Factors influencing project success in the healthcare sector: The paradoxical effects of healthcare legislation

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Master Thesis DD Operations Management

Factors influencing project success in the healthcare sector:

The paradoxical effects of healthcare legislation

Author

Mirjam Wagenmaker

m.s.wagenmaker@student.rug.nl

Msc Technology & Operations Management

University of Groningen, Faculty of Economics and Business

Supervisor: Prof. dr. J. (Jan) de Vries Student nr. s2242028

&

Msc Operations & Supply Chain Management

Newcastle University Business School

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Abstract

Due to drastic increases in healthcare spending and rises in governmental accountability requirements, healthcare institutions are exposed to market-like pressures and face the same challenges as other modern organizations. A common IT investment in reaction to this changing environment is the implementation of a (new) information system (IS). However, an IT project is a challenging endeavour which often leads to disappointing results or even complete failures, especially in the healthcare sector. Several distinguishing characteristics of the healthcare sector impede the project implementation process, and project management should be aware of these characteristics and their influence in order to improve project success in the healthcare sector. This research investigates the IT project success factors in the healthcare sector by means of a literature review and supporting case studies. Two paradoxes were found in this study. Firstly, demands for higher quality of healthcare services often result in a shift in priorities from providing qualitative healthcare services to administrative processes. Secondly, the required cost reductions lead to higher expenses, as the limited budget forces healthcare organizations to contract inexperienced IT

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Introduction

Trends in healthcare sector

The healthcare industry is challenged by several pressures from the external environment (Grimson et al., 2000). Firstly, as the total cost of healthcare continues to rise, healthcare organizations are becoming increasingly aware of their spending pattern (Poba-Nzaou et al., 2012). In addition to this awareness, the responsibility of healthcare organizations with regard to their budget spending is increasing as well, as the tremendous national interest in healthcare costs led to a high extent of transparency in healthcare expenses (Sinaiko and Rosenthal, 2011). In other words, healthcare organizations themselves as well as their public are increasingly well-informed about the financial decisions (Poba-Nzaou et al., 2012). Next to these accountability requirements, healthcare organizations are coping with a gap between the demand for healthcare services and the capacity to meet this demand (Grimson, 2001). Hence healthcare organizations are exposed to increasing competitive pressures, leading to a shift of focus to the improvement of the efficiency and the quality of the provided services (Paré and Sicotte, 2001). Due to these market-like pressures, healthcare organizations are facing the same challenges as other modern organizations, which can be seen as a trend called “corporatization” of the healthcare industry.

Moreover, the economic behaviour of healthcare organizations is affected by government legislation. The healthcare environment is highly regulated, and actions should be taken in response to the public policy pressures to improve the quality of health services and minimize costs (Menon et al., 2000). In order to deal with the national legislation together with the corporatization of the industry, healthcare organizations are seeking for flexibility, rapidity, integration and innovation (Ashkenas et al., 2002). Major reforms within the healthcare organization are often initiated by the government as a method to aim for efficiency improvements (Paré and Sicotte, 2001). As this creates both an opportunity and a necessity for technology usage, intensive usage of information technology (IT) is recommended by most scholars and experts (Poba-Nzaou et al., 2012). Since the recognition of the need for a rise in IT usage, healthcare organizations have increased their capital investments in IT innovations, hoping to reduce expenses while improving their overall organizational characteristics and thereby improving overall stakeholder satisfaction (Woodside, 2007).

IT projects and project management

A common IT investment in response to the changing environment is the implementation of a (new) information system (IS). However, such an IT project is a challenging endeavour, in the private sector as well as in the public sector (Waring and Skoumpopoulou, 2013). Due to the high costs and risks associated with IT projects, it often leads to disappointing results or even complete failures (Wainwright and Waring, 2004; Gargeya and Brady, 2005; Somers and Nelson, 2004). Several studies investigated the barriers for IS projects in an organization (Koh et al., 2011; Stefanou and Revanoglou, 2006; Poba-Nzaou et al., 2012; Shang and Seddon, 2000). According to Davidson and Chismar (1999), the implementation of a new technology usually results in organizational change of some kind. In addition, new knowledge, skills and capabilities are required and users of the new technology usually have to be trained extensively (Aydin, 2005). Hence, IT projects can result in organizational change. A common barrier highlighted by Koh et al. (2011) is the inability of employees to accept or embrace change. Therefore, next to technical issues, behavioural issues should be managed carefully and effectively, in order to prevent disorganization and user resistance (Mitchell, 2013).

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8 requirements (Sa Couto, 2008). These project requirements are often expressed in terms of time, cost, and quality. However, several examples of projects from practice demonstrate that a project can be considered successful although the project is not completed on time and/or within budget (De Wit, 1988; Wateridge, 1995; Jugdev and Müller, 2005). Moreover, projects that are successfully completed on time, within budget and to the specified quality requirements, might still fail because it will not be used as intended or because there is no satisfaction among the project stakeholders (Munns and Bjeirmi, 1996). Hence, project management can contribute towards project success but is cannot always prevent project failure. This indicates that the role project management plays in project success is affected by other factors outside the direct control of the project team (Munns and Bjeirmi, 1996). However, perhaps there are ways in which the project team can take these other factors into account, in order to strengthen the relationship between successful project management and project success.

Project management in the healthcare sector

In order to remain cost efficient and competitive as a modern organization, healthcare organizations need systematic innovation efforts (De Koning et al., 2006). Next to organizational efficiency, patient safety and patient satisfaction could also be improved by the use of IT. As healthcare organizations aim to meet regulatory demands as well as to achieve high levels of customer satisfaction, healthcare IT has been increasingly adopted as this can serve the regulatory and clinical needs concurrently (Poon et al., 2006). Due to the drastic changes in the industry, project management has been extensively used in the healthcare sector, for instance to implement IT projects (Sa Couto, 2008). Unfortunately, project delays and cancellations are endemic to healthcare organizations (Kaplan and Harris-Salamone, 2009). Despite a growth in best practices research identifying project success factors, many IT projects still bring about significant problems or are abandoned because of failures. About three quarters of evaluated IT projects in the healthcare sector are considered to have failed, which is a relatively large share compared to other industries (Littlejohns et al., 2003). Heeks (2006) even states that most health information systems fail in some way. The relatively high failure rate in healthcare IT projects is even more disturbing in the cases where patient safety is at risk due to negative unintended consequences, e.g. an increase in operational errors (Ash et al., 2004). In addition, IT-related project failures in the healthcare sector are often suppressed, ignored, or rationalized. As a result, lessons learned cannot be reported and mistakes are repeated (Kaplan and Harris-Salamone, 2009). This level of failure in healthcare IT projects should not be tolerated to continue unabated and significant changes in IT project approaches are inevitable.

The healthcare sector distinguishes itself from other sectors by several characteristics. The

environment of healthcare organizations is frequently described as hyper turbulent and information intensive, with extremely complex healthcare processes (Al-Ahmad et al., 2009). Therefore,

healthcare information systems face the need for well-defined standards, terminology, and

compliance with legal requirements (Kaplan and Harris-Salamone, 2009). It is assumed that the role of project management in achieving project success is affected by these distinguishing characteristics of the healthcare sector. Consequently, the main question of this research and the related sub questions are as follows:

Research question: How do the distinguishing characteristics of the healthcare sector affect the role

of project management in achieving project success in the healthcare sector?

Sub questions:

1. What is project management?

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9 4. What are the distinguishing characteristics of the healthcare sector?

5. How do these healthcare sector characteristics affect project management? 6. How do these healthcare sector characteristics affect project success?

An extensive literature review will search for an answer to these questions, followed by an analysis of several small case studies. By answering this research questions, this paper aims to create a better understanding of the role of project management in achieving project success in the healthcare sector. Although every project will take place in an at least slightly different context and every project is unique, identifying the project success factors in the healthcare sector is a fruitful exercise. It will provide valuable insights for the organization and especially for the project team into how to incorporate all the factors that can affect project success into the project management activities, thereby improving project and project management performance.

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Methodology

In this section, the research model of this study will be presented. The research was carried out by means of a literature review and several small case studies. The rationale behind this research design will be clarified in this section. The process of data collection for the literature review and case studies will be discussed, and analysis of the empirical findings will be covered as well. A systematic presentation of the research model of this study is shown in Figure 1.

Figure 1: A systematic presentation of the research model

In order to investigate project success factors in the healthcare sector, an extensive body of literature should be reviewed on project management and its advancements in the last decades. In addition, the distinguishing characteristics of the healthcare sector should be investigated as well. These types of information are widely oriented and cannot be collected easily by means of an empirical study. Hence, a literature review is applied in order to answer the research questions related to project management and the distinguishing characteristics of the healthcare sector.

Literature review

The literature review covers two major domains of study: a literature review of project management and project success, and a literature review of the distinguishing characteristics of the healthcare sector. In the end, the information gathered was used to formulate conjectures on how the distinguishing characteristics of the healthcare sector influence the relationship between project management and project success in the healthcare sector.

The literature review starts with defining a project and project management. It is investigated what project success is, and how successful project management can contribute to project success. In addition, other factors that might influence project success are discussed, and the role of project management in achieving project success is assessed. Afterwards, the characteristics that distinguish the healthcare sector from other industries are reviewed, and their influence on the relationship between project management and project success is considered.

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11 In order to provide a comprehensive bibliography of literature on project management on the one hand, and on the healthcare sector characteristics on the other hand, a thorough search through the two domains of study was executed. The search criteria used for the topics of study within these two domains are presented in Table 1. In this search, several top journals from these fields of study were consulted, which are listed in Table 2.

Domain of study Search criteria

Project management Project management

Project success IT projects

Project success factors Project success criteria Project failure

Change management

Healthcare sector characteristics Healthcare sector characteristics Healthcare industry

Healthcare organization Healthcare regulations Healthcare stakeholders

Table 1: Search criteria for domains of study

Journals

International Journal of Project Management Journal of Information Technology

Journal of Management

International Journal of Information Management European Journal of Information Systems

Information and Management

Journal of Evaluation in Clinical Practice Information Systems Research

Journal of Organizational Behavior

International Journal of Medical Informatics Health Care Management Review

Table 2: Consulted journals for literature review

Case studies

In order to supplement the findings from the literature review, three small case studies were executed in healthcare organizations. The multiple-case study method is a qualitative research method that aims to “offer insights based on the meaning of the research variables as seen by those participating in the research and as interpreted by the researcher” (Stefanou and Revanoglou, 2006: p. 120). Although case studies result in highly contextual knowledge and the generalisability might be relatively low, it is a suitable method to explore a real-life phenomenon in depth (Yin, 2009). Hence, to supplement the literature review with case studies is a valuable exercise. According to Eisenhardt (1989), four to ten cases should be studied in order to draw convincing and robust conclusions. Due to the limited time available to gather and analyse the collected data and one case withdrawal, a number of three case studies were executed. The unit of analysis is the IT project, focussing on the project management of the project.

Data collection

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12 individual´s role related to the IT project, the stakeholders of the project and their level of satisfaction, and the project objectives and project success. Prior to the interview, every interviewee was introduced by means of an introduction letter, in order to clarify the aim of the research and of the interview. The interviews were conducted in Dutch to enable an optimal comfort for the interviewees, however, the interviews were recorded and translated to English according to the 24-hour rule of Eisenhardt (1989). In order to improve the construct validity, the interviewees were asked to review the translated interviews afterwards (Yin, 2009).

Additional background information was derived from reviewing company documents (see appendix A for a list of documents that were reviewed) and informal conversations with people from the focal company. These additional data sources were used to achieve reliable historical data and enhance data triangulation, which helped to improve the content validity of this study (Karlsson, 2010).

Case selection

As this paper is concerned with factors that influence project success, the three cases were selected based on the different factors at play during the project. The first case was mainly a technical challenge, whereas the technical complexity was low in the second case, where the challenge was of a behavioural nature. As these circumstances are of a different nature, it was expected that they result in different outcomes as well. On the other hand, the third case was considered a challenge for both the technical and the behavioural side. By selecting those three diverse IT projects as

supporting evidence to the literature review, it is expected that causes for failure or success can be identified more easily.

Data analysis

The collected data from the interviews was filtered by including only those quotes that are of possible relevance to this study. Next, the relevant quotes were coded by labelling (parts of) quotes into categories and subcategories. These categories and subcategories were mostly derived from literature. Some additional categories or subcategories were added when the collected interview data suggested to do so. A more detailed explanation of this data reduction tool will be discussed in the section for the empirical findings of the case studies, as by then the categories derived from literature will be obtained. After data reduction, a within-case analysis was executed to draw a conclusion from each case separately. In addition, a cross-case analysis was done to connect the cases by means of pattern matching. Finally, the results from the within-case analysis and the cross-case analysis were combined to support the findings from the literature review.

Ethics

This research is conducted with several ethical considerations in mind. As this study involves human participants as well as gatekeepers controlling access to the organizations, many principles apply. Since access to the organization and the allocation of interview participants is controlled by a gatekeeper, the gatekeeper is in a powerful position and is able to impact the research. However, to improve content validity, several company documents were consulted in addition to the data collected by means of the interviews.

Prior to the interviews, every interviewee received an introduction letter. By means of this letter, the research ethics were communicated to the participant. Privacy of the research subjects and

confidentiality of the research data was ensured, and the anonymity of the individuals as well as the organization was protected. The importance of informed consent was acknowledged (Easterby-Smith et al., 2015), hence information was provided on the aim and scope of the research and the

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13 With the consent of the participants by means of a signed consent form, the interviews were

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Literature review

Projects

The implementation process of a project is complex and is influenced by a broad variety of sociological, cultural, financial and technical variables (Kaplan and Harris-Salamone, 2009). In the Project Management Book of Knowledge (PMBOK) created by the Project Management Institute (PMI) a project is defined as ‘a temporary endeavour undertaken to create a unique product, service, or result’ (2004). Several characteristics of projects can be derived from this definition. First, the definition implies that projects have a predetermined goal and specific objectives to achieve. Second, the temporary nature of projects indicates that there is a specified start date and date for

completion. Although this does not expose anything about the duration of the project, it shows that a project is a finite instead of ongoing effort (Sa Couto, 2008). Third, the definition states that every project is unique. Hence every project deals with a certain singularity, nevertheless its delivery may include some repetitive elements.

Because of the temporary and unique nature of projects, execution of the project will be done progressively. Step-by-step the project activities will be developed, dependent on their

interrelations. Furthermore, the scope of the project will be made more explicit and detailed during the project and adjustments for improvement will take place in an incremental manner (Sa Couto, 2008). Although many definitions of projects exist, these characteristics of projects are represented in most of them, albeit expressed in different terms (see for example Koskinen et al., 2003; Pich et al., 2002; Munns and Bjeirmi, 1996). Several authors mention other characteristics of projects in addition. Pinto and Prescott (1988) list a specified, limited budget and a specified set of critical success factors as supplementary project characteristics. Furthermore, Atkinson (1999) adds that the project activities often cross functional barriers.

Project management

Dealing with projects and their complex nature requires different management techniques than those required for day-to-day operations within an organization. Decision making needs to happen faster and in addition the choices made can be critical to a successful outcome (Munns and Bjeirmi, 1996). Project management has been recognized as a noteworthy discipline of management for handling the unique undertaking that projects bring about. Project management is concerned with the planning, organizing and controlling the project activities (Lock, 2003). If invested in sufficiently and carried out carefully, project management can contribute toward a successful project outcome (De Wit, 1988). However, there seems to be no clear definition of project management. Although many have attempted to define project management, so far there is no consensus on what project management is exactly. One of the earliest definitions known is the one by Olsen (1971, p.13):

Project management is the application of a collection of tools and techniques (…) to direct the use of diverse resources toward the accomplishment of a unique, complex, one-time task within time, cost and quality constraints.

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The planning, monitoring and control of all aspects of a project and the motivation of all those involved in it to achieve the project objectives on time and to the specified cost, quality and performance.

The definition provided by the UK Body of Knowledge which was created by the UK Association of Project Management (1995) is very similar to the definition above:

The planning, organisation, monitoring and control of all aspects of a project and the motivation of all involved to achieve the project objectives safely and within agreed time, cost and performance criteria.

Both these definitions include the success criteria time, cost, and quality/performance, as Olsen (1971) already suggested. Many other definitions and views of project management exist, but the three criteria seem to be entangled in every one of them. Currently, these common success criteria are often referred to as the Iron Triangle (see Figure 1). Holding on to the same definition of project management with the same three success criteria for almost 50 years implies that project management as a discipline has not changed or developed over time. However, project management is a profession that evolves by learning from past experiences. Hence it might not be a definable phenomenon, and perhaps it is not wrong to describe project management with a degree of vagueness and flexibility.

Figure 2: The Iron Triangle for project management

One such definition is suggested by Turner (1996), who states that project management best can be described as “the art and science of converting vision into reality” (p. 2). None of the elements of the Iron Triangle are included in this definition, nor can any other suggestions for success criteria be derived from it. Atkinson (1999) argues that Turner’s definition is the best starting point to redefine project management. However, by excluding the time element of the Iron Triangle from the definition, it seems to override another point made by Atkinson (1999) that “a finite time resource is possibly the feature which differentiates project management from most other types of management” (p.341). Indeed, turning vision into reality reminds us of the many ways to define regular, often long-term management activities. Nevertheless project management can easily be distinguished from other types of organizational management by four essential characteristics (Bee and Bee, 1997). Logically, these characteristics are derived from and thus related to the characteristics of projects. Unlike other management activities, the activities with which project management is concerned, are:

1. Extremely goal-orientated with specifically predetermined objectives; 2. Cross-functional, interrelated and highly coordinated;

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16 Hence, the knowledge, skills, tools and techniques of project management should be applied to these activities in order to meet the project requirements (Sa Couto, 2008). Project management is considered to be an efficient tool to cover the processes of initiating, planning, executing, monitoring and controlling, and closing of the project. As the Project Management Book of Knowledge (2004) states, project management includes the identification of requirements, determination of clear and realistic objectives, adapting the project specifications to the different expectations of the stakeholders of the project, and balancing the competing elements of time, cost, and quality. Not surprisingly, the latter is again concerned with the Iron Triangle of project criteria, which are argued to be the three major objectives of project management. This leaves the impression that if project management is carried out successfully, the objectives are achieved for the Iron Triangle requirements, resulting in a successful project outcome. Unfortunately, the relationship between successful project management and a resulting successful project is not that straightforward.

This second counterargument to the claim that the criteria from Iron Triangle underwrite successful projects can be illustrated by examples. Many projects around the world that have not been completed on time and within the predefined budget are nevertheless considered a success (De Wit, 1988). In the 1970s, the Fulmar North Sea oil projects experienced significant cost and time overruns. However, as a result of the extreme increases in the oil prices in the following years the project became vastly profitable (De Wit, 1988). Hence, the project was eventually considered a success. Another example is the Thames barrier project in the 1980s, initiated to protect London from being flooded by exceptionally high tides. With respect to the predefined objectives, the project took twice as long and costed four times the primary budget (Wateridge, 1995). Nonetheless the project provided a profit for most of the stakeholders, which made the outcome appear to be successful. A similar case is the Sydney Opera House project, which took 15 years to build and was 14 times over budget. Nevertheless, the project resulted in one of the most prestigious buildings in the world (Jugdev and Müller, 2005). These examples do not only show that it is always possible to contrive a reason why a project is a success, it also confirms the irrelevance of time and cost as criteria for project success. Currently, the opinion that project success or failure is not a function of time and cost is shared by many researchers (see for example Belassi and Tukel, 1996; Cooke-Davies, 2002; Jugdev and Müller, 2005). Hence, Baker et al. (2008) provided a new definition of project success:

The project is considered an overall success if the project meets the technical performance specification and/or mission to be performed, and if there is a high level of satisfaction concerning the project outcome among key people in the parent organization, key people in the project team and key users or clientele of the project effort.

This definition also highlights the importance to satisfy not only the project team and top management of the organization, but the end-users of the project as well. Indeed, a project that is perceived as successful by the project team and top management might be perceived as a failure by the end-users (Belassi and Tukel, 1996). If a project is completed on time, within budget, and to the required quality parameters, the project team and top management are expected to be satisfied. Nevertheless, if the project outcome fails to meet the expectations of the end-users, it might not even be utilized and the project can still be considered a failure (Atkinson, 1999).

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Project success versus project management success

The distinction between criteria and factors will help to clarify the distinction between project success and project management success. The clearest way to describe the difference between criteria and factors is probably by means of the pictorial presentation by Lim and Mohamed (1999), as presented in Figure 2. Besides, this representation already applies the distinction with regard to project success.

Figure 3: The pictorial representation of criteria and factors of project success (Lim and Mohamed, 1999)

Criteria are the principles and standards by which anything is or can be judged, hence the results against which success can be measured. On the other hand, a factor is a circumstance, fact, or influence that can contribute to a result, although they do not form the basis of the judgement (Lim and Mohamed, 1999). Applying these definitions to project success, project success criteria are the set of principles or standards by which project success is or can be judged, whereas project success factors are the set of circumstances, facts, or influences which contribute to the project outcomes. Hence, project success factors can directly or indirectly influence the project success criteria (Cooke-Davies, 2002). The success of the project can be either facilitated or impeded by these influential forces. Returning to our discussion of the criteria from the Iron Triangle and the conclusion that using time and cost as criteria for project success is irrelevant, the distinction between criteria and factors allows us to incorporate the elements of time and cost in the overall picture of project success: time and cost are factors of project success rather than criteria. Hence the Iron Triangle is not wrong, its usefulness is mistaken since it treats project success factors as project success criteria.

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18 management success is subordinate to project success (Thomas and Fernández, 2008). As De Wit (1988) already pointed out, “good project management can contribute towards project success but is unlikely to be able to prevent project failure”. The second part of this statement implies that successfully implemented project management might result in project failure because of other factors. Indeed, there are several factors outside the control of project management which could influence the success or failure of a project (Atkinson et al., 2006).

Project success factors

The clear conclusion from the project management literature is that a) the elements of the Iron Triangle are project success factors rather than project success criteria, b) balancing these elements, time, cost, and quality, is one of the project management activities, and c) next to project

management, project success can be influenced by other factors. Several authors have investigated the concept of project success factors and thereby identified various factors that are important to project success. However, there is disagreement on a final set of factors related to project success. A possible explanation for this disagreement is the fact that most project success prescriptions and frameworks are theoretically based, rather than empirically derived. Conceptual models that are developed from theory often lack practical evidence, whereas case studies and other empirically derived evidence is highly company-specific and therefore not generalizable to a broader perspective (Heeks, 2006). This led to disagreement and confusion concerning the project success factors. An assessment of the project success factors in practice showed that even in the mind of experts, ambiguities on project success factors exist (De Wit, 1988).

However, these findings are not extremely surprising because of the unique nature of projects. Perhaps a final set of project success factors is just not convincing, and they should be represented in another manner. Hence this paper suggests to follow the categorization of Belassi and Tukel (1996), who identified four areas into which the project success factors can be grouped. These groups are 1) factors related to the project, 2) factors related to the organization, 3) factors related to the external environment, and 4) factors related to the project team. Figure 3 shows the simplified representation of these four factors groups related to the project success criteria and the project outcome. Although these groups might be partly overlapping and can be interrelated, this categorization seems

convenient for the discussion of the various project success factors. Deduced from Belassi and Tukel (1996), each project success group will now be discussed to determine which elements are covered by which group.

Factors related to the project

One of the essential dimensions of project performance are the project characteristics. The first characteristic to be mentioned is the size of the project. Project size is related to the number of project activities, but also to the complexity of the project and its impact (Westerveld, 2003). Obviously, a company-wide project will be more complex and has more impact on the organization than a departmental project. The uniqueness of the project is another characteristic that is of importance to project success. Standardization of the project activities helps the project manager in planning, scheduling, and monitoring the project. Furthermore, the density of the project network influences the facilitation of resources to the project, and decision-making during the project is heavily influenced by the urgency of the project (Belassi and Tukel, 1996).

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19 these problems are easily forgotten after the completion of the project. If the project outcome meets the quality expectations, it is nevertheless a perceived success. Another important characteristic is the motive behind the initiation of the project. The motive behind the project influence the identification and the ranking of project objectives, and thus forms the basis for project success determination (De Wit, 1988).

Figure 4: Conceptual model for the project success factor groups

Factors related to the organization

Full support from the organization improves the project implementation process. Top management support can help the project manager to achieve the project objectives by providing the necessary resources (Belout and Gauvreau, 2004). In addition, support from the functional manager will help to understand the end-user needs and demands, thereby facilitating a successful project

implementation. Related to these organizational characteristics is the organizational structure of the project. The project hierarchy can influence the access to resources and thus enable or impede the successful outcome of the project.

Factors related to the external environment

Some factors that can influence the project outcome are external to the organization. These factors can be environmental, such as political, economic, and social factors, but they can also be related to technology or nature. Daake and Anthony (2000) illustrated that governments can be highly

influential during a project. An example of the importance of the economic environment to project success is the earlier mentioned Fulmar North Sea oil project, where cost and time overruns became irrelevant because of favourable economic circumstances (De Wit, 1988). In addition, the public attitude toward a project can be crucial to project success. The final judgement of success and failure of a project is affected by the subjective interpretations of all the people that are involved, including people from outside of the organization (Buchanan et al., 2007). Furthermore, technological

advancements within the industry and weather circumstances can affect the project outcome as well (Belassi and Tukel, 1996).

Factors related to the project team

Finally, there are several factors related to project management that are important to project

Project outcome

Factors related to the project team: - Project manager's skills

and commitment - Project team members'

skills and commitment - Political, communicative, marketing skills Factors related to the

organization: - Top management support - Functional management support - Project organization

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20 success. Firstly, the ability of the project manager to balance the Iron Triangle elements time, cost, and quality is of influence. A project manager’s commitment and competences are key in the execution phase of a project, whereas technical and administrative skills are necessary for project termination (Pinto and Slevin, 1989). Secondly, the members of the project team should be fully committed to the project and possess the necessary technical and communicative skills (Sumner, 2000). Furthermore, all project team members should possess political, communicative, and

marketing skills in order to achieve satisfaction among all project stakeholders (Thieme et al., 2003). In addition, the project manager should be able to delegate and coordinate tasks.

The role of project management in achieving project success

As the different project success factor groups have shown, project success is influenced by several factors that are outside the control of project management. Hence, project management is only a subset of the wider context of the project (Munns and Bjeirmi, 1996). It might not be able to prevent failure, but it can contribute to the achievement of project success. Although the project team will not be able to control these factors, it is important to create awareness of these factors and take them into account during the management of the project. This will fulfil the purpose of management, namely to predict as many organizational dilemmas as possible by planning, organizing and

controlling the project activities (Lock, 2003).

Broadening the scope of project management by incorporating an extensive analysis of the

characteristics of the project, the characteristics of the organization, and the external environment, might improve the role of project management in achieving project success. In this way, the short-term objectives of project management become more aligned with the wider project objectives, shifting the focus from managing the project until delivery to managing the project throughout its life. In other words, involvement of the project team should not be limited to delivery of the project, it should be extended to the stages of utilization and achievement of user satisfaction (Munns and Bjeirmi, 1996). Project management should be concerned with both the process and the outcome of the project, to strengthen the relationship between project management success and project success.

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21 project performance might be diminishing, a higher project output can be achieved within the same period of time compared to single project involvement, hence compressing time (Aral et al., 2012).

Distinguishing characteristics of the healthcare sector

The healthcare industry is challenged by continuous drastic increases in healthcare spending (Poba-Nzaou et al., 2012). This led to a shift of focus to the improvement of the efficiency and the quality of the provided services (Paré and Sicotte, 2001). In addition, “corporatization” of healthcare institutions arose because of increasing accountability requirements, thereby exposing them to market-like pressures. In order to deal with this changing environment, healthcare institutions often initiate new IT projects. The most common IT project is the implementation of a (new) information system. However, an IT project is a difficult undertaking, which often leads to disappointing results or even complete failures (e.g. Wainwright and Waring, 2004).

Project management has been extensively used in the healthcare sector, for example, to implement IT projects (Sa Couto, 2008). It might be argued that the healthcare industry is similar to other industries with regard to management of IT projects, since its motivations to invest in IT projects are common with that of other modern organizations (Pollock and Cornford, 2004). However, healthcare organizations are complex, multifunctional, and information intensive organizations that require information systems which are able to process large volumes of data (Chu and Chesnik, 2000). They are characterized by a hierarchical structure and are known to have “diverse social contexts of distinct units, with unique histories, circumstances, power and degrees of autonomy” (Boonstra and Govers, 2009: p. 178). Furthermore, the objectives of healthcare institutions are often diverse, since they aim at qualitative care for patients, training and educating new employees, and reducing costs. Moreover, the healthcare industry is a highly regulated environment that involves a large number of stakeholders, both internal and external (Stefanou and Revanoglou, 2006). The implementation and operation of an information system in the healthcare industry is therefore bound to be affected by the national legislation (Grimson et al., 2000) and is impeded by the different skills and requirements of the stakeholders (Tsiknakis et al., 2000). Additionally, there are significant differences between public and private healthcare institutions. To illustrate, the technological infrastructure of a public hospital is often older and more limited, compared to the technological infrastructure of a private hospital (Heeks, 2006).

Project success factors in the healthcare sector

It is assumed that some of the factors from the four project success factor groups are different in the healthcare sector and that this will influence project success. Following their framework, the

distinguishing characteristics of the healthcare sector and their effect on IT project implementation will be discussed.

The size of the project, the uniqueness of the project and the urgency of the project are all

characteristics that cannot be said to be different in the healthcare sector, since variations in these characteristics will have an impact on the project that is similar to other industries. However, the density of the project network, the dynamic and changing nature of projects, and the project motive might be different in the healthcare sector.

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22 organizations the IT infrastructure is often old and limited. This obstructs the implementation of a (new) IT project, since it limits the possibilities to improve the quality of care with IT solutions. Moreover, as healthcare services become more integrated, the old IT infrastructure might cause compatibility problems.

Secondly, projects are known for their dynamic and changing nature. Project success can be

influenced by this dynamic nature, since the perceptions of project success might also change during the project (Frame, 2003). Hence, although the project requirements remain the same for each stakeholder during the project, perceived project success can still be time dependent. For the healthcare sector, project success is even more complicated because project requirements might actually change during the project. As healthcare management is rapidly changing, healthcare staff often switch responsibility (Littlejohns et al., 2003). Consequently, the stakeholders of the project and the members of the project team might change during the project, and project requirements must perhaps be adjusted at several moments.

Thirdly, the motive behind the initiation of the project influences the identification and ranking of project objectives. If the project is initiated from a financial perspective, to reduce costs or increase efficiency, then profitability is a major objective for the project. In this case, cost and time overruns might be more acceptable, as long as the profitability objective is achieved. Although it probably takes a longer period of time, the stakeholders will be satisfied as long as the positive return on investment is gained. However, in healthcare institutions, next to the profitability objective, projects are often concerned with meeting quality demands or other governmental legislation. Hence, the budget for the project is relatively low compared to projects in other industries. As a result of this and the conflicting interests of the stakeholders, the project team often has to settle for an

acceptable project outcome instead of an optimal project outcome (Thomas and Fernández, 2008).

The project implementation process can benefit greatly from full support from the organization and its internal stakeholders. Healthcare organizations are often of a hierarchical structure and their workforce is highly diverse, including large spectrum of professionals (Mun et al., 2006). In addition, responsibility of services is shared between many autonomous units, which will affect the

stakeholders’ perspectives and interests in the project (Boonstra and Govers, 2009). Within the organization, several internal stakeholders exist, each viewing IT projects from a different rationality (Heeks, 2006). Top management obviously operates from a managerial rationality, concerned with the objectives of external stakeholders such as the national government. Top management support is therefore often bound to a finance-based view of the project.

As for support from the functional managers, this is often provided from a medical rationality. To illustrate, if a new information system is implemented within a medical specialized department, physicians prioritize quality requirements instead of cost requirements as objective. They prefer to put medical information and patients at the centre of the information system (Heeks, 2006). On the other hand, IT professionals and IT suppliers operate from a technical rationality, and design the information system from a technology-based view. Heeks (2006) stresses the issue that colliding rationalities can result in failed IT projects, especially when the information system is designed from one rationality, but will be used by stakeholders associated with another rationality. Hence, next to support from all stakeholders within the organization, their perspectives on the project can also play a crucial role in achieving project success.

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23 amount of time available for the project. Moreover, the high variety and complexity of healthcare processes is often underestimated, which can lead to project failure (Boonstra and Govers, 2009). Even the most basic administrative tasks are more complex in healthcare than in other sectors, since healthcare interactions often occur in the context of concerns, anxiety and time pressure. Any additional task is unwanted, especially when the task is not considered to be essential to help the patient or client (Littlejohns et al., 2003). As a result, although an IT project might be successfully implemented, it might not be accepted by the end-users, turning the project into a failure.

As pointed out several times already, the political environment of healthcare organizations is of great influence. Governments demand various changes in the healthcare sector as they consider the current healthcare provision systems to be unsustainable (Sa Couto, 2008). Healthcare spending cannot continue to grow indefinitely, hence cost reduction is necessary. At the same time, quality should be improved rather than compromised, according to governmental regulations. In this way the external stakeholders have a large impact on the healthcare organization and their influence is expected to increase even further (Whitehead, 2005).

Sometimes IT projects are initiated because of requirements from national legislation, for instance to meet or control for certain quality demands. In other cases, IT projects are initiated because of the economic environment. The corporatization of the healthcare sector forces healthcare organizations to act like a modern, competitive organization, facing market-like pressures (Poba-Nzaou et al., 2012). In addition, the social environment (consisting of the citizens, i.e. the consumers of

healthcare) demands better healthcare services, although a rise in governmental taxes is unwelcome. This led to increased transparency and accountability with regard to the spending patterns of

healthcare organizations (Paré and Sicotte, 2001).

It is stated that technological advancements within the industry and weather circumstances can affect the project outcome as well (Belassi and Tukel, 1996). Although weather circumstances and their influence are irrelevant in the discussion on healthcare sector distinctions, technological advancements certainly deserve attention. In the past 50 years, the healthcare sector has explored how information and communication technology can improve healthcare services (Avison and Young, 2007). The first four decades after World War II, the ways in which healthcare services were provided have been revolutionized by new technologies (Weisbrod, 1991). In the following years,

technological advancements continued to improve healthcare services and new possibilities are still being offered to the healthcare sector (Martin et al., 2002). Healthcare providers and users are becoming more willing to adopt technologies for the potential benefits, such as increased

efficiencies, reduced costs, and easier access to information. However, these seems to remain a gap between the positive potential for information technology to improve healthcare services and the more negative reality (Heeks, 2006). As a result, IT investments often go to waste on IT projects that are uncompleted or turn out to be ineffective.

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24 The other project team members should also be committed to the project and should possess the technical and communicative skills that are required to execute the project (Thieme, 2003). Since projects in the healthcare sector often have to be managed next to the daily operations, some team members might merely be involved at one stage of the project, or at least during a shorter period of time than the extended project programme. Although this enables the project team to consist of the rightly skilled members at the right time, it might have a negative influence on the project

commitment of the project team members.

The political, communicative, and marketing skills of all the project team members are of a much greater importance in the healthcare sector, as satisfaction should be achieved among the numerous stakeholders of the project. As politics dominate and the influence of the stakeholders increases, more time should be spent with all stakeholders in order to be aware of their impact and their objectives. (Whitehead, 2005). Although the different objectives are often in conflict, maximum satisfaction among the stakeholders can be reached by means of political skills. Since there are many internal stakeholders because of the characteristics of healthcare organizations as well as many external stakeholders because of the external environment of healthcare organizations, the project team is supposed to satisfy a voluminous set of stakeholders. Hence, stakeholder management is an essential part of project management in the healthcare sector, and it appears appropriate to discuss this in more detail.

Stakeholder management

An IT project has a considerable impact on all stakeholders involved, which impedes the achievement of project success. Poor stakeholder management is one of the failure factors in the conduct of a project, such as the implementation of an information system (Yeo, 2002). A stakeholder can be defined as “any group or individual who can affect or is affected by the achievement of the

organization’s objectives” (Freeman, 2010). The interests of stakeholders within the social structure of an organization might either converge or diverge depending on their roles, values or the situation (Chetcuti, 2008). In order to enable a successful project, each stakeholder should understand the benefits and accept the necessary changes that it brings about. As each stakeholder might assign a different meaning to the project from its own perspective, different outcomes might be desired by different stakeholders, which in turn complicates a successful implementation. It is therefore essential to carry out a stakeholder analysis, to investigate the stakeholder perspectives on the project and the related consequences.

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25 Next to expectations, the way in which project success is measured might also differ among the stakeholders. Thomas and Fernández (2008) found that a clear and well-defined vision of what the project is meant to achieve will increase project success and state that a definition of project success should be negotiated among the stakeholders before the start of a project. Creating a common understanding of how project success will be measured, will help the project team with managing and meeting the stakeholder expectations. As a result, the project vision might not be optimal from all stakeholders’ perspectives, but agreement on the project vision will improve the overall level of satisfaction (Boonstra, 2006), hence achieving perceived success of the project.

Concluding the discussion of the project success factors in the healthcare sector, several factors are expected to be different for projects within healthcare organizations. The revised research model for this study is presented in Figure 5.

Figure 5: Revised research model of this study

Basically, all the identified distinguishing characteristics of the healthcare sector are expected to impede a successful project outcome. Changes in project requirements and project team members during the project increase the dynamics of the project, and in addition the project is bound to a relatively low budget. This might decrease decision making performance within the project team. Furthermore, the colliding rationalities of top management, the ICT department, and the medical staff are assumed to cause difficulties in determining the project requirements. In combination with the high variety and complexity of healthcare processes, this might result in user resistance. The demanded cost reductions, quality improvements and increased transparency and accountability might be reflected in the motive behind the project, or can be considered limitations during the project. Time and cost overruns are assumed to be acceptable to some extent, provided that quality requirements are met. Inclusion of stakeholder management activities is expected to improve project outcome, since this might increase stakeholder satisfaction and thus perceived project success among the project stakeholders.

Project outcome

Factors related to the project team: - Focus on quality rather than time

and cost - Relatively low commitment to the project - Political skills highly important Factors related to the external environment: - Cost reductions - Quality improvements - Increased transparency and accountability - Unexploited IT possibilities Factors related to the project: - Old and limited IT infrastructure - Changing project requirements - Changing project team members - Relatively low budget available Stakeholder management: - Stakeholder analysis - Stakeholder perspectives - Stakeholder satisfaction Factors related to the organization: - Colliding rationalities - Project as part-time task - High variety and

complexity of healthcare

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Empirical findings

To support the findings from the literature review, a number of three case studies is executed. The data from the case studies was collected by means of semi-structured interviews and consulting company documents. A coding scheme was developed as a data reduction tool, as already mentioned in the methodology section. A coding scheme is an organized categorization of

information to identify patterns and themes from collected data (Beer et al., 2012). After filtering the data for quotes that were of possible relevance to this study, each quote was subscribed to one of the factor groups. Then, the quotes were coded with one of the categories derived from the

literature review. During the coding process, the coding scheme was refined and finalised. Appendix B presents the derived categories and descriptions of the categories. Examples of the allocation of quotes to these categories can be found in Appendix C.

The organizations at which these case studies were executed, will be shortly introduced. Afterwards, some background information will be provided for each case, followed by the findings from this empirical research. The findings will be categorized by the four project success factor groups from the literature review. In addition, activities related to stakeholder management will be identified from the interviews.

Case A

Case A was investigated at a public hospital centrally located in the Netherlands, delivering

healthcare since 1844. With almost 500 beds it facilitates over 390.000 polyclinic visits a year, next to more than 24.000 day treatments and more than 24.000 multiday treatments. The organization has around 2700 employees, among which almost 200 medical specialists, and will be referred to as organization X in the remaining sections of this paper.

This case concerned the implementation of an information system in the operating rooms. The information system was supposed to register the movements of the door to the operating room, in order to control the amount of accesses to the operating room during surgery. The objective of the IT project was to reduce the amount of post operational wound infections, thereby improving quality.

The project was referred to as a relatively small, seemingly simple, in-between project. The initial motive behind the project was directly related to governmental legislation. Organization X was reporting a relatively high rate of post operational wound infections, which can be caused by too many door movements during surgery. Controlling the amounts of door movements during surgery might reduce the amount of post operational wound infections, hence a new information system was implemented to register the door movements. Although the management information initially became available after a period of three months, organization X now receives real-time information on the door movements.

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Next to the switching manager of the operating rooms, the Board of Directors changed as well. At the start of the year, a list of projects was provided by a temporary Board of Directors. In response to this list of projects, resources are obtained and projects are scheduled. However, during the year the temporary Board of Directors was replaced by another Board of Directors, with different demands. Due to this change in top management support, the project employees were forced to shift priorities and change project schedules.

In addition, the project was not fully supported by functional management. The new information system was unwanted, as it made the medical staff feel like they were being audited, either by the ICT department or the governmental inspection. Furthermore, the management information provided by the information system would be used to address and account for cases with too many door movements, in order to moderate the behaviour of the medical staff. Besides the fact that the medical staff was reluctant to change in general, negative experience with many changes in the past two years had further increased this reluctance. Moreover, as pointed out by the manager of the operating room, changes in behaviour and culture are the most challenging. Surgeons are usually in charge in the operating room, hence they are not used to being dictated. In addition, medical staff indicated that priorities are shifting from the primary process of providing healthcare to

administrative tasks. As a consequence of this confirmation of colliding rationalities within IT projects, the manager of the operating room emphasized the importance of a program of

requirements. Next to creating awareness of the quality improvements and legislation matters, this will improve acceptance among the key stakeholders within the organization.

Several interviewees underlined the complexity of the project organization. Numerous people are involved in the project, from various levels within the organization hierarchy, hence a clear project structure is required in order to run the project smoothly. However, the project was initiated with little regard for structure compared to other IT projects within the organization. One of the employees mentioned the relatively small size and seemingly simplicity of the project as a possible explanation for this. Furthermore, the project approach was considered ‘soft’ compared to projects in the commercial sector, with a lack of thoroughness. Barely any internal control took place, which especially at the start led to considerable delay in project activities.

The external environment was of direct influence to this project, as the project was initiated due to increased accountability issues and quality demands. Efficiency played a role in the project initiation as well, as any post operational wound infection will lead to additional surgeries and thus additional costs.

It was mentioned that the economic environment is nog highly competitive. As a result of the increased accountability and relatively low competition, organization X was willing to outsource a few tasks to the supplier by providing them with in-house knowledge. By doing so, it aims to cover for possible issues by transferring the responsibility to the supplier.

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28 with and connecting to the server in organization X. The interviewees indicated that this led to design problems as well as other mistakes that might have been prevented by a more experienced supplier.

Several trade-offs had to be made with regard to the Iron Triangle criteria time, cost, and quality. This was mainly the task of the project manager and higher management. Quality has the highest priority within organization X, as they focus on customer value and patient satisfaction. The criteria of cost was found to be more important than the criteria of time, and as a result costs are often the reason behind project decisions. After properly executing cost-benefit analyses, this supplier was selected because it was about eight times cheaper than the single competitor. Furthermore, the decision had to be made whether the door movements would be displayed on the outside of the operating room as well, instead of only on the inside of the operating room. Due to cost

considerations, it was decided to limit the door movement display to the inside of the operating room.

A relatively low degree of project team commitment was reported, as this project was only a small part of the daily job of the project team members. The state of mind with such a minimal part-time task is different from full-time task commitment. This finding was also reflected in the reference to this project as being an ‘in-between project’, and is intensified because of the low urgency, limited structure and limited control.

Political skill was an essential skill for the project manager, as the project manager had to satisfy top management as well as the lower level end-users. In order to create a clear understanding of the project objectives and consequences, communicative skills are important for all team members. The importance of communicative skills was even higher due to the inexperience of the supplier.

Marketing skills are necessary to provide an evident motive behind the IT project. If all stakeholders understand why the project was initiated in the first place, difficulties such as the reluctance among medical staff might be reduced.

Stakeholder management

One of the greatest difficulties within this IT project was the necessity to moderate the medical staff’s behaviour, because of their reluctance to change. Old habits impeded this process, as

surgeons were not used to be dictated. In order to make this project successful, surgeons would have to proactively take responsibility for the amount of door movements during surgery. In addition, it requires an increased premeditation to ensure no extra door movements are needed for the supply of materials. Furthermore, as the issue of colliding rationalities was confirmed in this case, different perspectives among the stakeholders obstructed project success.

Case B

Case B was investigated at the same public hospital as case A, namely organization X. It concerned the implementation of an information system in the operating rooms that enabled the surgeons to take pictures and record videos during surgery, for accountability and educational objectives.

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29 somehow lost, resulting in a legal suit. In order to prevent similar mistakes in the future, an

improvement of data security was essential. Next to legal and accountability objectives, the project also could accomplish educational objectives and improve quality.

Initially there was a deadline to the project, but the project was not delivered on time due to

extreme delays. Although there was no time pressure from top management, from the governmental inspection, or from the supplier, frustrations within the project team and among the users were increasing because of the delay. Similar to case A, the delay was partly caused by the dynamic nature of the project. The project design was unclear from the start and has changed several times in the beginning. System requirements were also unclear and incremental changes were made. In addition, the operating system was updated during the project and several software versions were running within the organization. The different circumstances and technological environments in every operating room impeded the project execution as well, as every operating room needed a slightly different design. Finally, next to changing compositions of the project team, two different people fulfilled the function of project manager during the project, without a proper handover of project activities and a project plan of action.

The project was fully supported by both top management and functional management. The desire for this new information system originates both from top management as from the medical staff employed at the operating rooms, especially the gynaecology department. The medical staff had been waiting for this IT solution for an extensive period of time, hence there was a positive attitude towards the project.

The project organization was chaotic rather than organized. There was no steering group and no interference from middle or higher management with regard to the project progression. With the arrival of the new project manager, the project organization significantly improved. However, there was still no time pressure or control from within the organization or from the governmental

inspection. This lack of control led to a lack of focus on project activities, and as a result the project was ranked with low priority.

In addition to the recent event of the legal suit, organization X recently faced increased

governmental supervision with regard to quality demands, especially for the operating rooms. These invigorated quality demands indirectly led to the initiation of the project. Additionally, for

organization X to remain their position within the industry, quality improvements might lead to customer share preservation. Two of the interviewees indicated that organization X was becoming more commercially focused.

As organization X prefers to select the new information system from the supplier of the main information system, the initial orientation was to add a software module to the main information system. However, as this software was relatively new, the module was relatively expensive.

Therefore, the decision was made to select the information system from another supplier to reduce costs. Unfortunately, the resulting difficulties with connecting the two systems caused significant delay in the project. These difficulties were partly due to the fact that this supplier was a relatively small organization, with little experience in collaborations with large hospitals.

Factors influencing project success in the healthcare sector: The paradoxical effects of healthcare legislation

Master Thesis DD Operations Management