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Project or Program Failure and Organisation Reputation

Projects are an important part of the development of organizations as they are designed to meet the needs of their businesses. Construction projects often fail to meet the expected outcomes in terms of quality, cost, and desired needs. This damages the reputations of organizations as customers and suppliers are inconvenienced and in the case of public corporations the public does not get the services or products required and their tax money is already spent. Corporations do not anticipate such failures, however; they make miscalculations in project management such as lack of clear links between the corporations’ major strategic priorities and agreed measures of success and lack of a clear plan for the whole project time and realistic timescales. There is a need, therefore, to study the impacts of project failure on an organization’s reputation which was the objective of this study. The methodology used is a case study where documented information on this case was reviewed. The study found out that Projects or programs that fail are in problems even before they begin. This is brought about by the project team missing one or more aspects of the project management. It also recommends a number of measures such as carrying out pilot projects and testing, designing realistic projects in terms of cost, timescale and expectations.

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Introduction

People value their honor and reputation as stories told or written from the old and modern days show (Laszlo, 1999). Construction projects failure damages the reputation and image of an organization. According to Benn, (2007), a project is a distinct and compound set of harmonized activities undertaken with clear-cut starting and finishing points by an organization to meet specified objectives within a specific time. He continues to report that it has a defined lifespan, measurable outcomes, organizational structure, defined amount of resources, and a corresponding set of activities. Project or program failure is when there was no actual realization of the expected outcomes and in the expected quality. A report by the USA congress in 1988 showed that the USA showed that the government had already spent $ 15 billion in the military and civil energy projects which failed Barbaro, (2006).

Projects or programs that fail are in problems even before they begin. This is brought about by the project team missing one or more aspects of the project management. If they miss these things they are unlikely to anticipate project/program failure. There are several problems that cause projects/programs to fail as described by Orwig, & Brennan, 2000). Such as lack of clear links between the corporation’s major strategic priorities and agreed measures of success and the project outcomes/ outputs, it should define critical success factors, a clear plan for the whole project time, realistic timescales.

Yatim, Bredillet, & Ruiz, (2009), reports that in order to maintain a good image in the event of project failure corporations or any other business should protect and respect the right of individuals, by not engaging in acts of corruption such as favored procurement contracts in its projects or programs, bribery and other deals with businesses or personalities with a questionable reputation, corporations also ensure that the security services they hire respects the human rights codes and polices and avoiding exposure through supply chains and investors.

Shareholders and community groups respond to project failure in different ways depending on the stake they have in the organizations. They can call for the cancellation of license to operate, investigations, and inquiries into the project planning and implementation (Kutsch, 2008). The USA department of energy started a $700 million project to build a reactor that used plutonium instead of uranium to produce fuel in Tennesee. It failed to meet the expected outcomes and was canceled in 1984 after operating cost reached $1.5 billion and the estimated cost of finishing rose to $4 billion. This attracted a lot of public attention and anger and the USA congress and white house launched an investigation which led to its closure after reports questioning the technology’s usefulness (Greyser, 2009). Public outrage and call for sackings of officials is another way such as in the case of Bangladesh voters’ identity cards due to mistakes in design (Longman, & Mullins, 2004).

Research questions

  1. To what extent do public bodies and corporations anticipate the likely onset of project/program setbacks and failures?
  2. What methods are employed to limit the damage of project/program failure on the reputation of major organizations, and do they differ between sectors?
  3. How do clients and other customers of a corporate body involved in a failing project/program take action to protect themselves, as career-minded individuals, from reputation damage?
  4. How do stakeholders and community bodies respond to project/program failure and setbacks, and how are their reactions managed by corporate organizations?
  5. How does an organization balance the protection of its own reputation with that of the consortium or the project?

Objectives of the study

General objectives

  1. To explore the impacts of Projects or program failure on the reputation and image of the company
  2. Find out whether transformational and leadership in the management of organizations enhance handling its reputation in the event of failure.
  3. Find out problems and/ or opportunities within the study environment for enhancing reputation after project or program failure

Specific Objectives

  1. Find out whether public bodies and corporations anticipate the likely onset of project/program set-backs and failures.
  2. To explore the methods are employed to limit the damage of project/program failure on the reputation of major organizations, and do they differ between sectors.
  3. How do clients and other customers of a corporate body involved in a failing project/program take action to protect themselves, as career-minded individuals, from reputation damage.
  4. Find out How stakeholders and community bodies respond to project/program failure and setbacks, and how their reactions are managed by corporate organizations.
  5. Find out how an organization balances the protection of its own reputation with that of the consortium or the project.

Research premises

The study assumes that:

  1. Public bodies and corporations anticipate the likely onset of project/program set-backs and failures.
  2. Organizations employ some methods to limit the damage of project/program failure on the reputation of major organizations, and that they differ between sectors.
  3. Stakeholders respond differently and take measures to protect themselves from project/program failure and setbacks and that organizations take measures to manage these reactions.
  4. A balance can be reached between the protection of the organization’s reputation and that of the consortium of projects.

Justification of the study

The study is necessary as construction project failure has a long history where companies big or small; public or private; profit-making or nongovernmental; are affected though studies show them on the decline. It is therefore important to study how this failure affects company reputation in order to be prepared on how to deal with them in future.

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The study will also add to the collection of knowledge on the subject of project failure and organizations’ reputations.

Literature review

Studies carried out by the Standish group show that over the last 20-30 years project failure in the construction field has improved significantly this has led to a public inquiry if the budget is over by 3%. it also states that projects are often finished in time and within the budget. This does not mean there is an unusual, big, and public failure that does great harm to the organization’s reputation (Barber & Warner, 2005). They continue to report that a project is a distinct and compound set of harmonized activities undertaken with clear-cut starting and finishing points by an organization to meet specified objectives within a specific time. he continues to report that it has a defined lifespan, measurable outcomes, organizational structure, defined amount of resources, and a corresponding set of activities.

Construction projects involve the production of a physical end product with a basic value such as a residential block, office building, a bridge, a processing plant, and tunnels among others. In these projects, there is an agreement right from the commencement on the particulars of the desired outcome and output and a model can be constructed for the project almost accurately. Project or program failure is when there was no actual realization of the expected outcomes and in the expected quality (Barber & Warner, 2005).

Projects or programs that fail are in problems even before they begin. This is brought about by the project team missing one or more aspects of the project management. If they miss these things they are unlikely to anticipate project/program failure. There are several problems that cause projects/programs to fail as described by Bowenkamp & Kleiner, (1987). These include; lack of clear links between the corporations major strategic priorities and agreed measures of success and the project outcomes/ outputs, it should define critical success factors, a clear plan for the whole project time, realistic timescales; when there is no leadership and ownership from the top management and at the ministerial level. This is important in order to provide a view of the existing project interdependences to the project team. The approval of the project by the minister himself/herself or delegated authority shows support and guidance to the project; inadequate as lack of involvement of the stakeholders. Identification of the right stakeholders and the rationale for doing so should be identified is important, their views, requirements, and management method should be taken into account; lack of skilled project team with no experience on a proven approach to project and risk management. The roles and responsibilities of the project team should be outlined before commencing and if they are not available how to access the necessary expertise. the appropriate approach should be identified and checked whether they have the necessary resources for implementing it and realizing the desired outcomes; making of proposal evaluations based on initial prices rather than whole life value for money which takes into account capital, maintenance, and services costs; and failure to understand and involve the supply industry at the top level. The organization should test whether the supply industry thinks about the proposal, their assumptions, and whether it will be competitive.

Corporations need to maintain a clean reputation or image as this is an asset they cannot buy. Barbaro, (2006), reports that in order to maintain a good image in the event of project failure corporations or any other business should protect and respect the right of individuals. Comprehensive impact assessment on human rights of the people affected by the project/program should be done early in planning this way the corporation can be confident its decisions lie on firm social ground. Respect for the rule of law in following the required legal and trade regulations is another way a corporation can protect itself from a damaged reputation. This way it does not risk cancellation of business license or parliamentary inquiry when the projects fail. According to Vidal, & Marle, (2008), corporations guard their image, by not engaging in acts of corruption such as favored procurement contracts in their projects or programs, bribery, and other deals with businesses or personalities with a questionable reputation. Corporations also ensure that the security services they hire respect the human rights codes and policies. This is done by formulating the security strategy to use and then engaging those firms that meet those expectations and if in-house security is used the personnel is trained and their expectations outlined clearly. Corporations also protect themselves by avoiding exposure through supply chains and investors. They involve them right from the beginning which helps in the event of failure they share the blame instead of blaming the organization alone (Razgui, 2007).

Shareholders and community groups respond to project or program failure in different ways. They may lack confidence in the organization and sell their shares in the stock market and choose to invest in another company that is doing well (Vidal & Marle, (2008). This organization loses investment which affects it in a negative way. Public outrage especially in the failure of projects in the public corporation which is carried in the media and even demonstrations calling for investigations or sacking of senior executives. This was the case with the failure of Bangladesh’s voter Identity Card project failure in 1995 as they produced them with many mistakes that made them useless. The media pointed out that policymakers and lawmakers are not concerned about service delivery to citizens and called for the resignation of the Election Secretariat top officials resignation (Obe, 2007). Shareholders and community groups can also call for the cancellation of licenses to operate, investigations, and inquiries into the project planning and implementation. The USA department of energy started a $700 million project to build a reactor that used plutonium instead of uranium to produce fuel in Tennesee. It failed to meet the expected outcomes and was canceled in 1984 after operating cost reached $1.5 billion and the estimated cost of finishing rose to $4 billion. This attracted a lot of public attention and anger and the USA congress and white house launched an investigation which led to its closure after reports questioning the technology’s usefulness (European Journal of Marketing, 1988). Organizations come out and offer explanations or apologies as failure to do so is seen as arrogance which is not good for reputation.

Discussion

This discussion will focus on construction projects in the United States of America in the energy sector by the government that cost millions of dollars which were started and abandoned without. It is documented that 17 principal nuclear energy laboratories in 12 states in the USA have each used huge amounts of money in projects that end up being abandoned or canceled as a result of failure to function as expected or processes fail (Obe, 2007). Obe states that a $225 million processing building for plutonium used in triggers for thermonuclear bombs in Rocky flats, Colorado in 1973 became a complete failure. It was finished in 1981 and was in operation for only a month in 1982 before being closed because the new technology was obsolete and could cost an extra $400 million and eight years to make it operate. The plant was intended to replace an old one but was shut down when eight employees inhaled plutonium dust which is toxic.

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Another project is the $200 million reprocessing plant to recover uranium by chemically dissolving used fuel from the naval nuclear ships which were finished in 1985. The project built at Idaho National Engineering Laboratory was shut down because it failed to work as expected and spent an extra $20 million to redesign and rebuild the equipment. In 1986, the department finished a $176 million plant which was to process uranium into naval ship fuel at the Savannah River Plant. The plant failed to work due to what the department said was problems with equipment start-up, processes, and lack of experience by the staff (Ross, (2009). In another project, the Great Plains Coal Gasification Plant in Beulah, the government guaranteed a loan of $1.6 billion to construct a plant that could turn coal into synthetic natural gas to a group of five American companies.

The companies run into problems before they could repay or get any benefits from the investment so the government as a guarantor managed and run the plant for three years and sold it for a mere $85 million (Seanor & Meaton, 2008).

Problems and/or opportunities arising from failure of the projects above.

The projects have attracted inquiries by the House Energy and Commerce Committee into the energy Department Programs and lack of confidence has cased uneasiness in allocating funding to energy projects such as proposals to build new reactors and other nuclear plants.

Project management or lack of it is a big problem in government-funded construction projects. Projects are at risk of running out of time, budget, or expected outcomes and therefore good project management is required to eliminate the risk. It puts a structure where the chain of accountability is short and individuals responsibilities are defined and the project’s processes are put in writing to provide guidance and learning experiences. Such large public projects where millions of dollars are used should adopt management methodologies such as PRINCE2 (Ross, 2009).

Incompetence on the side of the staff has contributed to projects failure. The staff admitted that it was a challenge to undertake large-scale construction projects being proposed in the House Energy and Commerce Committee inquiry which further decreased the confidence in the department.

In retaliation, the senior executive said that as a department charged with two tasks of building nuclear weapons and developing advanced nuclear and non-nuclear sources of energy that have not been tested it was doing well and failure did not mean incompetence (Obe, 2007).

It is also clear that massive projects were undertaken without prior experimentation or testing of the technology and this could a source of failure.

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Recommendations

Government should engage in offering subsidies for technology development to the private sector and collaborate in implementing it on a large scale.

Corporations should design projects that are realistic in deadlines, scope, and expectations to avoid the failure of multimillion-dollar projects that leave the public disappointed and angry.

Pilot projects should be undertaken and tested before the commencement of massive-scale projects. Projects carried out in phases can be more successful as risks are identified and other lessons learned and experience built.

Project managers’ should have a clear line of reporting and decision making. This way he is able to build links between technologists and top management through communication.

A clear vision of what is to be achieved and well-defined scope and understood and agreed on outcomes of the project. It is also important to outline what not to do at the begriming of the project. The outcomes of public projects must be agreed upon with stakeholders or their representatives. These should be prioritized as one project can not meet all the expectations in order of functionality, technicality, and usability.

The public officials charged with project or program development should have the attention of the highest management level. This is because the changes desired will affect the whole organization.

Stakeholders’ management is important. They should be kept engaged throughout the project cycle through project boards where their input is considered and conflicting objectives resolved.

Conclusion

Project failure ruins the reputation of an organization. This is due to the project team missing one or more aspects of the project management from planning to implementation stages. If they miss these things they are unlikely to anticipate project/program failure. In order to maintain a good image in the event of project failure corporations or any other business should protect and respect the right of individuals including the right to a clean and safe environment, the rule of law, and formulating a security system that respects human rights. Shareholders and community groups respond to project or program failure in a different way depending on the stake they hold in the organization. These can be managed by the organization by coming out clearly and showing accountability with an explanation or an apology to the customers and the general public for inconveniences caused.

References

  1. Obe, Z..L (2007). Editorial. Chartered Institute of Building Journal. Vol. 9; 4
  2. Ross, D. (2009). The Use of Partnering as a Conflict Prevention Method in Large-scale Urban Projects in Canada. International Journal of Managing Projects in Business. Vol. 2;3
  3. Vidal, L.A, & Marle, F. (2008). Understanding Project Complexity Implication on Project Management. Kybernetes; vol: 37: 8
  4. Kutsch, E. (2008). The Effects of Intervening Conditions on the, Management of Project Risk. International Journal of Managing Projects in Business vol, 1;
  5. Seanor, P & Meaton, J. (2008). Learning From Failure, Ambiguity and Trust in Social Enterprise. Social Enterprise Journal. Vol. 4; 1
  6. Oackland, J.S & Tanner, S.J. (2007). A New Framework for Managing Change. The TQM Magazine. Vol.19; 6.
  7. Bowenkamp, R.D & Kleiner, B.H. (1987). How To Be a Successful Project Manager. Industrial Management and Data Systems. Vol. 87; 3/ 4
  8. European Journal of Marketing (1988). General Review: Commentary. European Journal of Marketing. Vol. 22; 2
  9. Razgui, Y. (2007). Knowledge Systems and Value Creation: An Action Research Investigation. Industrial Management and Data Systems. Vol. 107; 2
  10. Barbaro, G. (2006). Defining Realities: Why Community Consultations Needs to Start With the Problem Not the Solution. Journal of Communication Management. Vol.10;1.
  11. Greyser, S.A. (2009). Corporate Brand Reputation and Brand Crisis Management. Management Decisions. Vol. 47;4
  12. Benn, S. (2007). New Processes of Governance: Cases for Deliberative Decision Making? Managerial law. Vol. 49; 56.
  13. Laszlo, G.P. (1999). Project Management: A quality Management Approach. The TQM Magazine. Vol. 11; 3
  14. Barber, E & Warner, J. (2005). Leadership in Project Management from Fire-fighter to Firelighter. Management Decisions. Vol. 43. 7/ 8.
  15. Orwig, R.A. & Brennan, L.L (2000). An Integrated View of Project and Quality Management for Project Based Organizations. International Journal of Quality and Reliability Management. Vol.. 17;4/ 5.
  16. Yatim, F, Bredillet, C.N & Ruiz, P. (2009). Investigating the Deployment of Project Management: A New Perspective Based on the Concept of Certification. International Journal of Managing Projects in Business. Vol. 2; 3
  17. Longman, A & Mullins, J. (2004). Project Management Key Tool for Implementing Strategy. Journal of Business Strategy. Vol. 25; 5

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