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Mancini Short Term Scientific Mission

Megaproject Stakeholder Management Success

1. Megaproject Success definition: state of the art

Megaproject success is strongly linked with Stakeholder Management Success

(Shore, 1999; Cooke-Davies, 2002; Pinto, 2013). Project management tools and

techniques are useful to understand “what should be done” but, in truth, decision

making processes are influenced by external factors. Simon (1955) and Tversky and

Kahneman (1974, 1981) define this divergence as the “behavioural view" of the

project.

Past project performance analysis underlines some typical behaviour of project

teams and project managers that affect performances from the early stages. This

paragraph aim to briefly show the evolution of these factors during times, stressing

the high attention that research gave to this aspect.

Pinto and Kharbanda (1996) identify twelve factors that promote project failure,

briefly summarised below:

Ignore project context and its features, including stakeholders’ behaviour.

Push a new technology to market too quickly.

Do not plan possible to possible problems, for example through “what if”

analysis.

When problems occur, focus on the most visible one ignoring all the other.

Do not encourage projects based on new ideas because of their uncertainty,

with the risk that the inertia could kill innovation.

Do not conduct feasibility studies ex ante.

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Do not admit that a project is a failure, continuing to push the project even

though contextual feature, mismanagement or miscalculation prejudices the

project

Never conduct post failure reviews, losing the opportunity to learn and

understand the main reasons of the failure.

Allow bureaucracy and internal corporate mechanism to be more important

than project success.

Do not worry about project’s trade offs

Let political influence to modify decision making process

Chose a not charismatic and skilled project manager.

Flyvbjerg (2009, 2011) analyses human factor considering the particular case of

mega-projects, separating the causes of bad project performances from the roots of

these causes. He assesses that factors that lead to performances inferior to

expectations are project complexity, changing in scope of work, technological and

demand uncertainty, negative pluralities (e.g.: different stakeholders’ voices) and

the difference between real and expected geological features.

However, he analyses deeply the roots of failure causes, identifying two possible

roots:

Optimism Bias: it refers to biased estimations that managers forms based on

delusional optimism instead of on a rational cost-benefits analysis. In this

situation, decision making process is biased because of the underestimation

of costs and the overestimation of benefits. The result is that project

managers promote initiatives that are difficult to complete without cost

overruns and benefit shortfalls.

This behaviour derives from the “inside view” adopted in project

management, meaning a strong tendency toward the consideration of

project problems as unique, focusing exclusively on the single situation in

problem solving process.

Strategic misrepresentation

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Flyvbjerg identifies strategic misrepresentation when “politicians, planners

and project managers deliberately and strategically overestimate benefits

and underestimate costs in order to increase the likelihood that their

projects gain approval and funding” (Flyvbjerg, 2011). According to this

definition, project managers voluntarily focus their support on positive

scenarios, avoiding explaining the negative ones.

The nature of this behaviour is political and it is due to the presence of

political pressure on the project, which affects the initial stage.

It can be drawn that the phenomenon of optimism bias is particularly present

when political or organizational pressure is absent. On the contrary, strategic

misrepresentation is strong when political pressure high while is weak when it is

low.

Roots of poor project performances are complementary since both of them

explain this phenomenon. Most of all when complexity is high, as in mega-projects,

is fundamental to remember that both of factors influence the decision making

process together; considering just one of them would lead to an incomplete

analysis.

One of the most recent researchers that focused on this topic is Pinto (2013).

Capitalizing what said by other scholars, he identifies seven “deadly sins” that lead

to project failure.

1. Optimism bias

Notion taken from Flyvbjerg and explained above.

2. “Massaging” the plan

3. Creating project “death marches”

4. End date-driven schedule

5. Lack of relevant project management training

6. Poor change control

7. Superficial risk management

This analysis highlights some common factors that influence success, particularly

project management one since these human factors refer to mechanisms that

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affect project team, corporate and organisation. Furthermore, it is clear that lie and

deceive are common in decision making process, leading to failure in short term

goals achievement.

Previous frameworks explained the interaction between human behaviour and

project management success; the next one relates also project success to human

factor. Shore (2008) highlights that, besides decision making biases that corrupt

project management performance, there are many other factors could influence

also project outcome, and therefore also long term goals. This framework is the

most complete one since explains how input variables (hierarchical and project

power, culture, project standard and project goals) influence firstly project

management and decision making process, and finally also project outcome. The

Figure 1 below, adapted from Shore’s model (2008), illustrates the model and

highlights three influence levels: human factors/behaviours, project management

and project; it allows to understand how different variables interact, stressing the

hierarchical order that starting from human behaviour leads to project outcome.

Figure 1: most important variables that influence project outcome (adapted from Shore, 2008)

Project leadership

Systematic biases

Project culture

Project (goals,

budget, schedule,

complexity)

Manage-ment and

team decision

processes

Project planning

execution and control processes

Executive leadership

National culture

Organisa-tional

culture

Project standards and PMI

guide

Project outcome

Human factors/

behaviours

Project management

Project

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Culture is divided in national, organizational and project culture, as explained in

the following.

National culture: value systems and belief learnt during past experience of

the team members, difficult to be modified.

Organizational culture: it is developed in the context of national culture and

of the organizational leadership. It includes organizational techniques, tools,

skills etc.

Project culture: includes the way of perform planning, execution and control

processes.

Systematic biases are the ones that influence planning, control and execution

processes; it is possible to associate this concept to biases identified by Flyvbjerg,

both the ones due to optimistic estimations and the ones due to strategic

misrepresentation.

Shore shows how all the main factors identified in this paragraph by the other

scholars interact and influence project and project management success.

2. A model for success definition and quantification

Literature review shows that elements such as value or success from a

stakeholder perspective are basically synonyms: stakeholder gives a high value to

the project if it succeeds i. e. when expectations of each stakeholder are satisfied. In

the following of the paragraph is explained a model that helps to quantify project

success.

In this regard is proposed the use of Social Network Analysis (SNA), a model that

is useful to address interactions framework into the project, identifying causes and

consequences of these interactions (Haythornthwaite, 1996). However, studying

the resulting network allow us to evaluate success through the use of synthetic

indicators that quantify benefits produced by the project to its stakeholders, which

means its social performance. Is important to stress that this way of analysing

success is coherent with the features stated above, since benefits do not depends

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by value carried to shareholders but most of all by stakeholders’ perception. The

logical framework of the model is shown in Figure 2.

Figure 2: project success assessment process

2.1 Stakeholder and success criteria identification

As said, success is a multidimensional and dynamic variable; in literature there

are several models that show success identification criteria respecting these

features. This stage of the process could be done with a deeper stakeholder

identification process, as will be described in chapter 3.x. However, the aim here is

to show how literature developed about this topic and which categorisation have

been proposed for stakeholder identification; is not fundamental for success

assessment to have a structured stakeholder identification process. Furthermore,

many scholars associate to the identified stakeholders some success criteria that

are useful for the purposes of this model. In this model, success mixes both project

and project management one since criteria will include both short term and long

term goals. Therefore the process here described allows to quantify a sort of

“overall success” that merges both the time frame views.

The first proposed categorisation is the one provided by Atkinson (1999) that

identifies two project stages: delivery stage and post-delivery stage. In delivery

stage project success consists in “doing it right” while in post-delivery stage the aim

is “getting it right”; he models project goals in this stage with the Square Route

model (Figure 3), where adds to the iron triangle, useful in delivery stage, two more

fields of success valid in post-delivery stage: information system (e.g.: users,

customers), benefits for organization and benefits for stakeholder community. This

framework has been formulated for generic organizations and, as a consequence,

can be applied to project context as well.

Stakeholder and success criteria identification

Social Performance

Index (SPI) calculation

Network construction

and index calculation

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Figure 3: Square Route (Atkinson, 1999)

A not exhaustive list of criteria for each category identified above is reported in

Table 1.

Table 1: success factors divided according to stakeholder category (Atkinson, 1999)

The information system Benefits

(organisation)

Benefits

(stakeholder community)

Maintainability Improved efficiency Satisfied users

Reliability Improved effectiveness Social and environmental

impact

Validity Increased profits Personal development

Information-quality use Strategic goals Professional learning

Organisational-learning Contractors profits

Reduced waste

Capital suppliers, content

project team, economic

impact to surrounding

community

Other authors that focused on this topic are DeLone et al. (1992), which identify

the same stages of Atkinson; however they focus only on the post-delivery stage.

The six criteria identified for this stage are:

System quality

Information quality

Information Use

Users satisfaction

The “Iron triangle”

Benefits

(stakeholders community)

The Information

System

Benefits

(organisation)

Square route

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Individual impact

Organisational impact

Ballantine et al. (1996) revisit the previous model proposing a three-dimensional

one identifying three stages in project life cycle: development, implementation and

delivery.

Pinto and Mantel (1990) split up project life cycle in sub-phases, particularly

planning (so called strategic stage) and executive (so called tactical stage), ignoring

post-delivery stages. The identified criteria for each stage are shown in the Table 2

below.

Table 2: Comparison of critical factor associated with success and failure, by project lifecycle stage

(Pinto and Mantel, 1990)

Strategic Stage Tactical Stage

Success Factors

Mission Client Consultation Top Management Support Personnel

Schedule/Plans Technical Tasks Client Acceptance Monitoring & Feedback Communication Trouble-shooting

Failure Factors

Mission Trouble-shooting Client Acceptance Personnel

Technical Tasks Schedule/Plans Client Acceptance

Zhai et al. (2009) show a model in which suggest to focus the attention on four

main stakeholders found using power, legitimacy and urgency criteria (from

Mitchell et al. 1997; see Chapter 3). These stakeholders are enterprise,

subcontractors/suppliers, community and customers; then they analyse success

from their perspective, identifying for each one of them some key elements in its

definition.

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Figure 4: value framework of project management in mega-projects Zhai et al. (2009)

Turner (2009) classifies several success criteria according to the interested

stakeholder and the time frame. He suggest that project participants judge success

at its end, operators of project’s output and users judge success some months after

the end of the project while investors or sponsor judge success some years after the

end of the project (Table 3).

• Improve the project • performance • Improve the competencies • of the enterprise • Increase revenue • Cultivate the personnel • Improve customer

relationship • management • Cultivate favourable

corporate culture

• Realize the value of project • Save project investment • Better collaboration experiences

Value of project management in

mega-projects

• Improve the technical and management capabilities

• Build up long-term strategic cooperative partnership

• Avoid conflicts with the community within the project implementation

• Promote the economic and social development

• Foster a large number of talents in construction project management

• Improve the technical standards and management mechanisms in the industry

• Protect the environment

Enterprise

Customers

Subcontractors/

Suppliers Community

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Table 3: different perceptions of success by different stakeholders over different timescales, (Turner, 2009)

Measure of Success Stakeholder Timescale

The project increases the shareholder value of the

parent organization Shareholders End plus years

The project generates a profit Board End plus years

The project provides the desired performance

improvement Sponsor End plus years

The new asset produced by the project works as

expected Owner End plus months

The new asset produces a product or provides a

service that consumers want to buy Consumers End plus months

The new asset is easy to operate Operators End plus months

The project is finished on time, to budget, and

with the desired quality All End

The project team had a satisfactory experience

working on the project and it met their needs Project team End

The contractors made a profit Contractors End

Turner and Zolin (2012) develop a framework identifying eight stakeholder

categories which associate different success criteria according to time frame.

Particularly, while Turner (2009) states that stakeholders are interested in the

project only according to only one timeframe, the authors here suggest that each

stakeholder has different objective in each timeframe (Table 4).

In the following are described the different stakeholders and their interest in

the project. The authors split the concept of client in investor and sponsor;

Investor or owner: is the person or the group who pays for the project in

order to buy the new asset and for its operation in order to obtain benefits

and repay its investment;

Sponsor or executive: is the main supporter of the project, trying to convince

investors to join the project; are often senior managers of the parental

organisation or of user organisation.

Consumers: who buy product of the new asset.

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Operators or users: who uses the asset and produce on behalf of the owner.

Project manager and project team.

Senior supplier: senior management in the main contractor.

Other suppliers: people or groups who provided good, raw materials, semi-

finished products etc.

Public: they concern about environmental and social impact during project

life cycle.

Table 4: The new model of project success (Turner and Zolin, 2012)

Timescale Results

Project Output (project end)

Project Outcome (end plus months)

Impact (end plus years)

Investor or owner

Time Cost

Features Performance

Performance Profit Reputation Consumer loyalty

Whole life value New technology New capability

New competence New class

Project executive or project sponsor

Features Performance Time

and cost

Performance Benefits Reputation

Relationships Investor loyalty

Future projects New technology New capability

New class

Consumers

Time Price of benefit Features

Benefit Price of product

Features Developments

Competitive advantage

Price of product Features

Developments

Operators/users

Features Performance

Documentation Training

Usability Convenience Availability Reliability

Maintainability

New technology New capability

New competence New class

Project manager and project team

Time Cost Performance

Learning Camaraderie

Retention Well-being

Reputation Relationships

Repeat business

Job security Future projects New technology

New competence

Senior supplier (design and/or management)

Completed work Time and cost

Performance Profit from work Safety

record Risk record

Client appreciation

Performance Reputation

Relationships Repeat business

Future business New technology

New competence

Other suppliers (goods, materials,

Time Profit Client appreciation

Reputation Relationships

Future business New technology

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works, or services) Repeat business New competence

Public Environmental

impact

Environmental impact Social costs

Social benefits

Whole life social cost-benefit ratio

2.2 Network construction and index calculation

Once stakeholders have been identified, is possible to build the network. It is

composed by nodes, corresponding to each actor, and arrows, corresponding to any

kind of relationship (money exchange, information flows, resources, friendships

etc.). Network analysis consists in the calculation of two main attributes (Rowley,

1997):

Centrality degree: single node property that indicates its importance in the

network. It is similar to formal power but, while it is due to hierarchical

structure, centrality degree refers to each actor’s power based on its ties.

Centrality degree is defined as:

( ) ∑

( )

where:

( ) is centrality degree of i node;

∑ represents the sum of all direct relationships (x) that one node has

with all the other ones (g), excluding relationships with itself. In other words,

represents the total number of direct relationships existing in the network

Density degree: overall network property that states the completeness of

the network according to the number of its links.

Density degree is defined as:

( ) ∑

∑

∑

( ) indicates density degree;

∑ indicates the number of total direct relationships (x) in the network

∑ indicates the total number of indirect relationships (y) in the

network.

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Rowley highlights that if density degree increases, internal communication

becomes more effective since a few nodes are isolated; it implies also a

better expectation sharing between different stakeholders, avoiding false

expectations and promoting success.

2.3 SPI calculation

Doloi (2012) calculates a synthetic index that evaluates project social

performance starting from the importance of each stakeholder (represented by

centrality degree) and by his satisfaction ( ). Satisfaction can be evaluated with

qualitative methods (e.g.: surveys, interviews etc.) structured on the basis of

success criteria identified previously. SPI is defined as:

∑ ( )

∑ ( )

The more this index is the more project success grows: the achievement of a

good social performance means obtaining a high stakeholders’ satisfaction;

therefore, a good social performance is obtained maximising satisfaction of the

most important stakeholders (weighted for their centrality degree). This index

confirms that success is a multidimensional variable that reflects different

perceptions.

SPI has a greater utility if used in order to compare different projects, identifying

as the most successful the one with a higher SPI.

2.4 Success forecast

The model, as structured up to now, leads to an ex post evaluation of the

project success; Turner and Zolin (2012) stress that it is not very useful for project

manager to have an evaluation at the end of the project, since it prevents him to

have a proactive attitude through corrective actions. They indicate, to do this, a set

of indicators that are a proxy of success or failure of the project; in other words,

they represent way to understand if project will reach success. Authors identify two

different scales: project planning and stakeholders’ involvement (Table 5).

Table 5: Project success factor scales (Turner and Zolin, 2012)

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Input Scale Items

1. Success in Project Planning Rich Project Information The project has well-established information and

communication routines. Rich Project Information All key project information is gathered and

distributed efficiently Well-Structured and Formal Project Approach

The project has its own management plan for control which is used in an appropriate way

Well-Structured and Formal Project Approach

Project control is executed by good managerial or technical methods

Well-Structured and Formal Project Approach

Planning tools or similar aids are used in an effective way in project planning.

Clear Project Constraints The project is well described and coordinated with activities in other projects.

2. Key Participants Engaged Early Stakeholder Influence All key participants have been engaged in

producing the business plan or have had the opportunity to influence it.

Early Stakeholder Influence All participants have been given the opportunity to air their views on the project’s goal or mission.

Early Stakeholder Influence All key people engaged in the project know who has decided its terms of references.

Project planning scale measure the existence of unique and consolidated

information and communication system and the existing of a proper control system.

Stakeholders’ involvement indicates that they had a possibility to express their

opinions on the project, being involved in decision making process.

Researchers identify nine further scales to address stakeholders’ satisfaction

(Table 6).

Table 6: project managers’ perceptions of stakeholder satisfaction indicators (Turner and Zolin, 2012)

Stakeholder group Items

1. Stakeholder Satisfaction Owner Has a good relationship with the prime contractor? Owner Has good performance? Owner Has appropriate earned value? Executive Has allowed the project executive/project sponsor to profit? Contractor Has achieved stakeholder satisfaction? Contractor Has helped the senior supplier achieve their appropriate

business goals? Supplier Helps the supplier achieve their appropriate business goals? Contractor Has a good safety record?

2. Project Executive Satisfaction Executive Has achieved stakeholder satisfaction? Executive Has achieved satisfactory performance efficiency?

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Executive Has achieved satisfactory performance effectiveness? Executive Helps the project executive/project owner achieve their

appropriate business goals? Executive Has stakeholder satisfaction?

3. Product Satisfaction Customer Has a useful prototype? Operator Has a useful prototype? Operator Has good performance?

4. Product Efficiency Owner Has a useful prototype? Contractor Has achieved performance efficiency? Contractor Has managed risk appropriately? Customer Has good performance?

5. Satisfaction With Specifications Owner Has appropriate specifications? (they are satisfied with them) Customer Has appropriate specifications? (they are satisfied with them) Customer Has a good relationship with the project owner? Operator Has appropriate specifications? (they are satisfied with them)

6. Project Manager Satisfaction Project Manager Pride in your work? Project Manager Job satisfaction? Project Manager Recognition? Project Manager Skill growth? Project Manager Contacts? Project Manager High morale? Project Manager Attracts top management support?

7. Contractor Satisfaction Contractor Has achieved stakeholder satisfaction? Contractor Has achieved performance effectiveness? Contractor Has reduced waste? Supplier Has demonstrated contract compliance? Contractor Has demonstrated contract compliance?

8. Supplier Profitability Contractor Has achieved performance efficiency? Contractor Has allowed the supplier to profit? Supplier Has allowed the supplier to profit?

9. Public Stakeholder Satisfaction Public Has balanced social costs and benefits? Public Has acceptable environmental impacts?

While some elements are clear enough, some others need to be explained.

Stakeholders’ satisfaction states the achievement of the main corporate,

executive, contractors and suppliers goals.

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Executive satisfaction in the project is linked to stakeholders’ satisfaction,

general project performances, efficiency and effectiveness, achievement of

executive goals.

Project manager satisfaction regards his personal satisfaction,

acknowledgement, professional growth, contracts and top management

support

A high public stakeholders’ satisfaction means that project balanced social

Once indicators are identified, it is necessary to monitor them during project

execution using qualitative scales, similarly to ex post evaluation.

This model allows quantifying project success in two stages: success criteria

identification and synthetic indexes calculations. Furthermore, the model suggests a

framework useful to project manager in order to monitor success during project

executive stage.

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