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PAPERS The Relationship Between Project Success and Project Efficiency Pedro Serrador, Serrador Project Management, Toronto, Canada Rodney Turner,...

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Q1. How to measure Project Success?

Q2. Justify the relationship between Project Efficiency and Project Success.

Q3. Critically comment on this article in terms of theoretical and practical implications.

Q4. Summarize your conclusion why the Project Efficiency is very important to the overall success of Project Management.

PAPERS Project Management Journal, Vol. 46, No. 1, 30–39 © 2015 by the Project Management Institute Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/pmj.21468 30 February/March 2015 Project Management Journal DOI: 10.1002/pmj ABSTRACT Many researchers have suggested that meet- ing time, scope, and budget goals, some- times called ‘project efficiency,’ is not the comprehensive measure of project success. Broader measures of success have been recommended; however, to date, nobody has determined empirically the relationship between efficiency and overall success or indeed shown whether efficiency is impor- tant at all to overall project success. Our aim in this article is to correct that omission. Through a survey of 1,386 projects we have shown that project efficiency correlates mod- erately strongly to overall project success (correlation of 0.6 and R 2 of 0.36). Efficiency is shown through analysis to be neither the only aspect of project success nor an aspect of project success that can be ignored. KEYWORDS: project; success; efficiency; project success; project and industries INTRODUCTION P roject success criteria have been measured in a variety of ways. Although the conventional measurement of project success has focused on tangibles, the current thinking is that, ultimately, project success is best judged by the stakeholders, especially the primary sponsor (Turner & Zolin, 2012). As Shenhar, Levy, and Dvir (1997) and Turner and Zolin (2012) note, assessing success is time-dependent: “As time goes by, it matters less whether the project has met its resource constraints; in most cases, after about one year it is completely irrelevant. In contrast, after project completion, the second dimension, impact on the customer and customer satisfaction, becomes more relevant.” (Shenhar et al., 1997, p. 12) Building on that work, Shenhar and Dvir (2007) suggested a model of success based on five dimensions (Table 1). In a similar vein, Cooke-Davies (2002) differentiated between project success and project management success. Project management success is the traditional measure of project success, measured at project completion, and is primarily based on whether the output is delivered to time, cost, and functionality (Atkinson, 1999). Following Shenhar and Dvir (2007), we call this ‘project efficiency.’ Project success is based on whether the project outcome meets the strategic objectives of the investing organization. In this article we focus on overall project success, which is measured by how satisfied key stakeholders are about how well the project achieves its strategic objectives. Munns and Bjeirmi (1996) noted that much of the project management literature considers “projects end when they are delivered to the customer” (p. 83). They continued: “That is the point at which project management ends. They do not consider the wider criteria, which will affect the project once in use” (p. 83, our italics); this focus on the end date of the project is under- standable from a project and project manager’s standpoint. The definitions of a project imply an end date; at that time the project manager is likely to be released or move on to another project. Also, the reward structure in many organizations encourages the project manager to finish the project on cost and time and little else (Turner, 2014). Gareis (2005) and Gareis, Huemann, and Martinuzzi (2013) are very specific that project closing occurs with the delivery of the new asset (the project output) to the client, and that the proj- ect process is only part of the overall investment process. Thus the success of the project itself is measured by project efficiency, but the success of the investment is measured by the wider measures, as suggested by Turner and Zolin (2012). The literature has also examined the wider impact of projects on the business. Customer satisfaction has long been a part of the project manage- ment literature (Kerzner, 1979, 2009) but it has not usually been included in the formal measures of success. Shenhar et al. (1997) note that of the three traditional dimensions of project efficiency—time, budget, and scope—scope The Relationship Between Project Success and Project Efficiency Pedro Serrador , Serrador Project Management, Toronto, Canada Rodney Turner , SKEMA Business School, Lille, France
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February/March 2015 Project Management Journal DOI: 10.1002/pmj 31 of success: technical performance and customer satisfaction with an R 2 of 0.37 ( p < 0.001). This result showed a strong relationship between the two compo- nents, though this was not generalized to overall success. The importance of broader success measures for projects is now the norm. A Guide to the Project Management Body of Knowledge (PMBOK ® Guide) – Fifth Edition, as an example, no longer just mentions the triple constraint (Proj- ect Management Institute, 2013) and now includes project constraints such as scope, quality, schedule, budget, resources, and risks. It also refers to stakeholder satisfaction as well as other constraints that are not mentioned but may impact project success. Now that the most recent edition of the PMBOK ® Guide (Project Management Institute, 2013) recognizes stakeholder satisfac- tion as an additional measure of project success, it is timely to ask what the correlation is between that and project efficiency. Thus we see there are two compet- ing measures of success on projects, what Cooke-Davies (2002) calls ‘project management success’ and ‘project suc- cess.’ We adopt more current termi- nology, which uses ‘project efficiency’ instead of ‘project management suc- cess’ (Shenhar et al., 1997; Shenhar & Dvir, 2007) and define the two compet- ing measures as: Project efficiency : meeting cost, time, and scope goals; and Project success : meeting wider busi- ness and enterprise goals as defined by key stakeholders Apart from the work of Zwikael and Globerson (2006), few people have investigated to what extent these two measures of success are correlated. Turner and Zolin (2012) suggest proj- ect efficiency is important to success, because if the project is completed late and over budget it will be more difficult for it to be a business success. Prabhakar (2008) notes: “There is also a general agreement that although schedule goals, end-user benefits, contractor benefits, and overall project success) are highly inter-correlated, implying that projects perceived to be successful are successful for all their stakeholders” (p. 94). Thomas, Jacques, Adams, and Kihneman-Woote (2008) state that mea- suring project success in not straight- forward. “Examples abound where the original objectives of the project are not met, but the client was highly satisfied. There are other examples where the initial project objectives were met, but the client was quite unhappy with the results” (p. 106). Collyer and Warren (2009) cite the movie Titanic , which was touted as a late, over-budget flop but went on to be the first film to generate more than US$1 billion. Munns and Bjeirmi (1996) also note that a project can be a success despite poor project management performance. Zwikael and Globerson (2006), using data collected from 280 project man- agers showed that aspects of success show a similar frequency distribution. Figure 1 shows a highly similar distribu- tion between technical performance (a partial though not full measure of proj- ect efficiency) and stakeholder satisfac- tion. In addition, they reported a linear correlation between two components has the largest role, because it also has an impact on the customer and his or her satisfaction. They note: “Similarly, project managers must be mindful to the business aspects of their company. They can no longer avoid looking at the big picture and just concentrate on getting the job done. They must under- stand the business environment and view their project as part of the compa- ny’s struggle for competitive advantage, revenues, and profit” (p. 10). This view was reiterated by Jugdev and Müller (2005), who reviewed the project suc- cess literature over the past 40 years and found that a more holistic approach to measuring success was becoming more evident. Researchers increasingly measure success by impact on the organiza- tion rather than just meeting the tri- ple constraint. Dvir, Raz, and Shenhar (2003) state that “there are many cases where projects are executed as planned, on time, on budget and achieve the planned performance goals, but turn out to be complete failures because they failed to produce actual benefits to the customer or adequate revenue and profit for the performing organization.” (p. 89). They also found that “all four success-measures (meeting planning Success Dimension Measures Project efficiency Meeting schedule goal Meeting budget goal Team satisfaction Team morale Skill development Team member growth Team member retention Impact on the customer Meeting functional performance Meeting technical specifications Fulfilling customer’s 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 Table 1: The five dimensions of project success after Shenhar and Dvir (2007).
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