Proceedings of the 35th Hawaii International Conference on System Sciences - 2002

Discussion of Metrics for Distributed Project Management: Preliminary Findings

Mario Bourgault, ePoly, cole Polytechnique, Montral, mario.bourgault@polymtl.ca lisabeth Lefebvre, ePoly, cole Polytechnique, Montral, elisabeth.lefebvre@epoly.polymtl.ca Louis A. Lefebvre, ePoly, cole Polytechnique, Montral, louisa.lefebvre@epoly.polymtl.ca Robert Pellerin, ePoly, cole Polytechnique, Montral, robert.pellerin@epoly.polymtl.ca Elie Elia, ePoly, cole Polytechnique, Montral, elie.elia@epoly.polymtl.ca Abstract
Project-based activities are at the heart of the virtual organization concept, which implies working in a limited timeframe with distributed teams. Although distributed projects provide major benefits in terms of tapping partners competencies, they represent a significant challenge for coordinating and monitoring teams performance. This paper investigates distributed projects with a specific focus on performance metrics. This topic is central to performance measurement and control, particularly in cases where several organizations are involved. At this stage, very few studies have looked at this issue. We offer an exploratory discussion based on three dimensions that could eventually assist in the development of performance metrics for distributed projects. These dimensions refer to the concepts of project value chain, balanced scorecards, and a focus on the end users requirements. The dimensions are explored using the example of a re-manufacturing projecta typical industrial project involving a series of actors working together in a distributed mode. including research on how information technologies can help support project management in this context [12, 19], while others have looked at the related communications technology issues [8, 34]. Still others have looked at less technical issues such as the interpersonal effects of computer-mediated communication among distributed group members [35] or the impact of distributed work on trust and motivation among team members [2, 4, 21]. Warkentin and Beranek [36] studied the effectiveness of collaboration between virtual team members and proposed some measures to improve it. Other managerial issues add to the complexity of carrying out projects in a distributed mode, such as effectively managing remote workers [32] and the role of leadership in successful distributed team collaboration [37]. Overall, current research suggests that we are still far from understanding the entire complex nature of distributed work and that our view of traditionally opposing concepts (trust vs. control) is continuously challenged when we look at this kind of work in a historical context [22]. Monitoring the performance of all stakeholders taking part in a common distributed project appears to be one of the critical issues, yet relatively little research has been done on this topic. Understanding how one can measure and, eventually, optimize a network of firms acting on a projects value chain has not drawn much attention despite the fact that these tasks remain at the heart of project managers accountability. This is particularly true in a context where information is seen as a strategic resource for organizations. Indeed, project managers able to process relevant information quickly are in a position to perform better and add value to the organization for which a project is carried out [30]. The development of concepts such as management cockpits and competitive intelligence also illustrates how crucial information is for efficiently managing these new forms of organizations and raising project management to a more strategic level [11, 27].

1. Research Context
Project-based activities are at the heart of the virtual organization concept, which implies working in a limited timeframe and with distributed teams. Large, complex products are most often the result of a collective effort where the product integrator acts as the central hub around which product contributors, such as suppliers, add value [18, 25]. Even within a single organization, virtual and distributed projects are now quite common [3, 6]. The increasing prevalence of projects carried out in a distributed mode is creating new challenges with respect to the coordination and control functions that are necessary to ensure proper integration and delivery of project outcomes [7]. Some studies have recently tackled these issues,

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In this paper, we propose to open a discussion on the issue of performance metrics in the context of distributed projects. We suggest that this topic is central to performance measurement and control, particularly in cases where several organizations are involved. Our investigation draws on recent developments in the area of performance measurement, in particular Kaplan and Nortons [13, 14] work on balanced scorecards. Ultimately, debates among researchers and practitioners could lead to a set of propositions for improving how distributed project performance is measured, at both the operational and strategic levels. Three aspects of this issue have drawn our attention in this paper: how to identify project management metrics that take into account the efforts of each partner involved in a common project; how to develop indicators that provide information about clients expectations and their impact on the project value chain; and finally, how to measure the projects value for the firms development and growth. Overall, this paper sets out some of our thoughts and calls for more research in order to identify a sound foundation for devising effective monitoring systems in the case of distributed projects. It is also believed that such concepts would be instrumental in gaining a deeper understanding of how knowledge is to be managed in virtual and distributed projects [15].

The relevance of such measurements is well recognized in most cases. In industries such as software engineering, for example, practitioners continuously seek to improve the measurement process by fine-tuning the metrics and implementing internal processes that can generate significant information [1]. However, the use of current metrics raises some issues and these are particularly acute in the context of distributed projects. First, most of the project management metrics currently used focus on work completed at a certain point in time. They provide an appreciation of the efforts that have been carried out on the project and the level of performance (efficiency, effectiveness, etc.) measured on that basis. Because these metrics are actually measures of the past, one tends to see them as control tools rather than information supporting the decision-making process [20]. In the case of distributed projects, the increased number of dispersed playerson both a geographic and an affiliation basis [15]seems to create an even greater need for building new measurement tools that reflect this dispersion of action and decision-making. Secondly, most of the metrics currently used for project management deal with operational functions such as planning and monitoring, and also with the technical processes that lead to the delivery of the product (e.g. software coding metrics). Though these measures remain highly relevant for monitoring the execution of the project, they tend to be ill adapted for the measurement of other critical project outcomes such as the effect on organizational learning [16], the development of competencies, or the impact on organizational competitiveness. Measurement of client satisfaction with the project is another area that needs to be investigated at the theoretical level but where operational indicators are rarely put in place. Overall, it is clear that project management would benefit from a new approach to measurement that would take into account the new dimensions surrounding the running of projects within a web of inter-organizational relationships. This is required not only for project managers, who need access to better-quality information, but also for top managers, whose aim is to maximize the value of their activities through participation in these projects [10]. The increasing demand in the project management community for better risk management tools and processes can also be addressed through the development of more adapted metrics. In the end, this development is necessary to provide decision-makers with dynamic, user-friendly information systems that truly support management activities. The current interest in management cockpits illustrates how

2. Measuring Distributed Project Performance

More than ever, measuring performance appears to be a key condition for ensuring effective project management in todays highly competitive marketplace. According to Simons [30], performance management systems should be designed and implemented in such a way that managers can track the implementation of the organizations strategic goals and objectives through a balanced series of metrics. In the case of project management, standard metrics have long been used for monitoring critical tasks, observing trends within projects, revealing variances from baselines and the like [29, 33]. Examples of metrics include input indicators (e.g. number of person-hours), process-oriented indicators (e.g. number of milestones achieved), and output indicators (e.g. earned value). Similarly, other groupings of metrics focus on project management processes and resources (e.g. variance from initial budget) or on the technical process leading to a product (e.g. forecast RAM utilization rate for software development). Finally, recent efforts by project management professionals have helped to identify key metrics necessary for standardizing and benchmarking internal processes against maturity models [17, 31].

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Proceedings of the 35th Hawaii International Conference on System Sciences - 2002

information systems can play a central role in managing a network of firms without time, space or physical limitations [27]. Based on these considerations, we propose to review some of the key dimensions that could lead to a discussion of performance metrics where several dispersed actors are pooling their efforts on a common project.

Product Integrator Value Chain

Activity 1

Activity 2

Activity 3

Activity n

End User (Project Customer)

3. Tracking Distributed Project Performance: Investigation of Key Dimensions

At this stage, our investigation of the requirement for distributed project metrics remains exploratory and is based, as in other cases (e.g. [6]), on some direct observations in the field. Building on recent research into different aspects of the virtual organization and supply chain management, we identify three dimensions with regard to the construction of performance metrics for a distributed project.

Product Contributors Value Chains

Figure 1. The Product-Focused Project Value Chain

3.1 The Project Value Chain

A first dimension that appears to be significant builds on the concept of value chains, which defines the process by which a series of activities are linked together for the purpose of creating value for a client. This perspective on business and industrial activities was first introduced in the area of strategic management [23, 24], where the unit of analysis is generally the firm. More recently, this concept was adapted to electronic commerce by shifting the unit of analysis from the firm to the product [18]. In a context where most products (services) result from the integration of a series of components/subassemblies originating from multiple sources, a product-focused value chain offers a much more attractive model for characterizing how organizations deal with one another. The building of a project value chain could also be based on the same product-focused perspective rather than the usual project life cycle, which provides only a partial view of the work undertaken. Indeed, standard project life cycle comprising a fixed number of sequential phases is not always appropriate for representing the wide variety of industrial projects and the numerous actors involved in a project or its subprojects. Furthermore, it has been suggested that a project, as a form of work organization, can only be realistically defined by focusing on the product/service to be deployed or the specific mandate received from a client by an individual or organization [5].

Using this product-focused perspective, the value chain approach offers an interesting perspective on distributed projects as it allows participating organizations to adopt a broad perspective on the project and to know exactly where their input generates value for the end user. Using the main project value chain representation, they are also in a position to link their own value chain to the more global one (see Fig. 1). As this figure shows, this perspective can also take into account the fact that certain activities can be performed by more than one firm at a time. This situation is more and more frequent in industry where, for example, various dispersed teams work in common on the design of components that will eventually be integrated into a subassembly.

3.2 Devising a Balanced Scorecard for Distributed Projects

The process of building metrics for distributed projects would also benefit from the latest developments in the area of organizational performance measurement. More specifically, it is hypothesized that the concept of the balanced scorecard offers a perspective which can provide a more integrated, global view of the project and the firms involved. This approach, first introduced by Kaplan and Norton in 1992, is built on the assumption that financial results alone are not sufficient to measure and monitor an organizations performance in meeting its strategic objectives. The authors argue that traditional financial accounting measures such as return on investment and earnings per share point to past performance and can give misleading signals for continuous improvement and innovation [13]. Making financial measures more relevant is certainly a step towards improving performance measurement, but ultimately financial metrics need to be accompanied by other types of measures that give a more complete assessment of the organizations performance and complement the measurement of past performance with indicators of future performance.

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Proceedings of the 35th Hawaii International Conference on System Sciences - 2002

The original balanced scorecard (BSC) approach covers four business perspectives that are critical to an organization: 1) 2) 3) 4) Financial (return on capital, profit growth, etc.); Customer (market share, customer satisfaction, etc.); Internal business (cycle time, cost of services, etc.); Innovation and learning (revenues from new products, new product adoption rate, etc.).

The three other groupings of measures provide an opportunity for top management to go beyond the shortterm view of the traditional project success metrics by looking at how projects can support the firms growth in terms of gaining new competencies, consolidating customer base, and/or improving the way projects are conducted. Table 1 provides the goals and the rationale of these areas of measurement.
Table 1: Hypothesized Transposition of the Balanced Scorecard Concept to Distributed Project Management

In this framework, the measures of past performance, called lag indicators (e.g. return on capital, profit, etc.), are complemented by measures of future performance drivers called lead indicators (e.g. new product introduction rate) that evaluate cause-and-effect relationships. At the center of the balanced scorecard is the organizations statement of vision, which guides the choice of metrics within the framework. The metrics that are chosen in the scorecard reflect corporate strategy and are the indicators of success that the organization will measure and monitor. Since its inception, this model has been adopted by many organizations and it continues to be adapted to various areas including project management [9, 33]. The four perspectives of the balanced scorecard allow project managers not only to rely on traditional financial metrics but also to integrate performance management by linking the project to the organizations objectives. As Germain [9, p. 49] points out, it allows managers to steer the business with an eye on both the rear view mirror and the road ahead. Some suggestions to guide the identification of metrics for a project are provided in Table 1. Depending on the nature of the product involved, some aspects of the BSC may vary, but the important point is to determine how the project contributes to fulfilling the performance criteria specified in each area. It is also suggested that the BSC should not be overloaded with too many metrics [13, p. 72]: the balanced scorecard forces managers to focus on the handful of measures that are most critical. The first grouping of metrics (financial) follows Kaplan and Nortons original model by focusing on the question, How does the project look to the shareholders? In this case, the authors are referring to the traditional backwardlooking financial ratios that are still widely used for evaluating firms performance despite their limitations. In the case of project management, classic indicators also exist in the form of the well-known golden triangle (cost, schedule, performance) which, although challenged increasingly often [28], remains the most commonly used reference for measuring project success.

Financial and other classic measures of project success To ensure projects are executed in accordance with specified goals of cost, schedule and performance. Examples: Earned value Quality of product delivered (meeting specifications) Project and internal processes To maintain sound internal processes that enable efficient and effective execution of projects. Examples: Consistency in estimating and risk definition Quality of planning and progress tracking Efficiency of project change management Innovation and learning To use projects as a capability-building process and developing expertise Examples: Quality of project portfolio Progression on maturity models Motivation of teams Customer To ensure that the organization delivers full satisfaction to customers during project execution Examples: Responsiveness in terms of after-delivery service Level of mutual trust As with the original firm-oriented balanced scorecard, the specific metrics would need to be identified one by one, as this process draws heavily on the firms strategic orientations and success factors. The same reasoning applies to project management since, as previously mentioned, generic metrics may fall short of delivering useful information unless they are put in context, according to the product/service to be developed. It is clearly too early in the investigation process to claim that a comprehensive list of metrics has been, or can be, established. Indeed, some authors [33] have already engaged in this process without building a solid theoretical foundation.

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3.3 Performance Measurement Focusing on End

Users Requirements
A third dimension to be considered in distributed project performance management is how metrics are identified so they can represent valid measures for all of the organizations involved. In classic project monitoring, most metrics being used are organization-focused, which may be too narrow to effectively measure network-level activities. A logical starting point for building reliable indicators in the context of distributed projects could be to construct a scorecard that would reflect the needs of the projects end users. The proposed framework would therefore involve defining a series of metrics based on these needs and then having each participant evaluate its performance based on its contribution to the identified indicators. The role of the integrator (i.e. prime contractor) is key to constructing a set of metrics that reflect end users expectations. Because it plays a central role in integrating the projects inputs, this firm should also set the rules in

terms of performance evaluation at the various levels of the network. Depending on the project and the level of trust existing between partners, there appear to be two different ways of reflecting the end users needs in evaluating the partners (see Fig. 2). In a case where the level of mutual trust is fairly high, all of the partners would jointly assemble a series of metrics and agree on their respective responsibilities with regard to meeting end user expectations. Acting somewhat like a project charter, this distributed project scorecard would serve as a binding document for each of the firms involved (see Fig. 2 view no. 1 shared scorecard). In a more traditional situation where contractual agreements are the prevailing norm within the group, one could imagine a similar structure but, in this case, a topdown approach would allow all of the requirements identified for a certain level to flow down to the subsequent levels. End-user-focused metrics would therefore need to be defined at each level and between the partners involved (see Fig. 2 view no. 2 top-down scorecard).

Figure 2. Balanced Scorecards in Distributed Projects: Two Scenarios

Top-Down Project Balanced Scorecards Among Project Contributors

A Commonly Shared Balanced Scorecard Among Project Contributors

FINANCIAL PROJECT/ INTERNAL PROCESSES

Product Integrator

CUSTOMER

PROJECT SCORECARD

Product Integrator
Project balanced scorecard
FINANCIAL
INNOVATION & LEARNING

Product Contributor
PROJECT/ INTERNAL PROCESSES
CUSTOMER

FINANCIAL

Product Contributor

CUSTOMER

PROJECT SCORECARD

PROJECT SCORECARD

PROJECT/ INTERNAL PROCESSES

Product Contributor
INNOVATION & LEARNING

INNOVATION & LEARNING

Product Contributor

Product Contributor
CUSTOMER

FINANCIAL

PROJECT SCORECARD

PROJECT/ INTERNAL PROCESSES

Product Contributor
INNOVATION & LEARNING

4. Example of a Re-manufacturing Project

The proposed dimensions that have been identified in the previous section are now illustrated in the case of a remanufacturing project. This typical industrial project involves a series of actors working together in a distributed mode. This case obviously cannot be construed as proof of the validity of the concepts proposed above, at this stage of the research; rather, it is an example that will help illustrate some of the concepts proposed.

4.1 Re-manufacturing Projects: Context

Re-manufacturing is a major maintenance process in which worn-out equipment is restored to like-new condition. The re-manufacturing industry has grown steadily in the last decade as budget constraints have forced equipment managers to extend the lives of their fleets, especially in the military and transport sectors. For those industries, re-manufacturing has become an essential step in the equipment life cycle and is often planned as early as at the time of the equipment acquisition itself. This

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service is commonly outsourced to specialized overhaul companies. Because re-manufacturing organizations must work with existing products, a re-manufacturing project requires intense coordination between the users, the fleet or lifecycle managers, and the re-manufacturing firm that acts as project integrator. In spite of the wide variety of equipment being overhauled, the value chain is similar in most remanufacturing organizations. A re-manufacturing project generally starts with the receipt and disassembly of the equipment, followed by an inspection. At this stage, the project content is defined and negotiated with the life-cycle manager, who represents the end users. The next steps include the definition of the production processes and the development of a prototype to ensure the projects feasibility. Once accepted, pre-production and procurement activities are carried out before the start of the re-manufacturing process. The project is completed when the equipment has been overhauled and placed back in service. 4.2 The Distributed Project Value Chain

To align the performance metrics of all the participating organizations with the end users objectives, we use a top-down approach. The performance metrics of the activities of each of the four participating organizations would be determined according to the value these activities add to the clients project value chain. We then devise a project balanced scorecard for each participating organization to monitor its performance (see figure 4 and tables 2, 3 and 4).
Maintenance Operation Specs definition Contract management

EQUIPMENT USERS

Equipment deployment

EQUIPMENT LIFECYCLE MANAGER

Maintenance support Re-manufacturing Procurement

Production process design

Engineering

Inspection

Training

Receipt & tear-down

Prototype

Testing

RE-MANUFACTURING

Development & engineering

Manufacturing

Planning

Figure 3 illustrates the value chains involved in a remanufacturing project. For each participating organization, those activities that add direct value to the partner are illustrated, as well as the interconnection between them.

PARTS MANUFACTURER

Figure 3. Re-manufacturing Distributed Project Value Chain

Equipment End Users Project Activities

Performance Metrics: Financial, Project/Internal Processes, Innovation and Learning and Customer

Financial (FI)

Operation

Transport capability Operating cost Operations readiness Adoption of new technology

Customer (C)
-Operations readiness -Equipment availability

-Operating cost -Maintenance cost Projects contribution to the equipment end users value chain -Adoption of new technology -Preventive maintenance carried out by the users

Project / Internal Processes (PIP)

-Transport capability -Equipment availability

Maintenance

Equipment availability Preventive vs. Corrective Maintenance cost Preventive maintenance

carried out by the users maintenance measures

Innovation & Learning (I&L)

Figure 4. Equipment End Users Project Performance Indicators and Corresponding Balanced Scorecard

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Recuperation

Procurement

Distribution

Planning

Service

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Table 2: Equipment Lifecycle Managers Project Performance Indicators

Equipment Lifecycle Managers Project Activities Specs definition Contract management

Equipment End Users Project Activities Operation x x Maintenance x x x x

Performance Metrics: Financial (FI), Project/Internal Processes (PIP), Innovation and Learning (I&L) and Customer (C)

User acceptance (C)

Project duration (PIP) Project cost (FI) Project management capabilities (I&L) Total maintenance cost (FI) Maintenance support response time (C) Users ability to operate equipment (C)

Maintenance support Training

Table 3: Re-manufacturing Integrators Project Performance Indicators

Re-manufacturing Project Activities

Equipment Lifecycle Managers Project Activities Specs Contract definition Management x x Equipment deployment

Performance Metrics: Financial (FI), Project/Internal Processes (PIP), Innovation and Learning (I&L) and Customer (C)

Inspection Engineering

Production process design Prototype Planning Procurement Re-manufacturing

x x x x x

x Test Service

x x

Success in detecting defaults (PIP) Project cost (FI) Equipment capabilities (C) Project length (PIP) Project cost (FI) Project length (PIP) User acceptance (C) Equipment availability (C) Project lead-time (C) On-time delivery (C) Parts with defects (PIP) Meeting specifications requirements (PIP) Developing new re-manufacturing skills (I&L) Meeting specifications requirements (PIP) User readiness (C)

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Table 4: Parts Manufacturers Project Performance Indicators

Parts Manufacturers Project Activities

Re-manufacturings Project Activities

Performance Metrics: Financial (FI), Project/Internal Processes (PIP), Innovation and Learning (I&L) and Customer (C)

Production process design Development & engineering Planning Procurement Manufacturing x

Prototype Planning

Remanufacturing

x x x

Equipment capabilities (C) Adopting new technology (I&L) Project lead-time (C) On-time delivery (C) Parts with defects (PIP) Meeting specifications requirements (PIP) On-time delivery (C) Parts cost reduction (FI)

Distribution Recuperation

x x

5. Discussion
The sample re-manufacturing project illustrates how complex the issue of performance measurement can be within this new context of virtual and/or distributed teams. From a theoretical perspective, the difficulties associated with creating a sound foundation for a possible framework are due to the large variety of industrial projects which, in turn, create very different requirements in terms of performance metrics. At this stage of the research, it would be interesting to continue investigating the process of establishing metrics within distributed projects in order to pave the way for what could become a sort of Distributed Project Measurement System for the benefit of practitioners regardless of their field or industry. Steps such as the following could be the kind of model applicable to industry: 1) Define the project activities Identify the participating organizations. For each participant, identify the activities it contributes to the project. 2) Build the project value network Map the contributions of the different activities in the project value chain network. The project is represented as a series of value chains, each

one reflecting the contributions that each partner makes to the final product. 3) Align the distributed project performance metrics Using a top-down approach: Build the clients balanced scorecard according to its performance metrics for the project activities. For each participant, identify performance metrics for the activities it contributes to the clients project value chain. Build the participants project balanced scorecard accordingly. Obviously, several other topics of interest could be covered by future research on distributed project management. Concepts such as those proposed (and based on key dimensions described in this paper) need to be tested more thoroughly across different types of projects and industries. Another area of research could be the conditions for measurement system implementation within organizations and networks of organizations [26]. Clearly, research into distributed projects performance metrics and measurement needs more attention from researchers and practitioners so that it can contribute to the development and diffusion of well-designed management information systems. This would be particularly well received by the project manager community.

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6. Conclusion
Recent developments in information technologies have brought about several changes in the way projects are managed within industry. As distributed projects become more and more the norm, project management practices and processes need to be adapted so they can reflect this new reality. One aspect of these changes is related to how distributed project performance needs to be defined, monitored and measured. Building on current research trends in performance management and virtual organizations, this paper has investigated some concepts that could nurture the debate among theorists and practitioners concerning performance metrics for distributed projects. In the near future, it seems particularly desirable that more research be undertaken in order to continue building a theoretical foundation for performance measurement in this area.

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