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THE BARTLETTFaculty of the Built Environment



SANGRAM PANDIT STUDENT NO: 1049073 MSc. Project and Enterprise Management Full Time

Term Paper Brief:November 2010

Many project management text books focus upon the tools and techniques of project management (e.g. Levy, 2000 cited in Walker, 2007). Others would argue that these tools and techniques have insufficient focus upon the needs of the client and stakeholders and that our inherently complex construction and engineering projects need to operate as open systems in order to provide innovation and customer delight.

Objective:To read and assimilate material from books, journals and other sources. To present a literature review with references.

Word Count:Approximately 3150 words excluding Diagrams, Figures, Abstract and Table of contents.

Tags:Open Systems ; Customer Delight ; Closed System ; Project Organisation.


1. 2. 2.1 2.2 3. 4. 4.1 4.2 5.

Introduction Closed Systems Traditional Approach: Brief Overview Nature of Project success Why the need to look beyond traditional closed system? Open Systems: Brief Overview Analysis of the Dichotomy Project Objective Project : Organisation and Environment Conclusions and Recommendations

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Construction is one of the oldest professions in the history of mankind, so it is without doubt that one presumes that project management has its roots in the construction industry. Project Management as a professional discipline came into existence due to the rapid development of Defence and Aerospace projects in the 1950s and 1960s. The systems theory developed by Von Bertalanffy in late 1960s brought about the evolution of the management process. The management science took a leap of its own. The seedling which started as controlling and planning procedures for project management took shape of a whole new discipline within the systems theory, generally known as the Hard Systems or the Closed Systems. Contemporary thinkers of the time contributed to management science, the Soft systems approach also known as the Open Systems Theory which challenged the whole Construction management process. The debate which started in the 1960s has taken a stronghold in the wake of current spate of project failures during the past decade. The Egan Report to the Prime Minister of UK in 1998 Rethinking Construction entails the need for the traditional approach to be changed or to have a progressive evolution in the Project Management Discipline. This paper traces the Open systems theory and its focus on Innovation in the Construction Project Management to achieve Customer Delight. It dissects the dichotomy it shares with the Traditional tools and techniques of Project Management while forming a Open thought process and approach towards Value added project success and Customer Delight instead of just Profitability.


Introduction: Project Management

Project management as a concept took root in the early nineteenth century. It was initially adopted by the US aircraft industry, and it gained maturity as a discipline during the US defence and aerospace projects of the 1950s and 1960s. This time period saw the emergence of the modern day project management philosophy, and distinctive management tools and techniques. Modern Project Management has its roots embedded in operation research and systems approach to management (Walker 2007) Tools and techniques like Program evaluation and review technique (PERT), Critical Path Method (CPM), earned value, value engineering, work breakdown structure were developed by the defence and aerospace industry namely DOD and NASA (Rory Burke, 2000). Project management has evolved as a business process, which is put to practice among enterprise project management system. After the recession of 1989-1993, implementing Project Management became a necessity for the emerging companies (Kerzner, 2009). Kerzner (2009) and Rory Burke (2000) point out that in today competitive markets, changing technologies, fierce business environments, adoption of project management would offer a real solution. The PIPC Global Project Management survey of 2005 reiterates the same fact with a resounding 95% of the Companies stating that adopting and integrating project management is vital for their success. Modern day projects have grown in size and complexity. The current avatar of project management offers a systematic structured approach to managing projects. Rory Burke (2000) commonly refers it as Management-by-projects. Morris and Pinto (2004) make obvious references to the same concept and refer to it as Management of Project. This encompasses the total process of from initiation to delivering a project and not just the planning and control techniques. Walker (2007) elaborates the definition of construction project management as The planning and coordination and control of a project from conception to completion (including commissioning) on behalf of a client requiring the identification of the clients objectives in terms of utility , function , quality , time and cost, and the establishment of relationships between resources , integrating , monitoring and controlling the contributors to the project and their output, and evaluating and selecting alternatives in pursuit of the clients satisfaction with the project outcome. Experts in the field generally classify this systematic approach into two categories: Closed Systems and Open Systems. It is fatuous to proceed with the dissection of their dichotomy before understanding their individual perspectives.

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Closed Systems Traditional Approach: Brief Overview

The traditional approach according to PMBOK (2004) also known as the classical management is considered to cater to 5 functions: Project Initiation Project Planning Project Execution Project Monitoring and Control Project Closure

The sum of all these functions is regarded as the Project Life-Cycle. Traditional project management uses a typical set of techniques and procedures intended to define and direct the work. It uses a sequential procedural planning with time, cost and resources as its central functions.

Fig 1: Overview of the traditional Project Management (Kerzner 2009) Henry Gantts Development of bar chart in early 1900s and the techniques developed during the aerospace and defence projects of the 1950s laid the foundations for the plethora of Project management tools and softwares (Burke 2000). All of them rely on the sequencing of activities within affordable time durations and resources and cost budgets. The Foremost softwares which implement most of these procedures and techniques are: MSP : Microsoft Project Primavera Project Planning Primavera Enterprise Solutions

Many of the time taking calculations are becoming easier using these tools. With time these tools and techniques have become more flexible in their usage and also provides a efficient solution for

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multitude of quantitative tasks or purposes. The following table is a compilation of popular tools and techniques and their purposes. Techniques / Tools WBS Work Breakdown Structure Purpose Basic definition of the project work. Precedes the project schedule and cost estimations Bar charts or Gantt Charts Simple representation of the project schedule. Does not show the precedence relationships among activities Project Network techniques: PERT , CPM , PDM , GERT and other Net work techniques for work scheduling. Provide the analysis of the scheduling impacts the activities have on each other and the determination of critical activities and float times. Base of cost estimation, Resource allocation and management, and risk analysis Cost schedules Identification of the capital requirements for resources. Estimation of realistic budgets that provide standards against which project performance is measured. Project Control: PERT , Variance Analysis , Earned Value and others Assessment of project performance with the generation of performance indicators. Provide for the detention of project overruns and the need of corrective actions. The WBS , GANTT Charts and other scheduling techniques are usually incorporated in the project control process. Table 1: Overview of traditional Project Management Tools and Techniques (Rodrigues 1994)

2.1 Nature of Project Success The ultimate aim of any project manager is to achieve project success. PMBOK (2004) and Walker (2007) define success when project is 1) Within Time 2) Within Cost or Budget 3) At the desired performance /technology level functional satisfaction

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4) While utilizing the assigned resources effectively and efficiently 5) Accepted by the customer or Value for money Project success parameters are derived from the intellectual perspective of project management essentially as an execution discipline: of delivering a project on time, in budget , to scope (Morris, 2003).

2.2 Why the need to look beyond traditional Closed systems? The basic reason is due to inability to achieve project success in the current modern era. The PIPC Global Project Management survey indicates that 58% of projects fail to deliver its true business value. Most of the project managers and experts consider the traditional approach to be immature. Organisations are exposed to increasing rate of changes, along with the growing complexity of projects and of the environment (Rodriguez 1994). The traditional approach is not conceived keeping such complex environment in mind. The analysis given by closed systems is centered on logic of the project work Structure (Rodriguez 1994). Closed systems contains nothing detailed on project strategy , nothing on project definition , little on value management , nothing on technology management and little on the linkage with programs and portfolios. It concentrates only on implementation stage; there is no value addition during front-end and initial stages of the project life-cycle (Burke 2000). It fails to consider the broader aspect of project objectives (Morris 2003; Walker 2007; Kerzner 2009). The industry was in a state of inertia to adapt a new approach to overcome all the shortcomings till the Egan Report 1998 to the Prime Minister for Rethinking Construction, which stressed on 4 key areas namely Client engagement, Integrating teams and supply chain, People issues and Enhancing the value of the product (Walker, 2007). Experts and researchers use the word Hard Systems with the same reference to Closed Systems. The analysis of the dichotomy between Open and Closed systems will further throw light on the same.

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3. Open system: Brief overview Systems theory took root in General Systems Theory (GST) by Ludwig Von Bertalanffy in 1968. The open systems approach is based on Soft system methodology (SSM). Checkland (1981) advocates the soft system methodology as a general problem solving approach but not a method, while he denotes hard systems approach to problem solving as a method. Checkland (1981) uses the terms Systems Engineering and Systems Analysis to describe these hard systems. The soft systems approach to problem focuses on systems taken as a whole and not on their component parts taken separately (Checkland, 1981; Ackoff, 1971). Checkland (1981) considers soft systems as human activity systems and holds them on a higher level than just physical operations of a system. Such an approach is concerned with the total system performance (Ackoff, 1971). According to Ackoff (1971), the Open systems concept did not gain momentum despite of its importance because there was no unified or integrated set of such concept and the literature was widely dispersed. Walker (2007) believes that open system approach to project management as a holistic view of the project management process. This approach has a revolutionary impact on ones thinking about the relationship between performance and project objectives as it is more closely aligned with the stake holders, project sponsors or clients perspective (Morris, 2004). The project management process is taken in a wider context including all soft factors, internal and external to the project. Open systems focuses on the idea of customer delight and delivering value and in depth understanding of their needs. It compliments the whole concept of business strategy and value added project performance while adding value to its customers, known as Value driven business (Blockey and Godfrey, 2000). The open system approach stresses the contribution of the interrelationships of the parts or components of the systems and the systems adaption to its environment in achieving its objectives. Walker (2007) explains the benefit of open systems to construction project management is the structuring of organisation in a way as to achieve clients objectives. Understanding such reciprocal interdependencies requires more effort and systematic approach rather than just linking or plan sequential activities which are interdependent. The awareness of this aspect has encouraged more authors and experts to focus on the management needs of Projects (Walker, 2007).

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4. Analysis of the Dichotomy The proliferation of personal computers & an explosion of softwares related to project management during the 1990s made the use of traditional tools and techniques a norm (Burke 2000). These tools and techniques are just monitoring devices that declare the position too late after the event to take corrective action (Walker 2007). The defence and aerospace projects had considerably stable conditions and almost no constraints on resources and budget when these tools and techniques were developed. The current conditions faced by the construction industry and its clients are very complex and face numerous uncertainties and are affected by numerous external factors. Walker (2007) explains that projects are becoming increasingly complex, not necessarily technologically but in terms of specifying objectives and hence organisationally. But the engineering background of many in construction has instilled the closed system ethos (walker, 2007). The changing need have dictated a new open outlook towards Project Management. The further analysis is pertaining to the original argument of customer delight.

4.1 Project Objective The clients brief is traditionally regarded as the objective of the project. But this brief is generally unsatisfactory or unclear about time and cost or is deficient to the real needs of the customer. The interest of stakeholders or beneficiaries also has to be taken into account. Working towards a unified goal complicates the concept of establishing the project objective (Walker 2007). The most important aim is to develop an objective at the front-end. The closed system works with the assumption that the goals are clearly defined and need no further development. They address the task of most efficiently reaching the defined goal (Crawford & Pollack, 2004). Hall (1962) states that such a closed system is basically an engineering one about how to meet a defined need (cf. Morris, 2004). The current construction project involves numerous independent firms and professions. The arising conflicting objective due to the same, increase the degree of uncertainty inherent in the objective. Walker (2007) believes that open system approach helps all the contributors to be aware of the uncertainties and respond accordingly, either to adopt the best approach towards the unified objective or by contributing to identifying and rectifying deficiencies towards an objective to achieve customer delight.

4.2 Project: Organisation & Environment The traditional approach abides by the classical hierarchy in ordering and controlling organisation. Walker (2007) points out that the general reaction to this hierarchy is negative and it

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is out of date and inefficient. The construction projects under closed systems are still viewed as method and process oriented. It neglects the organizational structures and business value of the product (Kerzner 2000). A construction project organisation should therefore be designed to adapt and reflect to its environment. Open system adapts to events and occurrences outside the system also regarded as the System Environment (Walker 2007). Checkland (1981) explains the project and its entire system including system environment as intelligible systems. He denotes all complex modern projects as intelligible systems. Closed systems tend to be non-participative. The open systems imbibes a participative, collaborative and facilitative approach which promotes crossing professional boundaries to express views while addressing and issues and problems (Crawford and Pollack, 2004) Pryke and Smith (2008) explain the concept from a relationship point of view. The relationship approach to project management aims to improve the performance on project delivery by adding value and satisfying clients needs by socially managing relationships between people, people and firms and between firms. This is highly relevant to the current construction project scenario involving coalitions, partnering and numerous professional disciplines (Pryke and Smith 2008). Scott (1992) refers to original rational models of organisation like Taylor, Fayol, Webber and natural models like Bernanrd , Mayo as closed system views as they did not formally incorporate interaction with the environment within their system (cf. Walker 2007). Kerzner (2000) disintegrates the interaction between organisation (project system) and its environments into two broad categories namely: Macro-Environment and Micro-Environment. The following figure aptly explains the systems and its environment and their factors.

Fig 2: Inferred from Kerzner 2000.

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Walker (2007) states that there is no quantitative method to properly measure the impact of environmental forces on construction projects , but stresses that just the recognition and understanding of their effect on projects permits them to anticipate , adapt and respond to any changes in the environment. Open systems is dynamic and adapts to its environment by changing its structure and process. Business organisation are analysed as a function of open systems.

Micro-Environment Internal Factors Customer Stakeholders Beneficiaries Suppliers Competitors Employers

Macro-Environment External Factors Political Economic Socio-cultural Technological Environmental Legal

(Table 2: Data inferred from Kerzner, 2000; Walker, 2007; Winch 2010).

Assessing these factors from the table, Walker (2007) believes that the traditional organisational structures does not possess the ability to adopt the changes in the system environment due to the authoritarian reporting structures or lack of open relationship by all the contributors. The open systems approach enables to establish relationships during design or organisation which in turn allows a properly designed control function with appropriate feedback mechanisms to overcome the deficiency and operate effectively. Walker (2007) further points out that this approach to construction project management in structuring organisations effectively contributes to clearly define the objective. So the process of construction is now a subsystem of the clients system which needs to be integrated at the established boundary. The objective of this integrative device is to recognise and take action on changes in the client or construction process environment in terms of maximising the benefit to the client (Walker, 2007). Establishing and defining objectives at the front-end and managing evolutions of project to achieve business success, brings the whole project organisation into a more sophisticated view in terms of accomplishing project success. The new maturity models of project management reflect this theory of improving overall performance and achieving customer delight than just achieving initial baseline targets (Morris, 2004).

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Objectives of Project Management in construction industry as defined by Walker (2007) are: 1) Identifying goals, communicating and adapting the systems objectives. 2) To ensure that subsystems of the system are working efficiently and towards a unified goal. 3) To ensure that proper connections and relationships are established between the subsystems. 4) To relate the whole systems to its environment and adapting the system as required in response to changes in its environment.

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5. Conclusion and Recommendations Peter Morris (2004) points out that the execution view of Project Management is increasingly being recognised as having shortcomings and not always the appropriate view of the discipline. But the importance of the tools and techniques cannot be negated as well. Crawford and Pollack (2004) state while qualitative data of open system approach provide rich indepth understanding of the situation, the quantitative tools and techniques can be used to translate subjective judgements into precise metrics. Companies still prefer quantitative techniques for performance measurement as they are easy to record and analyze. Walker (2007) and Kerzner (2000) reiterate the use of GANTT Charts, PERT, Cost Analysis and Earned Value Analysis as integral parts of the Project management discipline. Improved project management methodology can be achieved by exploring the potential synergy of combining closed systems, traditional tools and techniques and open systems. Each system is part of a larger system and also comprises of other systems. This ideology is apt to be inculcated into the Project management evolution. Blockey and Godfrey (2000) elaborate on the same by stating that all closed systems are understood and managed through open systems. in fact it is better to interpret closed systems as being embedded in Open systems (cf. Walker 2007). Project management which has its roots in management is not a proper science by definitions. It is concepts and approaches towards the process of talking any issue. So ones approach will depend upon the extent of knowledge and personal experience. The latest PRINCE 2 Methodology recognises the concept of customer delight as it stresses that the user should be involved in all stages of development and that the project should be managed under the direction of all parties involved (Neal, 1995). It took almost 40 yrs for the construction industry since the Phillips report of 1950 to Emmerson report of 1962 to the Latham report of 1994 to realize the importance of Project Management and establishing it as a professional discipline. The inertial within the building industry and professions which stifled innovation (Marian Bowley 1966 cited in Walker 2007) has diminished. The increased awareness has seen a spurt in growth of Project management certifications and societies like PMI, APM, AIPM, IPMA, PRINCE 2, ProgM. Given the pace of change in the construction industry, Project management as a discipline will surely evolve with the amalgamation of traditional tools and techniques and Open system Approach. The current recession might even act as a catalyst and bring about a fast change in the discipline and move the focus from only achieving profits to achieving Value added business success, innovation and Customer Delight.

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