Hello, readers, and welcome to our project management series. Today we will be studying a retrospective appraisal of various project management performance evaluation techniques. The aim of project management is to optimize the performance of a project or organization. To a large extent (though there are other variables), the success or failure of the project is dependent on how the project manager carries out their responsibilities. Thus, to achieve the best from a project manager, there is the need for routine performance measurement.
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This article will study and analyze Performance evaluation as it relates to project management and a retrospective look at the performance evaluation techniques that were adopted in project management over the years till recent times. Historically, a project is judged to be good or poor based only on the use of financial data only; however, as the systems evolved over the years, it was discovered that financial criteria were not sufficient to evaluate a project or project manager. Performance evaluation thus started to recognize the dynamic nature of the environment and therefore had to evolve to remain appropriate to the organization. This was the origin of the change in performance evaluation as it relates to project management.
What Does Performance Evaluation Mean?
Before jumping the cart to what method of performance evaluation was used and when it was used, we need to have a comprehensive idea of what the phrase “performance evaluation” means. As mentioned earlier, it is important to make sure the project manager is carrying out his duties correctly. The tool and process of doing this is called Performance Evaluation.
Wikipedia defines performance evaluation, which is also known as performance measurement, performance appraisal, or performance review, as “a method by which job performance of an employee is documented and evaluated or a systematic and periodic process that accesses an individual’s (project manager) efficiency, effectiveness and productivity in relation to certain pre-established criteria and organizational objectives.” At this juncture, it is important to note that the central reason for utilization of performance evaluations is to improve performance.
Components of the Project Manager’s Performance Evaluation
Now that we fully understand the concept of performance evaluation, what then should be contained when evaluating the performance of a project manager?
Most of a project manager’s performance evaluation is often carried out using objective components. This is measuring if a project is completed within the confines of the project constraints, i.e., on time and within budget. When using objective components, managers are given a perfect score at the beginning but lose points when projects are late, defective, or over budget. The evaluation clearly state if the manager was successful in completing the project within the constrains or not.
Most companies are not only interested in evaluating what the project manager accomplished (product) but also how it was accomplished (process). The subjective component of an evaluation would list the skills the manager has developed and used effectively, as well as other skills that require improvement in order to be a better project manager. For example, a project could be completed on time because the manager worked round the clock instead of delegating; this would be a manager’s weakness. Although the work got done, the process was not the most effective. If work was delegated to other capable hands, the project could possibly have been more successful.
The employees’ voices are an important part of performance evaluation. An evaluator may interview employees or distribute surveys in which project managers are ranked with regard to different skills or competencies, such as giving directions clearly or mediating problems among employees. The evaluator can summarize the results as part of the evaluation or simply give managers copies of anonymous employee remarks.
Self-evaluation allows a project manager to reflect on the project after practical completion. During the self-evaluation process, managers reevaluate their performance during a project, noting areas that need improvement and areas where performances exceeded expectations
A Retrospective Look on Performance Management
Now that we have done a brief analysis of what performance evaluation in project management is, let us go back in time to the beginning of performance management. Here, we are hoping to get answers to questions such as: “How/when did performance measurement start? How was performance of project managers measured over the years? What has changed in project management performance measurement?”, just to mention a few.
In the early 1900s, definitions of project management were focused on the variables of time, cost and scope. This formed a basis for measuring performance of projects and their managers. Project performance was distinguished as good or poor based on the ability of the project manager and his team to meet the criteria of cost, time, and product/service quality, otherwise known as the “iron triangle” or triple constraint (Atkinson, 1999). Success at the implementation phase of the project translated directly into project success and the performance of the project manager was evaluated based mainly on financial data. This was and, in some organizations, still is the most used measure of performance because of its tangibility.
Measuring effectiveness is not tangible or easy to grasp and it also takes longer to determine, therefore it was rarely considered in organizations. According to Verna Allee, an American business consultant, “Financial performance measures remain the mainstay in practice though, as there is no consensus on how to measure intangible assets.”
Change, they say, is the only constant thing in life. This change is evident in the world we live in, both from the environmental and business perspective. Issues such as global warming, environmental consideration, development in technology, etc., are becoming key considerations in every sector. These changes have affected the way we implement our projects and our project performances are measured. Over time, the dynamic nature of these changes was recognized and it became a necessity for the systems employed in evaluating project and project managers’ performance to be changed also, as was seen appropriate to the organization’s environment.
We would start analyzing performance evaluation from the industrial era (early 1900s). This period is significant because most of the modern management systems/methods evolved during this era. We would be looking at the evolution of performance measurement from the industrialization era until now and a possible forecast of what the future holds for evaluating performance in project management.
The eras have been classified into four and would be analyzed in the following order
Just-in-Case Era or Industrial Era
Just-in-Case Era or Industrial era (1900 – 1970s)
This era started before the 19th century through to the late 1900s. It is the first era that birthed performance measurement. As the name implies, things were done as a provision against something happening, not necessarily because they were needed. For instance, companies made stock just in case they were needed; they employed human resources more than they actually needed, just in case they needed more hands, etc. The producers of goods and services usually dominated the market, while customers bought whatever was available. During this era, two major means of evaluating performance were employed. Organizations focused on different objectives at different points in time, and as often as these objectives varied the responsibility of the project manager followed suite, so also did the system of measuring his performance. These periods are:
Budgetary Control Era (1900–1940s)—Performance measurement started through double-entry bookkeeping that emerged in the late 13th century. It was used to avoid disputes and settle transactions between traders. This remained unchanged until the industrial revolution in the early 19th century. The budgetary control era of performance measurement emerged as a result of the industrial revolution. This era was mainly associated with financial planning and management of organizational performance as against the project budgets. Organizations had evolved and ownership and management were becoming increasingly separated. As a result, measures of return on investment were applied so that owners could monitor the performance of managers. At this era, the role of the project manager in organizations was to delegate day-to-day control and responsibility of operations to the project team and performance was evaluated based on this responsibility. The complexity of these organizations increased over time and it became necessary to motivate the sales force to pursue profitable sales. These developments in turn led to the emergence of divisional and departmental budgets. Early performance measurements also involved government institutions, since they became particularly associated with the practice of budget control.
Productivity Management (1940s–1970s)—The second half of the just-in-case era saw the concept of productivity start to increase as industrialization grew and demand was steadily growing beyond supply. The major focus of measuring performance in this era was to manage productivity through waste control and reduction. Productivity became a key driver of performance in this era due to the increase in business competition. This era birthed some commonly used techniques in industries and businesses, such as standardization, modularization, quality control, variety reduction, etc. Productivity and performance measurement became more important and were regarded as prerequisites for continuous improvement. At the early stages, productivity improvements were gained at the expense of customer/stakeholder satisfaction. During the productivity era, organizations still placed much emphasis on financial indicators for monitoring the business such as sales, productivity, efficiency, etc.
Today we set out to explore a retrospective approach of the various ways project performance has been evaluated. We began by explaining the need for performance evaluation and classifying performance evaluation into four eras. In this article we were able to explore the Just-in-Case Era, also known as the Industrial Era. In our next article, we will explore the Lean Era, the Agile Era, and the Networking Era.
Once again, thank you for reading. As usual, if you have any question or suggestion, do leave us a comment and we will get back to you.