“Traditional vs. Modern Project Management Methods. Theory and

Spalek, S. “Traditional vs. Modern Project Management Methods. Theory and Practice”. Smart and Efficient Economy: Preparation for the Future Innovative Economy, 21st International Scientific Conference, 21st International Scientific Conference, Brno University Technology, Faculty of Business & Management, Brno, Czech Republic 19-20.05.2016, 2016, pp. 499-506. [Web of Science Proceedings Paper]

21st International Scientific Conference Economics and Management

TRADITIONAL VS. MODERN PROJECT MANAGEMENT METHODS. THEORY AND PRACTICE Seweryn Spalek* Silesian University of Technology/Faculty of Organisation and Management, Akademicka 2A, 44-100 Gliwice, Poland

Abstract Purpose of the article The purpose of the article is to investigate the relationship between traditional project management (TPM) and modern project management (MPM), with a special focus on agile project management (APM). Moreover, the results of the studies on the application of APM in non-IT companies are presented. Methodology/methods Based on the literature review, the descriptions of TPM and MPM methods are given. Furthermore, the questionnaire-based survey is applied to obtain relevant knowledge on the application of APM methods in the non-IT companies. Scientific aim The scientific goal of the article is to ascertain the prerequisites for applying the TPM and MPM methods in the organisations, with a special focus on non-IT companies. Moreover, the conducted survey shed some light into the current state of application of APM methods in non-IT companies. Findings The TPM methods have been developed since the sixties and are suitable for application in large, long-term projects in a stable environment. The prerequisite for their application is the ability to plan, in detail, the project ex -ante, while MPM methods seem to more accurately match the client’s needs, especially if the requirements have the tendency to change frequently over time. However, the result of the study showed that the application of APM methods is very limited, even if the companies reported that they mostly operate in turbulent environments. Conclusions The MPM methods, with a special focus on APM, are a good alternative for non-IT companies seeking new ways of managing projects in a turbulent, client-oriented environment. However, the results of the studies revealed the limited application of APM methods in non-IT companies. They outlined directions for further research that should try to answer what hampers APM application in non-IT companies. Moreover, research dedicated to select industries should be performed. Keywords: TPM, APM, APM, traditional project management, modern project management, agile, survey, company, non-IT, waterfall. JEL Classification: M2, M11, M21, O31, O32,

* Corresponding author. Tel.: +48322777305; fax: +48322777361 E-mail address: [email protected]

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21st International Scientific Conference Economics and Management Introduction Project management, as a scientific discipline, has been developed since the 1960’s (Kerzner, 1987). At that time, projects were largely independent endeavours with a relatively long implementation period, calculated in months or years. Their level of complexity was usually high and, therefore, budgetary concerns were a significant factor. As a result, the main effort was put into the detailed planning of tasks and then controlling the implementation of the projects in relation to former assumptions (Kerzner, 2013; Wyrozebski & Spalek, 2014). The waterfall approach was widely applied in the running of projects (Ji, Sedano, & Ieee, 2011). Hereinafter, this way of managing projects is assumed to be traditional project management (Hebert & Deckro, 2011; Pellegrinelli, 2011; Robichaud & Anantatmula, 2011; Saynisch, 2010; Spalek, 2015). The turn of the century brought new challenges as the number of projects significantly increased, creating multi-project environments in companies (Formentini & Romano, 2011; Hofman, 2014; Spałek, 2012a). In the search for new ways of dealing with that situation, the concept of project management office (PMO) was introduced (Hobbs & Aubry, 2008). PMOs were established to play different roles, e.g. improving industrial engineering (Spalek, 2013), brokering knowledge (Pemsel & Wiewiora, 2013) or supporting innovations (Artto, Kulvik, Poskela, & Turkulainen, 2011). However, despite their broad-serving purposes, PMOs, as a new organisational structure, were not able to address all the challenges that companies face nowadays. The turbulent, global environment put additional pressure on companies to significantly reduce the time spent on the development of new products (Kach, Azadegan, & Dooley, 2012; Relich, 2015; Spalek, 2014b) and to customise their services to clients’ needs (Gil, 2009; Liberatore & Pollack-Johnson, 2013). Moreover, companies started to more carefully calculate their level of investment in project management (Rudzianskaite-Kvaraciejiene, Apanaviciene, & Butauskas, 2010; Spalek, 2014a). As a result, new methods of managing projects had to be developed, which are hereinafter referred to as the modern project management approach (Curlee, 2008; Shenhar, 2001). The purpose of this article is to discuss the major characteristics and highlight the key differences between traditional and modern project management methods. Moreover, the results of the empirical studies should allow one to glean insight into the application of modern project management methods in company practice. 1 Traditional vs. Modern Approach to Managing Projects Although traditional project management methods are well established, having been developed over a long period of time, it seems that they are no longer sufficient to overcome the challenges that companies face nowadays, regardless of their country of origin (Spalek, 2014d). The shorter time- to- market demand, costcutting tendencies and increasing pressure on innovations are of high interest in companies. Moreover, this tendency will most likely strengthen in the future and traditional methods like the waterfall approach, with detailed ex- ante planning of costs, time and scope, are not flexible enough to meet the expectations of the turbulent environment they operate in. The traditional project management methods are focused on work- breakdown structures - WBS (Zhang, Wang, & Zhan, 2013), Gantt charts (Eppinger, 2001) and detailed budgeting, including the earned value technique – EVT (Goh & Hall, 2013). Moreover, the triple constraint idea (time, money, scope) prevails in managerial projects’ practice (Basu, 2014). Furthermore, project managers should monitor and control the outcomes against the plan in the following areas (PMI, 2013): · Project Integration Management · Project Scope Management · Project Time Management · Project Cost Management · Project Quality Management · Project Human Resource Management · Project Communications Management · Project Risk Management · Project Procurement Management · Project Stakeholder Management Several tools and techniques, like the critical path method – CPM (Kim & de la Garza, 2005), or program evaluation and review technique - PERT (Makhloof, Waheed, & Badawi, 2014), have been developed to support the traditional project management approach. The set of traditional methods is also successfully used nowadays

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21st International Scientific Conference Economics and Management (Shen, Smith, & Ahmed, 2010). However, their application is limited to certain types of long-lasting endeavours which run in stable environments. The birth of modern project management can be traced back to the year 2001 when Agile Manifesto was proposed (Erickson, Lyytinen, & Siau, 2005). The basic idea came from the software development sector and some other industries are now trying to adopt it (Conforto, Salum, Amaral, da Silva, & de Almeida, 2014). The set of modern methods in project management includes, but is not limited to, SCRUM, XP, LEAN, TDD, ADD, SOLID, Pair programming, RUP, ASD, APF, DSDM (Dyba & Dingsoyr, 2008; Fitzgerald, Hartnett, & Conboy, 2006; Gary et al., 2011; Polesie, 2013; Santos, Flentge, Begin, & Navarro, 2011) R. Wysocki (2011) distinguishes the Linear, Incremental, Iterative, Adaptive, and Extreme models in project management life cycles and positions them over the Traditional, Agile, Extreme and Emertxe approaches in Project Management. At present, agile project management (APM) is of the utmost interest to scientists and practitioners alike, as it can cover a wide range of activities in the organisation. Therefore, APM receives detailed treatment in the article through extensive deliberations. APM, at its core, is oriented around the client’s needs and finding ways of meeting the client’s expectations as a key concern in the project outcomes. APM sees small project teams working closely with the client in order to tailor the product to his or her needs . That approach allows businesses to not only react quickly to oftentimes rapidly changing client needs but also to respond to the shifts coming from the turbulent environment. An overview of the key differences between traditional and agile project management is shown in Table 1. Table 1 The key differences between traditional project management (TPM) and agile project management (APM) Area of interest

TPM

APM

Basic assumptions

The product can be fully described at the planning phase of the project

A high quality product is worked out by small specialised teams on a continuous improvement basis.

Management style

Autocratic, Prescriptive

Affiliate, Democratic

Knowledge management

Explicit

Tacit

Communication

Formal

Informal

Organisational structures

Bureaucratic, Highly formalised

Flexible, Cooperative

Quality control

Planned in time in details

On-going control of the achieved subresults toward the client’s expectations

Source: Dybå, Dingsøyr 2008, s. 833-859; Serrador, Pinto 2015, s. 1040-1051 Although APM receives a lot of attention, there is an ongoing discussion on its actual contribution to the success of the company (Serrador & Pinto, 2015), and the ability of companies to run projects according to the agile rules only. Therefore, the newest approach sets out to incorporate some elements of agility into traditional project management or, while running big, complex programs with TPM, tries to extract from within the program, some projects which can be implemented with pure APM methods. The latter approach seems to be attracting an increasing number of supporters in the academic community. However, there is still some confusion as to if and to what extent APM is appreciated by the companies in their managerial practice, with a special focus on non-IT sector firms. The reason for focusing on non-IT companies is that APM was developed for IT project purposes and IT firms are strong proponents of APM, while some scientists see the potential for APM application outside IT-based enterprises. 2 Traditional vs. modern project management methods in practice There is a plethora of evidence that TPM is widely recognised and applied in companies’ managerial practice in many industries besides IT, like R&D (Chandrasekaran, Linderman, & Schroeder, 2015), governmental (Young, Young, & Zapata, 2014), transportation (Tian & Demeulemeester, 2014), construction (Almahmoud, Doloi, & Panuwatwanich, 2012), higher education (Neverauskas & Stankevicius, 2008; Spalek, 2012b) or power (Tan & Wang, 2012). In addition, the success factors of APM are also widely discussed (Mueller, Geraldi, & Turner, 2012; Spalek, 2014c). Nevertheless, evidence of APM applications in non-IT industries and related success factors are very limited (Conforto, et al., 2014; Serrador & Pinto, 2015).

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21st International Scientific Conference Economics and Management A recent study conducted by A. Komus (2012) on 236 mostly German (65%) companies, revealed that Agile methods are mostly (65%-81%) applied in IT- related activities. However, only 16% of the entire sample applies purely Agile constructs, whereas 3% are represented by non-IT projects. Although, when it comes to a mixed TPM-APM approach, the percentage is slightly higher, but IT projects still prevail in different TPM and APM combinations. The study (Komus, 2012) showed that the application of agile methods in non-IT industries is developing but there is still room for improvement, a fact which inspired the author to investigate related matters further. The study on agile management practices To plug the gap of knowledge on the application of the agile methods in the industrial environment, the survey was undertaken. The study was conducted in 2015 and its goal was to put the spotlight on agile practices, with a special focus on non-IT companies. The research method was questionnaire-based and it consisted of metrics (gathering the data on the participating companies) and, in the second part, its goal was to answer the research question (RQ): whether there is knowledge and application of agile methods in the industrial environment. The survey addressed select companies already practising the traditional project management methods and running several projects a year for at least five years. As a result, 30 questionnaires were received, out of which 27 were dedicated to non-IT projects. The project revolved around the following areas: production/technology, energy, mining, construction, transport and logistics, trade, pharmaceutical, telecommunication, consulting, finance and banking, media and advertisement, public administration, nongovernmental organisations, insurance, tourism and sport. 80% of interviewed companies were medium and large ones, employing more than 50 workers. 70% of them indicated that their business environment is turbulent. Moreover, the intensity in managing projects, understood as the number of projects run by the companies in comparison to all companies forms of activity, was measured. The study showed that the majority (43%) claimed to have a large intensity – meaning that the number of projects in the company is significantly high, supporting key company strategy. 20% indicated that intensity is very large – as the projects are the key activity of the company (project- oriented organisation). Furthermore, 20% reported that projects are significant for the company, which is assumed to be medium intensity. Only in 17% of cases was the intensity small – incidental, a few projects run by the company (Figure 1).

Figure 1 The intensity of projects in the surveyed companies The interviewees were asked if they had heard about agile project management methods. The vast majority (70%) answered no – they did/do not know this term at all. 23% of them had heard of the term but had no idea what it is about. Only 7% knew the term agile project management, but none of them had a good knowledge of it (Figure 2).

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21st International Scientific Conference Economics and Management

Figure 2 Survey answer of the question: Have you heard about agile project management? Furthermore, the respondents were asked if their organisation applies agile project management methods in practice. 40% of them indicated that they do not apply APM in their company, 7% admitted to doing it sometimes and 3% mostly. None of the organisations reported the application of APM to all projects. Moreover, 50% of respondents didn’t know if the company applies APM methods (Figure 3).

Figure 3 Survey answer to the question: Do you apply agile project management to projects? 3 Discussion The studies revealed that, although knowledge of agile project management is spreading among academics, it comes up somewhat short of expectations regarding its application in non-IT companies. Even if the company reports a turbulent environment, which is a prerequisite for exploring new – other than traditional – project management methods, the organisation has very limited knowledge of APM methods. Furthermore, the number of non-IT companies applying APM in practice is significantly low. Moreover, if they apply APM, it is most often as a sub-part of bigger programs run with traditional, mostly waterfall project management methods. Only a few companies decide to run single projects solely in accordance with the APM approach. This situation shows that there is significant room for disseminating APM

methods among non-IT companies and endorsing their application in different forms and scope.

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21st International Scientific Conference Economics and Management Conclusion Traditional project management methods have been developed and improved over the decades. Therefore, their broad application in companies is indisputable. However, in modern turbulent environments, they seem to be insufficient according to the new challenges organisations are facing. The need for time- to- market reduction, costcutting and enhancing client satisfaction generate new demands in managing the projects. The answer to this demand seems to be modern project management methods, including the agile approach, which looks like the most suitable for non-IT industries. However, the study revealed that the application of agile project management methods in the companies is very limited. This situation can be caused by many factors which need to be further investigated. The conducted questionnairebased survey is limited by its sample size, but its results indicate further research directions. One of them should definitely be focused on trying to answer the question: why are APM methods barely recognised by non-IT industries? Another could investigate knowledge of APM at the top-management level. Finally, research procuring knowledge from different

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