Project Management - Three Domains of Project Organizing - Essay Example

The beginning of a project usually involves a plan. The implementation of this plan may face some deviations, and some issues arise as a result of these changes. Coping with the issues becomes critical to the success of the project, and the determination of a more positive future. Projects must recognize the degrees of dependency that exist within the actors, and determine the extent to which they influence outcomes. Core values integral to effective completion of specific projects, or all project in general, need emphasis to enhance effectiveness. The scope of the project, its participants, and the specific tasks towards goal-achievement all play an integral role in determining the effectiveness and efficiency of performance. Ranging from the relational issues of governance and project management, addressing such problems requires specific approaches. Based on an earlier set of project issues and their futures, this paper seeks to propose some solutions to these criticisms. It will also review the possible futures under these solutions in general and for some example cases.

Governance Issues

According to Abednego & Ogunlana (2006); Crawford & Cook-Davies (2005) project governance issues have only gained attention in both public and private enterprises in the late 20th century into the 21st century. Governance is a process that involves both control and oversight, as well as the provision of guidance to monitor risks and compliance (Caldwell, 2004). Nevertheless, governance for projects often presents some daunting issues. The issues range from lack of direction and clarity of purpose, poor incentive, and the adoption of unsuitable management strategies or transitional approaches (Moldoveanu & Martin, 2001).

One of the approaches to solving governance issues is the constant review of the roles of the team and stakeholders. According to Kerzner (2015) project governance should be designed not for the replacement of decision-making in the project, but for the prevention of undesirable decisions. Consequently, project governance should be implemented in such a way that roles are constantly reviewed and specific decision-makers identified (Kerzner, 2015). With a comprehensive reporting structure, the project manager can note the points of deficiency, as well as the purpose of their oversight role. The manager’s ample understanding of their role will diminish the pressure on lower team levels and enable more efficient conduct of business (Turner, 2014). As the manager gains more adeptness, communication improves, and the business outcomes gain a more positive light.

Projects must be well-defined upfront, ensuring that consequent efforts are applied exclusively in the determination of suitable transitions (Price-Waterhouse Cooper, 2009 ). Defining the entire project will facilitate identification of the required skill sets, especially for the business case and project managers. Further, the project manager and the operations managers will receive appointments beforehand and guarantee their presence as the business-case manager defines the project (Price-Waterhouse Cooper, 2009 ). This approach ensures their understanding their roles, and the approaches of the others, preventing lags during transition (Müller, 2012).

Good governance should make sure that incentives link straight to existing corporate or project goals, as well as remove any elements that fail to adopt this relation (Price-Waterhouse Cooper, 2009 ). While incentives are critical, their ambiguity may lead to time wastage in negotiation and the loss of other resources within the project (Pryke & Pearson, 2006). As such, the correct incentives should be identified, based on an analysis of goals and the personal goals of the team. This approach will minimize costs and enhance effectiveness among team members.

Agency Theory

At the core of the principal-agent problem is the action of the agent failing to reflect the expectations of the principal (Grossman & Hart, 1983). Asymmetric information limits the extent to which the project owner can make decisions regarding their project managers or contractors. With adverse selection, it is highly improbable that the owner has perfect information regarding the agent (Altmann et al., 2014). Consequently, the most viable solution remains in getting as much information about a range of prospective managers before actual assigning (Andersen, 2012). This approach will minimize the risk, while recognizing the continued possibility of negative outcomes.

The moral hazard risk presents chiefly due to the absence of equal information. For instance, the project owner may not sufficiently understand the motivation behind the actions of the project manager (Winch, 2014). The basic understanding of this problem and the steps towards its solution should be that, as a rational person the manager will seek to maximize their utility (Elitzur et al., 2012). Consequently, the only time they will act in the interests of the owner is if their objectives are aligned (Guo et al., 2014). Incentives become critical at this phase, where the owner should seek to understand the needs of the manager and offer motivations towards these goals. For instance, in an entrepreneurial context, the success of the project could be linked to promotion in the organization (Kerzner, 2015).

Dealing with hold-up requires recognition of the opportunities that exist for the inappropriate exploitation of resources. This problem occurs in dual directions, with possible wrongful exploitation by the project owner or the project manager (Altmann et al., 2014). The basic approach to dealing with the hold-up problem relates to the existence of clear accountability and monitoring approaches. While it is inefficient to keep constant watch over the actions of the other party, it minimizes the possibility of exploitation (Turner et al., 2010).

However, there are other alternative approaches to handling the agency problems during project performance. Signaling is considered effective especially for the mitigation of moral hazard (Altmann et al., 2014). The approach ensures that the agent demonstrates their quality through prior certification or evidence. In the case of a construction project, for instance, the previous project portfolio of the contractor would be critical. On the other hand, approaches such as long term contracts and the presence of multiple counterparties will diminish hold-up (Altmann et al., 2014). The long-term contracts diminish the possibility of the emergence of ex-post conditions (Tumbat & Grayson, 2016). The multiple counterparties ensure that, in the event of hold up, there are alternatives for completion of the contract. This, however, is only effective where the agent is the cause of the problem and not the project owner (Andersen, 2012).

With the solution to these problems, the project is likely to achieve more comprehensive futures. The issues that the agent may have will be better understood and handled, and the agent consciously exercises irrationality in their activities. While rational thought demands that the project manager pursue their self-interest, they will be oriented towards the goals of the owner (Kerzner, 2015). This approach means that the goals of the project are more likely to be met against the situation where the project fails to take the precautionary measures.

Exaggerating the Business Case

Gambles (2012) note that many business cases will often lack integrity and competence in their completion. The making of cases is often overlooked as primarily for obtaining funds, leading to deliberate tailoring in ways that will attract sufficient appeal (Elitzur et al., 2012). However, enterprises engaged in project approaches to the process will need specific measures to counter such action, either from their departments or organizations seeking funding.

It is crucial that committees charged with the preparation of business cases maintain high degrees of specificity. This approach emphasizes detailed processes, featuring the approaches towards the accomplishment of goals against simply listing the benefits (Aitken, 2012). The project manager must also demonstrate the capability to maintain the processes and meet the objectives in question (Marchewka, 2014). As such, each business case requires definition of the procedures, and the delimitation of resources to be implemented in these procedures. The approach will demonstrate not only their competence in combining resources towards project achievement, but also their desire for integrity in the accomplishment of the benefits for the project owner (Carroll, 2016).

Adopting an approach of competence and integrity will eliminate the potential hindrances that face a project with lofty goals (Gambles, 2012). The project team endures less pressure for completion of interim and the overall goals as the resources available match the objectives (Young, 2013). This, in turn, translates in further team commitment and more effectiveness in the completion of work. The timeliness of activities also translates into a positive image for the project manager and the team, substantially building their portfolio for future achievements (Caniëls & Bakens, 2012).

On the other hand, there is a strong need for the development of review committees with sufficient intellect to analyze the business cases. CEOs may not always be in a position to understand the technical and the business perspectives of any proposal (Gido & Clements, 2014). In the case of IT projects, for instance, the project owner could be a business specialist. Their limited knowledge in IT could cause their approving an IT projects with highly decorated benefits that are impossible to achieve. Consequently, reference to specialists is necessary against choosing the case that appears to offer maximum benefits (Kendrick, 2015). The CEOs, or any project owner, could employ the services of consultants to review business cases (Hwang & Ng, 2013). With the use of the alternative consulting, the project owner ensures to fund the right project. Its funding will be based on its ability to offer the presented benefits, against the possible costs it imposes on the owner (Gambles, 2012).

The advancement in technology also offers alternatives for the elimination of business cases that lack the basis to justify their potential benefits. According to Caniëls & Bakens (2012) the use of information technology systems will enable the comparison of processes, resources, and benefits within a context to determine their viability. Therefore, the project owner could make the use of information systems and software like AON to simplify such analyses and enable choices (Gido & Clements, 2014).

Conclusion

The criticisms associated with project performance often result in negative outcomes, or outcomes below the anticipated levels. The recognition of each issue translates into the need for development of solutions to ensure more promising project futures. Governance issues may be hard to resolve, as they involve those in charge of the project. However, interventions such as constant reviews to determine specific roles in the team and among stakeholders are deemed effective. Further, the adoption of a comprehensive approach from the planning phase ensures each manager is aware of the processes, preventing lags in transition. Adequate research also minimizes unsuitable incentives, enhancing their effectiveness. The solution of the principal-agent problem offers a range of possibilities. The adoption of specific incentives mitigates moral hazard and hold-up. Other possibilities surrounding the agency problem include signaling and the adoption of multiple counterparties. For business cases, managers are advised to adopt competency and integrity, as it forms the basis for future portfolios. The project owners must also make sufficient efforts to understand the terms of operation. This approach will ensure only appropriate projects are approved. The combination of these approaches is likely to enhance competency and resource utilization, ensuring the completion of project in a more efficient and productive manner.