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Paper 8.Olsson, N.O.E. 2006.‘Flexibility and Front-End Management; Key to Project Successand failure’ Paper accepted for presentation by ProMAC International Conference onProject Management, 27-29 September 2006, Sydney, Australia.
Project flexibility and front-end management: Keys to project success andfailureOlsson N O ENorwegian University of Science and Technology, Trondheim, NorwayAbstractProject flexibility means a capability to adapt to new, different or changing requirements. The paperproposes a framework for understanding project flexibility. The framework for analysis consists of projectflexibility categorisations, perspectives of analysis, flexibility drivers and enablers. The proposed frameworkcan serve at least two purposes. First, it can work as a checklist for aspects that are to be included in ananalysis of project flexibility. Such analyses may be carried out as a part of ex-ante project preparations, expostproject evaluations or during projects. Second, the relation between different aspects in the frameworkcan be analysed to gain an understanding of interaction between the aspects.1. Focused and flexible - a project management dilemmaTraditionally, projects tend to strive for increased predictability and robustness, by managing details andattempting to bring all variables under control. However, experience shows that the chance of realizing aplan without major amendments decreases with increasing time horizon, which point to a need for flexibility,or adaptability. A key message in this paper is that successful projects are characterized by a firm andrealistic strategy in combination with sufficient tactical flexibility. Strategy and tactical flexibility need to becarefully addressed in front-end management of projects.Project flexibility is part of a fundamental dilemma in project management. On one hand, projects needstability and control to be executed efficiently, typically measured by time, cost and meeting specifications.In this perspective, flexibility shall be minimized. On the other hand, important decisions in projects must betaken based on limited information in an unpredictable world, creating a need for flexibility options.The results presented in the paper are based on a diverse sample of large public investment projects. Severaldifferent information sources have been used and analysed, including both quantitative and qualitativeinformation. The main data set used in this paper covers 18 Norwegian large engineering projects, whichhave been analyzed regarding project flexibility.The paper proposes a framework for understanding project flexibility. Like previous researchers, thisresearch has documented that the potential drawbacks of flexibility, both on efficiency and effectiveness, aresubstantial. However, the main drawback of project flexibility that has been observed in our research is notflexibility itself, but flexibility applications in projects that lacked structure and preparation for flexibility.This indicates that if a structural framework for a project is established, flexibility options could be utilisedwithout destabilising the project organisation.2. Project flexibilityAccording to the Merriam-Webster dictionary, being flexible is “characterised by a ready capability to adaptto new, different or changing requirements". This means that project flexibility includes preparations tomanage both internal and contextual uncertainty, such as: scope change management, iterative decisionprocess, adjustments related to uncertain funding in general and budget reserves in particular. This paperdoes not aim at covering the issue of uncertainty in a broad perspective. However, the distinction betweenthe two types of uncertainty that Karlsen [1] and Christensen & Kreiner [2], among others, discuss hasimplications on the analysis of project flexibility. This paper will use the terms contextual uncertainty andinternal uncertainty. Internal uncertainty is related to operational uncertainty [2] or task uncertainty [1].Real options represent one approach to project flexibility [3], [4]. Real options illustrate the value offlexibility based on theory related to financial options. Flexibility is compared to owning an option - theright, but not the obligation to take an action in the future [3].
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ISBN 82-471-8121-5 (printed ver.)IS
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Preface and AcknowledgementsThe wor
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Table of ContentsPreface and Acknow
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Paper OverviewThe following papers
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AbstractTraditionally, projects ten
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alternative use. There are indicati
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1. Introduction1. IntroductionThis
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1. IntroductionFlexible projects ar
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1. IntroductionA literature review
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2. Study design2. Study designThe r
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2. Study designInformation Content
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3. Flexibility in different project
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4. Project stakeholders4. Project s
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4. Project stakeholdersmandatory qu
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4. Project stakeholdersBased on res
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5. Effectiveness and efficiency5. E
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5. Effectiveness and efficiencyconf
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5. Effectiveness and efficiencyDegr
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6. Project flexibility categorisati
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7. Conclusions7. ConclusionsThis th
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7. ConclusionsProject phasesFlexibi
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7. ConclusionsEnablersThis thesis r
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7. Conclusions16, Figure 17, and Fi
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7. Conclusions4. AbsorptionAbsorpti
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7. ConclusionsThere appears to be a
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ReferencesAbbot, A. & Banerji, K. 2
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Gareis, R. 2004. Maturity of the Pr
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Miller, R. & Lessard, D. 2000. The
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Part 2.
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Paper 1.Olsson, N.O.E. 2006. Manage
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N.O.E. Olsson / International Journ
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Paper 2.Magnussen, O.M. & Olsson, N
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282 O.M. Magnussen, N.O.E. Olsson /
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