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Mancini Short Term Scientific Mission
Megaproject Stakeholder Management Success
1. Megaproject Success definition: state of the art
Megaproject success is strongly linked with Stakeholder Management Success
(Shore, 1999; Cooke-Davies, 2002; Pinto, 2013). Project management tools and
techniques are useful to understand “what should be done” but, in truth, decision
making processes are influenced by external factors. Simon (1955) and Tversky and
Kahneman (1974, 1981) define this divergence as the “behavioural view" of the
project.
Past project performance analysis underlines some typical behaviour of project
teams and project managers that affect performances from the early stages. This
paragraph aim to briefly show the evolution of these factors during times, stressing
the high attention that research gave to this aspect.
Pinto and Kharbanda (1996) identify twelve factors that promote project failure,
briefly summarised below:
Ignore project context and its features, including stakeholders’ behaviour.
Push a new technology to market too quickly.
Do not plan possible to possible problems, for example through “what if”
analysis.
When problems occur, focus on the most visible one ignoring all the other.
Do not encourage projects based on new ideas because of their uncertainty,
with the risk that the inertia could kill innovation.
Do not conduct feasibility studies ex ante.
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Do not admit that a project is a failure, continuing to push the project even
though contextual feature, mismanagement or miscalculation prejudices the
project
Never conduct post failure reviews, losing the opportunity to learn and
understand the main reasons of the failure.
Allow bureaucracy and internal corporate mechanism to be more important
than project success.
Do not worry about project’s trade offs
Let political influence to modify decision making process
Chose a not charismatic and skilled project manager.
Flyvbjerg (2009, 2011) analyses human factor considering the particular case of
mega-projects, separating the causes of bad project performances from the roots of
these causes. He assesses that factors that lead to performances inferior to
expectations are project complexity, changing in scope of work, technological and
demand uncertainty, negative pluralities (e.g.: different stakeholders’ voices) and
the difference between real and expected geological features.
However, he analyses deeply the roots of failure causes, identifying two possible
roots:
Optimism Bias: it refers to biased estimations that managers forms based on
delusional optimism instead of on a rational cost-benefits analysis. In this
situation, decision making process is biased because of the underestimation
of costs and the overestimation of benefits. The result is that project
managers promote initiatives that are difficult to complete without cost
overruns and benefit shortfalls.
This behaviour derives from the “inside view” adopted in project
management, meaning a strong tendency toward the consideration of
project problems as unique, focusing exclusively on the single situation in
problem solving process.
Strategic misrepresentation
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Flyvbjerg identifies strategic misrepresentation when “politicians, planners
and project managers deliberately and strategically overestimate benefits
and underestimate costs in order to increase the likelihood that their
projects gain approval and funding” (Flyvbjerg, 2011). According to this
definition, project managers voluntarily focus their support on positive
scenarios, avoiding explaining the negative ones.
The nature of this behaviour is political and it is due to the presence of
political pressure on the project, which affects the initial stage.
It can be drawn that the phenomenon of optimism bias is particularly present
when political or organizational pressure is absent. On the contrary, strategic
misrepresentation is strong when political pressure high while is weak when it is
low.
Roots of poor project performances are complementary since both of them
explain this phenomenon. Most of all when complexity is high, as in mega-projects,
is fundamental to remember that both of factors influence the decision making
process together; considering just one of them would lead to an incomplete
analysis.
One of the most recent researchers that focused on this topic is Pinto (2013).
Capitalizing what said by other scholars, he identifies seven “deadly sins” that lead
to project failure.
1. Optimism bias
Notion taken from Flyvbjerg and explained above.
2. “Massaging” the plan
3. Creating project “death marches”
4. End date-driven schedule
5. Lack of relevant project management training
6. Poor change control
7. Superficial risk management
This analysis highlights some common factors that influence success, particularly
project management one since these human factors refer to mechanisms that
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affect project team, corporate and organisation. Furthermore, it is clear that lie and
deceive are common in decision making process, leading to failure in short term
goals achievement.
Previous frameworks explained the interaction between human behaviour and
project management success; the next one relates also project success to human
factor. Shore (2008) highlights that, besides decision making biases that corrupt
project management performance, there are many other factors could influence
also project outcome, and therefore also long term goals. This framework is the
most complete one since explains how input variables (hierarchical and project
power, culture, project standard and project goals) influence firstly project
management and decision making process, and finally also project outcome. The
Figure 1 below, adapted from Shore’s model (2008), illustrates the model and
highlights three influence levels: human factors/behaviours, project management
and project; it allows to understand how different variables interact, stressing the
hierarchical order that starting from human behaviour leads to project outcome.
Figure 1: most important variables that influence project outcome (adapted from Shore, 2008)
Project leadership
Systematic biases
Project culture
Project (goals,
budget, schedule,
complexity)
Manage-ment and
team decision
processes
Project planning
execution and control processes
Executive leadership
National culture
Organisa-tional
culture
Project standards and PMI
guide
Project outcome
Human factors/
behaviours
Project management
Project
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Culture is divided in national, organizational and project culture, as explained in
the following.
National culture: value systems and belief learnt during past experience of
the team members, difficult to be modified.
Organizational culture: it is developed in the context of national culture and
of the organizational leadership. It includes organizational techniques, tools,
skills etc.
Project culture: includes the way of perform planning, execution and control
processes.
Systematic biases are the ones that influence planning, control and execution
processes; it is possible to associate this concept to biases identified by Flyvbjerg,
both the ones due to optimistic estimations and the ones due to strategic
misrepresentation.
Shore shows how all the main factors identified in this paragraph by the other
scholars interact and influence project and project management success.
2. A model for success definition and quantification
Literature review shows that elements such as value or success from a
stakeholder perspective are basically synonyms: stakeholder gives a high value to
the project if it succeeds i. e. when expectations of each stakeholder are satisfied. In
the following of the paragraph is explained a model that helps to quantify project
success.
In this regard is proposed the use of Social Network Analysis (SNA), a model that
is useful to address interactions framework into the project, identifying causes and
consequences of these interactions (Haythornthwaite, 1996). However, studying
the resulting network allow us to evaluate success through the use of synthetic
indicators that quantify benefits produced by the project to its stakeholders, which
means its social performance. Is important to stress that this way of analysing
success is coherent with the features stated above, since benefits do not depends
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by value carried to shareholders but most of all by stakeholders’ perception. The
logical framework of the model is shown in Figure 2.
Figure 2: project success assessment process
2.1 Stakeholder and success criteria identification
As said, success is a multidimensional and dynamic variable; in literature there
are several models that show success identification criteria respecting these
features. This stage of the process could be done with a deeper stakeholder
identification process, as will be described in chapter 3.x. However, the aim here is
to show how literature developed about this topic and which categorisation have
been proposed for stakeholder identification; is not fundamental for success
assessment to have a structured stakeholder identification process. Furthermore,
many scholars associate to the identified stakeholders some success criteria that
are useful for the purposes of this model. In this model, success mixes both project
and project management one since criteria will include both short term and long
term goals. Therefore the process here described allows to quantify a sort of
“overall success” that merges both the time frame views.
The first proposed categorisation is the one provided by Atkinson (1999) that
identifies two project stages: delivery stage and post-delivery stage. In delivery
stage project success consists in “doing it right” while in post-delivery stage the aim
is “getting it right”; he models project goals in this stage with the Square Route
model (Figure 3), where adds to the iron triangle, useful in delivery stage, two more
fields of success valid in post-delivery stage: information system (e.g.: users,
customers), benefits for organization and benefits for stakeholder community. This
framework has been formulated for generic organizations and, as a consequence,
can be applied to project context as well.
Stakeholder and success criteria identification
Social Performance
Index (SPI) calculation
Network construction
and index calculation
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Figure 3: Square Route (Atkinson, 1999)
A not exhaustive list of criteria for each category identified above is reported in
Table 1.
Table 1: success factors divided according to stakeholder category (Atkinson, 1999)
The information system Benefits
(organisation)
Benefits
(stakeholder community)
Maintainability Improved efficiency Satisfied users
Reliability Improved effectiveness Social and environmental
impact
Validity Increased profits Personal development
Information-quality use Strategic goals Professional learning
Organisational-learning Contractors profits
Reduced waste
Capital suppliers, content
project team, economic
impact to surrounding
community
Other authors that focused on this topic are DeLone et al. (1992), which identify
the same stages of Atkinson; however they focus only on the post-delivery stage.
The six criteria identified for this stage are:
System quality
Information quality
Information Use
Users satisfaction
The “Iron triangle”
Benefits
(stakeholders community)
The Information
System
Benefits
(organisation)
Square route
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Individual impact
Organisational impact
Ballantine et al. (1996) revisit the previous model proposing a three-dimensional
one identifying three stages in project life cycle: development, implementation and
delivery.
Pinto and Mantel (1990) split up project life cycle in sub-phases, particularly
planning (so called strategic stage) and executive (so called tactical stage), ignoring
post-delivery stages. The identified criteria for each stage are shown in the Table 2
below.
Table 2: Comparison of critical factor associated with success and failure, by project lifecycle stage
(Pinto and Mantel, 1990)
Strategic Stage Tactical Stage
Success Factors
Mission Client Consultation Top Management Support Personnel
Schedule/Plans Technical Tasks Client Acceptance Monitoring & Feedback Communication Trouble-shooting
Failure Factors
Mission Trouble-shooting Client Acceptance Personnel
Technical Tasks Schedule/Plans Client Acceptance
Zhai et al. (2009) show a model in which suggest to focus the attention on four
main stakeholders found using power, legitimacy and urgency criteria (from
Mitchell et al. 1997; see Chapter 3). These stakeholders are enterprise,
subcontractors/suppliers, community and customers; then they analyse success
from their perspective, identifying for each one of them some key elements in its
definition.
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Figure 4: value framework of project management in mega-projects Zhai et al. (2009)
Turner (2009) classifies several success criteria according to the interested
stakeholder and the time frame. He suggest that project participants judge success
at its end, operators of project’s output and users judge success some months after
the end of the project while investors or sponsor judge success some years after the
end of the project (Table 3).
• Improve the project • performance • Improve the competencies • of the enterprise • Increase revenue • Cultivate the personnel • Improve customer
relationship • management • Cultivate favourable
corporate culture
• Realize the value of project • Save project investment • Better collaboration experiences
Value of project management in
mega-projects
• Improve the technical and management capabilities
• Build up long-term strategic cooperative partnership
• Avoid conflicts with the community within the project implementation
• Promote the economic and social development
• Foster a large number of talents in construction project management
• Improve the technical standards and management mechanisms in the industry
• Protect the environment
Enterprise
Customers
Subcontractors/
Suppliers Community
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Table 3: different perceptions of success by different stakeholders over different timescales, (Turner, 2009)
Measure of Success Stakeholder Timescale
The project increases the shareholder value of the
parent organization Shareholders End plus years
The project generates a profit Board End plus years
The project provides the desired performance
improvement Sponsor End plus years
The new asset produced by the project works as
expected Owner End plus months
The new asset produces a product or provides a
service that consumers want to buy Consumers End plus months
The new asset is easy to operate Operators End plus months
The project is finished on time, to budget, and
with the desired quality All End
The project team had a satisfactory experience
working on the project and it met their needs Project team End
The contractors made a profit Contractors End
Turner and Zolin (2012) develop a framework identifying eight stakeholder
categories which associate different success criteria according to time frame.
Particularly, while Turner (2009) states that stakeholders are interested in the
project only according to only one timeframe, the authors here suggest that each
stakeholder has different objective in each timeframe (Table 4).
In the following are described the different stakeholders and their interest in
the project. The authors split the concept of client in investor and sponsor;
Investor or owner: is the person or the group who pays for the project in
order to buy the new asset and for its operation in order to obtain benefits
and repay its investment;
Sponsor or executive: is the main supporter of the project, trying to convince
investors to join the project; are often senior managers of the parental
organisation or of user organisation.
Consumers: who buy product of the new asset.
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Operators or users: who uses the asset and produce on behalf of the owner.
Project manager and project team.
Senior supplier: senior management in the main contractor.
Other suppliers: people or groups who provided good, raw materials, semi-
finished products etc.
Public: they concern about environmental and social impact during project
life cycle.
Table 4: The new model of project success (Turner and Zolin, 2012)
Timescale Results
Project Output (project end)
Project Outcome (end plus months)
Impact (end plus years)
Investor or owner
Time Cost
Features Performance
Performance Profit Reputation Consumer loyalty
Whole life value New technology New capability
New competence New class
Project executive or project sponsor
Features Performance Time
and cost
Performance Benefits Reputation
Relationships Investor loyalty
Future projects New technology New capability
New class
Consumers
Time Price of benefit Features
Benefit Price of product
Features Developments
Competitive advantage
Price of product Features
Developments
Operators/users
Features Performance
Documentation Training
Usability Convenience Availability Reliability
Maintainability
New technology New capability
New competence New class
Project manager and project team
Time Cost Performance
Learning Camaraderie
Retention Well-being
Reputation Relationships
Repeat business
Job security Future projects New technology
New competence
Senior supplier (design and/or management)
Completed work Time and cost
Performance Profit from work Safety
record Risk record
Client appreciation
Performance Reputation
Relationships Repeat business
Future business New technology
New competence
Other suppliers (goods, materials,
Time Profit Client appreciation
Reputation Relationships
Future business New technology
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works, or services) Repeat business New competence
Public Environmental
impact
Environmental impact Social costs
Social benefits
Whole life social cost-benefit ratio
2.2 Network construction and index calculation
Once stakeholders have been identified, is possible to build the network. It is
composed by nodes, corresponding to each actor, and arrows, corresponding to any
kind of relationship (money exchange, information flows, resources, friendships
etc.). Network analysis consists in the calculation of two main attributes (Rowley,
1997):
Centrality degree: single node property that indicates its importance in the
network. It is similar to formal power but, while it is due to hierarchical
structure, centrality degree refers to each actor’s power based on its ties.
Centrality degree is defined as:
( ) ∑
( )
where:
( ) is centrality degree of i node;
∑ represents the sum of all direct relationships (x) that one node has
with all the other ones (g), excluding relationships with itself. In other words,
represents the total number of direct relationships existing in the network
Density degree: overall network property that states the completeness of
the network according to the number of its links.
Density degree is defined as:
( ) ∑
∑
∑
( ) indicates density degree;
∑ indicates the number of total direct relationships (x) in the network
∑ indicates the total number of indirect relationships (y) in the
network.
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Rowley highlights that if density degree increases, internal communication
becomes more effective since a few nodes are isolated; it implies also a
better expectation sharing between different stakeholders, avoiding false
expectations and promoting success.
2.3 SPI calculation
Doloi (2012) calculates a synthetic index that evaluates project social
performance starting from the importance of each stakeholder (represented by
centrality degree) and by his satisfaction ( ). Satisfaction can be evaluated with
qualitative methods (e.g.: surveys, interviews etc.) structured on the basis of
success criteria identified previously. SPI is defined as:
∑ ( )
∑ ( )
The more this index is the more project success grows: the achievement of a
good social performance means obtaining a high stakeholders’ satisfaction;
therefore, a good social performance is obtained maximising satisfaction of the
most important stakeholders (weighted for their centrality degree). This index
confirms that success is a multidimensional variable that reflects different
perceptions.
SPI has a greater utility if used in order to compare different projects, identifying
as the most successful the one with a higher SPI.
2.4 Success forecast
The model, as structured up to now, leads to an ex post evaluation of the
project success; Turner and Zolin (2012) stress that it is not very useful for project
manager to have an evaluation at the end of the project, since it prevents him to
have a proactive attitude through corrective actions. They indicate, to do this, a set
of indicators that are a proxy of success or failure of the project; in other words,
they represent way to understand if project will reach success. Authors identify two
different scales: project planning and stakeholders’ involvement (Table 5).
Table 5: Project success factor scales (Turner and Zolin, 2012)
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Input Scale Items
1. Success in Project Planning Rich Project Information The project has well-established information and
communication routines. Rich Project Information All key project information is gathered and
distributed efficiently Well-Structured and Formal Project Approach
The project has its own management plan for control which is used in an appropriate way
Well-Structured and Formal Project Approach
Project control is executed by good managerial or technical methods
Well-Structured and Formal Project Approach
Planning tools or similar aids are used in an effective way in project planning.
Clear Project Constraints The project is well described and coordinated with activities in other projects.
2. Key Participants Engaged Early Stakeholder Influence All key participants have been engaged in
producing the business plan or have had the opportunity to influence it.
Early Stakeholder Influence All participants have been given the opportunity to air their views on the project’s goal or mission.
Early Stakeholder Influence All key people engaged in the project know who has decided its terms of references.
Project planning scale measure the existence of unique and consolidated
information and communication system and the existing of a proper control system.
Stakeholders’ involvement indicates that they had a possibility to express their
opinions on the project, being involved in decision making process.
Researchers identify nine further scales to address stakeholders’ satisfaction
(Table 6).
Table 6: project managers’ perceptions of stakeholder satisfaction indicators (Turner and Zolin, 2012)
Stakeholder group Items
1. Stakeholder Satisfaction Owner Has a good relationship with the prime contractor? Owner Has good performance? Owner Has appropriate earned value? Executive Has allowed the project executive/project sponsor to profit? Contractor Has achieved stakeholder satisfaction? Contractor Has helped the senior supplier achieve their appropriate
business goals? Supplier Helps the supplier achieve their appropriate business goals? Contractor Has a good safety record?
2. Project Executive Satisfaction Executive Has achieved stakeholder satisfaction? Executive Has achieved satisfactory performance efficiency?
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Executive Has achieved satisfactory performance effectiveness? Executive Helps the project executive/project owner achieve their
appropriate business goals? Executive Has stakeholder satisfaction?
3. Product Satisfaction Customer Has a useful prototype? Operator Has a useful prototype? Operator Has good performance?
4. Product Efficiency Owner Has a useful prototype? Contractor Has achieved performance efficiency? Contractor Has managed risk appropriately? Customer Has good performance?
5. Satisfaction With Specifications Owner Has appropriate specifications? (they are satisfied with them) Customer Has appropriate specifications? (they are satisfied with them) Customer Has a good relationship with the project owner? Operator Has appropriate specifications? (they are satisfied with them)
6. Project Manager Satisfaction Project Manager Pride in your work? Project Manager Job satisfaction? Project Manager Recognition? Project Manager Skill growth? Project Manager Contacts? Project Manager High morale? Project Manager Attracts top management support?
7. Contractor Satisfaction Contractor Has achieved stakeholder satisfaction? Contractor Has achieved performance effectiveness? Contractor Has reduced waste? Supplier Has demonstrated contract compliance? Contractor Has demonstrated contract compliance?
8. Supplier Profitability Contractor Has achieved performance efficiency? Contractor Has allowed the supplier to profit? Supplier Has allowed the supplier to profit?
9. Public Stakeholder Satisfaction Public Has balanced social costs and benefits? Public Has acceptable environmental impacts?
While some elements are clear enough, some others need to be explained.
Stakeholders’ satisfaction states the achievement of the main corporate,
executive, contractors and suppliers goals.
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Executive satisfaction in the project is linked to stakeholders’ satisfaction,
general project performances, efficiency and effectiveness, achievement of
executive goals.
Project manager satisfaction regards his personal satisfaction,
acknowledgement, professional growth, contracts and top management
support
A high public stakeholders’ satisfaction means that project balanced social
Once indicators are identified, it is necessary to monitor them during project
execution using qualitative scales, similarly to ex post evaluation.
This model allows quantifying project success in two stages: success criteria
identification and synthetic indexes calculations. Furthermore, the model suggests a
framework useful to project manager in order to monitor success during project
executive stage.
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