Project Management: How to Plan and Deliver a Successful Project - Essay Example

Essay Report-Project Management Name: Tutor: Course: Date: Executive summary Project risk management and stakeholder relationship management are important aspects of contemporary project management. This essay report features a number of mega-projects; the Three Gorges Dam, Wembley Stadium, Sydney Opera House and the Gotthard base tunnel in Switzerland with regard to risks and managing stakeholders. Specifically, the classical theory of decision-making observes that the probability of risk occurrence is the utility of each outcome is weighted under conditions of risk. The project manager prepares risk management strategies and mitigation after anticipating future uncertainties that threaten project outcomes. The decision making process pertains to problem identification, gathering of relevant information, finding out the limitations and constraints, selecting and analyzing all the alternatives, implementing the alternatives and establishing valuation and control system. The manager gets value through potential returns from decisions associated with bearing and managing cost, time and scope. Besides, the project manager communicates and keeps the stakeholders informed on matters of interest. A project manager necessitates effective decision making by managing, assessing and identifying risks and uncertainties. The project manager maximizes value for the project stakeholders by embracing the overall concept of value creation using a coordinated approach. He/she adds value to stakeholders during planning, implementation and evaluation in a number of ways. The project manager is responsible for managing stakeholders because the project is meant to create value for stakeholders. To create the desired value, it is imperative stakeholders make contributions just like a two-way street. This essay considers risk management and stakeholder relationship management as the key project management issues. It also introduces the two concepts, discusses in the body and concludes by agreeing with the assertion that the project manager’s decisions and activities are intended to create value. Table of Contents Executive summary 2 Table of Contents 3 Introduction 4 Project management issues 4 Risk management 4 Stakeholder management 7 Conclusion 10 References 11 Appendices 13 Introduction The aim of this essay is to discuss the whether or not project managers’ decisions should be based on value. Considering two project knowledge areas of risk management and stakeholder management, the essay examines several cases of major construction projects that had challenges in managing risks and stakeholders. While exploring literature on project management, the risk and stakeholder management involves making breathtaking decisions that will affect project outcomes. The project manager is tasked with bringing value to the project by managing both risks and interests of the stakeholders to ensure project success. As seen in mega projects around the world, some project management failures are associated with the failure to engage stakeholders or identify and respond to risks and uncertainties. This essay will show that the aim of the project manager is to bring value to the project by assuming roles and responsibilities in project design, planning, implementation and closure. Project management issues Risk management Haughey (2013) defines a project manager as someone charged with the overall responsibility of successfully controlling, monitoring, executing, initiating, design and planning and closure of a project. Among the duties of the project manager, recognizing risk as having direct impact of probability of project success is critical. Throughout the project lifetime, risks must be informally and formally measured. In the best interests of project objectives, responding, analyzing and identifying the risk factors is key throughout the project lifetime (Billingham, 2008). Rather than being reactive, control of possible future events as proper risk management is proactive. This reduces not only the magnitude of risk impact but also the likelihood of an event occurring. For example, reducing the probability of occurrence through mitigation measures helps to reduce the anticipated monetary value of a risk event. Any variation affect the project’s outcome if the stipulated value of scope, cost and time and not observed. Similarly, the project manager in risk management will have to make rational decisions that influence the entire decision making process (Bowles, 2014). Specifically, decision making models respond to a particular situation through reality checks but not essentially planning for the risks (PMI, 2015b). A risk response plan is deduced accordingly where the situation account for negativity or positivity of risks. The project manager makes a rational decision that is within the given constraints and conditions and suitable to the existing goals. Situations primarily dictate the nature of decisions to be taken. On the other hand, value determines the action and the results of a particular situation (Haughey, 2013). Again, the devised values and significances enable the project manager to reach the desired objectives. Decision making is an iterative process that involves intermediate goals that add up to form the final objective (PMI, 2015a). The decision making process pertains to problem identification, gathering of relevant information, finding out the limitations and constraints, selecting and analyzing all the alternatives, implementing the alternatives and establishing valuation and control system (Newton, 2015). In a case study of the 57 km Gotthard base tunnel in Switzerland, the tunnel workers faced huge technical challenges that were not anticipated (Bircher, 2016). Posing great risks to the project, the employees went through different rock layers such as heavy fragmented sediment to hard granite. The project manager was forced to use conventional blasting for 20 percent of the work while 80 percent of the main shafts involved use of tunnel boring machines. This process saw 28.2 million tons of excavated material but the project had cost and time overruns. On several sections, the project decided to use many tunnellers, about 400 Implenia employees at peak times, to save time and costs. However, employees faced the unprecedented rise in temperatures which could hit 50 degrees Celsius. Bircher (2016) observes that the project manager had to engage machines, materials and people through the mountain for them to access shafts and galleries. The project is the deepest-lying railway tunnel in the world with up to 2,300 meters of rock above it. Practitioners in the contemporary project management should manage in conditions of uncertainty as well as understand a great deal of the project’s risk profile (PMBOK, 2015). While this may apply to long-term infrastructure projects, the project manager should make decisions about potential risks after undertaking risk-weighted measurement of costs and understanding the client’s risk appetite (PMI, 2015b). According to Newton (2015), risks can be transferred or absorbed into the project with reasonable confidence. Moreover, the manager should prepare risk management strategies and mitigation after anticipating future uncertainties that threaten project outcomes in the form of externalities. One of the most commonly used decision making model is the Monte Carlo simulation model which uses probability and statistics as well as random sampling to determine the result (Joshi, 2014). This method is employed in quantitative risk analysis to identify quantitative impact of risks on the objectives of the project. In complex global business environment, decision making is vitally important yet it is increasingly challenging. According to the Project Management Institute (2015a), poor decision making impacts on around 47 percent of unsuccessful projects. In the Wembley stadium project case, the costs were more than double initial estimates and took 5 years longer than first estimated. Moreover, the stadium could have obstructed views within the stadium by using innovative steel arch. Although it adds aesthetic appeal and minimizes the need for internal support it could not have served the football fans well (Strategicppm, 2011). Again, the arch implementation was problematic and the delay caused further problems as the project manager attempted to replace the arch sub-contractor midway. While the load bearing arch was novel idea, the stadium design was untested in previous stadium designs. Organizations that are most successful establish and follow a transparent process and embed a culture of effective decision-making process. While making project and program decisions, these organizations provide the right information and support (PMBOK, 2015). Well managed project allows team members to access to the right information and fosters a culture of transparency (Newton, 2015). This enables the project manager to make a decision on how to manage risks. Eighty percent of projects that use decision-making processes meet their goals while forty-five percent of them struggle with the factors (Maylor, 2010). All professional and commercial activities in the case of project management are basically a gamble on the future. To identify the probability of risk it requires both judgment and science. Newton (2015) in the probability theory argues that the outcome of a random event may be any one of several possible outcomes that cannot be determined prior to its occurrence. Similarly, Kerzner (2009) in the classical theory of decision-making observes that the probability of risk occurrence is the utility of each outcome is weighted under conditions of risk. Risk measurement in judgment and science continues influence the impact and the probability of occurrence so that decisions are made by mitigation and management regarding the placement of mechanisms (Koleczko, 2012). Although it may be beyond the expectations of project manager, attitudes toward risk explains expected utility theory and why risks do not produce outcomes. The process of decision making concerns risk seeking and risk aversion. Project selection and planning under proactive risk management contributes to a more agile mindset. Projects manage obstacles more fluidly and become more flexible when risk management is consistent and begins early (PMBOK, 2015). Throughout the project life cycle, it requires the efforts of project teams, business units and executives working together. This enables them to make changes before problems arise in the projects (PMI, 2015b). Agile projects recognize the value of well-trained and experienced project managers capable of executing standardized management practices. Such managers are good at risk and change management. The stakeholders benefit from risk management by allocating responsibility to risk owners, facilitating decision making, delivery of desired outcomes and enabling the project to proceed without problems (Kerzner, 2009). A project manager necessitates effective decision making by managing, assessing and identifying risks and uncertainties. The manager gets value through potential returns from decisions associated with bearing and managing cost, time and scope (PMI, 2015a). The project manager has the capacity to produce shareholder value, stakeholder cash flow and real impact on project returns by managing risk and uncertainty. A project manager’s decision must directly benefit the project however the magnitude of decisions by controlling risk and minimizing uncertainties. Stakeholder management Individuals with vested interest or care about the project are stakeholders (Bourne, 2015). Stakeholders have something to lose or gain from the project or as people with active involvement in the project work. Project stakeholders create even greater challenges since they may have differing ideas (Yang, 2014). Projects create better or new ways of working that enables it to achieve part of its strategy. They also undergo change in operations to create or realize value for all or some of its stakeholders. Larson and Gray (2010) suggest that to maximize value for the project stakeholders, the project manager embraces the overall concept of value creation using a coordinated approach. When making project decisions, project managers maximize value creation and realization. For example, the Three Gorges Dam in China required not just assessing financial returns but also total value. In the multi-billion dollar project, Bosshard (2011) shows that the national interest of the project is matters environment and fate of communities living up and down river were taken hostage by generous kickbacks of a bribery-prone industry, bureaucratic power struggles and political prestige. This could not be termed as a successful project because key stakeholders were not involved in participatory decision-making process due to vested interests that were not held accountable and balanced. Bourne (2015) opines that managing a project involve addressing the expectations and concerns of the stakeholders, tackling the various needs and identifying requirements during project planning and implementation. The project manager is responsible for managing stakeholders because the project is meant to create value for stakeholders. To create the desired value, it is imperative stakeholders make contributions just like a two-way street. Managing project stakeholders enhances the probability that deliverables by the project team will be delivered within budget and on time (Larson & Gray, 2010). A stable environment ensures that the project stakeholders and tasks are ‘manageable’. However, current projects environment is undergoing unexpected changes. Changes potentially affect the stakeholders where project representatives such as project team members, the project manager and the project sponsor need to continuously make adjustments to the project plan (Eskerod & Jepsen, 2013). Furthermore, projects need to sustain relationships with their stakeholders because their satisfaction means sustained knowledge about their preferences and their relationships. Project representatives create better value for all stakeholders when they clearly understand project stakeholder values. In the Sydney Opera House case, the project failed to consider stakeholder interests and their value perception in a bid to minimize damage and instead made it much worse (Murray, 2004). Stakeholder management begins with the understanding what is valued project stakeholders and what they have to offer. In addition, project stakeholders should share a common culture, work processes and adapt to change in order to cope with cultural differences. Cultural differences likely to affect a project include decision making, negotiations and communications. At different points in the project lifecycle, all projects involve stakeholder relationship management and decision-making at different levels (Bowles, 2014). The decision-making involve assessing the affordability, viability and if it is worthwhile before a new project continue or starts. Projects should be within acceptable risk tolerance, planned and controlled and have good value for money. Decision-making is provided by a framework within governance should be tailored to blend of the basic requirements and designed during project Start-up (Larson & Gray, 2010). This meets the needs of a particular project if the project manager mandates the project and any specific arrangements. Tailoring a project depends on the type/quantity of stakeholders, risk, complexity, urgency, cost and predicted benefits. Bourda (2014) observes that stakeholder analysis derives the stakeholder action plan. The plan puts the planned activities into action and moves the stakeholders into stronger support positions (Kerzner, 2009). It is important that the project manager communicates and keeps the stakeholders informed on matters of interest. This includes supplying them with information relevant to the project, managing their expectations and involving them in key decisions about the project. In terms of motivation, money and time, stakeholder management brings classic returns (Watt, 2013). The bottom line in driving effective stakeholder management is that every minute invested brings out significant project outcomes. In stakeholder management, the project manager keeps influencers and decision-makers on-track and engaged along the pathway of successful projects. Project managers register high project performance when they have active executive support, superior stakeholder engagement, effective communication, timely knowledge transfer and disciplined decision making (Bowles, 2014). Even though the project objectives and deliverables are met without the happiness and satisfaction of key stakeholders, the project is not successful. This implies that key stakeholders can break or make the success of the project. Project managers handle the internal environment and people external to the project which could be more complex than compared to the internal environment (Watt, 2013). For example, project schedule in Sydney Opera House project was blown out when Utzon, the architect failed to deliver the design of roof shells within the stipulated time (Murray, 2004). To compound the problem, there was no project manager to directly control over any of the project team members. Project stakeholders in many times had conflicting interests and it required a project manager to understand conflicts and expectations and make attempt to resolve (Koleczko, 2012). Early in the project, the project manager manages the key stakeholders by identifying and meeting their constraints and needs. In the Three Gorges Dam case, the damming experience of the mainstream of major rivers transported sediments across river's ecosystems and interrupted the migration of fish. In a path-breaking report by the World Commission on Dams, the Bosshard (2011) observes that the recommendation of Development and Dams for the mainstream of the river should have been not be dammed. Again, the Mekong River Commission (MRC) undertook a Strategic Environmental Assessment and predicted that there would be loss of riverine and marine fisheries if damming the lower Mekong mainstream was done. Meanwhile, there would not only be erosion in the river channels and delta's coastline but also reduced agricultural productivity in the floodplains of Mekong Delta and Tonle Sap. The impacts to some section of the stakeholders were largely ignored. For instance, government silenced the voices of Chinese scientists who had predicted many negative impacts of the Three Gorges Dam claiming the project as an issue of national interest (Bosshard, 2011). While project managers behave like politicians, they are incapable of imposing their will because they are not inherently powerful to micromanage suppliers, subcontractors and coworkers. They exercise influence effectively over others just like politicians. On projects, project managers have the ability to influence others since they have direct control over a range of issues (Koleczko, 2012). Project managers add value to stakeholders during planning, implementation and evaluation in a number of ways (PMI, 2015b). One, they facilitate quality data collection and framing of key evaluation questions. Second, they interpret and make sense to the data collected. Third, they provide high quality and credible perspectives useful for evaluation (Bowles, 2014). Lastly, they increase the utilization of findings of the evaluation, and to support and build knowledge about the evaluation. Engaging stakeholders is also important for managing risks especially when evaluating a contentious program or policy in which key stakeholders are known to have opposing views (Watt, 2013). It is important to understand different perspectives on what will be considered credible evidence of outcomes and impacts. Project managers face the different stakeholders in projects hence the need to make decisions that balances their competing claims. In practice, Yang (2014) argues that stakeholders' behaviors and attributes highly relate to the choice of decision-making strategies. Three stakeholder attributes in most empirical studies involve proximity, urgency and power. On the other hand, stakeholder behaviors include neutral attitude, opposite position, competitive threat and cooperative potential which are crucial in dealing with stakeholder claims (PMI, 2015a). The project manager chooses and applies concession/adaptation, compromise and strategies of defense depending on the behavior types and salience levels of stakeholders to create value. Conclusion The essay found that the project manager is tasked with controlling and managing project activities while creating value by engaging the stakeholders. Through a number of cases such as the Three Gorges Dam, Wembley Stadium, Sydney Opera House and the Gotthard base tunnel in Switzerland, the project manager has a huge role in balancing the interest of key stakeholders and managing project uncertainties. Some of these projects could not meet the triple constraints of cost, time and scope because of the failure to incorporate proper project risk management or stakeholder relationship management. The essay agrees with the assertion that the project manager’s decisions and activities are intended to create value. Effective stakeholder management is that every minute invested brings out significant project outcomes. Similarly, a project manager makes informed project decisions where they have the right information and support. While ‘value’ could be huge financial returns from the project, it also implies satisfaction and happiness from all the stakeholders involved. Project managers make far reaching decisions to ensure that matters physical environment and employee work environment are taken into consideration their proximity, urgency and power. References Billingham, V. (2008). Project Management: How to plan and deliver a successful project, 3rd edn, The Project Management Excellence Center. Bircher, P. (2016). Implenia joins the celebrations: official opening of the Gotthard Base Tunnel. https://www.six-swiss-exchange.com/issuers/services/tensid_news_en.html?id=a8ffa3fb Bosshard, P. (2011). Analysis: Lessons from China’s Dams. InternationalRivers. https://www.internationalrivers.org/resources/analysis-lessons-from-china-s-dams-1667 Bourda, F.M. (2014). Effective stakeholder management. Tata Management Services. Bourne, L. (2015). Finding the project stakeholders who value value. Theprojectmanager. http://projectmanager.com.au/finding-the-project-stakeholders-who-value-value/ Bowles, C. (2014). Maximizing value to stakeholders through risk management. Association of Project Management. https://www.apm.org.uk/news/maximising-value-stakeholders-through-risk-management Eskerod, P. & Jepsen, A.L. (2013). What does the project stakeholder value? PMFirst. http://www.gpmfirst.com/books/advances-project-management/what-does-project-stakeholder-value Haughey, D. (2013). The role of the project manager. Projectsmart. https://www.projectsmart.co.uk/the-role-of-the-project-manager.php Joshi, S. (2014). Decision making models in project management. PMtimes. https://www.projecttimes.com/articles/decision-making-models-in-project-management.html Kerzner, H.R. (2009). Project management: A systems approach to planning, scheduling and controlling. John Wiley and Sons. Koleczko, K. (2012). Risk and uncertainty in project management decision-making. Public Infrastructure Bulletin, 1(8): 76-82. Larson, E.W. & Gray, C.F. (2010). Project Management: The Managerial Process, 5th edn, McGraw-Hill Higher Education. Maylor, H. (2010). Project Management. 4th edn, Prentice Hall, Financial Times. Murray, P. (2004). The Sage of the Sydney Opera House. New York, New York: Taylor & Francis, Opera House, 2012. Retrieved on March 1st, 2012; from http://www.aviewoncities.com/sydney/operahouse.html . Newton, P. (2015). Managing project risk: Project skills. Free Management e-books. PMBOK (2015). Project risk management. http://www.slideshare.net/pankajsh10/project-risk-management-pmbok5 Project Management Institute (2015a). Pulse of the profession: Capturing the value of project management through organizational agility. The Project Management Institute. Project Management Institute (2015b). Capturing the value of project management through decision-making. The strategy report. https://www.pmi.org/learning/thought-leadership/pulse/capture-value-decision-making Strategicppm, (2011). Project failure-Wembley Stadium. https://strategicppm.wordpress.com/2011/01/17/project-failure-wembley-stadium/ Watt, A. (2013). Stakeholder management. https://opentextbc.ca/projectmanagement/chapter/chapter-5-project-stakeholders-project-management/ Yang, R.J. (2014). Stakeholders’ attributes, behaviors, and decision-making strategies in construction projects: Importance and correlations in practice. Project Management Journal, 4(2): 45-56. http://www.itinfo.am/eng/project-management-body-of-knowledge-pmbok-guide/ Appendices Appendix I: Wembley stadium Appendix II: Gotthard base tunnel Appendix III: The Three Gorges Dam Appendix IV: Sydney Opera House Read More