Chapter 2
Key Characteristics of Government Projects and Programs
In this section, six key characteristics of government projects and programs have been identified and discussed:
- Pursuing non-financial benefits;
- Being susceptible to political environment and dynamics;
- Following a mandated project management process;
- Being a large and complex megaproject;
- Having a long product life cycle; and
- Dealing with multiple stakeholders
It is important to establish an overall framework for the key characteristics, as these fit well with government projects and programs.
2.1 Non-Financial Benefits
Government projects are designed for different purposes than those of private sector projects. Whereas private sector projects are driven by profit maximization and return on investment, government projects are not-for-profit and managed to make efficient use of tax resources, and increase social and democratic values, such as equality, openness, and transparency.
Traditional measurement of project success is based on the “triple constraints” of time, cost, and scope. However, these relatively narrow constraints do not reflect other subjective or intangible considerations that can have a big impact on the perception of project success. Other success criteria have been proposed to supplement the conventional constraints for better project success measurement including organizational and project benefits (Zwikael & Smyrk, 2011). Project benefits represent performance improvements that contribute to the achievement of organizational objectives (Office of Government Commerce, 2007).
Government projects often have major non-financial benefits. They are undertaken in the service of the public (for the public good), rather than being driven by revenue or profit. For example, one benefit realized from the National Security Hotline project in Australia was increased reporting of suspicious behavior by members of the public, which contributed to the higher level strategic goal of enhancing national security. Another example of a non-financial benefit from a government project is the ANCOR system (CrimTrac project in Australia) aimed to enhance child safety by providing a nationally consistent approach to child offender registration and in some instances, enable police to case-manage registered sex offenders. Similarly, the Homeowner Insulation Program was designed to generate economic stimulus and support jobs and small business, as well as improving the energy efficiency of Australian homes.
2.2 Political Environment
Projects evolve around the preferences and expectations of owners. Owners of public projects could be more focused on political aspects and outcomes of projects and not necessarily coincide with realities of related industries or sectors. For instance, only 5% of more than 600 legislators in Washington have professional experience in construction and design industries (Lancaster, 2001), whereas construction sector and investments are generally considered as key drivers of economic growth. This lack of knowledge and expertise on how to manage a project and what to expect throughout the project life cycle, as well as political concerns in the limelight, possible short-term changes in management, and political risks, inevitably all have adverse effects on government projects.
Considering durations between elections in democratic regimes, government projects that are ruled by political agendas reflect relatively short-term views of legislators and ministers. Governments win elections with promises, creating expectations in voters, followers, the public, and other involved parties. Therefore, governments primarily target fulfilling their engagements to create sympathy and eventually win re-election. Policy makers are empowered by parliament or senate votes. Moreover, governments include motivated individuals in various ministries, who are pursuing progress in their political careers. In a world of limited resources, a certain level of competition for supplies, assets, or authority between these people and their respective departments is inevitable (Boyd & Chinyio, 2006), and government projects are no exception to that.
Government projects are affected by political risks in addition to well-known universal project risks and contingencies, due to several uncertain conditions. However, although political risk is a factor, the primary risks and uncertainties of government projects are related to the instabilities and dangers adversely influencing project finances or even threatening existence of the projects. These factors include nationalization of project assets, failed government grants or permits, tax or tariff increases, law changes, strikes, and terrorism (Bueno, 2010).
Regardless of political or other environmental factors, governments invest in many areas such as construction, IT, transportation, and security and defense, in order to spark economic stimulus. Through creation of buildings and infrastructure that support all other economic activities, governments ultimately pursue resource utilization, continuity of work, productivity, and performance. However, political environment is a significant factor of project success.
2.3 Formal Processes
The mandatory use of a formal process makes the management of government projects rather unique. This includes the formality and intensity of processes for budgeting, project planning and execution, project monitoring and control, project governance, and internal audits and reviews.
Government projects must follow strict budgeting processes, standards, and procedures that are unique to government agencies. The use of different types of funds and budget codes create complexity in the budgeting process, and fiscal year budgeting makes the management of government projects challenging. After approval, budgeted funds must be spent within that fiscal year with the minimum allowance of money carried over.
In addition to strict budgeting processes, government projects must follow standard processes for specific activities related to project management. For example, for acquisition activities, the projects within the U.S. Department of Defense (DOD) must follow the procedure for the Joint Capabilities Integration and Development System. The U.S. Federal Highway Administration (FHWA) planners, engineers, realty, and finance staff conduct reviews of state Department of Transportation (DOT) actions and processes to assure compliance with federal laws and regulations. These process reviews are evaluations of the state DOT management of its highway program under state and federal laws and regulations. For project monitoring and control, strict guidelines and procedures must be followed. In the U.S., EVM principle is strongly recommended for a project over $20 million, and it is mandatory for a project of more than $50 million for project monitoring and control. In addition, formal milestones must be established, and gatekeepers must be assigned.
While a certain set of standard formal project management processes should be practiced, ineffective use of processes has been found. This includes requirement elicitation process (ANAO, 2007) and risk management processes (GAO, 2005) among others. Because EVM is not a mandatory requirement by the Australian government, there have been some challenges in project monitoring and control for Australian government projects (ANAO, 2006).
Unique to government projects are the required strict internal audits and review processes. These include audits from the U.S. GAO, the NAO in the UK, and the ANAO. While the audit and review processes can identify problems, the intensity and frequency of audits can hamper project progress and the performance of the project personnel.
2.4 Megaprojects
A key characteristic of government projects and programs is that they fit into the category of “megaprojects.” The United States Federal Highway Administration defines megaproject as “projects that cost more than $1 billion, or projects of a significant cost that attract a high level of public attention or political interests because of substantial direct and indirect impacts on the community environment and budget” (Capka, 2004). Merrow et al. (1988) also defined megaprojects as those whose capital cost exceeds $1 billion, although he used a cut-off value of $500 million in his study.
Risks and uncertainties associated with planning and implementing the project should be identified, analyzed, and incorporated during the planning phase in order to achieve commonly accepted criteria of a successful project, such as meeting project cost. Schedule is another key factor to include when discussing the megaproject. The typical length of a megaproject is more than 5 years. When it involves large programs, the duration can easily be doubled or tripled. Duration of government projects, in particular, can be affected significantly by dealing with multiple stakeholders, adopting appropriate technologies that are compatible and exchangeable for future usage, and managing change orders.
Conducting a thorough feasibility study, including benefit-cost analysis, during the initiation and planning phases and modularizing projects into smaller pieces can alleviate potential risks of high cost and long duration, as well as adapting to potential changes and uncertainties. Planning and coordination of suppliers and subcontractors are equally important and critical to keep the project on time and on budget as the impact could be significant to the overall project performance. Additionally, inefficient allocation of resources, underestimating project complexity and cost, competing management styles, and lack of leadership, can all contribute to poor performance.
A majority of the government megaprojects that we investigated did not meet the original scope, budget, or timeline. This resulted in stakeholder displeasure, additional cost to taxpayers, and other consequences. Poor project management performance of megaprojects has been attributed to too many stakeholders; lack of clear project governance structure, organizational structure, and timelines; and communication issues with competing interests. These factors resulted in reduced scope, increased expenditure, or in some instances, cancellation of projects.
2.5 Long Product Life Cycle
A long product/deliverable life cycle is another unique characteristic of government projects. The deliverable/outcome of government projects, including infrastructures, aircraft, and information systems, are expected to be operational for many years if not decades after completion. With the expectation that the product will have a long life, product design and planning can become very challenging. The product should be designed with the focus on quality and product life cycle in mind. The issues of product durability, functionality, and flexibility to address current and future needs are extremely important in government projects.
In addition to product quality, the anticipation of future needs can lead to a high level of technological uncertainty involved in product design. With a high level of technological uncertainty, decisions to adopt certain technologies become extremely challenging. If there are conventional technologies ready for adoption, the project team has to justify whether or not those technologies will become obsolete in the near future and whether or not the existing technologies are flexible enough to incorporate future changes. Using potentially obsolete technologies can shorten product life cycle, and decrease return on investment. Conversely, the evidence from this research also showed that in many cases advanced technologies required by the project did not even exist at the beginning of the project. The project team had to develop technologies along with the product, and in many cases, the technologies were not mature enough to be adopted, resulting in project failures.
2.6 Multiple Stakeholders
Each government project includes several stakeholders with various objectives and expectations, which require serious consideration during the planning and management processes. Dealing with multiple parties is common in project management; however, multiple stakeholders who may affect the progress of the project in political, social, or financial ways, are a unique characteristic of government projects. After project stakeholders are recognized, distinguishing the potential purpose and impact of each involved party is of vital importance for project success. Although it may be difficult to identify agendas of multiple stakeholders, it can be advantageous to understand who is for or against the success of the project (Egeland, 2009). Considering the aforementioned political environment and related parties, planning for and management of stakeholders becomes a crucial factor in government projects. Namely “stakeholder engagement” is a useful “process of identifying key stakeholders, analyzing their influence on the project, and managing their influence and impact–including winning their support where possible” (DPAC, 2011). Key stakeholders in government projects are those individuals or groups whose interest in the project must be recognized if the project is to be successful–in particular, those stakeholders who will be positively or negatively affected during the project or on successful completion of the project. Non-key stakeholders are those individuals or groups identified as having a stake in the project but who do not necessarily influence its outcome (DPAC, 2011).
Who are the stakeholders in government projects? How should they be classified and described? The Australian Tasmanian Government Department of Premier and Cabinet (DPAC) classifies key stakeholders in government projects under five groups: review, related projects, outcome impacted, output utilization, and outcome accountable (DPAC, 2011). (1) Review stakeholders are groups or organizations that need to review or audit the project and its outputs or outcomes, such as quality review consultants and the budget committee. (2) The related projects group consists of projects and change activities that are likely to either have an impact on or be internally or externally impacted by the project. (3) Outcome impacted includes individuals, groups, organizations, and related projects that are potentially under positive or negative influence of project outcomes. Project beneficiaries will enjoy advancements in service, thanks to the project outcomes in question; whereas those that are negatively impacted may face possible forfeiture. (4) Output utilization parties are needed to realize project outcomes while using project outputs, such as business owners and project customers. Finally, (5) outcome accountability classes define responsible parties for the project's success, including corporate clients and project sponsors. As an essential stakeholder of government projects, citizens and communities may be considered under more than one of the aforementioned groups, in accordance with their relation to the project.
Alignment, collaboration, and communication among the stakeholders are issues to be addressed in every project. Multiple parties often are involved in government projects, including agencies, authorities, administrative personnel, and lobbyists. Project progress is dictated by not only alignment under political agendas but also formalized communication and collaboration channels. When government projects involve multiple agencies, forming cross-agency cooperation and establishing interagency agreements are of utmost importance for affluent project processes. In addition, engagement and collaboration among key personnel of possible critical activities such as procurement and acquisitions, planning and management, manufacturing (or production) and logistics, and marketing and sales significantly contributes to the success of the project.
Since government projects are mostly utilized as economic stimuli and public development tools, it is important to coordinate with existing operations and the related business community. To illustrate, an inner-city transportation project should be planned without creating any traffic congestion or other social and/or economic outcomes, if possible. Also, as the project progresses, its effects on current sewage and drainage infrastructure should be minimized with proper planning. Moreover, to increase the effectiveness of project outcomes, the production process of government projects should be tailored to consider the needs and requests of public and private parties who may be impacted by the project. Consultation from associated business communities could potentially sustain the usability of project products.
A basic physics experiment shows that an object under several forces moves in the direction of the resultant force of the components. Consider component forces pulling the object in different directions, with opposing forces acting on the object. If all forces draw the object in the same direction, then it moves under the total impulse of the components. Projects can be considered the object in this experiment, and if individual stakeholders try to “win” for themselves in the project, thus creating resistance in the overall “force,” the project success would inevitably suffer. Conversely, if all involved parties work toward the same goal with alignment, coordination, and collaboration, project success may be achieved more easily than anticipated. Moreover, the identification of individual stakeholders and their respective purposes in a government project is of great importance to its ultimate success.