"Organizational Capital"

Today, project management is one of the growing disciplines in many organizations. However, ironically, the statistics of project success indicates that many projects do not accomplish their business results and most projects still fail. This gives possibly a unique opportunity for substantial improvement in the field. In this newsletter, a perspective is offered on the challenge that the project management community is facing today.? More focused directions are needed that may evolve as a central line in the next few years. This may help stimulating the debate and discussion about the future of the discipline. However, even though these views are not unique, they may provide an integrated perspective of the discipline. They may also provide a possible trigger for more discussion that may help attract more established academic disciplines and improve the status of project management.

Currently, there are many tools and applications that are based on traditional project management techniques, with enlarged detail and finesses. But for different projects success, all these are usually not enough. Evidently, some projects fail from managerial neglect or because of absence in planning. But also, even well-driven projects do not succeed to meet objectives, and on the other extreme even poor planning may lead to a project’s success. In every organization similar example are present. Thus, it may not all about tools or applications, nor the lack of process for project success or failure, the problem is much deeper. If organizations want to acquire the know-how in this profession, learning the basics of project management is not enough. Much deeper understanding of the project management will have an influence on project outcome and education in the field, and in the long run, effect the development of tools and processes. One of the important areas to focus on is the Structural (organizational) capital.

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Structural (organizational) capital describes the equipment and organizational structures that support employees to fulfil their duties. Organizational capital includes factors that surround employees and form the basis for development as well as usage of other intangible resources. The organizational capital represents the organization’s most explicit form of intangible resources. For example, projects for large companies, in particular, are considered to be bureaucratic; they have rigid departmentalization, a high degree of formalization and are considered to be organizations with centralized authority. This bureaucracy can cause ineffective communication, inflexibility and a lack of cooperation; therefore, the organizational structure plays an important role in the efficiency of managerial processes. Furthermore, project teams usually work within their own realm in order to have effective communication; therefore, organizational structure plays an important role in order to ensure high-performing project team members. Additionally, the organizational infrastructure of processes and systems is important for the enhancement and deployment of other resources for project success? since they can determine how workflows and processes can be handled through the organization. The organizational capital could help in bringing stability and quality to the project, as well as providing a context for teams to work in. Therefore, organizations that do not focus on organizational capital may lose the characteristics enabling them to succeed in the market.? Organizational capital can include the organization’s norms and guidelines. It can also include organizational and culture, routines and its strategic alliances. The guidelines and norms include the organization’s administrative procedures. The firm’s corporate culture and culture reside in organizational values, principles, and routines

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To conclude, the focus of the organizations can be in the form of top management support, motivation, and monitoring and control strategy. For example: following the understanding of the top management support presented in a previous newsletter, top management support is important in every case and provides a strong explanation of why the projects succeeded or failed. Management support could be in the form of aligning the human and financial resource elements, such as an experienced team capable of meeting the project needs. It also plays a prime role in the success of a project team by giving the required political backing and aligning the resource management systems (human, financial, and technological) with the needs of projects. Furthermore, project staff may play a very important role in project success or failure but if the minimum level of competency is recruited, then project success can be almost completely regulated by the quality of top management support. Additionally, high-level planning seems to play important role in project success if it reveals the motivations and beliefs of a project decision-making sponsor. User involvement seems to be valuable in calling requirements, but their actual worth seems to be present when top managers use the procedure of meeting user requirements to accomplish expectations. Transparency of top management plays an important role in undertaking issues and conflicts between diverse user priorities. For the project to be effective, the project team should be supported to take action proactively and promptly with regards to problem solving. Furthermore, from the definition of top management support (TMS) that is previously presented we can see that TMS is “when a senior management, the CEO and other senior managers devote time to review plans, follow up on results and facilitate management problems” (Young and Jordan, 2008). The cost and potential of the project will determine what time should be spent. We can understand this as the fact that CEO and the other senior managers should allocate time only to be aware of the project status and interfere if necessary and a project top management should employ more time on these activities. Understanding how important the TMS factor is, gives the explanation of why we have some projects successes or failures. Top management support also relates to effective decision-making to manage risk and to authorise business process change. It appears that TMS is most dependent on the ability of the project client to work with other top managers to authorise business process changes and make decisions to mitigate or bear risk. Success also appears to be dependent on the willingness of the CEO to actively intervene when the client lacks the authority or influence to resolve any impasses in decision-making (Young and Jordan, 2008).

Another example of an organizational focus is on motivation misalignment (Theme 5). Project teams who are able to troubleshoot with quick solutions had a higher chance to solve operational and technical problems in a timely manner, which could greatly improve both the timing and quality of their projects. However, problem-solving ability requires a motivated team. Hence, this analysis showed the influence of motivational misalignment on accomplishment of business-as-usual (BAU) goals, informed by the motivational theory literature. Results in the case study showed that not effectively aligning project participant motivation can have a harmful effect on project performance. Motivation towards the BAU goals can be critically impacted by specific aspects of the procurement approach if not appropriate under the project settings. Rose and Manley (2010) presented BAU goals as follows:

? The inability of the project team to control the financial incentive performance due to perceived inequitable contractual risk allocation

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? The late involvement of the managing contractor, who could otherwise have influenced design and construction cost risks

? The inaccuracies in the guaranteed construction sum (GCS) price estimate due to tender submission time pressures and a hasty negotiation process resulting in a low expectancy of goal achievement and receiving the incentive reward

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? The misalignment between the project performance goals and the incentive goals resulting in a perception of procedural injustice and decreasing the expectancy of goal achievement

? The absent of incentive performance measurement process under the project conditions.

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The motivation of an assigned project contractor might be affected by a desire for justice and reciprocity that shape their perceptions of a financial incentive system and not only by no desire to maximize income and avoid project risk (Rose and Manley, 2010). Consequently, project risk should be assigned and accomplished in line with its capacity to encourage balanced behaviour and collaboration. Numerous projects, mainly those that apply a performance-based encouragement mechanism (such as in case study 2), require higher-order goals and deliver the project team the intended option to struggle for these goals (Rose and Manley, 2010). Deprived of incentives and an insight by participants that they can regulate the project risks related with objective accomplishment, a failure to accomplish similar goals is probable. Consequently, a financial incentive system has to be set at a suitable amount to recompense equally for contractor project team risk and to encourage effort. Incentive amount is a key factor of a contractor project team’s level of effort. Reason for this we can find in the higher amount (more money per unit of effort) raised by the contractor’s project team’s income (Zenger and Marshall, 2000). So, the incentive has to be large enough to stimulate the contractor’s project team (based on the effort/cost to achieve). Distributive justice principles give support to this. Consistent with justice theory, founded on Adams (1963) equity theory, if the amount of a financial incentive does not equally connect with the anticipated level of performance, in relation to the incentive presented and distributed, it might reduce motivation.

Another example of an organizational focus is on monitoring and control strategy (Theme 11). Project success can also be affected by two very important management functions such as monitoring and control (Idoro, 2012). When we talk about strategic and tactical decisions for achieving project objectives, planning ability plays very important role. On the other hand, the monitoring and control deliver the required checks and sense of balance for confirming that the plans and overall project objectives are accomplished. Plans have to be supplemented with monitoring and control by the management to achieve projects goals. Mauricio and Carlos (2002) supported the claim that the performance of organizations in project delivery mainly 345

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rest on their control arrangements and production planning. Kharbanda and Pinto (1996) observed that in most project failures the reason for it could be traced to insufficient and mistaken planning or visionless devotion to the originally expressed plans regardless of how the environment transforms in the interim (Idoro 2012).