis, the emerged risks and prior to developing more formal procedures. unexpected events in the project execution phase In this study, the close follow-up of the case are not included in the risk management process. projects revealed that the interest towards the Instead, the project managers use other methods,

Project phases: Initiating Sales and bidding Execution Warranty Closing Intensity of activities

Supporting processes Project risk analysis Lessons Learned Final review Formal risk Archives management Preliminary Interpersonal Risk risk analysis process relations reviews

Informal actions Time Figure 2. Formal and informal risk management actions in a project.

50 www.pry.fi their own experiences and skills and project man- mon habit to use the risk documentation from the agement practices, to identify and analyze these previous projects as a reference to the risk analyses situations and to solve them in an appropriate way. in forthcoming projects may be misleading. This may be due to practical reasons: the project In our research data, in projects that have managers do not analytically separate and docu- adopted a more informal approach to the risk ment all the different events or situations that management, the cooperation, communication come their way, but simply tackle them all as a and personal relationships as well as situational part of their work. awareness and personal insights are emphasized. Currently, the main purpose of the risk analyses The ability to make decisions about the risk miti- is to make sure that all possible issues and probable gation actions quickly and spontaneously is seen risks are taken into the consideration as early as important, discounting the fact that the ad hoc possible, typically before the project execution. decisions and deviations from predefi ned risk After the project contract is sealed, risk analyses management procedures can sometimes be fatal. have only a subsidiary role. Also, updating the risk The informal risk management actions (e.g. re- analyses seems to be diffi cult, and in most cases, scheduling, arranging a crisis meeting or replacing the original risk analysis documents are neither a critical technical component) may be valuable referred to nor updated during the project. If the in a hectic project work and may save the project risk documentation is not updated during the from severe consequences. However, if these ac- project it does not contain the full risk informa- tions remain undocumented and unanalyzed it tion and fails to notice all the unforeseen events is diffi cult the transfer the knowledge to other that have occurred during the project. Therefore, projects. Additionally, informal actions are more the post-project evaluation based only on risk personalized and less codifi ed by defi nition, which documentation gives a wrong picture of the risk increases the risks involved. spectrum of the project. Consequently, the com-

GPS II – research project GPS II (Global Project Strategies II) was a multidisciplinary research collaboration aimed at creating and developing new knowledge on risk management processes in global projects. GPS II was a continuation of research co-operation between Finnish based international companies, researchers from VTT Technical Research Centre of Finland, the Helsinki University of Technol- ogy (HUT), and the Helsinki School of Economics (HSE). The collaboration dates back to 2003 when The Collaboratory for Research on Global Projects (CRGP) was launched at Stanford Uni- versity. VTT was CRGP's fi rst affi liate and conducted a pilot research project in Finland together with HSE during 2003-2004. At the beginning of 2005, HUT joined the research group and GPS I was launched. In GPS I the focus was on institutional complexities and cultural dynamics in global projects. During GPS I, it was widely recognized that risk management in global projects is an area that would benefi t from high quality academic research. Both the researchers and the industry partners of GPS I identifi ed project risk management as an important area for development, and subsequently, the basic idea of GPS II emerged.

The vision of the GPSII is to develop new ways to manage Vision effectively and innovatively global projects that are implemented in complex institutional and business envirinments with several participating organizations.

Culture & diversity: Project networks: Risk management: Research “Risk management in “Management of “Management of global project organizations Areas project networks” large and complex global projects” with cultural variety and diversity”

How can project networks What are the novel and How should a global Research be effectively managed in effective risk manage- project be organized for Questions different institutional and ment practices in global the effective management business environments? project networks with of cultural variety and several actors? diversity?

The research work in GPS II was jointly conducted by HUT, HSE and VTT and the project was executed during the period 1.4.2007-31.3.2009. While the main ﬁ nancier was TEKES, the following organizations have participated in and also ﬁ nanced the project: Nokia Siemens Networks, Wärtsilä Finland Oy, Foster Wheeler Energia Oy, Outotec Oyj, Ramboll Finland, and Synocus Oy.

Project Perspectives 2010 51 Formal risk Business risk management as part processes of project management Informal actions

Cultural features: PLAN - Organization cultures Roles and Strategy - Risk management cultures Project management IDENTIFY responsibilities - National cultures Quality Interpersonal Business ESTIMATE relations control Communication Project network Finance EVALUATE and consulting HR Coordination and co-operation Safety and TREAT Sensemaking and Project context Security MONITOR sensegiving

Decisions and actions to manage project risks

Figure 3. The risk management framework.

Conclusions Also conceptual understanding is argued: Un- In spite of all the detailed project plans, expe- derstanding both the variance in risk perceptions rienced project managers and well-planned risk and the varieties in unexpected events, their management activities, surprises will still occur. occurrences and management within projects, is One can never fully plan for the future, and no seen to contribute to more proactive uncertainty risk analysis is perfect. Unexpected events emerge, management in projects. At best, the informal evolve and evaporate during the project, what practices and formal practices in risk management makes their early identifi cation and proactive are congruent, and informal actions support the control very diffi cult. All non-controlled turns, formal systems and reinforce the project man- unstructured problems and unexpected circum- agers' behaviors that are aligned with formally stances can not be taken into account in project stated goals. It is important to become aware of risk analyses, but the formal analyses and shared the informal part of the project risk management. work procedures are still valuable in creating a We need to identify the informal actions that are common basis for understanding all these foresee- used in projects to be able to analyze their role able situations in projects. and value in project risk management. Then, new Research has revealed that unexpected events ways to make the informal actions more visible are only seldom managed according to formal and more transformable are required. project management procedures and guidelines. It It is realistic to say that no matter how good risk is more a question of the ability to quickly gather management practices, processes or tools we have, relevant data about the situation, to make and not all projects will use them anyway, or at least provide sense about the situation, and to correctly the procedures need to be modifi ed according to respond to it. Especially for the global projects, we both the project's needs and to the project man- need more fl exible and agile approaches to risk ager's preferences. Nevertheless, using informal management that take into account the complex risk management actions can never be used as an project networks, cultural diversities and high level excuse not to use the formal procedures available. of uncertainties. In this study, the following frame- The formal procedures need to be supported by the work, representing the formal risk management informal ones and vice versa. Finally, this paper has process supported by other business processes touched on the diverse approaches that projects and informal actions, was developed (Figure 3). actually have to risk management. Broadening the The framework illustrates how the decisions and view beyond the formal risk management process actions to manage risks in projects originate from will bring new perspectives to project risk man- many different sources and how the formal risk agement, especially in uncertain environments. management process cover and document only The essence of project risk management lies in a small part of all the risk management actions the way in which the tacit and the explicit – the taken. Informal actions are always needed to formal and the informal – risk management is give the project more versatile action repertoire woven together. especially in complex social contexts with neither predetermined action plans nor specifi ed response strategies available.

52 www.pry.fi References APM. (2006) Li, P. P. (2007) APM Body of Knowledge, 5th ed. Association of Social tie, social capital, and social behaviour: Project Management (UK). Toward an integrative model of information exchange. Asia Paciﬁ c Journal of Management 24, Atkinson, R., Crawford, L. & Ward, S. (2006) 227-246. Fundamental uncertainties in projects and the scope of project management. International Jour- Pender, S. (2001) nal of Project Management 24, 687-698. Managing incomplete knowledge: Why risk management is not enough? International Journal of Becker, M. & Knudsen, T. (2005) Project Management 19, 79-87. The role of routines in reducing pervasive uncertainty. Journal of Business Research 58, 746-757. Perminova, O., Gustafsson, M. & Wikström, K. (2008) Deﬁ ning uncertainty in projects – a new perspec- Chapman, C. & Ward, S. (2003) tive. International Journal of Project Management Project risk management. Processes, Techniques 26, 73-79. and Insights. John Wiley & Sons Ltd. PMI. (2004) Chapman, C. (2006) A guide to the project management body of Key points of contention in framing assump- knowledge. Project Management Institute, USA. tions for risk and uncertainty management. International Journal of Project Management 24, Susilo, A., Heales, J. & Rohde, F. (1991) 303-313. Project management effectiveness: The choice – formal or informal controls. Australasian Journal Dubois, A. & Gadde, L. (2002) of Information Systems 15 (1), 153-167. Systematic combining: An abductive approach to case research. Journal of Business Research 55 (7), Söderholm, A. (2008) 553-560. Project management of unexpected events. International Journal of Project Management 26, Hällgren, M. & Maaninen-Olsson, E. (2005) 80-86. Deviations, ambiguity and uncertainty management in a project-intensive organization. Project Ward, S. (1999) Management Journal 36 (3), 17-26. Requirements for an effective project risk management process. Project Management Journal 30 Hällgren, M. (2007) (3), 37-43. Beyond the point of no return: On the management of deviations. International Journal of Ward, S. & Chapman, C. (2003) Project Management 25, 773-780. Transforming project risk management into project uncertainty management. International Journal of Kliem, R. & Ludin, I. (1997) Project Management 21, 97-105. Reducing Project Risk. Gover, Hampshire. Ward, S. (2006) Meredith, J.R. & Mantel, S.J. (1989) Project risk management. In: Hillson, D. (ed.) The Project Management. A managerial approach. 2nd risk management universe. A guided tour. Business edition. New York: John Wiley & Sons. Information. Langley, A. (1989) In search of rationality: The purposes behind the use of formal analysis in organisations. Adminis- trative Science Quarterly 34 (4), 590-631.

Mervi Murtonen, M. Sc. (Tech.) VTT Technical Research Centre of Finland P.O. Box 1300, FI-33101 Tampere, Finland mervi.murtonen@vtt.ﬁ

Project Perspectives 2010 53 Use Confucius to improve project leadership in Chinese perspective

Weiping Jiang China has been deeply infl uenced by Confucius Introduction Yun Le for thousands of years. The Analects of Con- Project management is mainly based on system Qinghua He fucius is the most important book among all approach. Its tools also refl ect this characteristic School of Economics and books of Confucius. It advocates philosophies such as WBS, PERT, CPM (Moder etal., 1964; Harold Management of a gentleman who is benevolent, righteous, Kerzner, 1995). So project management doesn’t Tongji University courteous, wise, sincere and brave. A gentleman involve the soft things much. Shanghai is almost an ideal that people are pursuing in Facts of project management are similar to the People’s Republic of China China and other Asian countries. The six quali- description above. The concept of project manage- ties of a gentleman can be very useful to project ment has been introduced into China for more than managers to improve their project leadership in twenty years (Shizhao Ding, 2004). Unfortunately, China, especially foreign project managers who management in the construction industry is often are unfamiliar with China’s local culture. reduced simply to the use of bar charts, networks and resource allocation programmes. Many of the projects are not completed satisfactorily to meet specifi ed time, cost, quality and environmental requirements (Low Sui Pheng, 1995). Studying and learning management with Chi- nese specialty can benefi t management practice in China, and also benefi t the development of management science in the world. In the long history of China, there have been many deep thinkers in philosophies of management. Lao Tzu and Confucius are the famous thinkers in China’s history, and their thinking has infl uenced China for thousands of years (Sui Pheng Low, 1998). Their works mainly concentrate on ideal behaviors of people in the society. Most of their works especially “The Analects of Confucius” have become norm of behavior for which people are pursuing in China (Wai-Hung Ng etal. 2003). They also have great infl uence on behaviors of leaders and managers in China. It was felt that conventional wisdom remains relevant in today's competitive business environment (Sui Pheng Low, 1998). In particular, the application of age-old, time-tested wisdom in commerce as posited by ancient sages can be revived. This paper is intended to explore lessons for This is an updated version of a paper originally published in improving today’s project managers’ leadership the “IPMA Scientifi c Research Paper Series: Human Side of in China from Confucius’s The Analects of Con- Projects in Modern Business” (IPMA, 2009) fucius.

54 www.pry.fi Wise Precondition

Righteous

Courteous Brave

Cincere

Foundation Benevolent

Figure 1. Inherent relationships of the six qualities

The Analects of Confucius people and strong country is the main objective The Analects of Confucius is a book recording of management by moral, and gentlemen are the Confucius and his pupils’ words and deeds, and direction of education (Cai Yubo, 2002). Zhao compiled by the disciples of the disciples of him Jiuyun (1996) holds that the potentate should (Chen Yu, Zheng Yi, 2007). It is a crucial book of manage the people by moral not the law. A moral Confucianism composed of 20 chapters, describing potentate can impress the people with a perfect the criteria for a gentleman. The word “gentleman” image and gets invisible power. Guo Changhua has occurred in the book for 108 times. A gentle- (2000) considers that the government should make man should be benevolent, righteous, courteous, the people working according to objective law and wise, sincere, and brave. Benevolence is the fun- seasons, levy less tax and make the people rich; dament of the other fi ve qualities. And wisdom is cherish the people and never encroach on their the precondition of the others. These six qualities interests; select and use the best talents; make a interact to each other. For example, a brave man clear distinction between reward and penalty. will do things according to rightness even he may offend dignitaries. Likewise, a righteous man will 2. Confucianism’s enlightenment for become brave to help people inferior to him at the enterprise governance cost of his own interests. The inherent relationships Moderation in all things is the best of rules. There is of the six qualities are shown in fi gure 1. much use of moderation in enterprise governance It has been said for more than a thousand year (Gong Qiyao, 2000).Moderation means appropria- in China that you can governance the world after tion and objectivity. Systems of a company should you have read half of The Analects of Confucius. be fl exible, the employees should be self-disci- The Analects of Confucius has been seen as a clas- plined and heteronomous, a company should also sical works about management in China. In the combine decentralization of authority and central- modern society, easterners and occidental are both ization of power (Qiu Zhengchang, 2005). Moral is studying Confucianism more and more. According the standard of selecting talents, and words and to rough statistics, there are 64300 papers in Eng- deeds are also important factors. In Japan, many lish relevant to Confucianism and 181000 papers large companies have put Confucianism into prac- in Chinese relevant to Confucianism. But there are tice. In Hitachi Chemical, lifetime employment is big difference in understanding of Confucianism put into use. And in Mitsubishi Heavy Industries between the west and the east. Maybe it is the Limited Corporation, the highest ethical standard reason of language difference that the west can is moderation (Wang Chunhong, 2004). hardly research deeply in Confucianism. So most In a word, the Analects of Confucius mainly of papers in English advocate Confucianism but is applied in national governance and enterprise few put it into practice. Chinese put this thinking governance. And few scholars make research in into practice more frequently. All of the papers how to improve leaders’ qualities. And this paper can be concluded as two kinds: intends to make endeavors in the perspective.

1. Confucianism’s enlightenment for national Learning from the Analects of Confucius governance and Research Results People-oriented thinking is the foundation of Human beings’ knowledge grows basing on Confucianism’s management by moral, rich heritage from ancestors. The principles of Con-

Project Perspectives 2010 55 fucius’ philosophies can be adopted and mapped by Confucius are effi cient for project managers to into the business environment. The Analects of learn information in their limited time. The other Confucius is mainly refl ecting Confucius’ wisdom fi ve aspects are important factors to increase and philosophies; it can not only improve project project managers’ personal charm and eventually managers’ ability but also qualities of the people increase project leadership. being managed and at last advance the manage- A gentleman may not necessarily be a leader, ment results. The paper is intended to focus on but a leader has more or less the qualities of a lessons for improving project leadership from The gentleman. Being a gentleman will improve project Analects of Confucius which is advocating how to managers’ leadership greatly, I hope this paper be a gentleman. The authors have found out 25 will benefi t project managers in China, especially important references specially describing the six foreign project managers who are not familiar qualities of a gentleman, and fully use them to with Chinese culture. improve understanding about a gentleman. It is proved that the qualities of a gentleman For testing the qualities of a gentleman‘s infl u- are positive correlated to the project leadership. ence on project leadership, we investigated ten But there may be some deviation from the truth. projects which had been completed lately. Just as For example, an excellent project manager with shown in Table 1 which is designed according to insuffi cient resources and obsolete equipments the 25 important references, the six qualities of a can’t control the project well. The conclusion need gentleman in the project manager are scored by to be further tested, because the sample space is other project members. And Table 2 investigates small. Moreover, some thoughts of Confucianism the project manager’s performance (the results need to be verifi ed with the new times. Now Con- of schedule control and cost control). There is a fucianism has strong infl uence on management important hypothesis that the better the project in China and Asia. And how to fi nd out the new is controlled, the project manager has more lead- truth of management from Confucianism that can ership. Table 3 is summary of the results. In Table be applied in both the east and the west, it is the 3, the project manager who has higher score in further research of great importance. qualities of a gentleman controls the project better (for two exceptions, project managers have References relative high score in qualities of a gentleman but Harold Kerzner (1995) don’t control projects well). Therefore, there is a Project management: a system approach to conclusion that the qualities of a gentleman have planning, scheduling and controlling. New York: positive correlation with project performance. Ac- International Thomson Publishing Inc,. cording to the hypothesis, the more the project House, R. S. (1988) manager has qualities of a gentleman the better The human side of project management. Reading: Addison-Wesley. he controls the project. In the ten projects, three in construction indus- Shizhao Ding (2004) Project management for construction. Beijing: try, three in software industry and four in other China Building Industry Press. industries. All the projects are large, and each has Low Sui Pheng (1995) more than 20 project members. Table 1 was printed Lao Tzu's Tao Te Ching and its relevance for project and distributed among members of the projects. leadership in construction, International Journal In every project, we investigate 15 project mem- of Project Management, 13(5), pp295-302. bers. So 150 copies were sent out, and 130 were Sui Pheng Low (1998) received. We computed the average score for each Back to the basics: biblical wisdom for effective project manager and took the average score as the construction project management, International fi nal result. Then we calculated performance of Journal of Project Management, 16(5), pp209-214. project control from the fi nal documents of the Wai-Hung Ng, S.F. Lee, Elias Siores (2003) projects. What’s more, we also interviewed the ten 8C plus 6C management model for multi-national project managers, and found out an interesting corporation: a locally compatible and globally fi t phenomenon that project managers with high culture model, Journal of Materials Processing score usually were modest and courteous. There Technology, (139), pp44-50. were some defects in the methodology, such as Chen Yu, Zheng Yi (2007) The Analects of Confucius. Changchun: Jilin People project members’ subjective judgements. Press. Zhang Yan (2003) Conclusions Confucius image detailed analyse, Juornal of Gentleman is a high standard for people in China Liaoning University(philosophy and social science and some other Asian countries. The Analects of edition), 31(6), pp34-38. Confucius describes the philosophies of being a Zhang Peiguo (2002) gentleman. It still has important effects in applica- A discussion of confucian thought of rule by tion of project management in modern society. virtue, Guan Zi Journal, (3), 65-69. A gentleman should be benevolent, righteous, Zhang Dachun (2001) courteous, wise, sincere, and brave. Wise is relevant Exploration on confucian's initiation of mass edu- to professional ability, and other fi ve qualities cation, Journal of Jianghan PetroleumL Institute are relevant to personality. This also accords with (social science edition), 3 (1), pp 54-56. modern research results that personality plays an Wang Liming (2004) important role in leadership. Benevolence is the Confucius' scientifi c spirit, Journal of Henan Me- fundament of the other fi ve qualities, and wisdom chanical and Electrical College, (6), pp105-106. is the precondition of the others. In the aspect of Huang Xingen, Zhang Songhui (2005) being wise, several methods of learning provided On Confucius' learning rites from Lao Zi, Journal of Hunan University(social sciences), (4), pp6-10.

56 www.pry.fi Tang Hao (2003) On Confucian Gentleman, Journal of Jianghan Petroleum Institute(social science edition), (1), pp68-71. Cai Yubo (2002) The Characteristic of Confucianism’s Rule by Vir- tue, Social Science Research, (1), pp62-65. Zhao Jiuyun (1996) The thoughts in management of Kongzi-new discussion of The Analects of Confucius, Gansu Social Science, (3), pp1-4. Guo Changhua (2000) Discussion on kung Foo-tsz’ s management strategy, Jiangxi Social Science, (9), pp173-175. Gong Qiyao (2000) Discussion on moderation thoughts’ application in enterprise management, Journal of Shanxi Finance WeipingW i i JiJiang iis a Ph.DPh D studentt at and Economics University, 22(6), pp61-63. School of Economics and Management, Qiu Zhengchang (2005) Tongji University of China. He received his Absorbing Confucianism and relating it to enter- Bachelor degree from Wuhan University prise culture, Li Lun Xue Xi, (1), 44-45. of Technology, China. He studyied at as Wang Chunhong (2004) a postgraduate at Tongji University since Discussion on transition of Confucianism culture September of 2005, and was recommand- in Japan, Journal of Yuncheng University, 22(3), ed to study as a Ph.D student in the major pp23-24. of project management in construction in Yao Xinzhong, Zhao Yanxia (2002) September of 2007. Confucianism and Christianity: comparisons between benevolence and love. Beijing: China Social Sciences Publishing House. Zhang Yun (2005) The viewpoint of Lin Yutang about Confucian- ism, Journal of Inner Mongolia Normal University (Philosophy &Social Science Edition), 34(3), pp102- 106. Sun Wenjuan (2005) Benevolence of Confucianism and love of Christi- anity, Journal of Suihua University, 25(3), pp24-27. Zhang Zhixiong (2002) Religions and Confucianism, Religions in Fujian, (5), pp34-35. Cui Zhiying (2003) The culture of Confucianism and modern Korea Yun Le is a professor at School of Eco- society, Journal of Tongji University(Philosophy nomics and Management, Tongji University &Social Science Edition), 14(4), pp97-102. of China. He received his Bachelor, Masters Wu Xianfang (2007) and Doctoral degrees from Tongji Univer- Paciﬁ sm of Confucianism, Theory Horizon, (9), sity. He is a member of the board of direc- pp180-181. tor of China association of engineering Dong Ren (2002) consultants. He has published more than The nature of "courteous" and its modern mean- 50 papers and six books in construction ing, Foreign Sociology, (4), pp19-28. project management. Wu Bofan (2008) Confucianism’s moral principals and spirit-Jap- anese enterprises’ “courteous” and harmony, 21 Century Business Review, (7), 130-132. Li Wen (2002) The re-evaluation of the historical role of Con- fucian culture in East Asia, Studies in World Religions, (2), 24-30. Wang Wenyuan (2004) Confucianism is not a religion-discussion with Professor Li Shen, Journal of Nanchang University(Philosophy &Social Science Edition), 35(1), pp1-12. Li Shen (2007) Theoretical meaning of research on Confucianism, Qinghua He is a vice professor at School Confucius Studies, (1), pp4-6. of Economics and Management, Tongji Lian Yong, Li Baoshan (2005) Cross culture management in Chinese and Korea University of China. He received his Bach- enterprises, Journal of Hunan Business University, elor, Masters and Doctoral degrees from 12(1), 15-19. Tongji University. He has published more than 30 papers in construction project management.

Project Perspectives 2010 57 Quality of Gentlemen Score (0,1,2,3)

1. Benevolent 1.1 the fi rst to deal with problems and the last to enjoy the happiness of success 1.2 shares success with project team members 1.3 distinguishes gentlemen from fl unkies 1.4 shares his achievements with others 1.5 loves and hates distinctly 2. Righteous 2.1 care about his project team members 2.2 calm in front of profi ts and takes the profi ts should belong to him 2.3 select subordinates with excellent talents and appoint them in important positions or be generous to introduce them to his superiors 2.4 always ready to fi nd out unjust phenomenon and remedy it 2.5 loyal to the organization he is in 3. Courteous 3.1 show respect to his team members and gives them opportunities to use their talents 3.2 make exact rules of his team and let everyone including himself obey the rules 3.3 obey the rules consciously at any time 3.4 execute the rules strictly 4. Wise 4.1 learn something and practise it immediately should not make decisions with extreme views 4.2 combine learning and thinking effectively, and improve his capability con- tinuously 4.3 to acknowledge what is known as known, and what is not known as not known 4.4 from what have been known to deduce things haven’t been known before 4.5 be modest and learn from everyone 4.6 arrange works’ sequence according to their importance. 4.7 fi nd out the reasons for mistakes and refl ect yourself thoroughly 4.8 look before you leap 5. Sincere 5.1 keep his words 5.2 trust others especially his subordinates fully and appoint them in a important position according their talents 5.3 never lie or make a misleading statement 6. Brave 6.1 be brave to reform abuses, and propel the organization development with outer environment 6.2 be brave to take responsibilities and earn trusts from both his superiors and subordinates 6.3 be brave to innovate and don’t fear failures 6.4 be brave to face problems and dig opportunities from them to extend the organization’s capabilities Total score

Table 1. Qualities of a gentleman in the project manager

58 www.pry.fi Item Performance Schedule Cost

Table 2. Performance of project control. Note: if the schedule or cost overruns 15%, the performance will be called bad; if the overrun is between15% and 5%, the performance will be called well; otherwise the performance will be called good.

Score of qualities of Performance of project Project gentlemen control 1 60 Good 2 66 Good 3 61 Good 4 52 Bad 5 65 Good 6 59 Well 7 61 Well 8 56 Well 9 45 Bad 10 46 Bad

Table 3. The results of qualities of a gentleman and project performance

Project Perspectives 2010 59 ”IPMA certiﬁ cation has given me self-knowledge, an extended network and veriﬁ cation of my competence”

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