Professional Documents
Culture Documents
Proj ects
in the Construction Industry
Proj ect Perspecti ves 2009 85
Figure 1. Traditional and Total Caremodel (Cook, 2004).
Rolls-Royce
Eng.Health
Monitoring
Airline
Vendors
Rolls-Royce
Airline
Logistics Provider
Overhaul Base
Predictive
Maintenance
Vendors Logistics Provider
Overhaul Base
Rolls-Royce responsible for Airlines
non-core business activities
Non-core business activities
Focus on core
business
Core business
Passenger revenues
Traditional model TotalCare model
Literature Review
For the purpose of this research, Total Carein civil
aerospace industry, project procurement strategies
in construction industry and construction project
management skills required by project managers
are reviewed.
Need of Total Carein Civil Aerospace
Globalisation has encouraged competition,
changes and uncertainty in the airline industry.
Airline operators are continuously seeking new
ways to transfer non-core business activities such
as maintenance and service of engines with its
attendant risks to the suppliers in order to focus
on their core business activity of transporting pas-
sengers to increase value to their business (Davies
& Hobday, 2005).
Hence, Rolls-Royce the second largest aircraft
engine manufacturer in the world developed the
Total Carebusiness system which provides that
adds value to customers business by avoiding
unplanned costs, reducing operating costs and
maximizing prot (Terrett, 2006). This new busi-
ness model has transformed business from that of
traditional manufacturing organisation to service
provider.
Total Caredelivers a win-win situation to both
customer and the supplier. For the customer, Total
Careis a way to best manage the risk and cost,
increase customer value whilst maximising prot
and reduce operating cost. For Rolls-Royce, Total
Careis the best way to secure long-term revenue
streams. Risk to business is reduced because Rolls-
Royce has expertise developed through experience
in handling their own problems. Thus, Total Care
is seen to be the future of the aerospace industry
(Rolls-Royce, 2006).
Project procurement strategies in the
construction industry
The construction industry plays an important role
in the economic development of a country. Con-
struction is a large and diverse sector of industrial
activity ranging from huge projects such as the
Channel Tunnel, public and residential buildings to
the small-scale renovation and repair of existing
facilities. These projects are procured through dif-
ferent procurement routes peculiar to the clients
business requirements.
There are several types of procurement strate-
gies for a client to procure a construction project.
These are traditional design-bid-build, manage-
ment contracting, construction management,
design and build and project nance initiative
(PFI). Partnering, alliances, joint venture and
framework agreements are collaborative strate-
gies usually used by contractors to tender in more
complex projects.
The need to change
Project delivery performance in the construc-
tion industry has often been criticised for its
time and budget overruns. This is partly due to
its fragmented approach to contracting by the
traditional methods of separating the design
and construction processes from project delivery.
Fragmentation creates adversarial relationships
and lack of trust within the project delivery teams
which in turn leads to poor working relationships
and hence to poor project delivery performance
(Tenah, 2001). According to Bower (2003) the
fragmented and contractual relations that result
in sub-optimal performance should be replaced
with collaborative working systems and repeated
long-term relationships.
Private Finance Initiative (PFI) system
Under the PFI system, the purchase of an asset by
the public sector is replaced by the purchase of
a service for an annual fee paid to a PFI provider
(Smith, 2003). In PFI, the client (principal) has to
sign only a single contract (concession contract)
with a promoter (a group of specialists). Con-
cession contracts may be dened, according to
(Smith, 2002) as a project based on the granting of
a concession by a principal, usually a government,
to a promoter, sometimes known as the conces-
sionaire, who is responsible for the construction,
nancing, operation and maintenance of a facility
over the period of the concession before nally
transferring a fully operational facility at no cost
to the principal. During the concession period (typ-
86 www.pry.fi
ically 25-30 years) the promoter owns, operates
and maintains the facility and collect revenues in
order to repay the nancing and investment costs
and make a prot. In this manner, improvements
to public services can be made without upfront
public sector funds (Bower, 2003).
PFI in construction is perceived to have the
closest similarity to Total Carein civil aerospace.
PFI provider is responsible to designing, building
and operating a facility. The facility is then used to
support the core business of the public sector and
a unitary fee is paid for the services provided. In
Total Care, Rolls-Royce provides the aero engines
and aftermarket service to the airline operators.
The services provided will then be repaid at a
xed price by the customers. This phenomenon
indicates that the integrated approach of project
or service procurement is the current trend in
any industry.
Project management in construction
Two of the biggest changes in construction over
the last decade have been in the use of private
sector nancing for public sector works (roads,
hospitals, schools, prisons, etc.) and the move
towards partnering and alliances (Morris, 2004).
Froma project management perspective, the use of
PFI has forced project participants to focus on the
whole life characteristics of facility being built.
This include facilities management, cost-in-use,
whole life performance and integrated logistics
support. The emergence of PFI with long-term
perspectives of operational performance and the
trend towards partnering (including alliances and
joint ventures) are seen as challenges in project
management (Turner, 1995).
As a result of these changes, project managers
are being required to take on activities for which
they have not previously been responsible and
which require different skills that are not core
skills for project managers (RICS, 2003). Khan
(2006) developed a comprehensive list of project
management tools and skills required by project
managers in different knowledge areas.
Apart from technical competence, general
knowledge and skills are also important for a
project manager to be competent. The general
knowledge identied by (Khan, 2006; Edum-Fotwe
& McCaffer, 2000; Suikki, 2004) are nance and
accounting, sales and marketing, strategic plan-
ning, tactical planning, operational planning, or-
ganisational behaviour, personnel administration,
conict management, personal time management
and stress management.
Skills are derived fromexperience (Frame, 1999).
Khan (2006) and El-Sabaa (1999) categorise the
abilities needed for a project manager into three
basic developable skills: human skill, conceptual
skill and technical skill. Human skill is primarily
concerned with working with people. The human
skills are mobilising, communication, behaviour,
coping with situation, delegating authority, mak-
ing decisions, political sensitivity, self-esteem and
enthusiasm. Conceptual skill denes the ability
of a project manager to envision the project as
a whole. The conceptual skills include planning,
organising, strong goal orientation together with
the ability to see the project as a whole, the ability
to visualise the relationship of the project to the
industry and the community, and strong problem
orientation. Listed in the technical skills category
are special knowledge in the use of tools and
techniques, project knowledge, understanding
methods, process, and procedures, technology
required, and skills in the use of computer.
The role of project managers to manage PFI
projects and personnel will be seen to be much
more complicated and difcult when compared to
that of traditional project managers. PFI project
managers have to be really competent to ensure
successful project delivery. Therefore, the selection
of project managers with the relevant range of
knowledge and skills (from technical to general
skills) is very important to the overall success
of PFI projects (El-Haram & Agapiou, 2002; Gal-
limore, 1997).
Analysis and discussion
In this section data obtained by secondary research
method is analysed and discussed to answer the
research questions as follows:
Q1: Which strategy of project procurement
is considered as Total Carein construction
industry?
The common project procurement methods are
traditional design-bid-build, management con-
tracting, construction management, design and
build, PFI/PPP. Among all project procurement
methods, traditional design-bid-build is the least
satisfactory procurement method because it is
fragmented and usually procured based on lowest
bid and often does not promise best value to the
client. Management contracting and construc-
tion management are more suitable to the client
who has little or no knowledge of managing the
project. A management contractor is hired and
will be responsible for managing and controlling
the contractors on behalf of client. This helps to
reduce the risks of delay or cost overrun by assign-
ing a contractor who is good at managing project.
The design and build procurement method is in-
tegrated with the design and construction stage
of the project. The benet of this procurement
method is that the contractor is invited for the
design feasibility discussion at the design stage
thus ensuring project constructability by reducing
design changes that may occur at a later stage. If
design and build is considered as a simple integra-
tion then Private Finance Initiative (PFI) can be
considered as a much more integrated and compli-
cated procurement method. It integrates from the
project feasibility stage towards operation stage.
The lesser the fragmentation, the greater project
value will be delivered.
This research is attempting to identify the Total
Careproject in construction industry. The FI that
provides the greatest value among all the other
project procurement methods is chosen to be the
Total Carein the construction industry. The simi-
larity between Total Carein civil aerospace and
PFI in construction industry can be determined by
comparing the level of fullment to the clients
needs. This comparison is shown in Table 1.
Use of PFI has
forced project
participants to focus
on the whole life
characteristics of
facility being built.
Proj ect Perspecti ves 2009 87
Q2: What are the differences between traditional public
sector procurement method and PFI?
The fundamental difference between traditional public
procurement method traditional design-bid-build and the
Private Finance Initiative (PFI) is indicated by best value. At
a period when a traditional design-bid-build is widely used,
the public sector has the tendency to choose the bidder with
the lowest bid. Choosing the lowest bid is good enough as the
public money is saved, but it does not promise that project
will deliver on time, have good performance and on budget.
When the public sector is thinking about saving, the contractor
might think the same way too. At the end, even after time and
cost overrun, the project may not be t for purpose.
Traditional design-bid-build can only be considered if it can
deliver best value. So, the public sector is moving towards more
innovative procurement methods that can provide best value
- in term of time, cost, performance, risk, safety, functionality
and tness-for-purpose.
Among PFI, prime contracting and design-and-build, PFI is
the most integrated and distinct in the way of how the project
is being nanced. The PFI is privately nanced and the public
sector does not use the public money for the project. How-
ever, prime contracting and design-bid-build are still using
the traditional way of nancing the public sector will pay
to the contractors, consultants and designers, depends on the
payment arrangement.
In traditional design-bid-build, the public sector is bear-
ing the cost of project risks for example ination, supply
shortage or design change whereas, in PFI, the project risk
is totally transferred to private sector by public sector. Since
the project is privately nanced, the PFI provider has to raise
the project capital by different nancial instruments such as
debt, bond and equity. The raised capital has to be repaid to
the stakeholders over the concession period starting from
operation stage throughout the termination stage of the
facility. So, the PFI provider has to be certain that the project
will generate enough revenue to repay the debt, operate
and maintain the facility and create prot through strategic
project planning. The chances of PFI projects to be successful
are much higher than the traditional design-bid-build. The
National Audit Ofce report on construction performance
stated that nearly 80% of PFI projects had been delivered on
time and to budget and only 30% of conventionally procured
public projects are completed on time and to budget. Table
2 shows the differences between public sector traditional
procurement method and PFI.
Cl i ent s needs Tot al Care PFI
Focus on core busi-
ness
TC provides engines and aftermarket service
to the client.
PFI is responsible to nance, design, construct and
operate the facility to provide service to the client.
Downsizing on-go-
ing cost reduction
TC reducing the clients maintenance and
service costs.
Since PFI is fully or partially privately nance. The
project costs no or less to the client.
Predictability of cost
base
In TC, the client pays a xed and predictable
fee for the service.
In PFI, the client pays a unitary fee for the service.
Risk transfer
In TC, the client is transferring the risks (engine
performance, product improvements, condi-
tion of asset, etc.) to the service provider.
In PFI, the client is transferring the risks (cost, time,
performance, safety, functionality, tness-for-purpose)
to the PFI provider.
Table 1. The comparison between Total Carein civil aerospace industry and PFI in construction Industry
Tradi t i onal desi gn- bi d- bui l d PFI
Client gives detail technical requirements Client gives output specications
Not privately nanced Privately nanced
Usually the lowest bid is chosen Select preferred bidder who offer best value
Fragmented (design and construction phases are separate)
More integrated (the SPV is responsible to raise its own capital,
design, construction, operation and generate revenue)
Client pays fee/cost to the designer and contractor Client pays a xed unitary fee for the service
Partial risk retain No or partial risk retain
Higher cost to obtain facility and facility management is
under the client responsibility
Lower cost. The private sector is responsible to provide the
facilities management and to support clients core business
Unpredictable cost Predictable cost
Client have to manage both the core business (serving the
public) and non-core business (operating and maintaining
the facility)
Client concentrates only on core business
Small or simple project Large or complex
Short-term Long-term
More contractual interfaces Only one contract to awarding company
Short tender evaluation period Long tender evaluation period
Lower bidding cost Expensive bidding cost
Designer and contractor are individual entity Joint venture of several diversied company
Client role is important Reduced role
Table 2. The comparison of public sector traditional procurement and PFI
88 www.pry.fi
Q3: How the private sector contractors role in
traditional project procurement method differs
fromPFI?
In traditional design-bid-build, the design and con-
struction are separate entities. The client assigns a
designer for the detailed drawings, the contractor
is appointed late through competitive tendering.
The constructor has minimum or no control over
the design. The main task of the contractor is to
construct what has been planned and nish the
project according to requirements. The main focus
of the contractor is to nish the project in time
and budget. The contractor has no interest in the
functionality and tness-for-purpose of the proj-
ect. Therefore, the aim for a contractor to enter the
project is to earn prot. The value is impossible to
be created if the objectives of the client and the
contractor are not aligned.
The situation in PFI is, somehow, different. The
contractor has the ownership of the project. The
main focus of the contractor is shifted fromproject
prot to more customer orientation. It is about
maintaining a long-term relationship with the cli-
ent and adding value into the clients business. PFI
is an integrated system and strategic planning is
crucial if the project is to be successful. The project
is integrated fromthe beginning at project feasibil-
ity stage to project operation and decommissioning
stage. As PFI is privately nanced and the debt has
to be repaid, strategic planning is needed so the
aims of gaining prot and achieving client business
requirement can be achieved.
The recent trend of collaborative working has
changed the way of how contractors usually work
in the construction industry. In traditional design-
bid-build, the construction work is carried by one
contractor. However in PFI, because of the complex-
ity and long-term perspective of the project, it will
be difcult for an individual contractor to do all the
work. Joint venture from diversied companies is
needed in PFI. The aim of Joint venture is to enter
into a new project opportunity as a single company
and make the project more feasible by pooling
expertise and resources from different members.
Table 3 shows the differences of the contractors
role in traditional design-bid-build and PFI.
Q4: Which project management knowledge
and skills are required to determine the
success of a PFI project?
In this section, the discussion will be based upon
the research ndings from two researches. The
followings will introduce the research used by
both researchers.
Edum-Fotwe and McCaffer (2000)
The research topic of Edum-Fotwe and McCaffer,
Developing project management competency:
perspectives fromthe construction industry shows
how project managers can be competent in a
changing construction business environment.
Their study is based on a survey conducted in
UK. The survey was administered by applying two
research instruments, the interview technique
with key professional personnel and a postal op-
tion questionnaire survey of project managers
within the construction industry. In all, 170 good
responses from practising project managers were
obtained out of 500 questionnaires, which were
sent out for the postal survey, giving a response
rate of 35%.
Table 4 shows the primary knowledge and skill
elements required for developing project manage-
ment competency. Different aspects of experi-
ences that are skill based dominated the elements.
Edum-Fotwe and McCaffer (2000) have used the
equation 1 to perceive the level of importance for
each knowledge and skill elements.
Table 5 shows the secondary knowledge and skill
elements required for developing project man-
agement competency. This table predominantly
reected elements of an academic nature which
usually form part of many academic programs in
project management.
The researchers identied that the job experi-
ence is much more important than the contribu-
tion of academic programs and formal industry
training to the competency of project managers.
This survey established that in order to be com-
petent in a changing construction environment,
experience is very important (Edum-Fotwe and
McCaffer, 2000).
Tradi t i onal desi gn- bi d- bui l d PFI
No or less control over the design Contractor involves in design stage to ensure constructability
Competitive (many competitors) Less competitive (appointed by client)
Focus on prot Focus on delivering value to the client/public users
Less complicated
More complex and different technical and management knowl-
edge needed
Small to medium projects Large and more complex
An individual company Joint-venture company
The client pays for the construc-
tion cost
The company has to nd the capital fund and revenue itself
Facility ownership client Facility ownership contractor/SPV
Fragmented team Integrated team
Disrupted value chain Integrated value chain
Usually win-lose Usually win-win
Table 3. Contractor in Traditional design-bid-build and PFI
Proj ect Perspecti ves 2009 89
Table 4. Primary knowledge and skill elements for developing PM competency
(Edum-Fotwe and McCaffer, 2000).
Generi c PM Funct i on Knowl edge and ski l l (k- s) k- s f act or
Technical skills Planning and scheduling 97.3
Construction management activities 89.1
Basic technical knowledge in own eld 94.5
Productivity and cost control 82.7
Managerial skills Leadership 98.2
Delegation 96.4
Negotiation 95.5
Decision making 91.8
Motivation and promotion 90.0
Team working 90.0
Time management 82.7
Top management relations 81.8
Financial skills Establishing budgets 94.3
Reporting systems 90.6
Legal skills Drafting contracts 92.4
Communication skills Presentation 95.3
General and business correspondence 90.6
Report writing 88.7
General skills Chairing meetings 96.1
Understanding of organisation 84.5
Table 5. Secondary knowledge and skill elements for developing PM competency
(Edum-Fotwe and McCaffer, 2000).
Generi c PM f unct i on Knowl edge and ski l l s (k- s) k- s f act or
Technical skills Forecasting techniques 74.5
Quality control 72.7
Estimating and tendering 70.9
Material procurement 65.5
Reading and understanding drawings 62.7
Design activities and background 59.1
Site layout and mobilisation 54.5
Managerial skills Human behaviour 76.4
Strategic planning 60.0
Financial skills Project nance arrangement 74.5
Establishing cash ows 65.1
IT skills Project management software 75.6
Spreadsheet 59.3
CAD 55.8
Legal skills Health and safety issues 76.2
Industrial relations 57.1
Communication skills Public speaking 74.5
General skills Marketing and sales 50.5
Public relations 50.1
90 www.pry.fi
The Royal Institution of Chartered Surveyors, RICS
(2003)
The research topic of RICS entitled Project management and the
private nance initiative (PFI) studies the adequacies of project
management skills in the public and private sector in PFI.
The study is based on a literature review and an online sur-
vey of RICS Project Management Faculty members. Altogether
701 responses were received. 18 telephone interviews were
conducted incorporating six case studies of clients, SPVs and
consultants based around PFI.
The interviews undertaken show that the project managers
role is changing within PFI (RICS, 2003). The interviews found
that traditionally four separate project management roles
existed and were performed by different people. These are,
the employers agent and the independent certier, both of
whom work for the client; the technical adviser and the SPV
representative, both working for the SPV. However, because
of the emergence of holistic or integrated PFI service provid-
ers, these roles now tend to be combined into one function.
These changes mean that project managers are being required
to take on activities for which they have not previously been
responsible and which require different skills that are not core
skills for project managers.
Another output of the research undertaken shows that both
public and private sectors have their strengths and weaknesses
in managing PFI projects. The strengths of the public sector are
client understanding, process understanding and political skills.
Its weaknesses are lack of negotiating skills, management skills,
whole life cycle costing, construction skills, nancial modelling,
stakeholder management and people skills. The strengths of the
private sector are PFI and construction experience, nancial
modelling, technical and legal advice whereas its weaknesses
are specialist knowledge, whole life costing, client understand-
ing and people skills.
RICS (2003) suggested that training and education in key
project management skills should be provided to ll the gap
between the public and private sector in PFI project. Knowledge
and experience management are needed to retain the project
management knowledge and skills from both sector.
Conclusions
Total Carein construction industry
Total Careis the concept developed in civil aerospace industry
by Rolls-Royce to create value to the client through the inte-
gration of product and aftermarket service. From traditional
design-bid-build, managing contractor, constructor man-
agement, design and build to private nance initiative (PFI)/
PPP, PFI is the only procurement method which is similar in
characteristics with Total Carein civil aerospace industry. In
construction industry, PFI is usually integrated fromthe project
feasibility stage throughout the project operation stage. The
PFI provider is responsible for maintaining, service and oper-
ating the facility to provide support to the clients business
needs. The identication of Total Carein the construction
industry indicates that a more integrated project procurement
approach is becoming a trend not only in civil aerospace but
also in the construction industry and may spread into other
industry sectors as well.
Project management knowledge and skills in PFI
In the construction industry today, project managers are faced
with a situation whereby the fundamental roles and functions
they perform are gradually shifting focus. The practising
project managers are not only accountable for the technical
knowledge and skills (such as engineering and construction
accuracy, reliability of the facility and within-cost perfor-
mance) they are also accountable for other non-engineering
(general) knowledge and skills.
The additional project management knowledge and skills
have been identied is: nance and accounting, sales and
marketing, strategic planning, tactical planning, operational
planning, organisational behaviour, personnel administration,
conict management, personal time management and stress
management. The general skills are often essential for project
managers to function effectively with their knowledge. These
are leading (project, technical and team leadership), com-
municating, negotiating and problem solving. Combination
of these skills together with traditional engineering knowl-
edge will produce a new perspective of project management.
Education and training can provide the basic understanding
of these knowledge and skills, however learning from experi-
ence is considered to be the most effective way of lling in
knowledge and skills gaps.
This research approach has been inuenced by the preju-
dices and inaccuracies of the researchers; however, this cannot
be checked.
Recommendation for further research
An alternative approach to this research would have been
to conduct in-depth interviews with practising PFI project
managers. The aim of that research would be to identify key
management competencies of Total Careprojects in the
construction industry. To full the purpose of study, a quali-
tative approach needs to be adopted as the ndings would
be measured based on the opinions, views and perceptions
of the project managers from public and private sector and
from traditional design-bid-build to PFI projects in the con-
struction industry.
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Proj ect Perspecti ves 2009 91
Ali Imran Khan (lead author)
BSc (Hons), MSc,
Research Student
Project Management Special Interest Research Group
Ali Khan is a mechanical engineer with over 5 years
of working experience as a research associate and
professional engineer. He has also held membership of
Pakistan Engineering Council since 1999.
His rst degree is in Mechanical Engineering at Uni-
versity of Engineering and Technology, Taxila, Paki-
stan, where he secured top positions in each year and
earned all Gold Medals. He then completed his MSc
in Industrial and Manufacturing Engineering with
distinction from the same university.
Now he is pursuing his doctoral research in the eld
of project management at The University of Man-
chester UK in collaboration with Rolls-Royce. Dur-
ing his research he actively participated in VIVACE
integrated R & T project, co-ordinated by Airbus and
co-funded by the European Commission and success-
fully completed his project.
A
P j t M t
Mehmood Alam
BEng MSc, Research Student
Mehmood is a professional aerospace engineer with 4
years experience of working as a Project Engineer in
a hi-techechnology aerospace organisation. Having a
rst degree in aerospace engineering, he completed
his MSc in Management of Projects (MOP) with
distinction from The University of Manchester. Now
he is pursuing doctoral studies in the eld of project
management from the same university. His research
project is jointly funded by Rolls-Royce, AMEC,
Goodrich and EDS together with The University of
Manchester. He is also working on a research project
in collaboration with the British University in Dubai
(BUiD). He has also held membership of the APM UK
since 2005.
Tiew Ying Ting
Tiew Ying Ting is a civil engineer graduated with a
degree in Civil Engineering from the University of
Technology Malaysia. He recently gained a Master of
Management of Projects degree from the University
of Manchester. Ting is working for Halcrow, a multi-
disciplinary consultancy based in London and is cur-
rently involve in Crossrail project.
Professor Andrew Gale
BSc (Hons), PhD, CEng, FICE,
MCIOB, MACostE
Head Project Management Research Group, School of
MACE, The University of Manchester
Professor Andrew Gale is a graduate of Brunel Uni-
versity and the University of Bath. He spent 13 years
in industry both in the UK and Middle East prior to
beginning an academic career in 1985. He is a char-
tered civil engineer, Professor and Head of the Project
Management Research Group SIG in the School of
Mechanical, Aerospace and Civil Engineering at the
University of Manchester. He has signicant experi-
ence in collaborating with Russian higher education
and industry in developing masters level educational
provision for Russian engineers and project managers.
He is a member of the Senate of the British University
in Dubai (BUiD) and leads an academic collaboration
with the Institute of Engineering at BUiD. He is a
member of the Health Monitoring and Through Life
Support Research Group in MACE. He is Programme
Director of the MSc in Project Management Profes-
sional Development Programme, a exible modular
programme led by an industrial consortium compris-
ing: Rolls-Royce, AMEC, Goodrich and EDS. He has
published over 100 articles and paper (many relating
to gender and diversity). Since joining UMIST (now
The University of Manchester) in 1990 he has secured
and managed over 2 million worth of research and
consultancy grants.
Khan, A.I.(2006) Project Management of Product Based, Total
Care and MRMS Programmes in Aerospace (Rolls-Royce). 2006,
University of Manchester.
Edum-Fotwe, F.T. and R. McCaffer (2000) Developing Project
Management Competency: Perspectives fromthe Construction
Industry. International Journal of Project Management, 2000.
18(2): p. 111-124.
Suikki, R. (2004) Project Management Competence Development
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92 www.pry.fi
StanisawGasik
Sybena Consulting
Warsaw
Poland
Knowl edge Ori ented
Proj ect Management
Basic standards of project management are focused on project management processes. Knowledge
Oriented Project Management (KOPM) is an approach to project management focusing in project
management on utilization of the entire knowledge of project management collected by the project
manager or organization. KOPM substantially extends Process Oriented Project Management and
restores the right balance between processes and off-processual knowledge needed for project
management.
Introduction
Basic standards of project management such as
PMBoK (PMI, 2004) or Prince 2 (PRINCE2, 2005)
are focused on project management processes.
Such an approach may suggest that this is the
most important part of the knowledge needed to
achieve success in the area of project manage-
ment. But proper execution of processes may not
guarantee success in this domain. For instance, it
seems that in the area of cost management the
most important success factor is knowledge about
the prices of planned activities (price list). The
process of planning itself is less important than the
price list. There is an analogous situation in other
areas of management: in the area of risk manage-
ment, knowledge about risks threatening a project
is more important than (often overcomplicated)
management processes. It is more important to
know what skills are needed and what resources
are available than to know the (simple) process
of human resources management processes. The
words is more important should be interpreted
as implying: an error may have more signicant
consequences in project execution.
The examples that have been cited show that
the way of conducting project management
processes in all areas of project management, for
example those described in PMBoK, is not what
determines success in project management. A
substantial amount of knowledge beyond that
of project management processes is needed to
achieve this goal. According to my personal
observations, project managers would be more
satised by being provided with knowledge needed
for management than with the pure processes of
project management.
Focusing in project management on utilization
of the entire knowledge of project management
collected by the project manager or organization
is called Knowledge Oriented Project Management
(KOPM). The approach to project management
that focuses on project management processes,
which may be found in the most of the publicly
available PM standards, shall be called Process
Oriented Project Management (POPM). As will be
shown later on, POPM is a necessary element of
every instantiation of KOPM.
Project management knowledge has its own
local avor in most cases and areas. In the cost
management chapters in any project management
standard no price list is included nor can one be.
One reason is the local specicity (geographical;
imposed by the area of project implementation;
imposed by other factors) of price lists: the prices
of a given type of work in Warsaw differ substan-
tially from those in Los Angeles or India. Other
price lists are needed by civil construction project
managers and others by IT project managers. This
in no way means that one may plan and execute a
project without adequate knowledge of the prices
that prevail in a given project environment.
Collecting the full register of knowledge needed
for project management is not a simple task. Many
Project Management
Knowledge
Off-processual
Knowledge
Processual
Knowledge
Figure 1. General structure of project
management knowledge.
Proj ect Perspecti ves 2009 93
companies strive for many years to possess such
a register. Many consulting companies establish
their value just on their proprietary knowledge
relating to project management. This knowledge
may be acquired in several ways. The three basic
ones are:
- their own experience,
- publications,
- commercially accessible registers and data
bases.
Our approach to PM knowledge is purely empiri-
cal and relies on experience gained by the author
during his work as project manager. The contents
of this paper may be placed within the knowledge
framework dened by Zack (1999) we describe
the explicit, declarative knowledge but we did
not want to focus too strongly on theoretical
aspects of knowledge. Instead we focused on prac-
tical aspects which may contribute to everyday
project management work.
Project management knowledge in basic
PM standards
The approaches to full project management
knowledge in three basic PM standards are dif-
ferent.
There is no explicit reference to off-processual
PM knowledge in CMMI (SEI, 2002). This type of
knowledge is sometimes called declarative knowl-
edge (Zack, 1999). We call it off-processual to
emphasize its relationships to often overvalued
knowledge of processes. The concept of orga-
nizational process assets refers to items directly
referring to quality and process-performance
objectives.
There is nothing about off-processual PM
knowledge in Prince 2 either, as it describes proj-
ects from the point of view of their customers. It
is not the project customers business to collect
knowledge about project management.
PMBoK is closest to the concept of KOPM. Ac-
cording to this standard, an organization must be
conscious of its Enterprise Environmental Factor
and has to have dened Organizational Process
Assets. Elements of these items are input to several
PM processes. But no knowledge, except for pro-
cessual knowledge, is provided to the reader it
may not be, as was stated above. According to the
PMBoK Guide The Project Management Body of
Knowledge is the sum of knowledge within the
profession of project management. And, quoting
the same publication, PMBoK describes a particular
subset of this knowledge, mainly the PM processes
and organizational issues. PMBoK provides no
precise specication of the kind of knowledge
that is absent from this publication. Probably the
title Project Management Processes Framework
would be more suited to this publication. The full
bodies of knowledge in PM may only be developed
locally but this fact cannot be a rationale for
claiming that the description of PM processes is
the full scope of PM knowledge. If PMBoK were
really focused on full PM knowledge, there would
be a place for direct reference to off-processual
PM knowledge items in the Organizational Proj-
ect Management Maturity Model (OPM3 by PMI,
2003), which is based on PMBoK. If there were
references to the price list etc., we would be
sure that PMBoK concerns itself with the full PM
knowledge. But this kind of knowledge is absent
from OPM3. So PMBoKs approach to project
management knowledge may not be treated as
a holistic one.
KOPM does not supplant standard process
oriented project management, but substantially
extends it and restores the right balance between
processes and off-processual knowledge needed
for project management.
The full scope of knowledge needed for project
management is described in the next chapters. This
scope has been ordered by knowledge manage-
ment areas dened by PMBoK. These areas have
been extended to include a business management
area (the lack of which is an important shortcom-
ing of PMBoK) and knowledge about the project
management environment of an organization.
Business management
Strategic plan
First of all, every organization must know what
it wants to do. Mission and strategy, treated as a
long-term plan, must direct its everyday business.
Appropriate business categories, their parameters
and their acceptable values must be described
in the strategic plan. Market share, servicing of
particular territories, income level or the set of ser-
vices performed by an organization are examples
of strategic business categories.
Project selection and evaluation criteria
An organization must know what projects it should
perform it has to dene its set of project selec-
tion criteria. These criteria usually refer to strate-
gic business categories and to the organizations
capabilities resources, costs, risks. Project evalu-
ation should refer to the criteria that led to the
projects selection, but the sets of criteria need not
be identical with them. Resource availability may
be an example of a criterion of project selection
which may not be directly used for post-project
evaluation.
Integration management
Project management process
The project management process is one of the
most important elements of every project man-
agement methodology. This process must be uni-
ed and consistent. Prince 2 constitutes a good,
and perhaps the most well-known example of
a consistent project management process. This
methodology does not dene separate processes
for different management areas (PMBoK ap-
proach) it describes just one process fromproject
start to nish.
In PMBoK, the main part of the project manage-
ment process is described in the Project Integration
Management area.
The project management process is probably
the most important part of project manage-
ment knowledge, but we must remember that
this is only one of many such elements.
There may sometimes be very distinct com-
ponents of project management processes (sub
processes), which can be assigned to another area
than that of integration management. Quality
control may serve as an example. But one must
94 www.pry.fi
remember that the general consistency of a project
management process is more important than as-
signing a process to a particular project manage-
ment area. The quality control process makes up
an integral part of the production process.
Lessons learned register
This register contains lessons learned by the orga-
nizations staff in the course of executing projects.
It may relate to all other elements of knowledge
needed for project management. A lesson learned
should describe the reasons causing a given
situation, possible implications of this situation
and the scope of the lesson's applicability and
point out other elements of project management
knowledge.
Conguration items
Knowledge needed for effective conguration
management. A set of items classes which should
be put under conguration management. A set
of possible states must be described for every
conguration item.
State changes of conguration items
Element of knowledge needed for effective con-
guration management. A set of state changes of
conguration items. For each change a stimulus
causing state change must be described. One spe-
cic type of stimulus may be a change of state of
another conguration item.
Scope management
Products
A list of products produced by an organization.
The basic knowledge needed for project initiation
and planning. Every product should be described
by its general characteristics, the time and cost
of producing it, and possible modications. Pro-
cesses for the production of products should be
known, too.
Structure of products
Organizations should know the structures of their
products. The decomposition of every product
down to the level sufcient for planning work for
its development should be known. Each compo-
nent must be described by its basic characteristics:
name, signicance, method of production.
Time management
Activities categorization
In order to develop a set of qualitative or quan-
titative characterizations of activities, every
organization should have some classication of
project-related activities. Such classications are
usually used for analyzing activities workload or
cost.
Activities lists for development of WBS
elements
Activities needed for producing every WBS ele-
ment should be known. Such lists are usually
prepared for elementary WBS elements. They may
be predened for more aggregated WBS elements,
mainly in order to describe activities they have in
common with smaller WBS elements, e.g. manage-
ment activities.
Activities workload
Activities workload (number of work hours or
work days) is one of the basic items of knowledge
needed for effective project planning. Workload
may be dened for activity categories or for activi-
ties called for in the production of WBS elements.
The cost of an activity is dened on the basis of
its workload. Duration of activities is dened on
the basis of its workload, too though the rela-
tionship between these two parameters does not
have to be linear.
Cost management
A price list is the most important knowledge item
applied in the area of project cost management. It
details prices of goods and services being procured
from outside of the organization performing a
project, as well as goods and services being de-
veloped within an organization. The pay rates for
particular qualications (roles) and for organiza-
tion's workers should be dened separately.
Quality management
Product quality
The quality metrics for every product being de-
veloped in an organization must be known for
successful project planning and execution. Their
acceptable values must be dened, too. There
must be procedures for computing the values of
these metrics.
Human resource management
Project organizational structure templates
Every organization should have predened ef-
fective organizational structures of projects.
These structures can and should be different for
projects of different type and scale. Every element
of such a template must have dened functions
and roles in order to perform these functions.
Their responsibilities and authorizations should
be specied there, too.
Qualications and skills
The register of qualications and skills needed to
produce products developed in an organization.
This register is often of a hierarchical nature.
Qualications should correspond to dened levels
of prociency.
Resources
Human resources register. This hierarchy should
reect the structure of an organization. For ev-
ery staff member there should be a set of her/
his specied qualications and skills. One of the
qualications is usually singled out as primary role
of a particular staff member.
Demand for qualications and skills
There should be a register of demand for quali-
cation and skills in every organization. For every
interval (day, week) the demand for every quali-
cation or skill should be specied and documented
in this register. The demand may be expressed in
time units or in FTE.
Staff utilization registers
Every staff member must have his or her own
work assignment schedule. Such a schedule must
Proj ect Perspecti ves 2009 95
contain project identication, assignment status
(reservation / nal assignment), and dates of as-
signment.
Activities performed by role
For every role there has to be a list of activity
categories that it may perform. This register may
contain specications of minimum prociency
levels, too.
Communication management
Report templates
Reports are the main components of the informa-
tion exchange process. Every organization should
have a predened set of report templates needed
for project management. Report templates may
take the form of project management system re-
ports, reports fromother databases or they may be
templates produced by computer applications that
assist ofce automation. Every report template
should include a reporting schedule and indicate
the persons responsible for preparation of reports
and the persons receiving them.
Document templates
People planning a project must have access to
templates of documents needed to carry out
projects. These documents describe decisions made
during project execution (project plan a deter-
mination about the expected method of project
execution; acceptance protocols decisions about
product acceptance etc.).
Risk management
Register of risks which may be encountered during
the execution of projects. Risks are usually clas-
sied hierarchically. The description of every risk
should contain its general characteristics, project
elements exposed to it, estimation of risk impact.
Risk symptoms should make up another part of
risk description early portents of its occurrence.
Risk mitigation procedures and contingency
plans constitute other important elements of risk
description.
Procurement management
Project managers who plan to procure products
or services from outside the organization that is
performing the project, must have knowledge
about potential suppliers (Register of products,
suppliers and price list). A register of suppliers
should be organized in a way allowing for easy
searching for suppliers of needed goods. Project
managers need to know the prices and quality of
offered goods. The organization should collect
some other data about suppliers, such as the solid-
ity (e.g. punctuality) of their services.
Project management support
Project management information system
Contemporary project management is almost
impossible without specialized software support
(Primavera, MS Project). Project managers must
be skilled in the use of such applications in order to
manage a project effectively and efciently. Every
organization must have a system of familiarizing
project management staff with such software. The
project management information system is for
project managers the most important part of
the organizations information system.
Organizations information system
The information system is a set of rules and tools
for processing information needed in project man-
agement. The accounting system, HR systemor the
set of work procedures are the most important
aside from the PM information system com-
ponents of this system. Project managers cannot
successfully manage projects without knowledge
about this system.
Product development processes
Projects are carried out with the main aim of
producing certain products or services; one must
remember that project management itself is not
the goal of a project. So the indispensable, main
part of knowledge needed for project management
is the domain knowledge about products, devel-
opment processes, regulations etc. in the domain in
which the project is performed. Every organization
that performs projects must collect, structuralize
and pass on such knowledge to project teams.
The structure of such knowledge greatly depends
on the knowledge domain, but it must be deeply
integrated with knowledge that relates purely to
project management. CMMI (SEI, 2002) provides
a good example of such integration.
Conclusions KOPM Applications
Better project management. Knowledge Oriented
Project Management describes the area of project
management in a more complete way than Process
Oriented Project Management does. So the KOPM
model may be applied wherever POPM has been
applied up to now but with better results. The
basic application of the KOPM approach is its
direct utilization for the entire process of project
management with special stress on the phase of
project initiation and planning. It is impossible to
manage projects effectively and efciently with-
out complete knowledge that concerns more than
just processes of project management.
Basis for PM training improvement. The model
presented above provides guidelines for project
management staff training. Training that fails
to supply all needed knowledge will not prepare
prospective project managers for effective proj-
ect management. Education providers claiming
that they conduct effective project management
courses while they in fact provide only the pro-
cessual knowledge (a situation very frequently
encountered) are like airline agents that indicate
ticket prices without all the taxes and fees that
are included in the nal price.
Systemization of project management knowl-
edge. This paper attempts to present the structure
of the full range of knowledge on project manage-
ment. Our paper is in a sense similar to PMBoK: we
present in a systematic way all registers of project
management knowledge, while PMBoK presents in
a systematic way project management processes
(a subset of the whole subject matter).
The way of ordering an organizations knowl-
edge in the domain of project management.
Organizations performing projects must order
their knowledge. The paper presents the complete
96 www.pry.fi
set of registers used for the description of such
knowledge.
Basis for assessing the project maturity of an
organization. As there is a complete set of reg-
isters of project management knowledge, their
presence provides evidence of an organizations
project management maturity. Organizations that
have more knowledge registers are more mature
than those which have fewer of them or do not
maintain them at all.
Improving communication between project
stakeholders. The KOPM model constitutes a bet-
ter basis for effective communication between
organizations engaged in project management.
The company for which the author is currently
working had its risk management method devel-
oped by a consulting company. The initial nal
product we received under this contract consisted
only of risk management procedures. It took a long
time to explain to contractors that the procedures
alone, without knowledge about possible risks
in our projects, are practically useless. If we had
taken KOPM as the basis for this contract, the
risk of such a misunderstanding would have been
substantially reduced.
Basis for Component Oriented Project Manage-
ment. This paper summarizes project management
practices that the author has seen in many organi-
zations and that are applied without any method-
ological rationale. Developing a foundation for a
more complete approach to project management
than the process-oriented one is the main goal
of this publication. This model may lead to the
development of an even more advanced approach
to project management than KOPM Component
Oriented Project Management (COPM). Prepara-
tion of independent components for project
management domains (processes, other knowledge
registers, document templates) is the basis for
such an approach. These components correspond
to knowledge modules that are described in KOPM.
A project manager preparing a project must select
the proper set of components and combine them
into a unitary whole. This is another approach
applied in the domain of project management by
some organizations though it lacks methodologi-
cal support up to now.
Figure 2. Levels of maturity in project management.
Component Oriented
Project Management
Knowledge Oriented
Project Management
Process Oriented
Project Management
Function Oriented
Project Management
References
PRINCE2 (2005)
Ofce for Government Commerce, Prince 2 PRoj-
ects In Controlled Environment, UK 2005
PMI (2004) Project Management Institute
A Guide to the Project Management Body of
Knowledge 3rd Edition, PMI, Newton Square, PA,
USA, 2004
PMI (2003) Project Management Institute
Organizational Project Management Maturity
Model Knowledge Foundations, PMI, Newton
Square, PA, USA, 2003
SEI (2002) Software Engineering Institute
Capability Maturity Model Integration, Carnegie
Mellon University, Pittsburg, USA, 2002.
Zack, M. H. (1999)
Managing codied knowledge, Sloan Management
review, 40(4) Summer, 45-58, 1999
Stanisaw Gasik
Sybena Consulting
Warsaw
Poland
e-mail: sgasik@sybena.pl
Experienced project manager and project
management consultant, currently special-
izing in implementing project portfolio
management software tools Stanislaw
headed implementation of Primavera tools
at large Polish IT company, which was
distinguished with the Primavera Excel-
lence Award in 2006. He was a lecturer in
project management at Warsaw School of
Economics and other Polish educational
institutions. Stanislaw was an active par-
ticipant of IPMA and PMI congresses. He
was a member of the team which devel-
oped PMBoK 3rd Edition. His professional
interests include portfolio management,
maturity models, knowledge management
and supplier-customer relationships in
project management.
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