4. RESULTS
4.3 The support of the project front end to the project performance
In the literature review, five ways for the FE to impact the project were found with a sixth overall success category. Five categories were identified in the interviews and these are gone through in the following paragraphs. The difference being that interviewees did not recognize team performance but brought up competitiveness impact. The literature review identified an impact from FE performance to project performance. From the example projects (Figure 7) it can be noticed that both the financial and execution performance of each project somewhat matches with the FE performance. However, it is important to note that the data is rather limited.
A B C D E F G H I
Front end 5 5 4 4 2 4 2 4 3
Execution 5 4 4 3 3 4 3 4 1
Financial 5 4 3 4 3 5 3 4 1
Figure 7: Example projects’ performance evaluated (1, very poor – 5, excellent).
Based on the interviews the FE supports the project execution and financial performance. Three project and two sales organization members mentioned that the FE lays the foundations for the project. This means that after the FE there are lots of things that cannot be changed due to contractual limitations and that the project has taken a certain course. A sales organization member said: “The work that is done in the last phases of the FE cannot be done after the project execution has started”. If the FE is not well done the problems will most likely lie ahead as projects D, E, G, and I show. As a PM said: “A lot of effort can be spent on discussion in projects”. The interviewees mentioned that with a one really bad project you can lose margins for multiple projects, thus it is important to focus on defining the project. The mentioned example projects all had somewhat rushed FE or resource limitations which lead to surprises in the execution.
Also, work done in the early phases of the project is usually much cheaper than in the later phases as mentioned by a project organization member. It indicates that effort put in early on saves costs. The case projects that had no issues and went well in execution all had good FEs. From the cases that had issues in the execution all but one (C) had some kinds of difficulties or rush in the FE. However, from the cases that had issues in the execution, some were turned positive by hard work during the execution.
The budget and schedule are defined and agreed upon with the customer in the FE.
Thus it is quite natural that the FE has a big role in schedule and budget performance.
Typically the more effort is put in the FE the beyyet optimized the schedule and budget get. This happens through better-defined execution and technical solution which was mentioned by three sales and two project organization members. The more effort is put in the FE the more realistic and predictable the schedule and budget seem to be and according to two sales and two project organization members. If less effort is put in the schedule and budget are typically quite loose which leads to variation. A project organization member stated that if the drive to get the sales are high but the effort put in the FE is low it tends to drive the price down at the cost of profit margins and greater risks. This happened in projects D, E and G. A PM stated that in many cases the execution has to do a lot of work to make savings to keep the budget. Projects C, E, and G all faced budgetary surprises which were compensated with the work done in execution. Overall five of the case projects had cost overruns in execution four of which were due to somehow missed scope thus leading to too low budget and price. Project C stands out from this crowd since it had a lot of effort put into the FE but still had cost overruns. Projects D, E, H, and I had schedule challenges two of which were related to scope-related issues and one to resources. The project I had a serious schedule and cost overruns which could be due to multiple reasons. For one the project being very complex demanding a lot more resources and effort than anticipated. The requirements and complexity of the project were not fully understood. The projects A, B, and F that went well all had experienced project and SM working on them. The projects had sufficient time and resources in the FE and were thus done with a lot of detail. The FEs were all well managed and had good cooperation with the client.
The variance from estimates can also be called risk. The FE was mentioned to have an impact on the risk levels by 9 of the interviewees. The more effort is put in the lower the risks. A project and a sales organization member mentioned that risks are better managed when the FE is executed properly. Part of this was considered to be due to the risk reviews by two project and two sales organization members. A sales organization member and two project organization members stated that there will definitely be negative surprises if the FE is executed poorly which was pointed out in the previous paragraph and is visible in the case projects. A PM, however, brought up that if risks are very thoroughly considered it tends to drive up the contingencies and thus price for the client. Locking the concept early enough in the FE was mentioned to be one big factor behind lowered risks by two project organization members. If the concept is not locked
in it can often lead to mistakes and issues in change management which cause costs and delays in execution.
The lowered risks are typically achieved through a better definition of the project and risks. This means that when the FE is done well there is less additional- and rework needed in the project phase which lowers the cost. A project organization member mentioned that with better FEs there are typically fewer change orders during the project.
A sales organization member also confirmed this stating that a lot of extra effort needs to be put in during the execution if the FE is done poorly. This indicates that better performance in the FE means that unnecessary rework can be avoided in the execution.
Two sales organization members specifically mentioned that the relationship between the client and the executing organization is established in the FE. This in combination with the groundwork enables a better start to the project if the FE is executed well.
Especially sales organization members mentioned the FE's effect on competitiveness and probability of getting the project. Two SMs mentioned that typically the biggest factor for decision is the price. Other major factors are typically technology and delivery schedule mentioned by two project organization members. A project and a sales organization member also stated that sometimes agility and responsiveness in the FE is a competitive advantage. Projects C and E were partly won due to the case company's responsiveness. Building trust and assuring the client of the capabilities are also an important task. As mentioned above the more effort is put into the FE the better optimized the solution, budget, and schedule are increasing competitiveness. Two project and two sales organization members believed that by putting more effort into the project by better prioritization the probability to get the project increases and simultaneously margins improve. The interviewees also believed that through a well designed FE customer requirements can be met better. Case project A is a good example of a great project with cooperating with the client and listening to the requirements driving costs down and improving the schedule. In this specific area, the case company seems to have challenges. According to SMs, the organization is focused on fulfilling the internal requirements for the sales case. The customer is often forgotten focusing on fulfilling specification producing over quality driving cost up and competitiveness down. This creates a good basic solution but not necessarily what the customer wants and what is cost-effective. Thus poorly executed FE can lead to a lack of competitiveness and losing the project.