A General Framework for Gauging the Performance of Initiatives to Enhance Organizational Value

Abstract

The project management literature argues that most projects fail, and yet, paradoxically, increasing numbers of proposals for new initiatives attract funds. In order to resolve an apparent 'investment-in-failure' paradox, this paper questions the methodology used in the literature to judge project performance and to decide on funding new projects. Using results from a field study, the authors describe a project performance framework that both expands and extends traditional approaches. They argue that the conventional test of project performance is not only fundamentally flawed, but also irrelevant to decision-makers. In response, drawing on 'principal-agent', 'regret' and 'contingency' theories, the authors propose a new methodology to assess projects based on the concept of 'worth'. According to this approach, performance is judged at three separate levels: project management, project ownership and project investment. These three tests allow distinct judgements to be made about the respective performances of the project manager, the project owner and the investment represented by the original funding decision. To the extent that financial crises are associated with project failure, such a framework may prove useful, because it would support better investment decision-making.

Enhancing Project Funding Decision Quality

“…This input from the interviews aligned with the literature. For example, Ashurst et al (2008) suggested assigning a project owner-the person held accountable for securing the project's target benefits (Zwikael and Smyrk 2012)-as the accountable person for their realization. This clear and visible line of accountability can enhance the achievability of target benefits (Breese 2012, Lin andPervan 2003).…”

“…In other words, choosing which projects to fund is a critical strategic organizational decision. In making project funding decisions, senior managers take into account the proposed projects' estimated cost, duration, level of risk, and target benefits-those benefits expected to be realized at a project's completion (Zwikael and Smyrk 2012). To support such decision-making processes, prior research has discussed numerous methodologies ranging from financial-focused to multi-criteria approaches (Shapira and Shaver 2013).…”

Project Portfolio Management

“…Scholars distinguish three stages in the process of value realization: output, outcome, and benefit (Turner & Zolin, 2012;Winter & Szczepanek, 2009;Zwikael & Smyrk, 2012). Accordingly, the immediate results of a project (i.e., artifacts produced by the project) are defined as output.…”

Approaching information system evaluation methodology and techniques: a comprehensive review

“…The appraisal occurs prior to the beginning of each project in order to support the approval of the business case, while the evaluation occurs at project closure in order to identify project success or failure (Zwikael and Smyrk, 2012). Having established what is meant by IS/IT and by evaluation, this section turns to a discussion of the approaches that have been used to evaluate IS.…”