J.Rodney Turner

The Management of Innovation in Project-Based Firms

Abstract How relevant are traditional innovation ideas for project-based firms? This paper asks if project-based firms provide a context supportive of innovation or indeed if they view it as useful. Based on research in firms from a variety of sectors, including telecommunications, information systems, computers, financial services and engineering, procurement and construction, the paper reveals that the very project control systems around which the firms operate serve to stifle innovation. Project-based firms—regardless of sector—prioritise efficient management of projects, tolerating the use of slack resources only when absolutely necessary. Finally innovation is not seen as universally useful, but primarily as costly and dangerous. It concludes that the space at which ‘innovation’ and ‘projects’ comes together is still dominated by ideas on how to correctly manage projects, rather than how to effectively manage innovation. Innovation of ideas on managing innovation projects may be merited.

Quantity versus Quality in Project-based Learning Practices.

In the midst of the turbulence wrought by the global economy, it has become common to see projects as an essential medium for achieving change. However, project-based learning practices-as a subset of organizational learning practices-have not kept pace with this development. To explore this concern, we have carried out a study on practices adopted by organizations for learning through projects involving nineteen companies from across Europe and from a range of different industries. We use the concepts of variation, selection and retention in organizational learning to analyze our findings and report the challenges faced by project-based organizations in each of the areas highlighted. We conclude that time pressures, centralization and deferral are the key characteristics of learning in project-based firms and that these impede project-based members in learning from and through projects.

Mechanisms of governance in the project-based organization:: Roles of the broker and steward

The last 50 years has seen a shift in the nature of work, from mass production, with stable customer requirements and slowly changing technology, to the current situation where every product or service may be supplied against a bespoke design, and technology changes continuously and rapidly. This modern environment is a more project-based economy. The management of the former situation was well understood, based on classical management theory, developed over the previous 100 years. Classical management offers the traditional organization many strengths derived from the functional hierarchy at its core. These include strong central planning, governance and control, knowledge management and human resource development. The project-based organization requires a new approach to its management, which addresses the unique, novel and transient nature of its work, but retains the strengths of classical management. This paper is one of a series aimed at deriving such a management paradigm for the project-based organization. In this paper, we describe governance structures adopted by successful project-based organizations, and how they use them to manage the interface between projects and their clients. We describe two roles observed at this interface, labelled the broker and steward. We provide a Transaction Cost perspective of the governance mechanisms observed and the two roles. We note that the same governance mechanisms are adopted whether the project is managed in the market or the hierarchy. This is in stark contrast to the classically managed organization, and suggests different pressures act on the project-based organization requiring hybrid governance structures to be adopted for all projects. We outline the roles of the broker and steward in the different project governance structures we have identified. We consider why it is necessary to have two roles, a broker and a steward, and not one person fulfilling both.

Project contract management and a theory of organization

Abstract This paper attempts to develop concepts of project and contract organization to predict the selection of contract type on infrastructure projects. Conventional wisdom is that at low-risk fixed price contracts are best, moving to remeasurement and then cost plus as risk increases. We started trying to predict this from a transaction cost perspective, and such an analysis confirmed conventional wisdom. However, it does not fit with current practice. Further, the differences in transaction costs are small compared to differences in contract out-turn cost that occur under the different motivational effects of different contract types. We therefore take a different perspective. We assume the purpose behind a project contract is to create a cooperative project organization, in which all participants, clients and contractors, are motivated to achieve common objectives, their goals are aligned. This analysis confirms modern practice, and shows selection of contract type is related to uncertainty in the projects deliverables, and uncertainty in the process of their delivery. Build-only remeasurement contracts are used where uncertainty of both product and process is low. Design and build fixed price contracts are used where uncertainty of the product is low, but the uncertainty in the process of delivery is high. Fixed price contracts should be used where both are high. We extend the analysis to show when the client should be involved in the project organization in an alliance contract, and when they should not, as in a traditional project contract.

Company-wide project management: the planning and control of programmes of projects of different type

Abstract It has been perceived wisdom that where an organisation is undertaking a portfolio of projects, they should use a common approach to the management of all projects in the programme. Presumed benefits include comparable progress reporting, and consistent calculation of resource requirements enabling sharing of resources. People can also move freely between projects without having to learn a new management approach. However, research undertaken by the authors show that people more often report better results for their projects when they tailor the procedures to the type of project they are working on, matching the procedures to the size of the project, or the type of resource working on the project. In this paper, the authors report their findings and give an explanation of why, on many projects, it may be better to tailor procedures. Since it is still worthwhile to obtain some consistency of project management approach to achieve the benefits above, the authors suggest how to adopt a consistent approach at the strategic level, while tailoring the procedures at the tactical or detail level. They give an example of the use of this approach on the planning and control of a project from their own experience.

The versatile project-based organization: governance and operational control

Throughout the latter half of the 20th century, there has been a shift in the management paradigm, from the functional, bureaucratic approach, almost universally adopted in the first half of the century, to project and process-based approaches. This shift has been in response to the changing nature of work from mass production, with essentially stable customer requirements and slowly changing technology, to the current situation where every product supplied may be against a bespoke design, and technology changes continuously and rapidly. Whereas the functional, bureaucratic approaches to management are underpinned by a strong theoretical basis, the classical theory of management developed during the late 19th and early 20th centuries, the process and project-based approaches do not have a strong theoretical basis. Furthermore, in adopting project- and process-based approaches to overcome the weaknesses of the functional approach, managers have also lost its strengths; they have not replaced some of the essential roles it fulfils. With the eventual aim of developing a theoretical basis for the project and process-based approach, which recovers the strengths of classical management, we at Erasmus University Rotterdam are conducting a research project to determine how project-based organizations are managed. In this paper we present initial findings, especially as they relate to the management of the process of product delivery, that is in the areas of operational control and governance. We also briefly review the issues identified in the management of human resources.

The management of operations in the project-based organisation

Project-based organisations require a different approach to their management from the functional hierarchical line-management approaches adopted for most of the 20th century. The latter works well where products are stable. During the latter half of the century, however, the nature of work has changed so that now, for many organisations, almost every product or service is supplied against a bespoke design, and markets and technologies change continuously. The classical management theories developed to manage mass production no longer apply; the new organisation needs new theories for its management. At Erasmus University, we are investigating the management of project-based organisations, to identify practices adopted by firms internationally. In this paper, we report our findings about operations management practices adopted. We suggest a six-step process model for operations management, and show that different approaches are used in the implementation of this model, depending on the size of projects undertaken and the number of customers. We describe different approaches in each of the four cases: large projects-few customers; large projects-many customers; many projects-few customers; and many projects-many customers.

Group efficiency improvement: how to liberate energy in project groups

To achieve a successful outcome for their projects, project teams often need to liberate energies and capabilities greater than that of the sum of the individual members, during what can be a period of considerable stress. It can be beneficial to project teams to understand how this growth in group efficiency arises, and to be able to capture it repeatedly. In this paper we give some tips for group efficiency improvement suggested by several experienced project management practitioners.

Projects for Shareholder Value: The Influence of Projects at Different Financial Ratios

Projects are undertaken to add value to the sponsoring organization. In the private sector, this means increasing the value of shares to holders of equity. Traditionally, projects are said to be successful if they are completed to time, cost and quality. Certainly, the earlier a project is completed, the more cheaply and the greater the functionality, the greater is its contribution to shareholder value. However, it is often not known what the relative impacts of time, cost and functionality are. This chapter uses shareholder value analysis to assess the impact of projects on the sponsoring organization. First it is necessary to enhance shareholder value analysis for the analysis of projects. It is shown that the impact of projects on their parent organization can be predicted from eight financial ratios linked to eight value drivers, and the nature of the impact is different for different industries with different ratios. It is concluded that managers need to understand these different impacts, and in their annual appraisal project managers should be judged by the contribution of their projects to the value of the organization.