Lecture06 reading client_expectation_alignment


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Lecture06 reading client_expectation_alignment

  1. 1. ConfidentialRunning head: EXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION  1    Explaining Project Success with Client Expectation Alignment: An Empirical StudyThomas G. Lechler1Ting Gao21Associate Professor, Stevens Institute of Technology2PhD Candidate, Stevens Institute of Technology
  2. 2. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 2   AbstractThis study examines the management of client expectations during project implementation. Theproblem is that expectations of clients may change over the course of a project and may lead todisagreements and consequently to project failures. Based on stakeholder theory, we derive theconcept of client expectation alignment. It represents processes to continuously involve clients toexpress their expectations, set their expectations, and adjust inappropriate expectations. Withdata from 206 projects, we analyze the relationships between client expectation alignment, goalchanges, client support, and project success. Using structural equation modeling (SEM), theanalyses reveal mediating effects of project goal changes and client support of client expectationalignment on project success. The study also identifies three important factors that facilitate theexpectation alignment process: client competence, project team competence, and projectmanager’s formal project decision authority. The results expand the stakeholder theory and offera conceptual and empirical basis for research in project management. The results direct projectmanagers to the mechanics and the specific challenges in achieving client expectation alignmentand its consequences for achieving project success.Keywords: client expectation alignment, goal changes, project success, stakeholdertheory
  3. 3. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 3   Explaining Project Success with Client Expectation Alignment: An Empirical StudyProjects always involve multiple stakeholders whose interests and needs should beconsidered in managerial decisions to ensure project success (Cleland, 1986; Mallak, 1991;Turner, 1999; Olander and Landin, 2005; Takim, 2009). Among them, clients play an importantrole in projects because they are the ones for whom a project is usually intended and made useof. Actually, no project would exist without clients. They determine project scope, influenceproject implementation and test a project’s result (Project Management Institute, 2004). Clientsare also considered one of the most important stakeholders to decide project success criteria(Struckenbruck, 1987; Atkinson, 1999). However, project managers report that it is hard tosatisfy their clients’ needs or meet their expectations (Darnall & Preston, 2010). Deane, Clarkand Young (1997) also identified five levels of potential gaps between project outcomes andcustomer needs or expectations. The problem is that clients cannot always clearly describe theirexpectations at project start especially when projects are complex and face high levels ofuncertainty (Ojasalo, 2001). Another reason is that their expectations may change over the timeof the project execution through learning process in the dynamic business environments ofprojects (Zeithaml, Berry, & Parasuraman, 1993). Concepts of quality management, like thehouse of quality (Griffin & Hauser, 1992), are used to identify explicit and unspoken needs andexpectations. Meeting those expectations would lead to client satisfaction only if they remainstable over the implementation of a project, which is unusual in project settings.Client or customer expectations have been most investigated in the customer satisfactionand dissatisfaction and relationship marketing literatures (Oliver, 1977; Olson & Dover, 1979;Parasuraman, Berry, & Zeithamel, 1991; Walker & Baker, 2000). Although the importance of
  4. 4. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 4   managing client expectation is increasingly recognized by practitioners in project management,only a few studies directly investigate client expectation or its dynamics in project managementliterature (Deane, Clark & Young, 1997; Darnall & Preston, 2010). Following relationshipmarketing literature, we focus on the dyadic relationship between project management team andclients. Our first goal is to introduce the concept of client expectation alignment from a processrelated perspective. It represents those processes to manage client expectations which can lead toimproved interactions and further better performance. The second goal is to identify importantdeterminants, which can facilitate the management of client expectations. The third goal of thisstudy aims to derive important implications for the practice and research of project management.The paper is organized in six sections. The first section lays a theoretical foundation basedon a comprehensive literature review to define client expectation alignment and its relationshipto goal changes and client support. The second section explains the conceptual model andhypotheses. Section 3 describes the data collection methods, research design, and data analysismethods. Section 4 gives the results of our empirical test of the hypotheses. Discussion andimplications of the results follow.Literature ReviewEffects Induced by Instable Client ExpectationsA growing awareness of the instability of client expectations is found in a number ofresearch settings (Frame, 1987; Zeithaml, Berry, & Parasuraman, 1993; Kreiner, 1995; Yao &Murphy, 2002). For example, Zeithaml, Berry, & Parasuraman (1993) state that the needs,desires, and expectations change in response to new experiences, specific circumstances orpredicted services.
  5. 5. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 5   The instability of client expectations may cause harmful results to projects. A project may loseits relevance when changes of client expectations during project implementation are ignored ordisregarded (Kreiner, 1995). The downside of adapting to changes of client expectations is theproblem that if the project is hypersensitive to its clients and adapts itself to every change ofclient expectations, it will face many changes (Kreiner, 1995). Not surprisingly, clients orcustomers are always in a situation where they would like to introduce changes during projectimplementation (Globerson, 1997). Kreiner (1995) also described clients as those fighting fortheir right to keep suggesting additions to, changes in, or new directions for the project, almostup to the time of delivery. Especially, the changes of client expectations are effecting goalchanges. Project goal changes occur when clients realize new needs, especially in high value,complex industrial products and systems projects (Hobday, 2000). Many empirical studiesconfirm that the definition of project goals is important for project success (Rubenstein,Chakrabarti, O’Keefe, Souder, & Young, 1976; Pinto, 1986; Thamhain & Wilemon, 1986;Larson & Gobeli, 1987). Frequent goal changes could have a strong negative impact on projectperformance (Dvir & Lechler, 2004; Murphy et al., 1974).The research also shows that instable client expectations lead to a loss of client support(Baccarini, Salm, & Love, 2004). The value of the project to the clients is reduced when theirexpectations are not met and consequently their support to the project is lost. Client support isessential to project success, and thus loss of client support may bring detrimental results toprojects (Villachica et al., 2004). As Takim (2009) stated, the lack of client support is a factorcontributing to project failure.Reasons for Instability of Client Expectations
  6. 6. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 6   The significant influence of instable client expectations brings the need to explore itsreasons. In this section, we develop a theoretical explanation for the dynamics of clientexpectations. We consider two assumptions to explain the instability. The first assumption isrelated to information asymmetry, and the second is related to the clients’ motivation tomaximize value.Information asymmetry exists between project clients and the project team. As insiders,project manager and project team members are in a position to know more about the project thantheir clients are. Information asymmetry between clients and project team is an important reasonto cause instability of client expectations. The clients do not have access to the same informationas the project manager, and do not know if the project represents their interests and follows anappropriate process to deliver a product that will meet their needs. The existence of informationasymmetry between them creates the potential for mistrust (Turner & Muller, 2004). As aresponse, the clients may adjust their expectations to a more demanding level out of fear that theproject team will seek to maximize the team’s utility rather than theirs (Parasuraman et al.,1991). In addition, without updated knowledge of the project value proposition and the projectstatus from the project team, clients may change their expectations to impose new requirementssince they have no idea of the impacts that these changes will have on projects (Gil, Tommelein,& Schruben, 2006).From a traditional economic perspective, researchers state that a major aim of consumersis to maximize their utility or value (Fishburn, 1987; Eatwell, Millgate, & Newman, 1987). AsMachina (1987) stated, consumers always choose that “prospect” which maximizes the value oftheir individual utility function at a particular point in time. Also from the stakeholderperspective, stakeholders can be seen as supplying the firm with critical resources and in
  7. 7. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 7   exchange expecting their interests to be satisfied (Hill & Jones, 1992). As for customers, theysupply the firm with revenues and expect value for money in exchange. Clients try to maximizetheir value in any situation they encounter. On one hand, typically, clients do not have a clearunderstanding of what they want from a project. They may feel something is wrong or needs animprovement, but do not know what kind of improvement this should be. Also, they may beunfamiliar with that kind of project or they do not have the knowledge to understand thetechnological design. As a result, clients may just have fuzzy or implicit expectations and are notable to clearly specify their needs at the start (Ojasalo, 2001). However, when they could clearlyexpress their needs at a later stage or new ones reveal through their experiential learning duringthe project implementation, clients will change their expectations to maximize their value. Evenif clients have clear expectations at an early project stage, they might not be satisfied with theirpast choices at a later project stage particularly with increasing project duration. Their changedexpectations depend on their experiences, or temporal dependencies and their dissatisfaction withtheir past choices (Huber et al., 1997).Thus, as clients are motivated by value maximization, their change of expectation iscontingent on new information they perceive from the environment (Zeithaml et al., 1993;Kreiner, 1995). This is also the reason why researchers argue that client needs are dynamic andmisunderstood (Frame, 1987; Parasuraman et al., 1991).Client Expectation AlignmentAccording to relationship marketing literature, managers can to some degree influencecustomers or clients expectations through mediated and interpersonal communications to achievea better relationship (Morgan and Hunt, 1994). The relationship is characterized by concern, trustand commitment which will bring acquiescence and cooperation from clients (Buttle, 2001). We
  8. 8. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 8   access this issue from a process perspective. We define client expectation alignment as theprocesses to bring client expectations into alignment with project objectives and project team’sability to meet the requirements. These alignment process help build trust and relationshipcommitment between project management team and clients and control for the instability ofclient expectations. The processes may include allowing clients to express their expectations,setting their expectations, and adjusting inappropriate expectations. All these processes rely oninformation sharing and mutual understanding (Rogers, 1986). As Reich and Benbasat (2000)argued that such information sharing over time causes the individuals to converge to achieve themutual understanding and further support. Since alignment is achieved by maximization ofmutual information, a regular two-way communication between project team and clients isespecially important.Client expectation alignment is the key to manage client expectation with the intent toreduce goal changes. To align client expectations with the reality of the project, clients have tobe constantly persuaded to maintain realistic value expectations. Their perceived value of theproject will be shaped, reminded, and reinforced, leaving no necessity to change. Taylor (2006)suggested that educating the client to have a realistic expectation of how the project will progressis a key to ensure client satisfaction. Client expectation alignment is an important educationalprocess. Moreover, client expectation alignment through communication, especially when thecommunication is timely, can serve to promote trust by overcoming information asymmetry andclarifying misunderstanding (Etgar, 1979; Moorman, Deshpande, & Zaltman, 1993; Turner &Muller, 2004; Pinto, Slevin, & English, 2009). Parasuraman et al. (1991) also stated that open,regular, two-way communication paves the path for trust. Research suggests that when trust isestablished, client expectations tend to stay stable (Anderson & Narus, 1990; Morgan & Hunt,
  9. 9. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 9   1994; Yao & Murphy, 2002). Clients are likely to buy into the project product and process orkeep their expectations if they believe the project team is trying to be fair and behave asexpected. Therefore, client alignment through regular mutual communication should helpstabilize expectations and further reduce the frequency of goal changes during projectimplementation.Client expectation alignment can also help increase support from clients. According tothe theory of planned behavior, a person’s behavior is driven by an intention to perform abehavior and that intention can be predicted from three factors: attitude toward the behavior,subjective norms, and perceived behavioral control over the performance of the behavior (Ajzen,1991). Since client’s support of a project can be considered a behavior choice, the forces thatgovern general human behavior can be relevant to this specific behavior. Client expectationalignment mainly influences the attitude of the clients to get their support. The attitude refers to“the degree to which a person has a favorable or unfavorable evaluation or appraisal of thebehavior in question” as Ajzen (2005, p.118) states “people intend to perform a behavior whenthey evaluate it positively.” On one hand, the alignment process will bring client expectationsinto alignment with project objectives. When clients believe the project team strives to meet theirexpectations, they tend to have a favorable evaluation of the project and try to cooperate andcommit to achieve the common goals. On the other hand, during the alignment process, theassumptions held by the clients for the project are realistic and consistent with the deliverablespromised by the project team. In this case, once a project is faced with difficulties, clients withprepared minds will not evaluate project unfavorably and will continue to support the projectrather than be disappointed. Therefore, client expectation alignment helps the project to gain thenecessary commitments and buy-in from the clients through managing their expectations.
  10. 10. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 10   Model Development and HypothesesBased on the previous discussion about theoretical background and literature review, wedrew the conceptual framework of our study in Figure 1. As it shows, we use a multidimensionalapproach for assessing project success, which was recognized by many other researchers (Pinto& Mantel, 1990; Tatikonda & Rosenthal, 2000; Shenhar, Tishler, Dvir, Lipovetsky, & Lechler,2002; Lechler & Dvir, 2010).Figure 1. Conceptual framework of this studyGoal changes in our study are the changes that reflect a change in the project goals withhigh importance and high frequency. It is typically caused by the conscious decisions ofstakeholders as we assume in this study that clients are one of main reasons for goal changes(Baccarini et al., 2004). These frequent goal changes are harmful to the project. Project goals aresupposed to provide direction for the project team. Frequent goal changes may break downefforts and cause difficulty in efforts to implement the project. As Williams (1999) recognized,goal changes will result in product and project complexity while continuous changes may makeit extremely difficult to deliver the project in a stable way with constrained elements assigned toa project. Thus, project progress may be hindered because of ad hoc changes or even terminated(Baccarini et al., 2004). A few empirical studies have demonstrated the direct negative effects ofgoal changes on project success (Murphy, Baker, & Fisher, 1974; Lechler, 1998; Dvir & Lechler,Client CompetenceProject AuthorityGoal Changes Project Success. Efficiency. Effectiveness. Customer Satisfaction. Economic SuccessClient SupportClientExpectationAlignmentTeam Competence++-+-+++
  11. 11. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 11   2004). For example, Lechler’s study (1998) showed that a lack of continuity in goals issignificantly related to failed projects. Therefore, we expect a negative impact of goal changes inall measures of project success.Hypothesis 1: Goal changes are negatively related to project success.The basic idea of project stakeholder theory is that the project has relationships withmany constituent groups and the support of these groups needs to be considered and maintained.As clients are one of the primary stakeholders in the project, their support is important to projectsuccess. When clients support the project, they will share a vision of common success measureswith the project team. In addition, their support will bring their commitment and buy-in to theproject that lays the foundation for successful development and implementation efforts of theproject team (Karlsen, 2002; Villachica, Stone, & Endicott, 2004). On the other hand, lack ofclient support is often reported to be a factor contributing to project failure (Takim, 2009).Therefore, we propose that client support will positively impact the success of project.Hypothesis 2: Client support is positively related to project success.In this study, client expectation alignment means the processes to bring clientexpectations into alignment with project objectives. These processes include the extensiveinvolvement of clients to express their expectation, timely communication between the projectteam and clients to increase shared understanding of the project and the like.Taylor (2006) suggested that educating the client to have realistic expectations of how theproject will progress is a key to ensure client satisfaction. Some empirical studies have also beenconducted to test the effect of client management on project success. They find that clientinvolvement (Dvir, Lipovetsky, Shenhar, & Tishler, 1998; Deakin, 1999; Hyvari, 2006), clientconsultation, and client acceptance (Pinto & Prescott, 1988), or client communication (Mo & Ng,
  12. 12. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 12   1997; Gopal, Mukhopadhyay, & Krishnan, 2002) are critical success factors. Qualityimprovement tools and techniques in project management also help heighten awareness of theimportance of gathering input from the customer (Kumar & Wolf, 1992; Jonker, 2000; Jugdev &Müller, 2005). Pinto and Slevin (1988) emphasized the importance of interaction with theproject’s clients throughout the duration of the project. Further, researchers confirmed the role ofinteraction with clients through different kinds of projects such as new product development(Gruner & Homburg, 2000), design and build project (Mo & Ng, 1997; Chan, Ho, & Tam, 2001;Deakin, 1999), defense development projects (Dvir et al., 1998), offshore software development(Gopal et al., 2002), the high-technology projects (Hobday, 2000), and the large engineeringdesign project (Gil et al., 2006). For example, Gruner and Homburg (2000) found intensity ofcustomer interaction and closeness with customers to be significant in early and late stages ofnew product development (NPD) projects.In sum, we expect the processes to align client expectations will increase the efficiency ofthe project, improve the effectiveness, and ensure client satisfaction and economic success.Hypothesis 3a: Client expectation alignment has a strong positive effect on projectsuccess.In our conceptual discussion, we demonstrate that managing client expectations is aneffective way to reduce client induced goal changes. In practice, especially in software projectmanagement, managing user expectations has been considered increasingly important.Researchers point out that managing user expectation is to ensure that the assumptions held bythe user for a software project are realistic and consistent with the software deliverable promisedby the project team (Baccarini et al., 2004; Ginzberg, 1981). These expectations “must becorrectly identified and constantly reinforced in order to avoid failure” (Schmidt, Lyytinen, Keil,
  13. 13. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 13   & Cule, 2001). That is the function of client expectation alignment. Client expectation alignmentis about managing the promises. Project goals will have a better chance of staying stable when aproject team’s promises reflect the project actually delivered rather than an idealized version. Atthe same time, project teams should help clients set expectations at a reasonable level before theproject starts, and then reinforce their expectations and get their buy-in throughout the project.Therefore, client expectation alignment is the key to manage client expectations to reduce thefrequent goal changes through educating clients to have realistic expectations, reinforcing theirperceived value of project and clarifying misunderstanding between clients and the project team.We expect a negative effect of client expectation alignment on goal changes.Hypothesis 3b: Client expectation alignment has a strong negative effect on goalchanges.Client expectation alignment is expected to increase support from clients based on ourconceptual discussion. When clients’ expectations are aligned with project objectives, theirattitudes toward the project are also influenced in a positive way. According to the theory ofplanned behavior, while the clients are aware that the project team is striving to meet theirexpectations, they are willing to cooperate and commit to achieve shared goals. Their favorableevaluation of the project also ensures a necessary buy-in and support during the implementationof the project. Therefore, we propose:Hypothesis 3c: Client expectation alignment has a strong positive effect on clientsupport.We also expect client expectation alignment to relate indirectly to project success throughclient support and goal changes as mediators. Indeed, as client expectation alignment reduces thefrequency of goal changes, project success will be improved since the negative impact of goal
  14. 14. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 14   changes on project success is reduced. Similarly, as client expectation alignment increases clientsupport, it becomes increasingly likely that the client support will increase project success.Considering the findings from prior empirical literature that client management hassignificant direct effects on project performance, we expect that client expectation alignment willstill have significant direct effects on project success. Stated differently, we expect therelationship between client expectation alignment and project success will be partially mediatedby goal changes and client support.Hypothesis 4a: Client support partially mediates the relationship between clientexpectation alignment and project success.Hypothesis 4b: Goal changes partially mediate the relationship between clientexpectation alignment and project success.Since client expectation alignment is so important, we explored important factors thatmight facilitate the alignment processes. We take into consideration the competence andauthority of relevant stakeholders including clients, project team, and the project manager.In Cleland and Ireland’s (2004) book, competency is defined as being properly qualifiedand capable, adequate for the stipulated purpose. Individuals’ competency depends on theirknowledge, skills, and attitudes. Since a project is usually conducted within the context of sometechnology, we consider the technical knowledge of clients and the project team as part of theircompetence. We also consider sufficient training and understanding of project team.Cleland and Ireland (2004) define authority as the power to command others to act or notto act. Project managers’ authority may be defined by their position and their competency. Withhigh competence or authority, clients, the project team, and the project manager have morecapabilities to influence each other and tend to have a shared vision of success criteria. In the
  15. 15. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 15   client expectation alignment processes, when both clients and the project team have morerelevant technological knowledge, it is easier for them to communicate and achieve a commonunderstanding of the implementation process, its complexity, and its limitations. The clients’expectations will be more realistic accordingly. The project manager with sufficient power buildsthe foundation to align client expectations with project objectives since authority will be neededto make change decisions about the project to align project with client expectations or tonegotiate with clients to bring their expectations in alignment with the abilities of the projectteam to deliver the project. Thus, we expect client competence, project team competence and PMauthority will positively influence the client expectation alignment.Hypothesis 5a: Client competence is positively related to client expectationalignment.Hypothesis 5b: Project team competence is positively related to client expectationalignment.Hypothesis 5c: Project manager authority is positively related to client expectationalignment.MethodologyResearch Sample and Data CollectionThe proposed model was tested based on a sample of project data collected between 2001and 2006 in the United States. A detailed questionnaire was developed to collect information onsuccess factors of project management. The collection was assisted by project team membersand/or project managers. They were asked to select a single successful or failed project that wasrecently completed within their organizations, or that was close to completion, with a budget ofat least $500,000 and duration of at least six months. These individuals were then given three
  16. 16. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 16   identical questionnaires, which they were asked to distribute to the project manager, a coreproject team member, and the senior manager responsible for the funding of the project. Thequestionnaires were independently completed by the different participants. As a result, at leasttwo members of each project we selected responded to the survey, which resulted in over 600surveys and a sample of 249 projects. Thirty-nine percent of our respondents are projectmanagers, thirty-six percent are project technical team members, and nine percent are projectadministrative team members. Seventeen percent are other members. The multiple respondentshelp to avoid the common rater variance and reduce the expected value of correlation betweensystematic sources.The sample included different kinds of projects. As shown in Table 1, we used the projectmanager’s response about type of project. In our sample, 39% of the projects are new productdevelopment projects, IT/IS projects count for 34%, and construction projects and R&D projectsare 8% separately. The sample also includes 5% organizational projects, 1% investment project,and 6% other kind of projects we did not specify in our questionnaires. In sum, our sampleprovides a representative cross-sectional distribution of projects conducted in U.S industry.Table 1: Distribution of project typesProject type Frequency Frequency (%)New product development 98 39Software/IT development 38 15IT system project implementation 47 19Construction 19 8Investment project (capitalequipment) 2 1Organizational projects 12 5R&D 19 8Others 14 6
  17. 17. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 17   Total 249 100%Research MeasuresThe questionnaires used in this study include 199 single items and some quantitativemeasures of project-specific characteristics. Out of these, 67 items were directly taken fromPinto’s questionnaire, with permission of the author. The remaining items were developed withthe help of some experienced project managers. Each item was assessed on seven-point ratingscales with a range from “strongly disagree” to “strongly agree.” All constructs and itemsrelevant to this study are listed in Table 2. We applied existing and validated measurement fromprior literature. Those constructs consisting of multiple items were tested for composite validityusing factor analysis and Cronbach’s alpha. The Cronbach’s alpha scores ranged from 0.83 to0.95, well above the acceptable scale levels as suggested by Van de Ven and Ferry (1980).Project Success. There is no commonly accepted framework to measure project success.Reviewing the project management literature, Brown and Eisenhardt (1995) and Tatikonda andRosenthal (2001) identified two dimensions of new product project performance: (1) theoperational success, and (2) market success. Pinto and Mantel (1990) provided three aspects thatwere concerned with internal efficiency and external effectiveness of project performance: (1)the implementation process itself; (2) the perceived value of the project; and (3) clientsatisfaction with the delivered project. Shenhar et al. (2002) suggested another three successcriteria: (1) meeting design goals; (2) benefit to the customer; and (3) benefit to the organization.Following our previous study (Lechler & Dvir, 2010), we use a four-criterion success measure:efficiency, effectiveness, customer satisfaction, and economic success. The four criteria are
  18. 18. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 18   confirmed by the exploratory factor analysis using our sample and the Alpha values of the foursuccess scales are between 0.85 and 0.95 indicating high reliability of the success measure.Client Expectation Alignment. We measured this construct by integrating items fromthe scales of client consultation and client acceptance developed by Pinto and Prescott (1990). Intheir study, client consultation means communication and active listening to concerned partiesand potential users. The items measuring this construct include “the clients had been given theopportunity to provide input early in the project development stage,” “the client were toldwhether or not their input was adopted into the project plan.” Therefore, this process helpsclients express their expectations, which is necessary for the project team to align the projectobjectives with the client expectations. The typical items for client acceptance are “potentialclients had been contacted about the usefulness of the project output,” “adequate advancedpreparation had been done to determine how best to ‘sell’ the project to the clients,” and the like.From expectation perspective, these activities allow the project team to keep clients’expectations realistic and aligned with the abilities of the project team to deliver the project. Inaddition, two-way communication and mutual adaption between the project team and the clientsreflected in those two constructs are necessary to pave the way for our concept of clientexpectation alignment. Thus, we include items from both of these construct as measures of clientexpectation alignment. The result of exploratory factor analysis showed only one main factorunderlying the items, which suggests undimensionality of the created measurement construct(Hair, Anderson Jr., Tatham, & Black, 1998). The reliability of this measure is 0.89 and suggestsa good reliability of this scale to measure.Goal Changes. Two items are used to measure this construct. This scale emphasizes thefrequency and the magnitude of the change in project goals. The alpha of this variable is 0.85.
  19. 19. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 19   Client Support. The item used to measure this variable is “In case of difficulties, theclients supported the project team.” If the clients can support the project team in case ofdifficulties, they must have high support of the project. Therefore, this item represents the scaleto measure client support.Client Competence. Client competence mainly measures the technical competence ofthe clients using the item “During the negotiation process the client appeared knowledgeableregarding the technical aspects of the project.”Team Competence. Three items are used to measure team competence. One item isabout sufficient training, another one is about technical competence and the third about theproject understanding of the project team. The alpha of the construct is 0.83.Project Manager’s Authority (PM authority). PM authority is measured by four itemsdescribing the sufficiency of project manager’s authority to negotiate with clients, makenecessary decisions and make change decisions to achieve the project goals. The alpha of PMauthority is 0.84.Table 2: MeasurementScale Alpha ItemsEfficiency 0.85 1. The project was completed on schedule.2. The project was completed within budget.Effectiveness 0.95 1. The project met all technical specifications.2. The project does what it is supposed to do.3. The results of this project represent an improvement inclient performance.4. The project is used by its intended clients.5. The project has a positive impact on those who makeuse of it.6. Important clients, directly affected by the project,make use of it.
  20. 20. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 20   7. Clients using this project will experience moreeffective decision making and / or improvedperformance.Customer satisfaction 0.91 1. The clients were satisfied with the process by whichthis project was completed.2. The clients are satisfied with the results of the project.Economic success 0.89 1. The project was an economic success for theorganization that completed it.2. All things considered, the project is a success.Client expectation alignment 0.89 1. Potential clients had been contacted about theusefulness of the project output.2. The clients had been given the opportunity to provideinput early in the project development stage.3. The limitations of the project had been discussed withthe client (what the project is not designed to do).4. The clients were told whether or not their input wasadopted into the project plan.5. Clients know whom to contact when problems orquestions arose.6. The clients (intended users) were kept informed aboutthe project’s progress.7. Adequate advanced preparation had been done todetermine how best to “sell” the project to the clients.8. There was adequate documentation of the project topermit easy use by the clients (instructions, manuals, etc).9. An adequate presentation of the project had beendeveloped for the clients.Goal changes 0.85 1. Project goals were often changed.2. At least one major project goal was changedconsiderably.Client support N/A 1. In case of difficulties, the clients supported the projectteam.Client competence N/A 1. During the negotiation process, the client appearedknowledgeable regarding the technical aspects of the
  21. 21. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 21   project.Team competence 0.83 1. The project team was sufficiently trained.2. The project team was technically competent.3. The people implementing the project understood it.Project manager’s authority 0.84 1. The authority allocated to the position of projectmanager was sufficient.2. The project manager had enough authority to negotiateagreements with project clients (internal or external)regarding the terms, conditions, and or deliverables of theproject.3. The project manager had sufficient authority to makeall the necessary decisions to achieve the project goals.4. The project manager had the authority to changeobjectives in order to achieve the project goal.Data AnalysisBecause the variables in this study were conceptualized at the project level, individualscores had to be aggregated to the project level by taking the average of project members’ scores.We calculated the within unit agreement rwg(j) to justify our aggregation. The rwg(j) statisticestimated the consistency of judgments made by project manager, project team members andsenior managers in a project for each relevant variable. The average rwg(j) values for all scaleswere above the generally acceptable level of 0.70 (George, 1990) except for those of 43 projectswhich showed a lower agreement among project team members. Therefore, we deleted the dataof those 43 projects and aggregated the left 206 project teams. There were no big differences inthe distribution of type of respondents and projects. All further analyses in our study were basedon the sample of 206 projects.The mediational hypotheses were tested using a structural equation modeling—LISREL.The advantage of LISREL is to allow simultaneous analysis of hypothesized causal relationships
  22. 22. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 22   for multiple variables (Jöreskog & Sörbom, 1993). It greatly simplifies the modeling ofmediation by allowing one to incorporate measurement error and provides modeling ofnonrecursive structures (Brown, 1997) which are two limitations of multiple regression models(Baron & Kenny, 1986). LISREL can also give a diagram of all relationships among variables,compute indirect effects and handle missing data in a better way. Multiple criteria were used toevaluate the fit of the structural equation model such as chi-square, adjusted goodness of fitindex (AGFI), and the comparative fit index (CFI). To accept the model, the following criteriahave to be satisfied: a chi-square with P above 0.05 (Browne & Cudeck, 1993), AGFI > 0.90(Baumgartner & Homburg, 1996), and CFI > 0.85 (Bentler & Bonett, 1980).ResultsDescriptive StatisticsDescriptive statistics and zero-order correlations are provided in Table 3. Consistent withprior studies, goal changes are negatively correlated with all success measures (r between –0.33and –0.4) while client support are significantly positively correlated with success (r between 0.53and 0.77). Other significant correlation includes the relationship between client expectationalignment and project success (r between 0.40 and 0.65). As we expect, client expectationalignment is significantly negatively related with goal changes and positively related with clientsupport. Finally, the correlations suggest that client competence, team competence, and PMauthority significantly relate to client expectation alignment with a correlation coefficient of0.50, 0.60, and 0.38 respectively.
  23. 23. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION  Table 3: Descriptive Statistics and Correlations Among the Measured Variables1 2 3 4 5 6 7 81. Efficiency 12. Effectiveness 0.55**13. Customersatisfaction0.65**0.86**14. Economic success 0.66**0.88**0.86**15. Goal changes -0.33**-0.35**-0.37**-0.40**16. Client support 0.53**0.60**0.77**0.66**-0.31**17. Client expectationalignment0.39**0.65**0.61**0.58**-0.31**0.59**18. Client competence 0.23**0.33**0.36**0.35**-0.17*0.35**0.50**19. Team competence 0.50**0.55**0.52**0.55**-0.42**0.46**0.60**0.34**10. PM authority 0.45**0.44**0.50**0.52**-0.28**0.36**0.38**0.19**Mean 4.32 5.52 4.99 5.08 3.79 4.79 5.24 4.88Std. Deviation 1.72 1.28 1.55 1.68 1.55 1.08 1.00 1.36Minimum 1.00 1.05 1.00 1.00 1.00 1.00 1.56 1.00Maximum 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00Note: * Correlation is significant at the 0.05 level (2-tailed).** Correlation is significant at the 0.01 level (2-tailed).
  24. 24. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 24   Tests of the Research HypothesesWe applied LISREL analysis to test the interaction of our model variablessimultaneously. The results of the structural equation model are presented in Figure 2. Fitindexes suggested that the model fitted reasonably well (χ2 = 2.19, df = 1, P–value=0.14, AGFI= 0.94, CFI =1.00). Parameter estimates are from the completely standardized solution and aresignificant at P < 0.05 or better. Since all tests achieve or exceed the required fit criteria, the finalstructural equation model is accepted.Figure 2. Results of the structural equation modelHypothesis 1 stated that goal changes would be negatively related to project success. Thesignificantly negative path coefficient (-0.14) of goal changes on project success supports thishypothesis. The high positive impact (+0.59) of client support on project success fully supportsour second hypothesis H2. As the positive path coefficient (+0.24) shows project success issignificantly affected by client expectation alignment. Hypothesis 3a describing the direct impactof client expectation alignment on project success is supported. The signs of the path coefficientsindicate negative effect (-0.32) of client expectation alignment on goal changes and positiveeffect (+0.56) of client expectation alignment on client support. Thus, Hypothesis 3b and 3cproposing the effects of client expectation alignment on goal changes and client support are alsofully supported.Goal ChangesProjectSuccessClient SupportClientExpectationAlignment+0.59+ 0.24-0.32+0.56-0.14
  25. 25. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 25   Table 4: Direct and Indirect Effects to Project SuccessProject successDirect Indirect TotalClient expectation alignment +0.24 +0.38 +0.62Goal changes -0.14 -- -0.14Client support +0.59 -- +0.59Hypothesis 4a and 4b proposed that client expectation alignment would be mediated bygoal changes and client support to influence project success. Baron and Kenny (1986) definedthat a variable functions as a mediator when it meets the following conditions: (1) variations inlevels of the independent variable significantly account for variations in the presumed mediator(i.e., Path a); (2) variations in the mediator significantly account for variations in the dependentvariable (i.e., Path b); and (3) when paths a and b are controlled, a previously significant relationbetween the independent and dependent variable is no longer significant, with the strongestdemonstration of mediation occurring when path c is zero. In our model, Condition 1 wasassessed by H3b and H3c and was supported. Condition 2 was assessed by H1 for the effect ofgoal changes on project success and H2 for that of client support on project success. Condition 2was also met for both mediators. Condition 3 was assessed by the significance test of indirecteffects of client expectation alignment on project success. LISREL gave the direct effects ofclient expectation alignment on project success (+0.24), total effects (+0.62), and total indirecteffects (+0.38) as shown in Table 4 and significant tests of these effects. Since we proposed twomediators, we followed Brown’s (1997) suggestions to decompose the total indirect effects oftwo mediators into two specific indirect effects. The specific indirect effects of client expectationalignment on project success via goal changes (0.05) and client support (0.33) were significant.Since three conditions for a mediational effect to be present were met, Hypothesis 4a describing
  26. 26. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 26   the mediational effect of goal changes and 4b describing the mediational effect of client supportare fully supported.The exploratory hypothesis H5, proposing facilitating factors of client expectationalignment, was tested by a linear regression model using stepwise method. Stepwise regression isa procedure in which the most correlated variable is entered into the equation first, and thenremaining variance in dependent is explained by the next most correlated variable and so on. Theresults of the regression model are shown in Table 5. All three determinants are significantlyrelated with client expectation alignment. Project team competence is the most importantdeterminant. The three variables in total account for 50% of variance in client expectationalignment. We also tested the collinearity among independent variables and it was not a problemin the model. Therefore, Hypothesis 5 is supported.Table 5: Regression Results With Client Expectation Alignment as the Dependent VariableVariables entered Step 1 Step 2 Step 3Project teamcompetence0.62**(0.05)0.51**(0.05)0.43**(0.05)Client competence 0.33**(0.04)0.32**(0.04)PM authority 0.17**(0.05)F value 118.82** 88.22** 64.30**R20.38 0.48 0.50R2change 0.10 0.02Notes:* p<0.05 ** p<0.01Standardized betas are given with standard errors in parentheses.
  27. 27. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 27   DiscussionPrior literature suggests that taking into account the needs and requirement of projectstakeholders is an essential element of project success (Cleland, 1986; Diallo & Thuillier, 2005;Olander & Landin, 2005). Our study supports this view. In addition, we suggest that dynamics ofclient expectations drives the need for managing client expectations. We developed a conceptualmodel of instability of client expectations to understand its effects and possible reasons. Theinstability of client expectations may cause a project to lose its relevance and client support or itmay lead to frequent goal changes, both of which are harmful to project performance. We madetwo assumptions to explain why clients change their expectations: one is information asymmetry,and the other is value maximization. Understanding the underlying reasons that cause clients tochange their expectations helps us to propose that client expectation alignment will stabilizeclient expectations. It is the processes to align client expectations with project objectives overproject implementation. Our result showed a significant and highly positive relationship betweenclient expectation alignment and all project success criteria including efficiency, effectiveness,customer satisfaction, and economic success.Moreover, we explored how alignment processes influence project success throughreducing goal changes and increasing client support. Goal changes and client support areproposed to mediate the effects of client expectation alignment on project success. Themediational effects are fully supported. However, goal changes have a weaker mediational effect(7% of the total effects) while client support has a much stronger mediational effect (54%). Onepossible reason is that negative effects are usually hard to detect while positive effects areoverestimated in empirical studies. The results confirm the findings in the literature of changemanagement. The study supports the argument of researchers (Gil et. al, 2006; Hobday, 2000;
  28. 28. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 28   Eckert, Clarkson, & Zanker, 2004; Baccarini et al., 2004) that clients are the main causes forchange requests in projects due to instability of their expectations. The negative effect betweengoal changes and client success is consistent with other researchers (Murphy et al., 1974;Lechler, 1998).Our results also confirmed the significant effect of client support on project success,which is a general success factors suggested by stakeholder theory. Combing these findings, wecan see that client expectation does not only influence project success directly, but it is alsomediated through goal changes and client support to improve project performance.Finally, it is worthwhile to note that three factors were found to be important to facilitatethe alignment processes: client competence, project team competence, and PM authority. Thesethree factors explain about 50% of variance in client expectation alignment. They representimportant preconditions to align client expectations with project objectives.Implications and OutlookIn this paper, we focus on management of client. Specifically we are interested inmanagement of client expectations represented by client expectation alignment. By analyzing theinteractions between client expectation alignment, client support, goal changes and projectsuccess, this study contributes to stakeholder theory. Stakeholder management is an importantpart of the management of an enterprise and the management of a project. From stakeholdermanagement perspective, a project needs to simultaneously satisfy a variety of its stakeholderseach of whom has its own desires and expectations with respect to the project. However,stakeholder expectation does not often appear as a separate construct in stakeholder literature.Our study showed that client expectation is an important construct for study because researcher
  29. 29. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 29   can use client expectation to explain stakeholder influence or behaviors. In our case, dynamicclient expectation is a driver for project change.The results of this study also showed that the management of client expectations hassignificant effects on project success both directly and indirectly through goal changes and clientsupport. Although prior literature indicated that client management could positively influenceproject success, we have proposed the mediating effects for the first time. The analysis providesinsights into the role of client expectations on goal changes and client support and their stabilityfor project performance. Project management research should consider both direct and indirecteffects of client expectations on project success.This study makes a contribution to the practice of project management in two ways. First,according to our study, management of client expectation helps improve project performance.The results also suggest the nature of alignment processes. One important suggestion is allowingclients to express their expectations from the start and during the project. A second suggestion israther than tailoring the project to meet the client’s unrealistic expectations, the project team mayattempt to educate their clients to let them know what is achievable through the project byintense communication. The clients become more realistic when they understand theimplementation process, its complexity and its limitations. Once they become committed to theproject, they will tend to support the project even in difficult situations. Second, our study shedlight on the management of change. Prior literature provides many prescriptive suggestions tomanage changes caused by clients such as making more explicit to clients the economic impactof changes, formulating contractual arrangements to shape the behavior of the parities(Dayanand & Padman, 2001) or frequent meetings with clients to discuss the status of the project(Pitsis, Clegg, Marosszeky, & Rura-Polley, 2003). However, our study explored mechanisms to
  30. 30. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 30   stabilize client expectations. Our results showed that management of client expectations didreduce goal changes. Therefore, this study helps the practitioners who struggle with frequentchange requests from clients to understand their issue in a deep way and develop their ownalignment process accordingly.Although the study offers several new insights, some limitations should be noted. Onelimitation is that although we proposed a conceptual model for reasons of instable clientexpectations, we were not able to directly test our theoretical model. Another limitation is thecommon method variance problem, which is attributable to the measurement method itself(Podsakoff, Mackenzie, Podsakoff, & Lee, 2003). One potential source of the common methodvariance is common rater problem, which means the same person is asked about his or heractivities and outcome. Since we collected project data from at least two members of a projectteam, this doesn’t seem to be a significant problem. Another potential source is related with thesame questionnaire we used for collecting all of data. We conducted a Harman’s single-factortest, and there was not a primary factor emerging from the confirmatory factor analysis.Therefore, the common method variance in our paper does not pose any significant problems.Another limitation is the absence of a direct measure of client expectation. Finally, the design ofthis study is cross-sectional, which limits our ability to draw causal inferences.From this study, we gain some suggestions for further research. First, we introduced anoperational definition for our core variable: client expectation alignment that needs to be moreaccurately defined and operationalized. At least alternative measurement models should betested. Second, we explored the effect of management of client expectations in this paper, and itwas found to be beneficial to the project. A further direction may be how to manage expectationsof different internal and external stakeholder groups and its effect on project success. Third,
  31. 31. ConfidentialEXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 31   project uncertainty may be a factor that could be added to our suggested model as a moderatorvariable. When the project is under high uncertainty, the completion of the goals involves highrisks. In this situation, aligning client expectations with project objectives to get necessarycommitment and buy-in from clients is more important for the project than under loweruncertainty. Fourth, the existence of significant direct effect between client expectationalignment and project success indicates more mediating factors except goal changes and clientsupport. We may develop a more complete theory about instability of client expectations to findmore significant mediators that help us understand the role of client expectation alignment inproject management.
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