3 PROJECT AS A TOOL OF BUSINESS DEVELOPMENT
3.4 Project success and success factors
The definition of success is not an easy task to do. The simplest way of defining success would be to measure whether the goals set for the project are met, but it does not take into account the possibility of ill-defined goals. Furthermore, some of the goals may be measurable and some of them may be not. According to de Wit (1988, 169), measuring success is complex and a project is hardly ever a disaster or a failure for all the stakeholders during all the phases in the project life cycle.
Success is also time dependent; a project may be perceived as a success one day and as a failure the next. Baker et al. (1983, 684) have introduced the term perceived success as meeting the project’s technical specifications and/or the project mission to be performed and attaining high levels of satisfaction from the parent organisation, the client, the users and the project team itself. All the people in the development process need to be satisfied at the outcome of the project.
Salminen (2000, 15) defines success with two dimensions: efficiency and effectiveness. Efficiency is related to achieving the goals on the schedule within the budget, and effectiveness refers to the ability to create performance improvements and positive perceptions among the organisational members. The basic purpose behind the project is that the company can achieve a more effective and efficient way of doing business. The project should result in an improved capability to generate more profit. But it is very difficult to distinguish, which of the results are consequences of the development project and which are caused by other factors such as changes in competition, prices, other projects, etc. An additional problem is the issue of the degree of success. The traditional approach to project success has been criticised for classifying projects to successful or unsuccessful ones. In reality all projects can be placed somewhere between those extreme positions (Salminen 2000, 15).
It is important to draw a distinction between project success and project success criteria. The success criteria consist of the measures by which the success or failure of the project will be judged. Success factors are those inputs to the management system that lead directly or indirectly to the success of the project (Cooke-Davies 2002, 185). Measuring the success involves an evaluation of the degree to which the objectives have been achieved. In this process, the objectives become the success criteria (de Wit 1988, 168).
The project management success is not the same as the project success. Delivering the project success is more difficult than delivering the project management success (Cooke-Davies 2002, 186 - 187). Projects that meet the budget and schedule constraints may be considered successful even though they do not meet the customer needs and requirements (Dvir, Lipovetsky, Shenhar & Tishler 1998, 917 - 918). Atkinson (1999, 338 – 341) introduces a similar conclusion.
Traditionally, it has been said that projects are successful if they are completed on
time, within the budget and to the quality, often referred to as The Iron Triangle (Figure 3.4).
Cost
Quality Time
Figure 3.4 The Iron Triangle of project management (Atkinson, 1999, 338).
The Iron Triangle is based on short-term thinking. However, projects continue to be described as failing despite successful project management. Atkinson (1999, 341) argues that also the resultant system and the benefits of it need to be measured.
Shenhar et al. (2001, 699) have identified four major distinct success categories:
project efficiency, the impact on customer, direct business / organisational success and preparing for the future. They have compiled a list of thirteen specific measures for project success assessment (Table 3.3).
Table 3.3 Four success categories (Shenhar et al. 2001, 712)
Success Dimension Measures
Project efficiency Meeting schedule goal
Meeting budget goal
Impact on customer
Meeting functional performance Meeting technical specifications Fulfilling customer needs Solving a customer’s problem The customer is using the product Customer satisfaction
Business success Commercial success
Creating a large market share
Preparing for the future Creating a new market Creating a new product line Developing a new technology
The different dimensions are more important at different times with respect to the moment of project completion. Project efficiency can be assessed only in the very short-term, during the project’s execution and immediately after its completion.
The impact on the customer can be assessed after a short time, when the project has been delivered to the customer and the customer is using it. Customer
satisfaction can be assessed within a few months of the moment of the purchase.
Business success can only be assessed after a significant level of sales has been achieved, usually after one or two years. The last dimension, preparing for the future, can be recognised and assessed after a longer time, in probably three to five years (Shenhar et al. 2001, 716). Figure 3.5 illustrates the time frame of the success categories.
Project efficiency Impact on customer Business success Prepare the future SUCCESS DIMENSION
TIME FRAME Very
short
Short Long Very
long
Figure 3.5 Time frame of success categories (Shenhar et al. 2001, 716)
Rouhiainen (1997, 34 – 36) introduces a similar list of project success domains grouping them to:
Commercial success; meeting the expectations set at the beginning of the project
Technical success; composed of better performance and client satisfaction Classic project management success; the project is executed on the schedule, within the budget and its results meet the expectations
Learning over time; the improved knowledge of the project members.
Several authors have developed lists of critical success factors (cf. Baker et al.
1983; Pinto & Slevin 1987; Salminen, Rintala & Korpi-Filppula 2000). Pinto and Prescott (1990, 307) criticise that most of this work is based on theoretical conceptualisations rather than be empirically derived. As a solution to this problem Pinto and Slevin (1987) have designed a project management and analysis tool, Project Implementation Profile (PIP), to help managers in their every day work. PIP
is a questionnaire booklet and expected to be filled by the project team members.
Project Implementation Profile consists of an empirically derived set of critical success factors, which according to its developers are general enough to be applied across a variety of organisations and project types. Finch (2003, 32) has expressed a concern regarding the applicability of the PIP methodology to different business cultures.
PIP consists of ten critical success factors of project implementation: project mission, top management support, project schedule/plans, client consultation, personnel, technical tasks, client acceptance, monitoring and feedback, communication and troubleshooting. These factors are divided into strategic and tactical ones. The strategic factors involve early planning, policies and general objective setting. The tactical factors deal with the resources deployment and the implementation of the specific tasks (Schultz, Slevin & Pinto 1987). The ten project implementation success factors are introduced in Figure 3.6.
Project mission
managementTop support
Project Schedule/
Plan
Client consultation
Personnel, Recruitment
Selection Training
Technical tasks
Monitoring and feedback
Troubleshooting
Client Acceptance Communication
Figure 3.6 Ten key factors of the project implementation profile (Schultz et al. 1987, 42)
Slevin and Pinto (1987, 34) studied over 400 projects when developing the instrument (PIP profile) to measure a project’s scores on each of the ten factors.
The participants’ critical success factors are ranked in comparison with the database of these projects. PIP comprises a self-assessment methodology, which requires the
participants to indicate their degree of agreement on a 7-point Likert scale to a series of 50 statements covering ten critical factors (Pinto & Prescott 1990, 311).
Each factor is comprised of five sub-items. The produced PIP-profile provides the project managers with a quantitative way of quickly profiling a project on the critical factors and identifies the areas of concern (Slevin & Pinto 1987, 34; see also Slevin 1989, 303 - 321). It also gives information about the organisation’s ability to carry out the project through to full implementation (Pinto & Mantel Jr. 1990, 270).
Salminen (2000, 95) has conducted a study on operational change and introduces eleven potential success factors of change management. The factors, defined on the operative level from the project manager’s point of view, are introduced in Table 3.4. According to Salminen (2000, 96 - 98), the success factors can be used as a basis for analysing the actions and conditions of change projects. These success factors are present throughout the change project.
Table 3.4 Success factors of change management (Adopted from Salminen 2000, 97)
Success factor Definition
Leadership The behaviour and actions of the person or persons leading the change
Management support The role and actions of managers, who have authority over issues and resources critical for the project
Need for change Identifying and communicating the reasons for the change Participation Involving those affected by the changes in planning and
implementation
Defining roles Defining roles and organisation during the change process Planning Planning the change process in terms of what is to be done by
whom and when
Goal setting Defining a vision and goals for the change Control Monitoring and controlling the progress Training Training and educating the people
Communication Distributing information about the changes and gathering feedback from the people
Motivation Getting people motivated and committed to changes through active motivational efforts
According to a study on Finnish SMEs (Salminen & Perkiömäki 1998, 23 – 42;
Salminen 2000, 8) that have carried out a productivity improvement project, 20 % of the companies reported that the project had failed to produce the targeted productivity improvements. But there was no statistically significant correlation between the perceived success and the actual productivity improvement in the
companies. Only 35 % of the companies succeeded in improving their total productivity by 5 % or more. In 42 % of the cases the total productivity actually decreased during the project. According to Salminen and Perkiömäki (1998, 25), the project success was based on the following factors:
The project was started based on the clear business requirements The staff was supported by development training
Monitoring and efficient corrective actions
Working out of a written project plan and final report
Pinto and Prescott (1988, 17) highlight the temporal nature of the critical success factors of the project. The relative importance of various critical factors is subject to change at different phases of the project implementation process. The planning factors seem to be of a greater relative importance for the project success across all the stages of the project life cycle (Pinto & Prescott 1990, 319). Dvir et al.
(1998, 931) argue that the project success factors are contingent upon the specific type of project and that the list of project success factors is far from universal.