Interfirm Project Management

49002 Managing Projects - Report

Survey and analysis of collaborative project management and governance with a focus on inter-firm system integration within the high tech industry

1 INTRODUCTION:

1.1 Efficient Project Management and Performance Assessment of Cross-Company Projects with a Collaborative Project Scorecard

In almost all Industries nowadays the level of competition has been increased and hence the independent suppliers have to work in collaboration to cope up with the development in the market. To achieve this target, project governance for the cross company projects and presence of an IT framework is of utmost importance. It frame work for governance is also very important as it is becoming crucial for supporting, sustaining and development of the business.

Another challenge is that the supply chain managing department in most of the industries is lacking flexibility nowadays; to cope up with this problem tools such as CobiT framework and Collaborative Project Scorecard (CPS) can be applied to improve communication and mutual trust within the cross company’s projects.

“The IT governance standard ISO 38500 is a guide to improve the effectiveness, efficiency and acceptable use of IT with respect to management and decision process.”-Niebecker, Chew, 2010.

Balance Scorecard Techniques are used for measuring performance of IT governance and the CobiT framework helps to identify the KPI (Key Performance Indicators) which mainly helps organizations to focus on operations (business, IT, assets). By using the scorecard techniques, the CPS helps in categorizing the project objectives as project results, collaborative processes, collaboration, learning and development. Each of these prospective may consists of Targets, Matrices (KPIs), target values and collective actions. After this, another crucial step that is Collaborative Project Strategy Map (CPSM) is formed which helps in visualization of relevant interdependencies of common and shared goals.

The inter firm IT governance framework helps to share the common project objectives and aligns it with their own firm’s strategy which in turns helps to maintain mutual trust in cross company projects and flexibility in supply chain management departments.

 Fig 1.1 Source: International Journal of Managing Projects in Business

1.2 Efficient Project Management and Performance Assessment of Cross-Company Projects with a Collaborative Project Scorecard:

For adapting with the latest market trend, organizations are looking for reducing cost and cycle times for their projects and are moving towards cross company project structures. But this technique is facing many challenges such as lack of transparency, flexibility, unclearly defined goals among cross company projects. To curb up with these challenges tools such as Collaborative Score Card or Balanced Score Card techniques have been developed which consists of the following 4 perspectives:

·         Financial

·         Customer

·         Internal

·         Learning and Growth perspective.

The sample can be shown in the following figure. CPS can actually be developed on the basis of each of the partner’s project goals so that the goals can be aligned to the strategies of all the companies involved, hence increasing transparency of business objectives and their interdependencies.

Fig.1.2 Source: Balanced scorecard strategy software

“The assessment of Collaborative Project Scorecard is most efficient if project partners and team work on more than one single project together so that a set of common defined goals and Key Performance Indicators can be carried from one project to another.”- Niebecker, Wagner, Kubitza, Eager, 2007

Assessment of Collaborative projects is done through these techniques and results are translated into project objective and measures that are to be taken to improve the process. The assessment is done by the Project Excellence criteria. Hence these techniques are vital for identifying strengths and weaknesses in a partnership and other loopholes in it.

The challenge is too greatly identified common goals in order to improve the efficiency of any collaboration. Collaborative Platform Scorecard (CPS) answers the problems by providing an overview of projects and associated risks and performances. Key Performance Indicators (KPI) is essential for the good completion of collaborative project. New collaborative tools are also due to the virtualisation of the environment. System integration becomes the common way of management.

Cause-and-effect relationships can be observed by the “impact matrix”

The transparency of a project is given by defined common measurable objectives and it allows a better communication and comprehensibility of the aim of the project. However regular workshops are requested to maintain and adapt the strategies to gain always more transparency.

Indicators are the tools, which allow a quick reaction and a learning approach.

CPS can then be used to evaluate partnership and also manage risk caused by misinformation. Its aim is to align project goals and business strategies and be sure that KPI and measure are implemented.

Integrated software’s allow a better continuous reliability of the data collected.

Finally, CPS, integrated in collaborative project management processes, is a tool to standardise the tasks. Collaborative IT governance as well as integration systems are necessary for the development of inter-firm project. In fact, they will be a guideline to follow a global common strategy and goals in accordance with the individual ones of each company involved in the project. CPS and CobiT framework can be used to achieve this purpose. CPS improves the transparency of the status of a project end indicators like trust responsiveness and flexibility have a huge importance regarding performances. The aim is to control the interdependency between the objectives.

Due to the economic situation independent companies have to do strategic partnership. Relevant stakeholders have to define together the objectives as a base of truth and confidence. The implementation of strategy is the most important aspect of an inter-firm project and is supported by the Balanced Scorecard, which focus resources on strategy.

2. ADAPTION OF PROJECT GOVERNANCE TECHNIQUES IN HIGH TECH INTER FIRM PROJETS

2.1 Measuring performance through Score Cards through Score Card Techniques:

Recent studies show that IT governance has become a necessary tool for any firm that seek for solidifying its position in the marketplace. Many high tech firms in the last decade have derived a sustainable source of high performance and competition through developing scorecard applications and creating a performance measurement system. They linked it to their supply chain practices to ensure that the inter-firm projects are performing successfully up to the expectations. It has been obvious that adopting IT governance has improved returns on investment of these firms and increased level of security and services with lower costs.

It was not an easy step for organizations to establish and enforce an effective IT governance system because of involvement of some formal process changes that addressed formality and friction into the organization. In particular, many organizations have developed a supply chain management framework to adopt scorecard principles as a tool for assessing supply chain performance.

Supply chain management (SCM) approach integrates demand and supply management within and across companies. Supply Chain Management (SCM) is known as an integration function for linking business functions and processes within and across companies into a high-performing business model. It includes all of the logistics management activities and production operations across product design, finance, marketing, and information technology.

A wide range of the leading organizations both private and public have adopted the Balanced Scorecard Approach (BSC) which is a tool developed by Robert Kaplan and David Norton (1996); to measure performance. The organizations use this concept to translate their vision into a set of performance indicators that were distributed among four perspectives (financial, customer satisfaction, internal business processes, and learning and growth) (McShane, Olekkalns & Travaglione, 2010). These indicators are maintained by organizations to measure the progress toward achieving their vision, as well as the long term drivers of success. Through the BSC, the organizations can monitor both their efforts and their current performance to enhance information systems and to improve processes by motivating and educating employees.

Fig 2.1 Balanced Scorecards Strategic Perspectives

The key role of the BSC is the determination of a clear vision and measurable target value for the performance goal. According to Kaplan, R. and Norton (1996), the implementation of BSC requires translating the plans strategy into activities and operational terms, linking the organization members to each other to create synergies, defining precise strategy and instructions to avoid misunderstanding among managers and lower level employee, monitoring the effectiveness of the strategy and updating the plans according to the practical results. Nonetheless, some organizations have failed to implement the balanced scorecard concept and perceived that it is a complex system, and cannot be adopted. According to (Niebecker, 2009), fail in adopting the balanced scorecard can be because of a transition problem, a development problem or an implementation problem which is deemed as the most common reason of failure. This failure could be due to many reasons such as lack of interest in the balance scorecard concept by the top management, the number of projects are not sufficient, and lack of participation of lower level staff.

2.2 Demand for new frameworks by the organization:

Project governance is considered one of the fundamental building blocks in success of particular project. The likelihood of a failed project can be a result of poor governance technique. Project governance becomes one of the main player in a successful project and results in an efficient and timed project decision. Type of project governance adopted can vary from company to company. Some of the companies always adopt a different type of governance for every project even if the projects are somehow the same. And some other companies may use similar type of project governance for almost all different type of projects. Some of the organisations have certain set of policies which define the project governance and its approach. So by our research we came up with two new approaches to the project governance in inter firm techniques keeping in mind by the demands of organization:

1. COOPETITION: Coopetition is defined as a tern which is amalgam of both competition and cooperation. This type of phenomenon occurs in high tech firms which are working together. It incorporates the dynamics governing the inter-firm operations in the modern industry. The conventional approaches towards working together in the firms had problems and complexities. So the need of inter firm collaboration in respect to competition and cooperation of the firms gives birth to this Coopetition theory. “It suggests the Coopetition is a matter of incomplete interest congruence concerning firms’ interdependence.” In case of Coopetition the cooperation and the competition basically merges together and form a new strategic interdependence between firms in inter-firm projects. The field of strategic management is facing new set of challenges and the cause of those challenges is restless dynamics of change of environment and the strategic action and thinking of firms in inter-fir projects.

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2. ADAPTING PROJECT STRATEGY: “Project Strategy is the project perspective, direction, and guidelines on what to do and how to do it, to achieve the highest competitive advantage and the best project results.”-

In order to create a framework for delineating the elements of project strategy we need to consider the elements of project strategy which consist of Product Definition and Competitive Advantage, Business Perspective, Project Scope, and Strategic Focus. When dealing with project strategy, we need to address all four elements, in an interactive and unique way.

2.3 Advantages from the Framework Systems

·         Most projects are executed in a competitive market environment. Therefore, the project outcome such as a product, process or service is likely to face competition from other product or services in the market. If we want to win the competition-the customer will buy our product; prefer our services to what offered by competitors it must have a competitive advantage which should be brought into project objective. A good project strategy is what can help the project to achieve this goal. Even some project may not be carried out in a competitive environment such as an internal organizational project, restructuring efforts, or public works the organization still need a project strategy because they still want it to succeed.         

·         The Coopetition theory deals with both the processes of competition and cooperation both in the inter-firm projects. So it basically converge the benefits of both approaches so that firms can get benefitted from this new approach. It balances the effectiveness of cooperation and competition. The benefit of cooperative approach is economic and the benefit of competitive approach is to get edge over various firms. In most of the partnerships the interests are not always purely competitive or purely cooperative there is always a balance and harmony created at the end. Some of the case studies conclude that if there is no balance between competitive and cooperative approach the dependent firm is most likely to hold up from the other partners.

3. KEY PERFORMANCE INDICATORS

Eager (2007) wrote that Key Performance Indicator is an engineering jargon expression for performance measure. That is, the key performance indicator is the assessment of the success of a project or the individual activity that it is involved. As a result, a good understanding of what is important to the organization is quite valuable for selecting the right key performance indicators. Furthermore, different departments might have distinctive opinion about ‘what is import’. For example, in a finance department, the key performance indicator might assign to the revenue or investment profits. However, in the information technology department treats the development of internal system operation as the most important part. Therefore, performance indicator variety is frequently closely connected with the usage of numerous tools to evaluate the current business, and its vital activities. Regard with this report, the key performance indicators in the project management of inter-firm systems involves six elements: trust that represents the positive relationship between managers and employees, responsiveness that can benefits for the usage of the available resource in the best manner, advanced estimation that can minimize the failure probability of a project, project transparency that can back up for the complex challenge in management responsibilities, flexibility that can improve the performance of the project, and risk management that avoids or reduce the probability  of negative influence of risk.

Key performance indicators are normally used in the evaluation of the previous performance of a corporation. What is more, it benefits in the complex decision making of operational planning level as well. Further, key performance indicators are not only analyzing the company and its past performance, but also comparing their competitors’ performance. For the following part, this paper would illustrate key performance indicators in the project management of high level of Information Technology Company.

To begin with, trust is one of the major key performance indicators in project management. The relationship between the manager and employee must be positive. That is, they should have a faith in each other, or they have confident to success the project when they work together.

Secondly, responsiveness also should be involved as well. Parnaby (2003) cited that responsiveness could integrate the ability of assimilated information system to comprehend and complement its tasks in a fixed duration. As a result, responsiveness is advantageous for a system using the existing resources in the best method.

Thirdly, advanced forecasting using leading and lagging is also the key measurement to direct the project in the right way. The advanced forecasting of a project’s requirements would be valuable for its risk management, and adaptation of flexible external influences. An experienced project manager can minimize probability of the project from failure just because he or she can forecast the potential risks and uncertainty.

Fourthly, Frame (2003) wrote that project transparency aims to support the complicated challenges in the managerial tasks. It structures the progress and performance of a project by its results and phases. Therefore, project transparency can benefits employees for better understanding of the whole structure of project.

Fifthly, flexibility also plays an important measurement in the project management. Regard with engineering project management area, flexibility refers to design a project to adapt the environment when external adjustments arise. As a consequence, in the measurement of a project, the ability of responding the uncertainty is the way of increasing its performance or value.

In addition, risk management aims to avoid the risk, reduce the undesirable effect of the risk. In other words, the control of risk in a right manner is the increase of the project performance. Regard with this case, according to Chivonne (2007), information technology often covers such risks as lack of operator contribution and administrative management support, uncertain requests, and unfortunate planning.