Project ManagementCritical Success Factors

Critical factors for project success would depend upon the kind of project that is being carried out

Type II project Type IV project

WATER AIR

* Product Development * Research project * Organization development

Type I project Type III project

EARTH FIRE

* Engineering project * Application Software project* Software Development

No

No

Yes

Yes

Met

hods

Wel

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efin

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Goal Well Defined Greater Chanceof Success

Greater Chance of FailureTYPE of PROJECTS

PROJECT START-UP TECHNIQUE

- Multidisciplinary Teams - Inspiration / Negotiation- Brainstorm - Strategy Definition- No Defined Technique - Communicate

“ COACH “ “ EAGLE “

- Specialist implementer - Facilitator- Known Technique - Informal Negotiator- Defined Organization - Agree on Goals

“ CONDUCTOR “ “ SCULPTOR “

Top - downApproach

Bottom – UpApproach

Met

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Wel

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Goal Well DefinedYes No

No

Yes

Successful Project implementation ?

A project is considered to be successfully implemented if it is -

on-schedule on-budget achieves basically all the goals originally

set for it accepted and used by the client for whom the project is intended.

Critical success FactorsMissionTop Management

SupportScheduleClient ConsultationPersonnelTechnical TasksClient AcceptanceMonitoring and

FeedbackCommunicationTroubleshooting

Client Consultation

Communication, ConsultationAnd active listening to all impacted parties

Technical Task

Availability of the required technology andexpertise to accomplish the specific technical action steps

Communication

The provision of an appropriate network and necessary data to all key actors

Trouble Shooting

Ability to handle unexpected Crisis andDeviations from plan

Communications

ProjectMission

TopManagement Support

ProjectSchedulePlan

ClientConsultations

Technical Task

PersonnelRecruitmentSelection& Training

ClientAcceptance

Monitoring &Feedback

Trouble - Shooting

(Schultz and Slevin, 1984)

The Model

A study on identifying CSFs

A sample of 400 projects50-item instrument ( 5 items per

factor )Each factor found significantly

related to project successCumulative r sq. value was 0.615 (ie. 61% of the success can be

explained by these 10 CSF’s )

Strategy CSF

Tactics CSF

• MISSION• TOP MANAGEMENT• SUPPORT• SCHEDULE / PLANS

• CLIENT CONSULTATION• PERSONNEL• TECHNICAL TASKS• CLIENT ACCEPTANCE• MONITORING &

FEEDBACK• COMMUNICATION• TROUBLE SHOOTING

PLANNING ACTION

Probability of Type I and Type III

errors

High acceptance: Misuse

High probability of implementation Success

High probability of Implementation Failure

Probability of Type II and Type IV errors

Low acceptance: Low use

L H

Effectiveness of Strategy

E

ffec

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nes

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L

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Type I : Taking an action when, in fact, none should be taken

Type II : When an action should have been taken and was not taken

Type III : Solving the wrong problem

Type IV : Taking an action which solves the right problem but solution is not used

TYPES OF ERRORS

Cell 1 : High Strategy – High Tactics

Setting for these projects which have been rated highly effective in carrying out both strategy and tactics during implementation

In addition to high quality Strategic activities, these projects have also been effectively operationalized.

Cell 2 : Low Strategy – High Tactics

Initial planning is inadequately developed

Tactical operationalization is effectively managed

“ Errors of Actions “Unnecessary project is implemented

Cell 3 : Low Strategy – Low Tactics

High likelihood of Implementation

failure.

Not only is initial Strategy Low, or poorly performed, but subsequent tactics are also ineffective.

Cell 4 : High Strategy – Low Tactics

Project Strategy was effectively performed but subsequently tactics were rated ineffective.

Exhibits a strong tendency towards “Errors of Inaction”.

Low acceptance : Client consultation and selling of the project are poorly performed.

Conceptualization Planning Execution Termination

Imp

ort

ance

Strategy

Tactics

Fig.: Changes in strategy and Tactics across the project life cycle

Stages

1. Use a Multiple – Factor model2. Think strategically early in the

project life-cycle3. Think more Tactically as the project

moves forward in time4. Make strategy and tactics work for

you and your project team5. Consciously plan for and manage

your project team’s transition from strategy to tactics

Implications for Managers

R&D Project Selection at Volvo

A large MNC Automobile company◦ Turnover: 28 B USD R&D budget: 840 M

USD (3%)Has 4 Global R&D centers: Sweden,

Brazil, China and IndiaMultiple Global R&D projects (> 10,000

projects in 2002-2003)A system to select R&D projects: Global

Development Process (GDP)◦ I – Value (Innovation importance value)

The GDP ProcessGDP constitutes a framework for

project managementA development change is

initiated due to 3 main reasons:◦Market (New variants, features,

services)◦Industrial system

(quality/cost/improvement)◦Legal (New regulations related to

product)

Project Management at VolvoTwo issues that senior managers

look for◦Cross-functionality

All functions involved in the project must participate from the very beginning to ensure that their area is properly taken care of

Each area has a project manager◦Responsibility

Project Managers are responsible for QDCF (Quality, Delivery, Cost and Features)

The project “purchases” resources from the line organizations and promises benefits

Gates and decisionsEach project moves along gates

and decisions, once approvedFurther funding is based on the

recommendations of the PM by a project steering committee

Gates are checkpoints; PM confirms meeting of targets and opens next gate

The number of gates in every project depends on the project class

Project classesThree classes:

◦Class 1: Small changes, e.g. creating new variants using existing parts

◦Class 2: Modifications of existing products

◦Class 3: New product or major changes of existing products

I – ValueI-value = Innovation Importance

valueReason for development of I-

value◦A neutral/objective help for

prioritisation of Product Modification

Requests (PMRs)◦Personal/subjective preferences will

not steer those PMRs that will be

processed◦Factors used to calculate I-value will

be updated periodically; last done

1998

Goal with I-value

Early OK/Deletion gives quick and

clear answers Concentrate resources on critical PMRs

◦ More resources available within the

organisation

Reduce number of low prioritised

PMRsLowered friction in the organizationPossibility to compare PMRs from

different areas

Basis of I-value

The I-value considers◦Volume

◦Yearly Profit

◦Net Profit / Operating Profit (according to part

cost model)

◦Expected Product Life-time

◦NPV (Net Present Value)

◦Tooling Investment & Development Resources

◦ IRR

◦Quality influence of change

◦Market needs and Strategic Influence

When to use I-value?Valid for Projects up to 3.5 m USD

◦ I-value model does not have any limitations, but

projects above 3.5 m USD should be based on

strategic/intuition

I-value should not be seen as the

absolute truth; Common sense and

intuition must always be considered.Important that the I-value model is

continuously refined with mutual

experience and other inputs.

Finally, some major project disasters

Critical managerial variables: Based on a study on 110 defence projects undertaken in Israel and completed between 1981 and 1990 by Dvir et al. (1990)

Size/development duration of projects

Project sizes from less than USD 1 M to over USD 500 M.

Development duration from about one year to more than 20 years.

Type of projects (subject-wise)

25 projects: new weapon systems.44: surveillance and electronic

warfare systems.Others developed communication,

command and control systems and support equipments.

Project classification19: feasibility studies.28: improvement projects of

existing systems.Others developed entirely new

systems.27: pure hardware projects.Others included software and

hardware.33: developing sub-systems.76: developing full-scale systems.1: development of a platform.

Critical managerial variables: initiation phase of the project and pre-contract activity

Critical managerial variables:project preparation, design policy, technological infrastructure and design methods

Critical managerial variables:planning and control processes

Critical managerial variables:organizational and managerial environment