Page 198 - Global Project Management Handbook

9-4 COMPETENCY FACTORS IN PROJECT MANAGEMENT

Increased Project Scrutiny
During the 1990s, many governments promoted concession and BOT projects as a means
of building new public infrastructure without increasing public debt. Many projects were
financed through project finance, that is to say, financed by private financial markets
based on the forecasted revenue stream of the project and without significant guarantees
by either private or public participants in the project. Developing financing for projects
has become a major part of project development. The nominal placement of ownership in
private hands is insufficient for the financing of a project to be considered as being off
the balance sheet and thus not be counted as a part of public debt.
In order to be considered as being off the balance sheet, significant control and risk
must be assumed by the private party. The increased role of financial analysts subjects
projects to more scrutiny and places more emphasis on the analysis and allocation of risk.
The development of financial packages has increased in complexity, and financial engi-
neering has become a key competency in project development.

Collaborative Contracting
The new modes of project development and delivery typically involve many more organi-
zations in more interdependent roles than traditional projects organized by a dominant
owner and coordinated through rigid contracts. Many of the projects in the newer modes
of organization involve many specialized firms and public participants in situations of
mutual interdependence. Joint ventures, consortiums, and alliances of different kinds are
more often the basis for participation in major projects.
The ideal of collaborative involvement and working with alliances has been a power-
ful trend in organizations in all areas, not just in project management. The trend has been
manifest both within and between organizations. An example that is particularly relevant
to project management is concurrent engineering. This organizational arrangement has
replaced sequential development in isolated departments with the creation of multidepart-
mental teams bringing resources specialized in manufacturing and operations into the
early design of projects. Examples of collaborative and interdependent relationships
among organizations include alliances, joint ventures, partnering, and outsourcing.

Cospecialization
The trend toward more specialization among organizations is not restricted to the realm of
major projects. The dominant idea in the field of business strategy for more than a decade
has been the division of labor in areas where organizations have distinctive core compe-
tencies and of allocating nonstrategic activities to other organizations with distinctive com-
petencies in these areas. The ideals of the vertically integrated or widely diversified firm
are challenged by the value of outsourcing and cospecialization (Chesbrough, 2003).
These major trends in organization and in strategy are part of the general context in
which experimentation with new development and delivery modes were tested in the field
of major projects. The fact that these practices were popular in both private and public
administration legitimated and facilitated their adoption on major projects.

Technology
Some projects are in fact high-technology ventures. However, many projects implement
technologies that are less high-tech. Technology has played a less dramatic and subtler
role in such projects. Information and telecommunication technologies have facilitated