Systems Approach to Project Management

April 30, 2018

Golden Papers

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All projects need simple processes in place to monitor and control cost, progress and quality. It is argued, however, that projects involving innovation and complexity, almost regardless of size, need a “systems approach” to project management. Discuss. 1. Introduction This literature review will discuss Project Management and the apparent need for a systems approach when managing projects involving innovation and complexity compared to using a simple process. In order to conceptualise the discussion, the construction industry will be used to provide a framework for Project Management.

This literature review will firstly outline the context demonstrating the importance of the construction industry to the UK economy. Secondly, provide answers to the questions: what is a simple process and what is the systems approach. Thirdly, to analyse what constitutes a projects involving innovation and complexity. This submission will identify the apparent need for a systems approach, not a simple approach, by reviewing project management, innovation, and complexity.

Like most sectors within the UK, the construction industry has been the subject of many studies relating to theories on innovation, efficiency and productivity (Larsen 2010; Loosemore, Dainty and Lingard 2003). Growth or stagnation, changes in the industry affect many people. The construction industry was estimated at ? 102,363 billion pounds with a workforce estimated at 2,216,000 people and worth approximately 10% of gross domestic produce by the Department for Trade and Industry (Dainty, Green and Bagilhole 2007).

The industry remains crucial to the UK economy for two main reasons. * Firstly it is a key sector for society and culture because buildings and infrastructure are the basis for working, living and leisure (Konepfel 1992). * Secondly it is “one of the pillars of the domestic economy” and therefore is should not be allowed to stagnate (Egan 1998). Dainty et al (2007) suggested that due to the size of the industry it is worthy of research, not just focusing on productivity but on the social element described as ‘human capital’.

Systems theorists would view both the economy and the construction industry as open systems, meaning they are linked because they are dependent on each other. Having noted the importance of interrelationships and the cause-effect relationship; Ackoff (1974) suggests that one thing, or event can be taken, to be the cause of another. If this is accepted, the construction industries’ people, processes and practices are also significant to the economy. The construction industry is a project-based industry and projects introduce changes within the core business of organisations.

Projects are often temporary with a defined start and end; they also require a number of people from different teams to work together on a short-term basis. Project Management is how to manage a project. Winch (2007) states Project Management adopted its own identity in nineteenth century, to meet the need for the clients, to have a co-ordinator of the different trades on site. In the last 30 years the application of Project Management techniques in construction developed, in response to an increase in complex projects, operating within a fragmented industry, with specialised contractors (Watts 2011).

Walker (2007) said that projects exist in a complex environment and success in construction depends on the way the Architect, Quantity surveyor, Engineer and Contractor work together with the Project Manager directing their perceptions of the project objectives. These contractors work within their own system but merge to form a coalition in order to achieve the project goal as specified by the client (Watts 2011; Walker 2007). To reiterate, the construction industry should not be allowed to stagnate due to its financial and social value.

How far can the systems approach go towards assisting the Project Management process to deliver innovative solutions in a complex construction setting? Points to consider: * The way the individual members of the project team understand the clients objectives and can align it with their own objectives (Atkinson 1987). * The contractual relationships formed through construction contracts enforce accountability; this rigid bureaucratic structure does not allow the organic nature of innovation to flourish (Walker 2007). The internal conflicts that come to light when people operate or react to information according to their human needs (Dainty and Green 2007). * The skills of the Project Manager to be able to solve the complexities of interdependent interrelationships in order to meet the client’s objectives (Pryke and Smyth 2006). * The effective application of the systems approach to Project Management in order to add value for the client (Egan 1998; Latham 1994). 2. 1 Simple Processes and Systems Approach

Atkinson (1999) details the simple processes in order to monitor and control cost, time and quality; this is known as “The Iron Triangle”. It is a structured way to measure project success but it has not lived up to the complexity of the construction industry. Atkinson argues that projects need to go beyond simple processes to be successful (Walker 2007; Atkinson 1999). Ackoff (1974) states taking a systems approach consists of three elements, these make up the whole that can be divided into parts, but must be viewed together. Firstly, the behaviour of each element affects the behaviour of the whole. * Secondly, the behaviour of each element that affects the whole depends on the behaviour of at least one other element. * Thirdly all the elements cannot be divided and act independently, they all have an effect on the performance of the whole. Two schools of thought developed within the systems approach, the closed system and the open system. In order to deal with the complexities expressed above, the open system perspective emphasises the interdependences between the organisation and its environment.

The key to the open system is that it takes the view that it must be responsive to the environment in order to survive (Loosemore et al 2012). Drucker (1987) suggests management has become a specific function in our current society; therefore we operate in a ‘society of organisations. ’ So, both Ackoff and Drucker would agree, the process of Project Management needs to identify and understand the parts of the project taken separately.

Then synthesise, the separate elements in order to understand the whole situation. For example where the problem appears, may not be the root of the problem or where a solution to the problem can be found (Ackoff 1974; Drucker 1987). Lock (2003) looks closely at the simple process of Project Management he notes version one- cost, time and quality: version two also includes dealing with people. The Iron Triangle focuses on the hard systems, but Locks’ inclusion of people introduces the soft systems approach.

Kapsali (2011) highlights the importance of adjusting from a closed hard system, she feels that the focus on outputs in terms of process management and not outcomes like goal achievement, only assist top managers to monitor the progress of processes. Therefore the rules used when applying the hard system, only serves to control and does not meet the current needs of Project Management. In contrast the soft system makes a link to human behaviour, this is important because as Atkinson (1999) explains the Project Management Team need to define an approach to measure project objectives that is applicable to their team environment.

Relationships The complexity of projects is in the very nature of projects, they involve people; Lock, Winch and Walker hold the ‘people’ as an imperative part of the construction process. Walker (2007) notes Bennis’s criticism of the classical approach was that it looked at “organisations without people” later commenting that the behavioural approach “people without organisations” does not work either (Walker 2007; Watts 2011; Winch 2007; Lock 2003).

The ‘people’, within the project team are often responsible for the productivity and efficiency, not the tasks themselves. This leads to the behavioural approach, looking at people as systems, who are motivated to work for a number of reasons. Maslow’s Hierarchy of Needs, explores five levels of human motivation, 1. Physiological- includes the basic needs water, food and shelter; 2. Security- job security a steady income; 3. Social- a sense of belonging; 4. Esteem- recognition for a job well done and 5. Self-actualization (O’Bryan and Pick 1995).

Maslow suggests people are systems; therefore construction professionals will work to fulfill their needs within a project. This is important because it adds to the complexity of the individual; they are not just motivated to achieve the company’s goals or the project goals but their own objectives to achieve first. The conflict here is that organisations initiating projects are systems, which operate with their own codes of practice in order to achieve profits or add value to their core business (O’Bryan and Pick 1995).

For most clients, the basis of a project is not the core business; therefore the project itself is only a sub-system of the clients’ organisation. The core business is also subject to the changes in the external environment, as mentioned above the economy, but also political, social, environmental, technological and legal. So the objective of the project is dependent on the overall client’s vision and how the client is able to react to its’ external environment.

Lock (2003) further comments that the primary function of Project Management is to define the scope of the project, understand the clients overall business plan and anticipated schemes. Which is a fundamental concept of systems theory (Winch 2007). 3. Innovation Innovation exists because there is a void in a process, product or service leaving space for new solutions to meet the need and add value. There are two different types of innovation, the breakthrough- where it’s a sudden addition or incremental- where the solution is gradual.

Since the Egan (1998) and Latham (1994) reports’ there has been a continuous drive to innovate, Project Management can be seen as an incremental innovation. However the systems approach notes that everything affects everything else, therefore, the very nature of Project Management brings about change and even a level of uncertainty in the interlinked open system. As described by Williams et al (2012) “known unknowns” can lead to a number of problems which arise and as Ackoff (1974) mentions impacts on the whole.