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Link to thesis - Concept - NTNU

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Midler (1995) relates the decreasing degree of freedom <strong>to</strong> maneuver with a rising degree of irreversibility in projectdecisions. Mahmoud-Jouini et al. (2004:361) describes the descending curve as “possibilities of action in theproject”. Mikkelsen and Riis, (2003:47) let the “high <strong>to</strong> low”-curve represents importance of decisions.The “low <strong>to</strong> high”-curve usually represents either accumulated cost (Eikeland, 2001) or the relative amount ofinformation or knowledge available related <strong>to</strong> the project (Mikkelsen and Riis, 2003; Midler, 1995; Samset, 2000and Mahmoud-Jouini et al., 2004).1.4 Stakeholder’s opinion on flexibilityOlsson (2004) analyzed the expected opinion on project flexibility. Project owners and users were likely <strong>to</strong> be morepositive <strong>to</strong>wards changes aimed at increasing the benefit side of the projects, or related <strong>to</strong> effectiveness.Stakeholders whose main responsibility lie on the cost side of the project, such as project management andcontrac<strong>to</strong>rs, are less likely <strong>to</strong> embrace changes. According <strong>to</strong> Kreiner (1995), the project management is made theguardian of efficiency.In manufacturing industry, it has long been established that task control is a key <strong>to</strong> achieve high efficiency andproductivity. The theoretical foundation for this include scientific management theory (Taylor, 1912), administrativemanagement theory (Fayol, 1949) and bureaucracy theory (Weber, 1922). These theories all have in common thatthey assume closed systems in order <strong>to</strong> minimize uncertainty and disturbance (Thompson, 1967). Stability,predictability and control are key elements. Project management techniques such as Work Breakdown Structure(WBS) and other elements of the engineering tradition in project management are descendants from these theories.Samset (2001:116) discusses and illustrates the need for a division between the project itself and the strategic frameof the project. While the financing party has limited possibility <strong>to</strong> influence the execution of the project, they haveincentives <strong>to</strong> define the strategic prerequisites as precisely as possible. This reduces the tactical room formaneuvering, and consequently the chances that the project will be carried out as planned. In a similar way, Müller(2003) claims that the owner should impose medium levels of structure on the projects manage. Too much structurewill not give the project manager sufficient flexibility <strong>to</strong> deal with uncertainties that arise. Too little structure willlead <strong>to</strong> anarchy.1.5 Flexibility as blessing and curseProject flexibility is part of a fundamental dilemma in project management. On one hand, projects need stability andcontrol <strong>to</strong> be executed efficiently, typically measured by time, cost and meeting specifications. Thus, flexibilityshall be minimized. On the other hand, important decisions in projects must be taken based on limited information inan unpredictable world, creating a need for flexibility. We briefly discussed different approaches <strong>to</strong> this dilemmafrom a theoretical standpoint. In the following, methodology and results from a study is presented in an attempt <strong>to</strong>illustrate some aspects of project flexibility. The empirical data are based on the preparation and execution of aQuality-at entry regime of Norwegian governmental investments. To begin with, this regime is presented.2. The quality-at-entry regimeThe largest public investment projects in Norway amount <strong>to</strong> about 3 billion USD per year <strong>to</strong>tally, mainly channeledthrough the Ministries of Labor and Government Administration, Finance, Defense, and Transport andCommunications (St.prp 1 (2001-2002)). In 1998, the Norwegian ministry of finance initiated an analysis of anumber of major governmental investments. Effective from 2000, the Norwegian Ministry of Finance initiatedmanda<strong>to</strong>ry quality assurance and uncertainty analysis of all governmental investments in Norway exceeding NOK500 millions (60 million USD), the so-called Quality-at-entry Regime. The regime was introduced in response <strong>to</strong> asituation with large overruns (Berg et al., 1999).As a consequence, the responsible ministries are required <strong>to</strong> undertake assessments prior <strong>to</strong> the parliament'sappropriation of the projects, with a particular aim <strong>to</strong> review cost estimates and major risks that might affect theprojects when implemented. Such analyses are given the short name Quality Assurance 2 (QA2). The aim is <strong>to</strong>6

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