Introduction
In the recent decade, the necessity for improvement in the functioning of governments has created the need for a reliable systemic approach. Currently, the approach universally accepted by governments is the creation of projects targeting specific issues and implementing recommended solutions. Understandably, the success of the described projects depends on the skills and expertise of staff members responsible for the implementation. In the public sector, the likelihood of success is further decreased by budgetary constraints and lack of consistent control. Finally, the increased demand for transparency and accountability characteristic for the sector requires the integration of respective practices, further complicating the matters.
To address the host of complications caused by these factors, various project management practices have been applied to the projects. Such a move allowed the project managers to utilize numerous readily available methodologies, instruments, and tools and incorporate measurement systems accepted as industry standards in the private sector. However, it has been pointed out by critics that the effectiveness of practices designed for for-profit organizations may not provide the expected improvement. The purpose of this literature review is to provide information on the principles of project management in the public sector, highlight important factors responsible for their success, define the roles of effectiveness and efficiency in the assessment process, outline approaches to risk management, and describe relevant processes.
Public Projects in Dubai
Since its emergence as a global economic entity, the United Arab Emirates has become a center of innovation. To keep up with the pace of change, the government allocates considerable resources for modernizing the public segment by stakeholder expectations (Ibrahim 2015). Currently, several such projects have already been successfully launched. The brightest examples include the software solutions in transportation, safety and security, and social activity domains (Buhumaid, Constantin & Schubert 2016). Also, several initiatives exist in Dubai intended to further promote and streamline the development and implementation of projects in the public sector (UAE Government n.d.). Thus, it is necessary to establish a framework for the assessment of the efficiency of projects in the public sector.
Project Phases and Common Constraints
The growing public dissatisfaction with the performance of the public sector in recent years has created the need for a response that would provide improvements in organizational performance. The typical goals of such initiatives in the public sector are increased transparency and greater accountability of the organizations, reduced cost of operation, and greater capacity for quality improvement through change (Biygautane & Al-Yahya 2011). These initiatives are typically implemented in the form of projects – systematized programs that utilize a specific structure and comply with a set of universally accepted criteria (Hazel & Jacobson 2014). One of these criteria is the consistency of the project’s structure, which can be achieved through the use of well-defined phases.
It is important to understand that in contrast to the continuous enterprise, a project is a finite phenomenon. The primary reason for this is a focus on a specific goal or set of goals that are intended to be achieved within a certain time frame. The academic literature frames this property as a life cycle of the project (Mir & Pinnington 2014). In the most basic form, a life cycle is viewed as comprised of four phases: initiation, planning, implementation, and closure (Bertók 2005). The initiation phase is where the project direction is being determined. At this stage, it is necessary to collect evidence confirming the existence of the issue and document its impact on organizational performance (Mir & Pinnington 2014). Finally, the proposed solutions are reviewed for feasibility and relevance to the problem. The decision-making at this stage is limited to determining strategic direction and outlining the general approach.
The initiation phase is especially important for public sector projects for two reasons. First, the projects undertaken in this domain are closely monitored by the controlling organizations due to transparency considerations. An appropriately organized initiation would greatly improve the perceived viability of the organization’s actions. Second, unlike for-profit companies, public sector organizations often encounter funding restrictions (Kerzner 2017). From this standpoint, the phase-in question outlines the expected budget of the project.
During the planning phase, the overarching goal is used to formulate objectives, and necessary actions are determined to meet each of them. After this, each set of actions is examined from the position of economic viability and consistency of tasks with the identified requirements. The outlined tasks, actions, milestones, and variables are then compiled into a document that is used as a primer throughout the project’s life cycle. The plan also contains details on the equipment and inventory necessary for the project’s implementation, time frames of each distinct component, and roles and responsibilities of the stakeholders. In many cases, planning also includes identifying the probable barriers and risks associated with the project (Hwang & Ng 2013). Finally, in the public sector, where accountability is a priority, the plan must also cover the issue of quality by specifying relevant indicators of success, tools for measuring performance, and identified milestones along with the planned achievements. With these components implemented, it will be possible for the project’s management to avoid the majority of difficulties and reach the intended outcomes (Hwang & Ng 2013). The majority of decision-making is made and documented at this stage.
During the third phase, the planned changes are implemented. As was mentioned above, in the public sector the progress of the project is closely monitored for consistency with the planned performance (OECD 2014). In addition to accountability, monitoring allows for the introduction of timely adjustments that address minor issues without disrupting the flow of the project. This phase will differ significantly depending on the type of organization. However, the most common approach would be to follow the plan compiled during the previous phase and, in case this is not possible, seek and implement plausible alternatives. Thus, the decision-making is limited to deciding on the most appropriate response and the mode in which the adjustments can be made.
Finally, the fourth phase occurs once all of the identified objectives are met and the project is considered successful in reaching its overall goal. This conclusion should be backed by documentation containing the results of the evaluation, which is especially important for the public sector, where transparent reporting is one of the conditions (Rees-Caldwell & Pinnington 2013). Often, the closure phase also includes the analysis of the main advantages of the implemented project as well as barriers encountered in the process, ensuring its applicability in similar scenarios in the future.
The described framework was eventually expanded by dividing the implementation phase into launch and performance and control sub-phases. The reason for the change is the amount and diversity of tasks initiated at the starting point of implementation, such as tracking systems setup, resource assignment, and coordination of the effort, all of which can be allocated to the launch phase (OECD 2014). This approach allows for additional focus on identifying and addressing the deviations from the original plan.
Project life cycle and phases were initially intended for use by businesses and other for-profit organizations (Todorović et al. 2015). However, with the growing adoption of other organizational development methods has led to the concept’s application in the public sector. The universality and strategic scope of the phases allow for applying the framework to a wide range of organizations in the public sector and, as a result, significantly increasing projects’ performance (Todorović et al. 2015).
It is also necessary to mention that different phases pose unique restrictions on the projects’ management. The most apparent is the notable lack of planning in the public sectors of some governments. Specifically, the lack of strategic perspective and a formulated plan is sometimes reported as a reason for budget overruns, ineffective risk mitigation and prevention policies, and failure to meet the deadline (Ofori 2013). The implementation phase, on the other hand, can be compromised by the lack of proper communication channels and the inability of the team to detect and address the setbacks in the plan.
The information above suggests the existence of several constraints characteristic for the projects. Depending on the scope and type of the project, they can be categorized using various degrees of specificity. However, the most common approach is to use the model referred to as the “project management triangle.” According to the model, the quality of the final product depends on a combination of three factors, namely the cost, scope, and time of the project (Kerzner 2017). Importantly, the determinants are indirectly related, which means that the adjustment in one area invariably produces changes in the other two domains. Therefore, the underperformance in one of the areas can be mitigated at the expense of performance in others, whenever the situation permits such an approach. For instance, the compliance with a short deadline can be achieved by allocating more resources to certain tasks (thereby increasing costs) and eliminating the most lengthy and/or resource-demanding (thereby decreasing scope). Consequently, the increase in scope would require both a larger budget (i.e. increased costs) and longer implementation lifespan (i.e. increased time) (Kerzner 2017). The model is useful as an accessible tool for illustrating the interconnection between the constraints of the project, estimating the areas impacted by the planned adjustments and changes, and communicating the outcomes to the stakeholders.
Other models exist that offer a more detailed disaggregation of project-related constraints. For instance, the cost category can be further disaggregated as consisting of aspects of human resources, equipment, facilities, and infrastructure (Kerzner 2017). In the same manner, scope-related constraints may include organizational issues, methodological flaws, and legal restrictions.
Effectiveness and Efficiency of Projects
As can be derived from the information above, each phase of the projects’ life cycle has the capacity for the improvement of their results. Therefore, the improvements in question usually aim at increased effectiveness and efficiency of the projects. However, despite the intuitive nature of the concepts, both are rarely defined in the academic literature on project management. Thus, to proceed, it is first necessary to provide the definitions of effectiveness and efficiency relevant to project management in the public sector.
In the most basic terms, effectiveness is the capacity to fulfill a certain task (Sundqvist, Backlund & Chronéer 2014). Efficiency, on the other hand, is the capability to organize the procedure in a way that eliminates as many barriers as possible and ensures the best results at the expense of the least time and effort invested in it (Sundqvist, Backlund & Chronéer 2014). In other words, effectiveness is the ability to produce the results whereas efficiency is the ability to arrive at the concluding phase without the unnecessary waste of resources and efforts.
By extension, it is possible to assert that the former can be measured by comparing the results to the milestones laid out in the project’s plan whereas the latter is assessed by identifying the gaps and inconsistencies in the process and identifying their causes (e.g. insufficient funding or misapplication of human resources). However, it should be understood that these definitions are rarely explicitly formulated in public sector-related projects (Kaufmann, Kraay & Mastruzzi 2011). In most cases, the terms are used in a self-explanatory manner. In some instances, this approach can be justified by the lack of apparent need to introduce a robust definition – for instance, the projects that utilize specific measurable parameters as determinants of success may only use the concepts of efficiency to outline the overarching goal (Hazel & Jacobson 2014). However, in situations where these concepts are used as chief determinants of performance, such vagueness can b considered detrimental to the transparency of the process.
At this point, it is necessary to accept the fact that the field of project management covers a wide variety of activities and processes. Since both effectiveness and efficiency are usually attributed to specific processes and utilize different metrics based on their characteristics, it becomes clear that at least on some occasions the concepts will attain different sets of characteristics. According to the study by Sundqvist, Backlund, and Chronéer (2014), the characteristics attributed to both effectiveness and efficiency vary significantly across the segment. The most common aspects are the ability to satisfy or exceed customer expectations, compliance with certain internal requirements, such as cost, timeframe, and resource utilization, and elimination of deficiencies. As can be seen, some of the proposed aspects align with the criteria posed by specific industry standards for quality. It is possible to view the requirements as goals, which allows incorporating the standard definition of effectiveness into the measurements. Understandably, such an approach would only be possible in the projects that deal with variables that are consistent with the requirements of respective standards. The main advantage of such an approach would be the possibility of select reliable tools and apply guidelines, recommendations, and expertise from related fields.
For the projects that are incompatible with the described approach, project managers often introduce their interpretation of the term. The definitions mainly depend on the priorities of the project, previous experience of the management, and personal perceptions of the stakeholders. For instance, some projects may prioritize the adequate allocation of resources as a determinant of performance, thus characterizing effectiveness as the capacity to maximize the returns on the invested resources (Liu, Wang & Wilkinson 2016).
Finally, it is necessary to acknowledge that the views on effectiveness and efficiency are expected to differ depending on the hierarchical structure of the organization. Specifically, the top management segment is more likely to adopt the strategic viewpoint and thus consider the accomplishment of the ultimate goal as the main determinant of effectiveness whereas individual team leaders will be more focused on short-term objectives (Ibrahim 2015). Notably, both approaches are consistent with the definitions of effectiveness provided above. Nevertheless, such disparity within a single project may lead to confusion and, in certain situations, compromise trust in the project.
For reasons specified above, an assessment of the effectiveness and efficiency of the projects in the public sector is complicated by several factors. In the absence of a universal framework, the main source of data is the case studies published in academic journals. According to the study by Pūlmanis (2014), the growing popularity of project management tools and techniques in the public sector harbors the significant potential for improvement. At the same time, the discrepancies between the perceptions of project managers and the results of the self-assessment of the process suggest the insufficient level of maturity of the organization. It is also important to understand that the assessment was conducted on an ongoing project and, as a result, accounted only for the observable and measurable performance (Pūlmanis 2014). In other words, it is more consistent with the accepted definition of efficiency, whereas the authors use the terms “efficient” and “effective” interchangeably, compromising the validity of findings.
The same approach was used in the study of the effectiveness and efficiency of Australian and Chinese projects. The research team relied on factors related to the tendering processes, thus downplaying the relevance of meeting the set goals (Liu, Wang & Wilkinson 2016). In other words, the team prioritized efficiency despite the claims made in the methodology. The described tendency is observed in the majority of the projects conducted in the public sector. The results of the analysis indicate that an increase in effectiveness is included in the list of goals of 18% of the studied articles, followed by increased efficiency at 15% (De Vries, Bekkers & Tummers 2016). However, the most numerous group (35%) does not present a formulated goal. Also, many of the papers provide vague and inconsistent definitions of the concepts that are only generally attributable to the definitions above.
Risk-Taking and Decision-Making in Projects
According to the information presented above, risk management one of the chief concerns of projects. The main reason for such a situation is a strong emphasis on innovation (Potts 2009). Currently, innovation is viewed as the most feasible means of increasing the effectiveness and efficiency of the institutions in the public sector. In response, organizations from different countries have initiated the process of adopting innovative technologies and policies. However, the pursuit of innovation introduces a certain amount of risk to the project. It should be understood that the situation observed in the public sector is different from that in its private counterpart, from which the concept was adopted. Specifically, the projects in the public sector are known to be inherently less flexible, poorly structured, and prone to design inefficiencies (Page et al. 2015).
Also, the projects in the public sector are more susceptible to political pressures, which have a detrimental effect on the process (Potts 2009). Finally, it should be acknowledged that the growing demand for innovation creates additional pressure on the project managers and, as a result, requires a certain capacity for risk-taking. Unlike the private sector, where risk management is already driven by an established set of practices, in the public sector risk is traditionally managed through avoidance (Holub, Marshall & Hood 2014). It has been suggested that this approach occurs due to a lack of risk diversification by the organizations. It is also important to acknowledge that for the organization in the private sector, it is possible to underperform in several areas and still achieve a positive result by excelling in one aspect. Such net success is rarely available for the public sector projects, in which achievements in some aspects do not necessarily cover gaps from the failed ones (Kaufmann, Kraay & Mastruzzi 2011).
The restrictive conditions described above impact the decision-making of project managers. The issue is further complicated by the introduction of uncertainty. According to the definition, risk complicates the decision-making process via the introduction of known adverse outcomes, whereas uncertainty provides no known outcomes or options as a basis for decisions (Rausand 2013). This issue is only partially acknowledged by the government institutions, which recognize the existence of risk as an inevitable component of innovation but relatively rarely provide guidance for projects willing to undertake it (Bhatta 2003). In most cases, the documents dealing with the question provide a generalized statement on the significance of innovation in achieving excellence of service, maintaining the desired level of quality, reducing workload, and otherwise beneficial for the project’s outcome (Osborne & Brown 2011). At the same time, no information is offered on the methods of dealing with associated risks, and, in extreme cases, risks are unspecified or excluded from the text (Braig, Gebre & Sellgren 2011). Some sources go as far as suggesting that risk management is a redundant process that requires considerable funding while providing a negligible positive effect (Osborne & Brown 2011). Understandably, such an attitude impairs project managers’ decision-making and reduces risk-taking to aversion and occasional unsystematic mitigation (Bhatta 2008).
Project Management Risks
As was mentioned above, project planning includes the acknowledgment of risks and the development of strategies intended to prevent or mitigate them. The depth level of this aspect of project management differs depending on the scope of the project and the perceived influence of the occurrence of risks on its performance. One of the most feasible solutions is the use of a universally accepted framework that streamlines and systematizes the process. The framework typically includes three stages – identification, evaluation, and mitigation (Deloitte 2015). During the first stage, the potential sources of risk are identified and evaluated for the likelihood of occurrence. The most common sources of knowledge are previous experience with similar projects and data obtained from academic publications (Hazel & Jacobson 2014). Usually, the list is then systematized by assigning categories to the identified risks. Finally, it is possible to further disaggregate the list by utilizing a risk breakdown structure. This approach is useful for visualizing the areas of concentration and, as a result, allocating the resources more appropriately.
During the evaluation phase, the risks are weighted by their impact on the project. Depending on the expected precision of the project, the likelihood of risk occurrence determined during its identification can be quantified, allowing for a more systematic assignment of priorities. The literature on risk management offers several functional tools that can simplify the process, such as impact-likelihood matrices (Kelbessa 2016). However, the projects in the public sector rarely make use of these instruments, relying instead on intuitive judgments. The likely reason for this is the lack of familiarity with the instruments and the failure to recognize the benefits associated with their use (Jałocha et al. 2014). Also, the requirements of the evaluation process are rarely formalized, which allows ignoring the procedure or substituting it with an informal alternative. Finally, risk aversion is responsible for at least some of these instances.
In the third stage, the findings of the evaluation are used to create a risk mitigation plan. A typical risk mitigation plan contains a combination of strategies addressing the risks based on their likelihood and severity. The mitigation is possible through risk avoidance (implementation of strategies intended to minimize the likelihood of risk), risk-sharing (partnering with organizations that can partially address the concerns), risk reduction (direct allocation of funds intended to address specific areas of concern), and risk transfer (relocation of responsibilities to a third party) (Kelbessa 2016). As can be seen, each of the identified strategies requires a certain amount of resources and effort. The availability of the mitigation plan thus provides the opportunity to compare the costs of different strategies and decide on the optimal strategy.
It is also possible that some of the identified risks are perceived as a threat to the project’s success. In this case, an alternative is developed that allows for a favorable outcome despite the occurrence of the risk. This alternative, known as a contingency plan, is usually a suboptimal solution in terms of costs and thus requires the creation of a contingency fund reserved for its launch.
As can be seen from the information above, the main bulk of risk management activities are allocated to the planning phase. At this stage, it is possible to gain access t the project’s parameters that may be necessary for creating viable risk mitigation strategies. Also, at this stage, it is possible to incorporate the contingency plan into the project’s plan to avoid inconsistencies. Finally, the budget required for the creation of a contingency fund may only be available for allocation at this stage (Deloitte 2015). It is also possible to encounter the necessity to initiate a risk mitigation strategy at the implementation stage. In the most severe cases, the encounter of a major risk may trigger a switch to a contingency plan, which will also occur at this phase. However, it should be understood that an appropriate risk mitigation plan requires intervention only in severe instances, whereas in most cases the flow of the project remains uninterrupted.
Monitoring and Assessment of Stakeholders’ Expectations
One of the trends observed in the public sectors is the increasing relevance of public participation. Consequently, it becomes necessary for project leaders to be able to identify the parties impacted by their decisions and able to participate in the project’s life cycle. These parties, defined as stakeholders in the academic literature, can have a significant influence on the progression and outcomes of the project (Kelbessa 2016). Therefore, to achieve a successful outcome, the project’s management must be able to identify and assess the expectations of stakeholders.
The recommended approach to the described process is a method known as stakeholder analysis. In its basic form, stakeholder analysis involves four stages. During the first stage, the stakeholders are identified. The most intuitive way of doing this is to map the people who are expected to be affected by the project’s outcomes. Once the main groups are identified and mapped, it is also recommended to categorize them based on their disposition as external and internal (Riege & Lindsay 2006). In the public sector, internal stakeholders are directly involved in the project’s life cycle whereas external ones contribute to the progression by providing feedback and offering experience relevant for achieving the set goals and objectives (Nica 2013).
During the second stage, each stakeholder or group of stakeholders is weighted by their relevance for and possible impact on the project. At this stage, it is important to acknowledge that the behavior of stakeholders and respective effects on the project depends on several factors, including their relationship with the organization, the issue targeted by the project, and the power available to them. The weight can be derived from two main factors: influence, or the capability to change the outcome, and importance, or the priority of a given stakeholder’s in the project’s hierarchy. Influence can be exerted directly (e.g. by using relevant knowledge or authority) and indirectly (e.g. through social or economic interactions) (Mergel 2013).
Once the weight of all stakeholders is determined, it is necessary to document the findings, preferably in a quantifiable form. This is typically done using a simple matrix. By utilizing the factors identified in the previous stage as variables, it is possible to assign stakeholders to four distinct groups. After this, it becomes possible to manage relationships with stakeholders by applying unique sets of principles to each of the categories (Mergel 2013). This approach provides the necessary consistency of actions and allows for monitoring and adjustment of the project’s implementation.
Project Oversight and Audit
To maintain the necessary level of integrity, projects can be subject to control at certain stages of their life cycle. Depending on the character of the project, the control in question can be performed internally or independently by a trusted party. The internal control, commonly referred to as internal audit, is a process aimed at assuring the project’s characteristics, such as effectiveness and efficiency, compliance with regulations, and reliability of reporting, among others (Piper 2015). Internal audit is performed through various means, including monitoring, oversight policies and procedures, identification of inconsistencies via communication with respective parties, and establishment of a controlled environment (IFAC 2013). Depending on the type of data gathered, controlling processes and activities may include supervision of operations, retention of records, installation of physical safety measures (e.g. locks, surveillance cameras), use of security software, and various authorization mechanisms (Cole, Eppert & Kinzelbach 2008). It is important to understand that internal control does not focus on the financial aspect of the projects and examines all relevant aspects and activities in its life cycle. Depending on the project’s scope, the audit can be applied to specific components or the project as a whole.
In the broadest sense, all participants of projects in the public sector are responsible for the audit process. However, the main bulk of activities are concentrated within two groups. The first one is top management, which is responsible for integrating activity into the project’s plan. Also, project managers establish the necessary environment that promotes accountability and transparency and improves the efficiency of the activities (OECD 2007). The second group is internal auditors – individuals tasked to gather, analyze, and report data on the project’s efficiency. Auditors are also responsible for maintaining the overall effectiveness of the oversight system. Other common areas of assessment include monitoring of the project’s control environment (e.g. identification and elimination of gaps), evaluation of risk mitigation and contingency plans, evaluation of the intra-organizational communication systems, and supervision of the audit’s feasibility (Nalewaik & Mills 2014).
An internal audit is organized by one of the two models. The first option, known as a centralized audit, is conducted by a single dedicated organization either by delegating tasks to the project’s members or by placing the organization’s representatives within the project (Prabhakar 2009). In the second category, referred to as decentralized audit, the external organization develops standards of the control process, which are then used by the project’s management to create an internal unit responsible for measuring compliance with these standards (Potts & Kastelle 2010). As can be seen, the second category delegates some of the responsibility to the individual projects. The standards used for decentralized audits include performance standards, which provide quality criteria for the typical processes in public sector projects, and attribute standards, which determine characteristics of control entities in question.
As can be seen, the decentralized approach offers greater flexibility and independence from external authorities. Nevertheless, it remains relatively uncommon in the public sector, mostly due to firmly established hierarchy and well-defined layers of control (OECD 2014). However, several countries, such as Canada, the United Kingdom, and the United States are already undergoing an adoption of decentralized practices.
To conduct a reliable audit, it is necessary to collect relevant and accurate data. The easiest option is the assessment of progress in terms of meeting the set objectives. A more elaborate approach involves the use of tools producing quantifiable data, such as key performance indicators (KPIs). A KPI is a systematized list of indicators that represent vital elements of the project’s performance (Kerzner 2017). Due to their popularity in the financial sector, KPIs are used primarily for financial performance measurement. However, it is equally plausible to use them for the assessment of non-financial outcomes (Kerzner 2017). In the public sector, key indicators may include compliance reviews, staff retention rates, volume and quality of information published in the reporting process, and several known unaddressed issues.
Summary
As can be seen from the literature review, the academic sources cover project establishment in sufficient detail. However, certain important elements, such as a universal definition of efficiency and effectiveness, are scarce. While effectiveness and efficiency are recognizable concepts that are already routinely applied to many projects in the public sector, the majority of managers demonstrate an insufficient understanding of the definitions and determinants of the concepts. Thus, it is reasonable to expect a wide variety of results that are not necessarily compatible with each other. Another probable outcome is the lack of consistency in the selected approaches and demonstrated results.
Next, at least some of the strategies and tools used in the private industries apply to the public sector with only minor adjustments. Some aspects of project management, such as increased attention to transparency and accountability, require additional attention in the project development process.
Finally, a range of issues and barriers can be identified as pertinent to the risk management of public sector projects. Specifically, despite the availability of tools and techniques adopted from other domains of project management, risks in the public sector are rarely managed consistently.
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