Week02 slides spring_2013
- 1. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 1 MGT610 Lecture 2 The Impact of Project Risks and Uncertainties
- 2. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 2 Module Topics and Objectives The role of project plans and changes – Importance of quality of project planning. – Recognize that plan changes and goal changes are different. – Analyze the impact of plan and goal changes on project value. – Analyze the impact of contextual factors on plan and goal changes.
- 3. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013 Value PM: Core Conflict in Maximization Paradigm Maximize Project Value PrerequisiteRequirementObjective The management core problem: – Management of change: Opportunity discovery and exploitation. Exploit Opportunities Not Exploit Opportunities Initial Requirements Met Stakeholder Expectations Met PM’s Value Mindset 3
- 4. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013 Plans are Nothing, Changing Plans is Everything The Impact of Changes on Project Success For academic use only. 4
- 5. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 5 Conceptual Framework of Project Planning and Changing Efficiency Customer Satisfct. Goal Changes Plan Changes Quality of Planning Context + + + + + + - - - - - - + Hypothesized Relations between the Planning Variables and Success
- 6. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 6 Conceptual Framework – Variable Definitions – Plan changes: frequency – Goal changes: importance and frequency – Planning quality: work breakdown, resource allocation, scheduling, budget – Success: efficiency, customer satisfaction – Context • Technical Risks: demanding • Importance: usefulness, importance for organization • Experience: similar project • Manpower: personnel losses or transfer • Parallel Projects: undertaken at the same time • Breakthrough: technological
- 7. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 7 Conceptual Framework – Variable Measurements Scale Measures Efficiency (Alpha:0.86) 1. The project had come in on schedule 2. The project had come in on budget Customer satisfaction (Alpha:0.81) 1. The clients were satisfied with the process by which this project was completed 2. The clients are satisfied with the results of the project Plan changes The project plans (schedule, personnel, budget) were often changed Goal changes (Alpha:0.83) 1. Project goals were often changed 2. At least one major project goal was changed considerably Planning quality (Alpha:0.85) 1. The entire project task (scope) was structured in work packages. 2. Every work package was allocated with a specific time allowance. 3. We knew which activities contained slack time or slack resources. 4. All work packages had a predecessor and a successor work package (except the first and the last). 5. There was a detailed budget plan for the project. 6. The precise demand for key personnel (who, when) was specified in the project plan
- 8. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013 Conceptual Framework – Variable Measurements For academic use only. 8 Scale Measures Technical risks (Alpha:0.79) 1. The task was technically demanding. 2. The completion of the business goals included high risks. Importance (Alpha:0.78) 1. It was important that the results of the project could be used as soon as possible 2. The implementation of the project was important for the organization’s policy 3. The implementation of the project was important for the success of the organization Experience The projecting company had experience with the solution of similar problems Manpower The project team did not experience any significant personnel losses or transfer during the project’s development Parallel projects The completion of the project depended on other projects, undertaken at the same time. Break through The project was not subject to any recent technological breakthrough, which could have rendered it obsolete.
- 9. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 9 Empirical Findings - Sample Description Kind of Project Absolute frequency Relative frequency Machine tool manufacturing 25 5.6% Plant construction 61 13.6 Building construction 30 6.7 Product development 116 25.9 Reorganization 52 11.6 Software 109 24.3 Others 55 12.3 Total 448 100.0% Returned Questionnaires: 43%, N= 448 (257 successful, 191 unsuccessful) Respondents: Project Leader 46%, Team 27%, Others 27%
- 10. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 10 Empirical Findings – Correlations between Contextual and Planning Variables Quality of Planning Goal Changes Plan Changes Personnel Constraints n.s. .226** .226** Parallel Projects n.s. .202** .174** Occurrence of Breakthrough n.s. .247** .127** Technical Risks n.s. .175** .165** Importance .204** n.s. n.s. Experience .170** n.s. n.s. **p<=0.01, n.s. – not significant
- 11. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 11 Empirical Findings – Path Model Efficiency Customer Satisfct. Goal Changes Plan Changes Quality of Planning -.27 -.21 +.50 +.61 +.14+.27 -.16 -.23 n.s. n.s.
- 12. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 12 Empirical Findings – Path Model (total) Efficiency -.20 R2= 26% Cust. Sati. R2= 55% +.61 Technical Risk Goal Changes Plan Changes Quality of Planning Personnel Constr. Parallel Projects Break through Import. Experie. +.16 +.15 +.14 +.18 +.11 -.16 -.21 -.23 +.50 +.14 +.16 +.20 -.27 +.27
- 13. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 13 Empirical Findings – Effects of Success Factors Planning Variables/ Impact on Efficiency Direct Effect Indirect Effect Total Effect Quality of Planning +.27 +.08 +.35 Goal Changes -.21 -.10 -.31 Plan Changes -.23 - -.23 Planning Variables/ Impact on Customer Satisfaction Direct Effect Indirect Effect Total Effect Quality of Planning +.14 +.25 +.39 Goal Changes -.15 -.19 -.34 Plan Changes - -.14 -.14
- 14. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 14 Goal Changes Empirical Findings – Calculation of Effects (Ex.) • Indirect Effects of Goal Changes • (+.50 * -. 23) = -.10 • = Indirect Effect -.10 ( ) • + Direct Effect -.21 ( ) • = Total Effect -.31 Efficiency +.50 -.23 -.21 Plan Changes
- 15. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 15 Summary of Empirical Findings • The influences of planning and changes on project success – The positive total effect of the variable quality of planning (+.35 and +.39) is completely overridden by the negative combined effect of plan and goal changes (-.54 and -.48) • The interactions between the planning variables – The quality of planning reduces the level of goal changes (−0.27), it does NOT affect plan changes – Changing project goals leads to changes of project plans (0.50) • The influences of context on the project planning activities – Strategic importance and the level of experience of the project team affecting only the quality of planning – The others influence goal changes and plan changes
- 16. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013For academic use only. 16 Summary of Empirical Findings • Plan changes and goal changes are different! • Goal changes will lead to plan changes • The influence of frequent changes on project value is significantly negative • The quality of project planning can reduce goal changes • The causes for changing project plans are contextual- related
- 17. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013 Definitions of Project Risk and Uncertainty • Project Risk – Project risks also known as the Known-Unknowns are basically events, circumstances, situations or conditions that have a potential negative impact on meeting predefined project objectives. • Project Uncertainty – Unexpected and unforeseen project situations with potential significant impact on the value of a project. For academic use only. 17
- 18. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013 Exploratory case based interview study • 42 case studies • 90-minute interviews with semi-structured questionnaire • Creation of case study protocol and database Research Method Project Category Frequencies Information Systems Projects 20 Product and Service Development Projects 9 Construction Projects 4 Business & Organization Change Projects 3 Research & Development Projects 2 Project-like tasks 4 Total 42 For academic use only. 18
- 19. Mgt 610 Strategic Perspectives on Project Management © Thomas Lechler 2013 • Stakeholder capabilities and dynamics are the most frequent source of uncertainties! • Mergers and acquisitions and politics lead to uncertainty. Categories of Uncertainties Uncertainty Categories Uncertainty Sources Frequencies Stakeholder uncertainty Inexperience, change, contracts 18 Organizational uncertainty M&A, politics, unknown legacy system 9 Technological uncertainty Tech. issues, tight specs 8 Contextual turbulences Legal, market 6 Project characteristics Unknown complexity 3 Malpractice Self induced uncertainty 2 For academic use only. 19