value of megaprojectsthe value of megaprojects introduction infrastructure projects in china...

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The Value of MegaprojectsThe Value of Megaprojects

Megaproject: Learning from CasesMegaproject: Learning from CasesLeeds University, 30Leeds University, 30thth November 2012November 2012

Prof Rodney TurnerProf Rodney TurnerAdjunct ProfessorAdjunct Professor

University of Technology SydneyUniversity of Technology Sydney


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PS: I am sorry the letter is so long. I didnPS: I am sorry the letter is so long. I didn’’t t have time to write a shorter one.have time to write a shorter one.

Oscar WildeOscar Wilde



IntroductionIntroductionInfrastructure projects in ChinaInfrastructure projects in China

Megaprojects in the oil and gas industryMegaprojects in the oil and gas industryLeading performance indicators on complex projectsLeading performance indicators on complex projects

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A project is A project is …………

A temporary organizationA temporary organizationto which resources are assignedto which resources are assignedto do workto do workto deliver beneficial changeto deliver beneficial change


Beneficial change Beneficial change –– project resultsproject resultsExploitationExploitation

ImplementationImplementation

ResourcesResources ProjectProject OutputsOutputs

OutcomesOutcomes

GoalsGoals

BenefitBenefit

ImprovedImprovedperformanceperformance

OperationOperation Do the right Do the right projectproject

Do the projects rightDo the projects right

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Chinese economic systemChinese economic system-- 19491949--19771977

Planned economyPlanned economyBrought China from semiBrought China from semi--feudal, semi feudal, semi colonial, war ravaged country to colonial, war ravaged country to industrialized nationindustrialized nationPublic money mainly invested for political or Public money mainly invested for political or military purposesmilitary purposes

not public goodnot public good

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Chinese economic systemChinese economic system-- 1978 to present day1978 to present day

Significant progressSignificant progressMore delegated to provincial and municipal More delegated to provincial and municipal governmentgovernmentGDP growth 10% per yearGDP growth 10% per year

fuelled by substantial investment in infrastructurefuelled by substantial investment in infrastructureGDPGDP

45% investment45% investment45% consumption45% consumption10% exports10% exports


Poor project performancePoor project performance

Project outputs cannot deliver desired Project outputs cannot deliver desired outcomesoutcomesOperating costs not consideredOperating costs not consideredFeasibility study unrealisticFeasibility study unrealisticPoor quality of outputsPoor quality of outputs

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Aims and objectivesAims and objectives

How can the public and government in China How can the public and government in China get the best results from key infrastructure get the best results from key infrastructure projects by increasing results orientation?projects by increasing results orientation?

China can realize the maximum benefit from key China can realize the maximum benefit from key projects in the public sector by increasing results projects in the public sector by increasing results orientation and performanceorientation and performancea clear definition of the project organization, with a clear definition of the project organization, with the assignment of responsibility to project the assignment of responsibility to project sponsors and owners, can improve the benefits sponsors and owners, can improve the benefits from key projectsfrom key projects


MW Kellogg Logic modelMW Kellogg Logic model

Resources/Inputs Activities Outputs Outcomes Impacts

Planned Work Intended Results

1 42 3 5

Traditional M & E

Results-oriented M & E

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ResultsResults--based M&E on Projectsbased M&E on ProjectsExploitationExploitation



OutcomesOutcomes

GoalsGoals

BenefitBenefit


OperationOperation Do the right Do the right projectproject

Do the projects rightDo the projects right


The project lifeThe project life--cyclecycle

ConceptConcept

FeasibilityFeasibility

DesignDesign

CloseClose--outout

ExploitationExploitation

ExecutionExecution


OutcomesOutcomes

GoalsGoals

BenefitBenefit


OperationOperation

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Principles of good governance in the Principles of good governance in the public sectorpublic sector

IntegrityIntegrityact impartially, ethically and in the best interests act impartially, ethically and in the best interests of the publicof the publicdo not misuse informationdo not misuse information

StewardshipStewardshipenhance value of public assetsenhance value of public assets

LeadershipLeadershipgood governance through leadershipgood governance through leadership

EfficiencyEfficiencyoptimal use of resourcesoptimal use of resources


Principles of good governance in the Principles of good governance in the public sectorpublic sector

AccountabilityAccountabilityanswerable for decisionsanswerable for decisionsadhere to standardsadhere to standards

Transparency, opennessTransparency, opennessclear roles and responsibilitiesclear roles and responsibilitiesclear procedures for exercising powerclear procedures for exercising power

Rule of lawRule of lawabide by the rules of societyabide by the rules of societycontracts, propertycontracts, propertypolice and courtspolice and courts

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ResultsResults--based M&E in the public sectorbased M&E in the public sector


OGC project organization structureOGC project organization structure

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PropositionsPropositions

P1: Strategy and objectivesP1: Strategy and objectivesalign project strategy to government strategyalign project strategy to government strategyclear definition of needs and project objectivesclear definition of needs and project objectiveseffective starteffective start--upupportfolio and program managementportfolio and program management

P2: Conceptual planning and designP2: Conceptual planning and designquality of conceptual planningquality of conceptual planningdefinition of project resultsdefinition of project resultsrelationship between results helps align outputs to userelationship between results helps align outputs to usehelps define O&M requirementshelps define O&M requirements

P3: ImplementationP3: Implementationaim for the best resultsaim for the best resultspoor output guarantees poor resultspoor output guarantees poor results


Propositions (cont)Propositions (cont)

P4: Project transfer, operation and maintenanceP4: Project transfer, operation and maintenancetransfer output and adapt outcome based on transfer output and adapt outcome based on experience of O&Mexperience of O&M

P5: Project organization and ownershipP5: Project organization and ownershipclear ownership of results (at all levels) improves clear ownership of results (at all levels) improves performanceperformancefacilitate coordination between government facilitate coordination between government departmentsdepartments

P6: Transparency and participationP6: Transparency and participationinterest and involvement of owners and managers interest and involvement of owners and managers responsible for O&M during delivery improves responsible for O&M during delivery improves performanceperformance

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Water treatment plants in ChinaWater treatment plants in China

Project

Ministry ofHealth

Owner

Sponsor

Manager

LocalGovernment Operator

Finance

Ministry ofFinance

Ministry ofWorks

Ministry ofWater

FormalCommunication

RequiredCommunication


Propositions (cont)Propositions (cont)

P7: Monitoring and evaluationP7: Monitoring and evaluationresultsresults--based M&E improves successbased M&E improves successdistribute critical reports to responsible partiesdistribute critical reports to responsible parties

P8: Law, regulation and processP8: Law, regulation and processpolitical consensus improves public projectspolitical consensus improves public projectsprofessional project management helpsprofessional project management helps

P9: China contextP9: China contextcoordinate results with contextcoordinate results with contextapply good governanceapply good governance

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Nine case study projectsNine case study projects

In designIn designEnergyEnergyGuanxiGuanxi LongtanLongtanHydroelectric Power StationHydroelectric Power Station

In constructionIn constructionTransportationTransportationJiangsuJiangsu SutongSutong Yangtze Yangtze River Highway BridgeRiver Highway Bridge

In constructionIn constructionSocial welfareSocial welfareDisabled Occupation and Disabled Occupation and Skill Sports Training CentreSkill Sports Training Centre

In constructionIn constructionPublic HealthPublic HealthBeijing Beijing YouanYouan HospitalHospital

Operation 1 yearsOperation 1 yearsWater ManagementWater ManagementSichuan Sichuan ZipingpuZipingpu Water Water ConservationConservation

Operation 1 yearsOperation 1 yearsCity infrastructureCity infrastructureLuanhuachiLuanhuachi XiluXilu RoadsRoads

Operation 1 yearsOperation 1 yearsCultureCultureCapital MuseumCapital Museum

Operation 3 yearsOperation 3 yearsUrban environmentUrban environmentYuannanYuannan EnvironmentEnvironment

Operation 3 yearsOperation 3 yearsTransportationTransportationHebeiHebei RoadsRoads

StageStageSectorSectorProjectProject


Data collectionData collection

Access to project documents and project archival Access to project documents and project archival recordrecordInterviews with the project owner, implementation Interviews with the project owner, implementation agency and operators and usersagency and operators and usersSite visitsSite visitsParticipation in and observation of project meetings, Participation in and observation of project meetings, including progress meetings and post project reviewincluding progress meetings and post project reviewWorkshopsWorkshopsWork groups with the KPIOWork groups with the KPIOOther sources such as World Bank and Asian Other sources such as World Bank and Asian Development Bank specialistsDevelopment Bank specialists

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ResultsResults

Good fit brings valueGood fit brings valueStrongStrongChina contextChina contextP9P9

Safety importantSafety importantMediumMediumLaw, regulation and processLaw, regulation and processP8P8

Reduce postReduce post--implementation justificationimplementation justification

MediumMediumMonitoring and evaluationMonitoring and evaluationP7P7

Problems with people in Problems with people in different departmentsdifferent departments

StrongStrongTransparency and participationTransparency and participationP6P6

Ownership importantOwnership importantStrongStrongProject organization and ownershipProject organization and ownershipP5P5

Due to lack of experienceDue to lack of experienceWeakWeakProject transfer, O&MProject transfer, O&MP4P4

Late changes difficultLate changes difficultMediumMediumImplementationImplementationP3P3

HebeiHebei roads design changedroads design changedStrongStrongConceptual planning and designConceptual planning and designP2P2

Fit multiFit multi--year strategyyear strategyStrongStrongStrategy and objectivesStrategy and objectivesP1P1

CommentCommentSupportSupportPropositionPropositionNoNo


ResultsResults--based M&E important through based M&E important through the whole lifethe whole life--cyclecycle

FeasibilityFeasibilityalign project with strategyalign project with strategyset clear objectivesset clear objectives

DesignDesignimproved by good conceptual planningimproved by good conceptual planningset logical relationship of resultsset logical relationship of results

ExecutionExecutiona good output is a necessary condition for successa good output is a necessary condition for success

OperationOperationadapt outcomes based on experienceadapt outcomes based on experiencegood maintenance and changes ensure fitness for purposegood maintenance and changes ensure fitness for purpose

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Responsibility and ownershipResponsibility and ownership

Project organization and individual responsibilityProject organization and individual responsibilityclear ownership improves results orientationclear ownership improves results orientationthrough the governance structurethrough the governance structure

Transparency and participationTransparency and participationinterest of the owner in O&Minterest of the owner in O&Mclear information enables parties to accept ownershipclear information enables parties to accept ownership

Monitoring and evaluationMonitoring and evaluationresultsresults--based M&E improves performancebased M&E improves performancecritical reports distributed to key partiescritical reports distributed to key parties

Law, regulation and processLaw, regulation and processenforcement of law and political consensus necessaryenforcement of law and political consensus necessaryuseful that professional project management applieduseful that professional project management applied





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Influence managers of megaInfluence managers of mega--projectsprojects

The ability of managers to influence strategy is a The ability of managers to influence strategy is a function of the amount of resource they control not function of the amount of resource they control not their senioritytheir seniorityThe managers of megaThe managers of mega--projects control between $0.5projects control between $0.5--$20 billion.$20 billion.Decisions underpin the allocation of resources and Decisions underpin the allocation of resources and the cost of poor decisions is high.the cost of poor decisions is high.Information is a key input to decision processes.Information is a key input to decision processes.A challenge of megaprojects is inadequate, unreliable A challenge of megaprojects is inadequate, unreliable or misleading information; and conflicts between or misleading information; and conflicts between decision making, policy and planning.decision making, policy and planning.


Research questionsResearch questions

Which aspects of informationWhich aspects of information--feed factors feed factors supporting project managerssupporting project managers’’ decision impact decision impact strategic objectives the most?strategic objectives the most?How can the decision framework of the How can the decision framework of the managers of megaprojects be enhanced?managers of megaprojects be enhanced?

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IDENTIFYIDENTIFY

InitiationInitiation

ASSESSASSESS

EvaluationEvaluation

OPERATIONOPERATION

Operation &Operation &MaintenanceMaintenance

EXECUTIONEXECUTION

Detail designDetail designconstructconstruct

commissioncommission

DEFINEDEFINE

TechnicalTechnicalSpecifcationSpecifcation

SELECTSELECT

GenerateGenerate& Select& SelectConceptConcept

11 22 33 44

11 Decision gate go/no go/go backDecision gate go/no go/go back

FramedFramedopportunityopportunity

FeasibilityFeasibilityreportreport

ConceptConceptselectionselection

basis forbasis fordesigndesign New assetNew asset

StageStagedeliverabledeliverable

FrontFront--end Engineeringend Engineering ExecutionExecution

Influence of project managersInfluence of project managers


Focus of megaFocus of mega--project managersproject managers

Megaprojects are complex:Megaprojects are complex:long project and product lifelong project and product life--cyclescyclesunpredictable in terms of time and scopeunpredictable in terms of time and scopesubstantial irreversible commitmentssubstantial irreversible commitmentshigh probabilities of failurehigh probabilities of failureskewed reward structure skewed reward structure

The focus of managers of megaprojects The focus of managers of megaprojects should be on strategic objectives and business should be on strategic objectives and business benefit not project efficiency.benefit not project efficiency.

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ResultsResults--based viewbased viewExploitationExploitation



OutcomesOutcomes

GoalsGoals

BenefitBenefit


OperationOperation


Shenhar and Dvir (2007)Shenhar and Dvir (2007)

EfficiencyEfficiency(end)(end)TimeTimeCostCostYieldYield

functionalityfunctionalityperformanceperformance

OthersOthers

TeamTeam(end)(end)SatisfactionSatisfactionMoraleMoraleLearningLearningGrowthGrowthRetentionRetentionWellWell--beingbeing

CustomerCustomer(+months)(+months)RequirementsRequirementsSpecificationSpecificationBenefitBenefitUseUseARMARMSatisfactionSatisfactionLoyaltyLoyaltyBrandBrand

BusinessBusiness(+years)(+years)SalesSalesProfitsProfitsMarket shareMarket shareROIROICashCashCycle timeCycle timeOrganizationOrganizationRegulatory Regulatory acceptanceacceptance

FutureFuture (Learning)(Learning)(+years)(+years)NewNew

technologytechnologymarketmarketproduct lineproduct linecompetencecompetencecapabilitycapability

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Challenges of megaprojectsChallenges of megaprojects

Numerous stakeholdersNumerous stakeholdershigh sociohigh socio--economic and political interesteconomic and political interest

High time and cost pressureHigh time and cost pressurecan impair decisionscan impair decisionsproject efficiency versus business effectivenessproject efficiency versus business effectiveness

Decisions influenceDecisions influenceteam performanceteam performancesenior management perceptionsenior management perception


Strategic value in the Oil and Gas Strategic value in the Oil and Gas IndustryIndustry

Admiration of key stakeholdersAdmiration of key stakeholdersHealth, safety, security and environmental Health, safety, security and environmental responsibility (HSSE)responsibility (HSSE)Significant socioSignificant socio--economic contribution to the economic contribution to the societysocietyProfitability of the businessProfitability of the business

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Normative decision approachNormative decision approach

People make decisions to maximize utility People make decisions to maximize utility based on selfbased on self--interest and rationalityinterest and rationality

restricts ability to respond to uncertaintyrestricts ability to respond to uncertaintyoil and gas industry dominated by technical oil and gas industry dominated by technical people who adopt a normative approachpeople who adopt a normative approach


Descriptive decision approachDescriptive decision approach

People make decisions to satisfy their People make decisions to satisfy their important needs important needs

even if they do not have all the required even if they do not have all the required informationinformationtheir choice is not optimal their choice is not optimal

Faced with uncertainty people simplifyFaced with uncertainty people simplifyrules of thumb/heuristicsrules of thumb/heuristicsbounded rationality/satisfyingbounded rationality/satisfyingprospect theoryprospect theory

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Prospect theoryProspect theory

Decision making under riskDecision making under riskFramingFraming

analysis of prospectsanalysis of prospectssimplification of riskssimplification of risks

ValuationValuationassess value of prospectsassess value of prospectsopportunityopportunity--threat/gainthreat/gain--lossloss

During framing information feed has a big impactDuring framing information feed has a big impactuntimely information is degradeduntimely information is degraded

DecisionDecision--makers who use more informationmakers who use more informationare more comfortable with ambiguity and uncertaintyare more comfortable with ambiguity and uncertaintyare more positive with labelling their challengesare more positive with labelling their challenges


InformationInformation--feedfeed LongLong--termtermstrategic valuestrategic value

PMPM’’s perceptions perceptionof controllabilityof controllability

H2H2

H1H1

••PMPM’’s perceptions perceptionof needs of seniorof needs of senior

managementmanagement••PMPM’’s professionals professional

experienceexperience

H3H3

Research modelResearch model

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VariablesVariables

Information feedInformation feedinformation on stakeholdersinformation on stakeholdersproject performanceproject performancecorporate performancecorporate performanceinformation timelinessinformation timeliness

Strategic valueStrategic valuevalue to partnersvalue to partnersHSSE complianceHSSE complianceprofitabilityprofitabilityvalue to host communityvalue to host community


Variables Variables -- ControllabilityControllability

10 areas of challenge on megaprojects10 areas of challenge on megaprojects1.1. Contracting and procurement management; Contracting and procurement management; 2.2. Government relations Government relations 3.3. Host community relation Host community relation 4.4. Joint venture interfaces Joint venture interfaces 5.5. Health, safety, security, and environmental (HSSE)Health, safety, security, and environmental (HSSE)6.6. MultiMulti--location of fabrication and facilities location of fabrication and facilities

integrationintegration7.7. Implementation of local content policiesImplementation of local content policies8.8. Project governance;Project governance;9.9. Aspirations of the core project team Aspirations of the core project team 10.10. MultiMulti--cultural leadershipcultural leadership

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Variables Variables -- contextcontext

PMsPMs perception of senior management perception of senior management driversdrivers

costcostscheduleschedulestakeholdersstakeholderssafetysafetyeconomicseconomics…………

PMsPMs experience (tenure)experience (tenure)


SurveySurvey

107 total responses107 total responses8 not from the Oil and Gas Industry8 not from the Oil and Gas Industry30 did not complete the questionnaire30 did not complete the questionnaire

69 useable responses69 useable responses11 responses per variable11 responses per variable

5 pilot responses also not used5 pilot responses also not used

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Information feed and strategyInformation feed and strategy

1 = p<0.11 = p<0.12 = p<0.052 = p<0.05

3 = p<0.013 = p<0.014 = p<0.0014 = p<0.001


Hypothesis 1Hypothesis 1

Hypothesis 1 is supported with respect to Hypothesis 1 is supported with respect to stakeholder pulsestakeholder pulseproject performance project performance

Hypothesis 1 is not supported with respect toHypothesis 1 is not supported with respect tocorporate performancecorporate performancetimeliness timeliness

Strong interaction of megaStrong interaction of mega--projects on societyprojects on societycontext analysis is very important to successful context analysis is very important to successful strategic management in business organizationsstrategic management in business organizations

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Controllability and information feedControllability and information feed

1 = p<0.11 = p<0.12 = p<0.052 = p<0.05

3 = p<0.013 = p<0.014 = p<0.0014 = p<0.001


Scores for controllabilityScores for controllability

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Hypothesis 2 supportedHypothesis 2 supportedAll means (except team cohesion) less than 3All means (except team cohesion) less than 3

PMsPMs of megaof mega--projects feel exposed to risksprojects feel exposed to risks3 risk factors are external to the project team3 risk factors are external to the project team

quality of relationships with context is a major quality of relationships with context is a major success factor on large projectssuccess factor on large projects


Influence of contextInfluence of context

P = Pure moderatorP = Pure moderatorQ = Quasi moderatorQ = Quasi moderator

PO = Profitable operationsPO = Profitable operationsSS = Stakeholder supportSS = Stakeholder supportPS = Project schedulePS = Project schedule

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Hypothesis 3 Hypothesis 3 isis supported for some senior supported for some senior management driversmanagement driversHypothesis 3 is not supported for PM tenureHypothesis 3 is not supported for PM tenure


ConclusionConclusion

Poor knowledge of the external environment has a Poor knowledge of the external environment has a significant impact on poor performance of megasignificant impact on poor performance of mega--projectsprojectsRisk mitigation on megaRisk mitigation on mega--projects significantly projects significantly influences information feedinfluences information feed

a superior risk management system enhances the a superior risk management system enhances the PMsPMs sense sense of controlof control

The significance project managers attach to HSSE as a The significance project managers attach to HSSE as a core value is indicative of a fear of losscore value is indicative of a fear of loss

they have greater fear of defaulting on cost and schedule they have greater fear of defaulting on cost and schedule than on HSSE. than on HSSE.

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Early Warning System for Success Early Warning System for Success and Failure in Complex Projectsand Failure in Complex Projects

Associate Professor Roxanne ZolinQueensland University of TechnologyProfessor Rodney Turner, SKEMA Business SchoolDr. Kaye Remington, Research Fellow, University of Technology SydneyDr. Artemis Chang, Senior Lecturer,Queensland University of Technology

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Increasing complexity of projectsIncreasing complexity of projects

Projects finished late and overspent are later Projects finished late and overspent are later perceived to be a successperceived to be a success

Sydney Opera House, Thames BarrierSydney Opera House, Thames BarrierOthers finished on time and on budget are Others finished on time and on budget are later perceived to have failedlater perceived to have failed

Sydney Cross City TunnelSydney Cross City TunnelPPP project where the private sector investors lost their PPP project where the private sector investors lost their moneymoneybecause motorists were not willing to pay the toll and because motorists were not willing to pay the toll and use the tunneluse the tunnel


Our research projectOur research project

The aim was to identify leading performance The aim was to identify leading performance indicators as early warning systemsindicators as early warning systems

modelling successmodelling successassessing complexityassessing complexity

dimensionsdimensionsseverity of the dimensionsseverity of the dimensions

impact of dimensions of complexity of complexity impact of dimensions of complexity of complexity on successon success

In this paper we describe the modelling of In this paper we describe the modelling of successsuccess

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Leading performance indicators may Leading performance indicators may be be …………

Measures of success criteria that show the Measures of success criteria that show the projects is heading to a successful conclusionprojects is heading to a successful conclusionMeasures of success (or failure factors) that Measures of success (or failure factors) that show the project is going off the railsshow the project is going off the rails

may interact with each othermay interact with each othermay interact with dimensions of complexitymay interact with dimensions of complexity

Be perceived differently by differently Be perceived differently by differently stakeholdersstakeholdersBe perceived differently over different Be perceived differently over different timescalestimescales


Research questionsResearch questions

How can we assess the success of large complex How can we assess the success of large complex projectsprojects

multiple stakeholdersmultiple stakeholdersmultiple time framesmultiple time framesduring the life of the projectduring the life of the projectto predict the performance of the product it producesto predict the performance of the product it produces

What leading performance indicatorsWhat leading performance indicatorsmeasured during project deliverymeasured during project deliveryprovide a valid and reliable forecast of the assessment of all provide a valid and reliable forecast of the assessment of all the stakeholders during the productthe stakeholders during the product’’s lifes life

Can the leading performance indicators be used as Can the leading performance indicators be used as early warning systemsearly warning systems

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Stages of the researchStages of the research

1.1. Develop a model of project success reflecting the assessment Develop a model of project success reflecting the assessment of the projectof the project’’s output,. outcome and impact by different s output,. outcome and impact by different stakeholders over different timescalesstakeholders over different timescales

2.2. Evaluate the ability of success and failure factors as perceivedEvaluate the ability of success and failure factors as perceivedby the project team to act as leading performance indicators by the project team to act as leading performance indicators during project deliveryduring project delivery

3.3. Evaluate the ability of those leading performance indictors to Evaluate the ability of those leading performance indictors to predict the achievement of the projects output, outcome and predict the achievement of the projects output, outcome and impact as perceived by different stakeholders over different impact as perceived by different stakeholders over different timescalestimescales

4.4. Identify combinations of the leading performance indicators in Identify combinations of the leading performance indicators in the context of different combinations of complexity that are the context of different combinations of complexity that are more likely to be precursors of project failuremore likely to be precursors of project failure

1.1. Develop a model of project success reflecting the assessment Develop a model of project success reflecting the assessment of the projectof the project’’s output,. outcome and impact by different s output,. outcome and impact by different stakeholders over different timescalesstakeholders over different timescales

2.2. Evaluate the ability of success and failure factors as perceivedEvaluate the ability of success and failure factors as perceivedby the project team to act as leading performance indicators by the project team to act as leading performance indicators during project deliveryduring project delivery

3.3. Evaluate the ability of those leading performance indictors to Evaluate the ability of those leading performance indictors to predict the achievement of the projects output, outcome and predict the achievement of the projects output, outcome and impact as perceived by different stakeholders over different impact as perceived by different stakeholders over different timescalestimescales

4.4. Identify combinations of the leading performance indicators in Identify combinations of the leading performance indicators in the context of different combinations of complexity that are the context of different combinations of complexity that are more likely to be precursors of project failuremore likely to be precursors of project failure


Turner (2009, 1Turner (2009, 1stst ed 1993) ed 1993)

MeasureMeasure StakeholderStakeholder TimescaleTimescaleShareholder valueShareholder value ShareholdersShareholders End+yearsEnd+yearsProfitableProfitable BoardBoard End+yearsEnd+yearsHappy sponsorHappy sponsor BoardBoard End+yearsEnd+yearsHappy consumersHappy consumers ConsumersConsumers End+monthsEnd+monthsEasy to operateEasy to operate UsersUsers End+monthsEnd+monthsEasy to sellEasy to sell MarketingMarketing End+monthsEnd+monthsTime, cost, qualityTime, cost, quality AllAll EndEndHappy project teamHappy project team Project teamProject team EndEndProfitable for contractorProfitable for contractor Project teamProject team EndEnd

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Shenhar and DvirShenhar and Dvir

EfficiencyEfficiency(end)(end)TimeTimeCostCostYieldYield

functionalityfunctionalityperformanceperformance

OthersOthers

TeamTeam(end)(end)SatisfactionSatisfactionMoraleMoraleLearningLearningGrowthGrowthRetentionRetentionWellWell--beingbeing

CustomerCustomer(+months)(+months)RequirementsRequirementsSpecificationSpecificationBenefitBenefitUseUseARMARMSatisfactionSatisfactionLoyaltyLoyaltyBrandBrand

BusinessBusiness(+years)(+years)SalesSalesProfitsProfitsMarket shareMarket shareROIROICashCashCycle timeCycle timeOrganizationOrganizationRegulatory Regulatory acceptanceacceptance

FutureFuture (Learning)(Learning)(+years)(+years)NewNew

technologytechnologymarketmarketproduct lineproduct linecompetencecompetencecapabilitycapability


XueXue YanYan (2010) (2010) ––sponsored by the Asian Development Banksponsored by the Asian Development Bank

ExploitationExploitation



OutcomesOutcomes

GoalsGoals

BenefitBenefit


OperationOperation

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Multiple views, multiple stakeholders, Multiple views, multiple stakeholders, multiple timemultiple time--framesframes

StakeholdersStakeholdersInvestorInvestor

ConsumerConsumer

OperatorsOperators

SponsorSponsor

Manager/teamManager/team

Senior supplierSenior supplier

SuppliersSuppliers

PublicPublic

OutputOutput -- endendEfficiencyEfficiency

Price, timePrice, timeFeaturesFeaturesDocumentationDocumentationTrainingTrainingEfficiencyEfficiencyRisk, safetyRisk, safetyEfficiencyEfficiencyExperienceExperienceEfficiencyEfficiencyProfitProfitProfitProfitClient satisfactionClient satisfactionEnvironmentEnvironment

OutcomeOutcome -- +months+monthsProfitProfitReputationReputationPricePriceBenefitBenefitOperabilityOperabilityARMARMRelationshipsRelationshipsInvestor loyaltyInvestor loyaltyReputationReputationRepeat businessRepeat businessReputationReputationRepeat businessRepeat businessReputationReputationRepeat businessRepeat businessEnvironmentEnvironmentSocial cost/benefitSocial cost/benefit

ImpactImpact -- +years+yearsWhole life valueWhole life valueLearningLearningAdvantageAdvantageDevelopmentDevelopmentOperability, ARMOperability, ARMLearningLearningNew projectsNew projectsLearningLearningNew projectsNew projectsLearningLearningNew projectsNew projectsLearningLearningNew projectsNew projectsLearningLearningEnvironmentEnvironmentSocial cost/benefitSocial cost/benefit


Evaluating and predicting successEvaluating and predicting success

Success can only be evaluated in the days months Success can only be evaluated in the days months and years following the projectand years following the project

different stakeholdersdifferent stakeholdersdifferent timescalesdifferent timescales

The aim is to develop leading performance indicators The aim is to develop leading performance indicators that predict the likelihood of achieving later that predict the likelihood of achieving later assessments of successassessments of success

monitor and adjust the performance of the project team, monitor and adjust the performance of the project team, contractors and subcontractors and sub--contractorscontractorsidentify as soon as possible that the project cannot be identify as soon as possible that the project cannot be achieved within the resources the stakeholders are willing to achieved within the resources the stakeholders are willing to commitcommitand cancel the project if necessaryand cancel the project if necessary

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Possible success factors and leading Possible success factors and leading performance indicators (LPI)performance indicators (LPI)

StakeholdersStakeholdersInvestorInvestor

ConsumerConsumer

OperatorsOperators

SponsorSponsor

Manager/teamManager/team

Senior supplierSenior supplier

SuppliersSuppliers

PublicPublic

Success factorsSuccess factorsClear accepted purposeClear accepted purposeEndorsement, interestEndorsement, interestClear specificationClear specificationCommunication, acceptanceCommunication, acceptanceClear specificationClear specificationCommitment, communicationCommitment, communicationOpen communicationOpen communicationPolitical supportPolitical supportClear accepted purpose Clear accepted purpose Respect, trust, risk awarenessRespect, trust, risk awarenessRisk awareness, communicationRisk awareness, communicationRespect, trustRespect, trustCommitment, communicationCommitment, communicationRespect, trust, collaborationRespect, trust, collaborationTransparency, accountabilityTransparency, accountabilityCommunity outreachCommunity outreach

LPILPISatisfaction with specificationSatisfaction with specificationRelationship with contractorRelationship with contractorSatisfaction with specificationSatisfaction with specificationRelationship with sponsorRelationship with sponsorSatisfaction with specificationSatisfaction with specificationPrototype performancePrototype performanceStakeholder satisfactionStakeholder satisfactionClear strategic goalsClear strategic goalsPride, satisfaction, growthPride, satisfaction, growthTop management supportTop management supportRisk, HSE, stakeholdersRisk, HSE, stakeholdersContract, strategic goals, learningContract, strategic goals, learningContract complianceContract complianceBusiness goalsBusiness goalsSocial impactsSocial impactsEnvironmental impactsEnvironmental impacts


Based on the work of Based on the work of …………

Jacobson and Jacobson and ChoiChoi, 2008, 2008Andersen et al, 2006Andersen et al, 2006Kang and Moe, 2008Kang and Moe, 2008MMüüller, 2003ller, 2003Pinto and Pinto and SlevinSlevin, 1988, 1988MMüüller & Turner, 2007ller & Turner, 2007

Turner, 2009Turner, 2009Yu et al, 2005Yu et al, 2005Atkinson, 1999Atkinson, 1999BrydeBryde, 2005, 2005Turner et al, 2008Turner et al, 2008

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Scale development processScale development process

DeVellisDeVellis (2003) eight step guidelines for scale (2003) eight step guidelines for scale developmentdevelopment


Pilot StudyPilot Study

Ascertain reliability and appropriateness of Ascertain reliability and appropriateness of survey questionssurvey questions8 DMO project managers or program 8 DMO project managers or program directorsdirectors

by telephoneby telephoneRevised questionnaireRevised questionnaire

final check by senior DMO stafffinal check by senior DMO staff

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Main studyMain study

ZoomerangZoomerangProject managers and program directors Project managers and program directors from DMOfrom DMO

237 invited to participate237 invited to participate152 responses152 responses64% response rate64% response rate50 air projects50 air projects31 land projects31 land projects31 sea projects31 sea projects40 joint responses40 joint responses


Factor analysisFactor analysis

Ascertain construct validity and reliabilityAscertain construct validity and reliabilitydrop from scale questions whichdrop from scale questions which

detract from detract from ChronbackChronback’’ss alphaalphado not load optimally on scaledo not load optimally on scale’’s s factorfactor

Rotated Rotated VarimaxVarimaxeigeneigen values greater than 1values greater than 1converged in 11 iterationsconverged in 11 iterationsrepeated repeated ChronbachChronbach’’ss alpha testalpha test

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ResultsResults

Two project success factor scalesTwo project success factor scales1.1. success in planningsuccess in planning2.2. stakeholder engagementstakeholder engagement

Seven stakeholder satisfaction scalesSeven stakeholder satisfaction scales1.1. stakeholder satisfactionstakeholder satisfaction2.2. supplier profitabilitysupplier profitability3.3. contractor satisfactioncontractor satisfaction4.4. product efficiencyproduct efficiency5.5. project executive satisfactionproject executive satisfaction6.6. satisfaction with specificationssatisfaction with specifications7.7. public stakeholder satisfactionpublic stakeholder satisfaction


P1: Success in planningP1: Success in planning

Well established information and Well established information and communication routinescommunication routinesKey information gathered and distributed Key information gathered and distributed efficientlyefficientlyProject control follows good managerial and Project control follows good managerial and technical methodstechnical methodsProject tools used in an effective wayProject tools used in an effective wayProject is well described and well coordinated Project is well described and well coordinated with other projects and programswith other projects and programs

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P2: Stakeholder engagementP2: Stakeholder engagement

Key participants engaged in producing the Key participants engaged in producing the business plan and could influence itbusiness plan and could influence itKey participants given the opportunity to air Key participants given the opportunity to air their views on the projecttheir views on the project’’s goal and missions goal and missionKey participants know who has decided the Key participants know who has decided the project's terms of referenceproject's terms of reference


S1: Stakeholder satisfactionS1: Stakeholder satisfaction

Good relationship with prime contractorGood relationship with prime contractorGood performanceGood performanceAppropriate earned valueAppropriate earned valueProject executive or sponsor profitsProject executive or sponsor profitsAchieved stakeholder satisfactionAchieved stakeholder satisfactionSenior supplier achieves appropriate business goalsSenior supplier achieves appropriate business goalsOther supplier achieves appropriate business goalsOther supplier achieves appropriate business goalsGood safety recordGood safety record

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S2: Product satisfactionS2: Product satisfaction

Useful prototypeUseful prototypeGood performanceGood performance


S3: Contractor satisfactionS3: Contractor satisfaction

Achieved stakeholder satisfactionAchieved stakeholder satisfactionAchieved performance effectivenessAchieved performance effectivenessReduced wasteReduced wasteDemonstrated contract complianceDemonstrated contract compliance

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S4: Product efficiencyS4: Product efficiency

Useful prototypeUseful prototypeAchieved performance efficiencyAchieved performance efficiencyManaged risk appropriatelyManaged risk appropriatelyGood performanceGood performance


S5: Project executive satisfaction S5: Project executive satisfaction

Achieved stakeholder satisfactionAchieved stakeholder satisfactionAchieved performance efficiencyAchieved performance efficiencyAchieved performance effectivenessAchieved performance effectivenessHelps executive achieve their goalsHelps executive achieve their goalsHas stakeholder satisfactionHas stakeholder satisfaction

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S6: Satisfaction with specificationsS6: Satisfaction with specifications

Appropriate specificationsAppropriate specificationsGood relationship with the project ownerGood relationship with the project owner


S7: Public stakeholder satisfactionS7: Public stakeholder satisfaction

Balanced social costs and benefitsBalanced social costs and benefitsAcceptable environmental impactsAcceptable environmental impacts

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S8: Supplier profitabilityS8: Supplier profitability

Achieved performance efficiencyAchieved performance efficiencyAllowed supplier to profitAllowed supplier to profit


S9: Project manager satisfactionS9: Project manager satisfaction

Pride in workPride in workJob satisfactionJob satisfactionRecognitionRecognitionSkilSkil growthgrowthContactsContactsHigh moraleHigh moraleAttracts top management supportAttracts top management support

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Performance indictorsPerformance indictors

1.1. Clear specificationClear specification2.2. Clear purposeClear purpose3.3. Accepted purposeAccepted purpose4.4. Appropriate L1 planAppropriate L1 plan5.5. Appropriate planAppropriate plan6.6. Open communicationOpen communication7.7. Stakeholder endorsementStakeholder endorsement8.8. Interested ownersInterested owners9.9. Appropriate specificationAppropriate specification10.10. Effective communicationEffective communication

11.11. Efficient decision makingEfficient decision making12.12. Contractor relationshipContractor relationship13.13. Useful prototypeUseful prototype14.14. Good performanceGood performance15.15. Met earned value targetsMet earned value targets16.16. Right execution costsRight execution costs17.17. Environmental standardsEnvironmental standards18.18. Met safety standardsMet safety standards19.19. Relationship with ownerRelationship with owner20.20. Consistent safety recordConsistent safety record


KippendorffKippendorff’’ss alphaalpha

0.7000.700--0.7990.7990.8000.800--0.8990.8990.9000.900--1.0001.000

Appropriate for exploratory studiesAppropriate for exploratory studiesMostly acceptableMostly acceptableNearly always acceptableNearly always acceptable

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Alignment of the project managers Alignment of the project managers views with views with …………

The ownerThe ownergood performance (good performance (αα=.7367 =.7367 -- low)low)environmental standards (environmental standards (αα=.8255 =.8255 –– medium)medium)safety standards (safety standards (αα=.7301 =.7301 -- low)low)

The consumerThe consumerconsumersconsumers’’ acceptance (acceptance (αα=.7258 =.7258 –– low))low))

The project executivesThe project executivesgood risk awareness (good risk awareness (αα=.7070 =.7070 -- low)low)managed risk (managed risk (αα=.8648 =.8648 -- medium)medium)consistent safety record (consistent safety record (αα=.7576 =.7576 -- low) low)


Alignment of the project managers Alignment of the project managers views with views with …………

The lead/prime contractorThe lead/prime contractorlead contractor made a profit (lead contractor made a profit (αα=.8355 =.8355 -- medium)medium)

Other contractorsOther contractorsgood relationship with prime contractor (good relationship with prime contractor (αα=.8673 =.8673 --medium)medium)clear specification (clear specification (αα=.8157 =.8157 -- medium)medium)trusted (trusted (αα=.7282 =.7282 -- low)low)

Operators/usersOperators/usersnothingnothing

PublicPublicnothingnothing

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What a sorry tale!!!What a sorry tale!!!

Interest is in more what is missing than what Interest is in more what is missing than what is thereis there


ThatThat’’s All Folkss All Folks

[email protected]@[email protected]@skema.edu

value of megaprojectsthe value of megaprojects introduction infrastructure projects in china...

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