Project Management Critical Success Factors
Jan 13, 2016
Project ManagementCritical Success Factors
Critical factors for project success would depend upon the kind of project that is being carried out
Type II project Type IV project
WATER AIR
* Product Development * Research project * Organization development
Type I project Type III project
EARTH FIRE
* Engineering project * Application Software project* Software Development
No
No
Yes
Yes
Met
hods
Wel
l D
efin
ed
Goal Well Defined Greater Chanceof Success
Greater Chance of FailureTYPE of PROJECTS
PROJECT START-UP TECHNIQUE
- Multidisciplinary Teams - Inspiration / Negotiation- Brainstorm - Strategy Definition- No Defined Technique - Communicate
“ COACH “ “ EAGLE “
- Specialist implementer - Facilitator- Known Technique - Informal Negotiator- Defined Organization - Agree on Goals
“ CONDUCTOR “ “ SCULPTOR “
Top - downApproach
Bottom – UpApproach
Met
hods
Wel
l D
efin
ed
Goal Well DefinedYes No
No
Yes
Successful Project implementation ?
A project is considered to be successfully implemented if it is -
on-schedule on-budget achieves basically all the goals originally
set for it accepted and used by the client for whom the project is intended.
Critical success FactorsMissionTop Management
SupportScheduleClient ConsultationPersonnelTechnical TasksClient AcceptanceMonitoring and
FeedbackCommunicationTroubleshooting
Client Consultation
Communication, ConsultationAnd active listening to all impacted parties
Technical Task
Availability of the required technology andexpertise to accomplish the specific technical action steps
Communication
The provision of an appropriate network and necessary data to all key actors
Trouble Shooting
Ability to handle unexpected Crisis andDeviations from plan
Communications
ProjectMission
TopManagement Support
ProjectSchedulePlan
ClientConsultations
Technical Task
PersonnelRecruitmentSelection& Training
ClientAcceptance
Monitoring &Feedback
Trouble - Shooting
(Schultz and Slevin, 1984)
The Model
A study on identifying CSFs
A sample of 400 projects50-item instrument ( 5 items per
factor )Each factor found significantly
related to project successCumulative r sq. value was 0.615 (ie. 61% of the success can be
explained by these 10 CSF’s )
Strategy CSF
Tactics CSF
• MISSION• TOP MANAGEMENT• SUPPORT• SCHEDULE / PLANS
• CLIENT CONSULTATION• PERSONNEL• TECHNICAL TASKS• CLIENT ACCEPTANCE• MONITORING &
FEEDBACK• COMMUNICATION• TROUBLE SHOOTING
PLANNING ACTION
Probability of Type I and Type III
errors
High acceptance: Misuse
High probability of implementation Success
High probability of Implementation Failure
Probability of Type II and Type IV errors
Low acceptance: Low use
L H
Effectiveness of Strategy
E
ffec
tive
nes
s o
f T
acti
cs
L
H
Type I : Taking an action when, in fact, none should be taken
Type II : When an action should have been taken and was not taken
Type III : Solving the wrong problem
Type IV : Taking an action which solves the right problem but solution is not used
TYPES OF ERRORS
Cell 1 : High Strategy – High Tactics
Setting for these projects which have been rated highly effective in carrying out both strategy and tactics during implementation
In addition to high quality Strategic activities, these projects have also been effectively operationalized.
Cell 2 : Low Strategy – High Tactics
Initial planning is inadequately developed
Tactical operationalization is effectively managed
“ Errors of Actions “Unnecessary project is implemented
Cell 3 : Low Strategy – Low Tactics
High likelihood of Implementation
failure.
Not only is initial Strategy Low, or poorly performed, but subsequent tactics are also ineffective.
Cell 4 : High Strategy – Low Tactics
Project Strategy was effectively performed but subsequently tactics were rated ineffective.
Exhibits a strong tendency towards “Errors of Inaction”.
Low acceptance : Client consultation and selling of the project are poorly performed.
Conceptualization Planning Execution Termination
Imp
ort
ance
Strategy
Tactics
Fig.: Changes in strategy and Tactics across the project life cycle
Stages
1. Use a Multiple – Factor model2. Think strategically early in the
project life-cycle3. Think more Tactically as the project
moves forward in time4. Make strategy and tactics work for
you and your project team5. Consciously plan for and manage
your project team’s transition from strategy to tactics
Implications for Managers
R&D Project Selection at Volvo
A large MNC Automobile company◦ Turnover: 28 B USD R&D budget: 840 M
USD (3%)Has 4 Global R&D centers: Sweden,
Brazil, China and IndiaMultiple Global R&D projects (> 10,000
projects in 2002-2003)A system to select R&D projects: Global
Development Process (GDP)◦ I – Value (Innovation importance value)
The GDP ProcessGDP constitutes a framework for
project managementA development change is
initiated due to 3 main reasons:◦Market (New variants, features,
services)◦Industrial system
(quality/cost/improvement)◦Legal (New regulations related to
product)
Project Management at VolvoTwo issues that senior managers
look for◦Cross-functionality
All functions involved in the project must participate from the very beginning to ensure that their area is properly taken care of
Each area has a project manager◦Responsibility
Project Managers are responsible for QDCF (Quality, Delivery, Cost and Features)
The project “purchases” resources from the line organizations and promises benefits
Gates and decisionsEach project moves along gates
and decisions, once approvedFurther funding is based on the
recommendations of the PM by a project steering committee
Gates are checkpoints; PM confirms meeting of targets and opens next gate
The number of gates in every project depends on the project class
Project classesThree classes:
◦Class 1: Small changes, e.g. creating new variants using existing parts
◦Class 2: Modifications of existing products
◦Class 3: New product or major changes of existing products
I – ValueI-value = Innovation Importance
valueReason for development of I-
value◦A neutral/objective help for
prioritisation of Product Modification
Requests (PMRs)◦Personal/subjective preferences will
not steer those PMRs that will be
processed◦Factors used to calculate I-value will
be updated periodically; last done
1998
Goal with I-value
Early OK/Deletion gives quick and
clear answers Concentrate resources on critical PMRs
◦ More resources available within the
organisation
Reduce number of low prioritised
PMRsLowered friction in the organizationPossibility to compare PMRs from
different areas
Basis of I-value
The I-value considers◦Volume
◦Yearly Profit
◦Net Profit / Operating Profit (according to part
cost model)
◦Expected Product Life-time
◦NPV (Net Present Value)
◦Tooling Investment & Development Resources
◦ IRR
◦Quality influence of change
◦Market needs and Strategic Influence
When to use I-value?Valid for Projects up to 3.5 m USD
◦ I-value model does not have any limitations, but
projects above 3.5 m USD should be based on
strategic/intuition
I-value should not be seen as the
absolute truth; Common sense and
intuition must always be considered.Important that the I-value model is
continuously refined with mutual
experience and other inputs.
Finally, some major project disasters
Critical managerial variables: Based on a study on 110 defence projects undertaken in Israel and completed between 1981 and 1990 by Dvir et al. (1990)
Size/development duration of projects
Project sizes from less than USD 1 M to over USD 500 M.
Development duration from about one year to more than 20 years.
Type of projects (subject-wise)
25 projects: new weapon systems.44: surveillance and electronic
warfare systems.Others developed communication,
command and control systems and support equipments.
Project classification19: feasibility studies.28: improvement projects of
existing systems.Others developed entirely new
systems.27: pure hardware projects.Others included software and
hardware.33: developing sub-systems.76: developing full-scale systems.1: development of a platform.
Critical managerial variables: initiation phase of the project and pre-contract activity
Critical managerial variables:project preparation, design policy, technological infrastructure and design methods
Critical managerial variables:planning and control processes
Critical managerial variables:organizational and managerial environment