Project Management in

Sweden and Ethiopia

- Potential improvements in Project
Management methods

Pär Karlsson
Titel: Project Management in Sweden and Ethiopia
- Potential improvements in Project Management methods

© Pär Karlsson 2011

Division of Construction Management

Faculty of Engineering
Lund University
Box 118
221 00 Lund
Sweden

ISRN LUTVDG/TVBP--10/5418--SE

Printed by Media-Tryck, Sweden 2011

Abstract

Titel: Project Management in Sweden and Ethiopia

- Potential improvements in Project Management methods

Author: Pär Karlsson

Construction Management - Faculty of Engineering, Lund University

Examiner: Stefan Olander, PhD, Division of Construction Management -

Faculty of Engineering, Lund University

Supervisors: Kristian Widén, PhD, Division of Construction Management -

Faculty of Engineering, Lund University

Bo Grims, Project Export, Midroc Project Management AB

Purpose and The purpose of the study is to identify which successful methods of
objective: project management in Swedish projects that are appropriate to
implement in the Ethiopian operations, and vice versa, to increase
the efficiency and minimize the risks in construction projects. Sub-
ordinate objectives of the study are to:

- Identify success factors in project management for studied

projects.
- Identify potential improvements in project management for
studied projects.
- Match success factors against potential improvements to
identify suitable areas for benchmarking.
- Evaluate identified improvements, based on priority of which
improvements that are most suitable to start with.
Method: The theoretical background was based on literature concerning the
studied areas. The empirical approach in the study was qualitative
and the data was gathered through informal interviews and
observations on construction sites in Sweden and Ethiopia. The
analysis was based on PMI’s nine project management knowledge
areas throughout the study.

Conclusion: The study resulted in strengths and potential areas of improvement

and gives recommendations of areas that should be prioritized for
improvement of management methods in the Swedish and
Ethiopian operations.

Areas that should be prioritized in benchmarking from Sweden to

Ethiopia were also identified. Contextual factors and conditions
should be considered in all implementation and benchmarking of
potential improvements, in order to develop more efficient
methods of project management.

There are three areas in the Swedish operations and seven areas in
the Ethiopian operations that are prioritized for improvements. The
improvement that should be considered with the highest priority is
the development of an efficient planning process early in the
Ethiopian projects, in order to develop a coherent and accurate
project plan.

Four areas are considered prioritized for benchmarking from the

Swedish to the Ethiopian operations. The area with the greatest
potential improvement by benchmarking is the management
system. The Ethiopian operations need to be more consistent and
reach a higher general level of professionalism, which an
implementation of an adapted form of the Swedish management
system most certainly would provide.

Keywords: Project Management, Construction Management, International

Comparison, Method Improvements
Acknowledgements

This master thesis was performed for the Division of Construction Management,
Faculty of Engineering at Lund University. The study was performed in
cooperation with Midroc, and two of Midroc’s subsidiaries; Midroc Project
Management in Sweden and Saudi Star Agriculture Development in Ethiopia, were
case companies for the study.

I want to thank my supervisors Kristian Widén at Lund University and Bo Grims at

Midroc Project Management for their valuable help during the study. I also want
to acknowledge the Swedish expatriates in Addis Abeba and Camp Bonanza for
sharing their experience and for their efforts to make this study possible. At last, I
also want to thank Linda Svensson for her great advice and comments regarding
the disposition of this report.

Lund, February 2011

Pär Karlsson
 Table of Contents

1 Introduction .................................................................................... 9
1.1 Background ............................................................................................... 9
1.2 Problem formulation............................................................................... 10
1.3 Purpose and objective ............................................................................ 11
1.4 Demarcation............................................................................................ 11
1.5 Disposition of the study .......................................................................... 11
2 Method ......................................................................................... 13
2.1 Work methods ........................................................................................ 13
2.1.1 Qualitative och quantitative methods ............................................ 13
2.1.2 Deduction och induction ................................................................. 14
2.2 Data collection ........................................................................................ 14
2.2.1 Literature studies ............................................................................ 14
2.2.2 Case studies..................................................................................... 14
2.2.3 Informal interviews ......................................................................... 15
2.2.4 Observations ................................................................................... 16
2.2.5 Reliability and validity ..................................................................... 16
2.3 Chosen work method .............................................................................. 17
2.3.1 Workflow......................................................................................... 17
2.3.2 Literature study ............................................................................... 17
2.3.3 Approach ......................................................................................... 17
2.3.4 Empirical work................................................................................. 17
2.3.5 Validity ............................................................................................ 18
2.3.6 Method quality................................................................................ 18
2.4 The case company ................................................................................... 18
3 Theory ........................................................................................... 21
3.1 Project ..................................................................................................... 21
 3.2 Project Management .............................................................................. 22
3.2.1 Project Management Process Groups ............................................ 23
3.2.2 Project Management Knowledge Areas ......................................... 27
3.3 Benchmarking ......................................................................................... 36
3.4 Context .................................................................................................... 38
4 Empiricism ..................................................................................... 43
4.1 Sweden.................................................................................................... 43
4.1.1 Context ............................................................................................ 43
4.1.2 Project Management ...................................................................... 44
4.2 Ethiopia ................................................................................................... 53
4.2.1 Context ............................................................................................ 53
4.2.2 Project Management ...................................................................... 54
5 Analysis ......................................................................................... 61
5.1 Sweden.................................................................................................... 61
5.1.1 Strengths ......................................................................................... 62
5.1.2 Potential areas of improvement ..................................................... 64
5.2 Ethiopia ................................................................................................... 65
5.2.1 Strengths ......................................................................................... 66
5.2.2 Potential areas of improvement ..................................................... 67
5.3 Benchmarking ......................................................................................... 71
6 Discussion...................................................................................... 75
6.1 Discussion regarding method ................................................................. 75
6.2 Discussion regarding conclusions ........................................................... 76
7 Conclusion ..................................................................................... 77
8 References ..................................................................................... 83
Appendix 1 – Template for interviews ................................................... 87
1 Introduction
1.1 Background

The construction industry is built up by many different companies in many

different countries. The structure and conditions in companies and projects often
vary largely from one country to another (Bray & Lugosi, 2008). The culture and
history of a specific country have a big influence on the whole society, which also
makes it an important issue to take into account in the management of a
construction project. A project in the context of one country or culture is likely to
experience different problems and have a different structure than projects in
another context (Walker, 2007).

Both individuals and society in general are affected by the conditions in a country.
The conditions for development and the social status also have a significant
impact on peoples approach and values (Bray & Lugosi, 2008). Financial status and
religion are also factors that largely affect how people act and behave in all
situations in life. It is important to be aware of these contextual factors, as people
interact with each other on a professional level (Everyculture).

Project management is naturally carried out in different ways depending on which

context the project is situated in. This aspect is very important to be aware of
when work methods and structures between different countries, in different
contexts, are compared (Friedman, Dyke, & Murphy, 2009). This difference,
however, also suggests that there can be a great potential for improvements by
comparing the methods of project management in different contexts (Broms,
1987). As many companies expand their business to the international arena,
issues concerning culture and different conditions must be taken into account.
Although multinational companies face many problems, they also have a great
opportunity to develop their work methods by learning from other cultures with
different approaches (Friedman, Dyke, & Murphy, 2009).

A country’s development has a strong connection to the level of skill and

knowledge that people show in their profession. Companies in a low level
developed country, often have employees with limited skills and experience, and
the work methods are often outdated and inefficient compared to countries with

9
a higher level of development (Bray & Lugosi, 2008). Two countries with largely
different conditions are Sweden and Ethiopia. The level of development differ
largely between the countries and other contextual factors such as financial and
social status, climate and influence of religion are all very different in Sweden and
Ethiopia (Everyculture).

Ethiopia is a country with great opportunities for development in all areas of the
society. This potential has attracted multinational companies, particularly in the
construction industry, to establish in the Ethiopian market (Howard, 2010).
Construction projects in Ethiopia, however, differ largely from construction
projects in Sweden. Due to large differences in both development and business
and work culture, problems that are experienced in Swedish projects are likely to
be of a different nature than the problems experienced in Ethiopian projects.
Differences in culture and conditions between the countries also mean that there
are great difficulties in transferring a successful work method from one country to
the other (EBDSN).

1.2 Problem formulation

The major differences in conditions and work methods in project management
that exist between Sweden and Ethiopia, suggests that there is a great potential
for improvement by learning from each other. Which parts of the respective
activities in project management that are appropriate to transfer from one of the
countries to the other, largely depends on how a particular work method, system
or approach is respected and handled in the new environment. Differences in
business and work culture, and differences in society in general, are important
parameters to take into account when changes in methods and procedures for
project management are investigated.

Which successful methods of project management in Swedish projects

are appropriate to implement in the Ethiopian operations, and vice
versa, to increase the efficiency and minimize the risks in construction
projects?

10
1.3 Purpose and objective
The objective of the study is to identify and suggest improvements in project
management, based on existing work methods in Swedish and Ethiopian
construction projects. Subordinate objectives in the study are:

- Identify strengths in project management for studied projects.

- Identify potential improvements in project management for
studied projects.
- Match strengths against potential improvements to identify
suitable areas for benchmarking.
- Evaluate identified improvements, based on priority of which
improvements that are most suitable to start with.

1.4 Demarcation
The study is concerned with methods of project management with the focus to
identify strengths and potential improvements in the current operations. How
implementation of new methods should be conducted is not included in the
study. The study is to some extent limited to the involved projects and further
studies are required in order to reach conclusions that are general valid
throughout the construction industry.

1.5 Disposition of the study

Chapter 3 includes relevant theory to the study.

Chapter 4 is empirical data from the studied projects. The empirical structure is
based on PMI’s project knowledge areas.

Chapter 5 includes analysis of the empirical data, based on the previously

presented theory.

Chapter 6 includes discussion regarding method and conclusion where potential

weaknesses in the approach are handled.

Chapter 7 presents the conclusion of the analysis, with prioritized improvements

and suitable areas for benchmarking.

11
12
2 Method

A method is, in an academic approach, a tool to solve problems and come up with
new knowledge. With regard to sustainability and critical analysis, the context of
the current study determines which method is most suitable. The method should
be adjusted so that it, as closely as possible, consists with the reality that is
investigated (Magne Holme & Krohn Solvang, 1997). To increase the sustainability
of a study it can be necessary to use several methods that complement each
other. All methods have strengths and weaknesses, making the choice of method
important for the sustainability of the results (Magne Holme & Krohn Solvang,
1997).

2.1 Work methods

2.1.1 Qualitative and quantitative methods
There are generally two different methodological approaches. Qualitative
methods are used to gain a deeper understanding of the studied problem. The
objective in a qualitative study is to describe the big picture of the context that
includes the problem. A qualitative method requires a significant closeness to the
studied source. It is characterized by unsystematic observations as informal
interviews or an interview schedule with no fixed answer alternatives (Magne
Holme & Krohn Solvang, 1997).

Quantitative methods are based on structured surveys with predetermined

possible answers. In contrast to qualitative methods it consists mostly of general
conclusions and assessments. When the information is gathered, formal analysis
and comparisons are made to determine in which situations, and for what units,
the drawn conclusions are valid. In quantitative methods the analysis of collected
information is characterized by statistical methods (Magne Holme & Krohn
Solvang, 1997).

Both qualitative and quantitative methods have the common purpose to create
an understanding of how society works and of the problems that may arise. The
most significant difference between the two methods is that quantitative
methods focus on transforming information into numbers and amounts which can

13
be analyzed. Qualitative methods on the other hand focus on the researcher’s
interpretation of motives, social processes and context of the problem (Magne
Holme & Krohn Solvang, 1997).

2.1.2 Deduction and induction

Deductive and inductive methods are two methodological approaches that have
different relations between theory and empiricism. Induction is based on
empirical information and means that general and theoretical conclusions are
drawn through data collection (Wallén, 1996). In the inductive method, it is
important that data is collected completely impartial, which often is difficult to
meet as many studies require some kind of theoretical position. The deductive
method is instead based on hypothesis that originates from theories in the field.
The conclusions drawn in a deductive study describes how well the hypothesis
matches, and how applicable it is, with conditions given by the collected data
(Wallén, 1996).

2.2 Data collection

2.2.1 Literature studies
Literature study is an integral part throughout the investigation in a study. A
literature study provides knowledge of what have been written and studied in the
area prior to this study. The literature is particularly important at the beginning of
a study, as it gives the researcher insight and background information on the
subject. Through literature study the researcher also gains insight on appropriate
theories, possible issues and definitions of terms (Svenning, 2003).

2.2.2 Case studies

Case studies are a form of scientific method in an investigation. A case study can
be used to develop as well as to test a theory. The case study is flexible and can be
used regardless if a qualitative or quantitative method is used to collect
information. A case study can in general be described as a systematic way to
investigate a phenomenon (Merriam, 1994).

There is a fundamental difference between case studies in which experimental

methods or non-experimental methods are used. In order to use experimental
methods, it is required that the researcher is able to lock certain conditions and
then manipulate the variables of interest. This method is often used to study

14
cause-effect relations in different situations. In a study where the conditions are
impossible to manipulate and/or the variables are too complex to identify, it is
preferable to use non-experimental methods. These methods are often called
descriptive studies and strive to describe and explain events and phenomenon in
the studied situation (Merriam, 1994).

A case study examines a specific event or phenomenon and requires a defined

system for accurate conclusions to be drawn from the study. Qualitative case
studies have strengths in that they focus on insight, discovery and interpretation
of a problematic situation. As the focus is on a single event or phenomenon, the
interaction between major factors that characterize the event can be illuminated.
Another useful strength of a case study is that it can handle several different types
of empirical data, such as documents, interviews, observations etc (Svenning,
2003).

2.2.3 Informal interviews

Informal interviews, sometimes also called semi-structured interviews, are an
effective tool to collect soft data. An informal interview can in general be
problem-orientated or problem-based. The difference between the two
approaches is that the problem-based interview goes into more depth than the
problem-orientated (Svenning, 2003). In practice, this difference can be very small
since it depends heavily on the researcher to control the interview. The objective
of both methods is to interview a few people around given subjects, where each
question and area is covered thoroughly before the interview goes on (Svenning,
2003).

Informal interviews are characterized by the fact that the conversation flows
freely, creating better access to comprehensive answers. To get the maximum
effect of this type of interview, the interviewer should be flexible, adapt to
responses and new topics or problems that are revealed during the interview. The
interview can be recorded in order to facilitate the interpretation of the replies
when the result of the interview is compiled. The interviewer can also take notes
during the interview, although these do not completely replace the tape recorder
in precision to reproduce questions and answers retrospectively (Svenning, 2003).

Who the researcher chooses to interview has a major impact on the outcome of
the interview. To get an accurate picture of a problem, it is therefore important
not only to interview key persons, who often have a personal responsibility for
problems, but also people with other viewpoints on the subject (Svenning, 2003).
15
Responses from the interview must be understood according to the role and
terms of reference of the interviewed person. In an informal interview it is
important that the researcher maintains a critical, analytical position. The
researcher’s main instrument to control the interview is to be active with follow-
up questions and thereby ensure that the interview is fairly deep, focuses on
relevant subjects and reduces the risk of misunderstandings (Svenning, 2003).

2.2.4 Observations
Observation methods are often assigned to observer-based or participatory
observations. Observer-based observations, often called systematic observations,
are based on listening and observing, while integration with the studied group is
subordinate. In an extreme observer-based observation, the observed is not even
aware that the observation is carried out (Svenning, 2003). Participatory
observations have a strong focus on integration, creating good conditions for
understanding. The risk of observers also participating in the work is that
objectivity may be impaired as a result of engagement in the task and friendship
with the other participants. Participatory observations are often considered as the
most effective, because the understanding of the problem is good. The
presumption for its efficiency is that the observer is careful with objectivity and
has respect for the observation group (Svenning, 2003).

2.2.5 Reliability and validity

The reliability in a study concerns the reliability in data collection and analysis by
taking the random variations in account. By reporting how a study is conducted,
the reader can assess the approach. Good reliability means that a reader who
makes the same study, with the same method and purpose should reach the same
conclusion as the read study (Höst, Regnell, & Runeson, 2006).

Validity concerns the connection between what was intended to be evaluated and
what was in fact evaluated. High validity means that there is a strong connection
between theory and the empirical part in a study. One way to increase the validity
in a study is to evaluate one object with several different methods (Höst, Regnell,
& Runeson, 2006).

16
2.3 Chosen work method
The study was based on the differences in conditions and methods that exist
between Swedish and Ethiopian construction project management. The general
workflow of the study is presented below.

2.3.1 Workflow

Start of study End of study

Identification of
Observations
Literature study Analysis success factors Result
and Interviews
and potential
improvements

2.3.2 Literature study

In the beginning of the study, a literature study was made to create a theoretical
background to the studied issue. The literature study included areas such as
construction projects, project management, process management, work and
business culture represented by nonfiction literature as educational journals,
scientific articles and company documentation. Relevant parts from the literature
study are presented in the theory chapter.

2.3.3 Approach
There are many theories and method systems available in the area of the studied
issue. Because of this, the study was made with a deductive approach, based on
PMI’s Project Management System. The complexity of the studied issue made the
qualitative methodological approach most suitable for the study. A quantitative
method was considered irrelevant in the analysis of the issue. The research was
made through observations on construction projects and interviews with key-
roles within the involved project organizations.

2.3.4 Empirical work

During the empirical work the author was present on the case company, both on a
project in Stockholm, Sweden and Gambela, Ethiopia. In the case study, focus was
on observation of the project team and review of project documents. Prioritized
documents in the review were general overall documentation of the project
management. Interviews were concentrated to key persons in the project
management team and were carried out as informal interviews, to gain a deep

17
understanding of the conditions and the studied issue. The following roles were
interviewed in both projects; project manager, production manager, controlling
manager and procurement manager. The interviews had the basic structure of the
template that is shown in appendix 1.

The primary objective with the empirical work was to understand the project’s
method of project management and to make an evaluation based on the 9
categories presented in the PMI’s Project Management System. The approach was
to make a comparing study between the Swedish and the Ethiopian project
management methods. The identified potential improvements were also
evaluated regarding priority and suitability for benchmarking against the
Swedish/Ethiopian operations.

2.3.5 Validity
The author’s close cooperation with the different project’s management team
created an open and honest information flow. The validity of the study concerns
the author’s ability to translate and convey the collected data correctly. Since the
data collection was made over quite a long period of time, the conditions were
good for the author to get a correct picture of the studied issue. The respondents
in the interviews were closely familiar with the studied areas. Together, these
factors contribute for the validity to be considered high in the study.

2.3.6 Method quality

The collected data through observations and interviews was influenced by the
author’s interpretation and view of the studied issue. The approach, based on the
PMI’s Project Management System, was consistent for both studied projects. The
choice of persons for interviews was made so that the same roles in the project
management team were represented in both studied projects. Notes were taken
during all interviews to minimize the risk of misunderstanding and make it
possible to control the answers during the analysis of the study. A new study in
the same area is not likely to reach the exact same conclusion, since the empirical
data was strongly connected to the studied projects.

2.4 The case company

Midroc Group, Mohammed International Development Research and
Organization Companies, consists of four main concerns and is owned by

18
Mohammed Al- Amoudi. Al- Amoudi is born in Ethiopia but now lives in Saudi and
has both Ethiopian and Saudi nationality.

Midroc
Group

Midroc Midroc Middle

Midroc Africa Midroc
Europe East
(Ethiopia) Petroleum
(Sweden) (Saudi)

Figure 1. General organizational structure of the Midroc Group.

The four concerns have many subsidiaries and together with the large number of
other companies owned by Al-Amoudi, there are a total of 70,000 employees in
the Midroc Group worldwide (Midroc). Midroc Petroleum’s main activities are
exploitation, refining and distribution in the oil business. The other three concerns
are mainly active within construction, Project Management, Project Development
and Property Investment.

Midroc Project Management, an affiliated company to Midroc Europe, includes

one unit that works exclusively with project export. The purpose of this unit is to
create opportunities for more efficient cooperation with the sister organizations
in Africa and The Middle East. From the platforms in Saudi and Ethiopia project
export are conducted to countries in The Middle East and Africa with big influence
of local labor. Project export mostly works with project management, engineering,
and local construction management. There is a great potential benefit with the
project export unit since it is a good concept for disseminating successful practices
and tools for project management to other departments and markets where
similar operations are conducted. The studied project in Ethiopia is owned by
SSAD, Saudi Star Agriculture Development, which also is included in the Midroc
Group.

19
20
3 Theory
3.1 Project
A project is a temporary endeavor with the objective to create a unique product
or service. It is temporary in the aspect that it has a definite beginning and a
definite end. The uniqueness with a project means that the provided service or
product is different from all other services and products (Briner, Hastings, &
Geddes, 1996). Many organizations use projects to response to requests that
cannot be handled within the normal organizational limits. The size and length of
a project can vary from one person to thousands and from a few weeks to more
than five years (PMBOK, 2004).

A project ends when the objective has been reached, or when it becomes clear
that the objective cannot be met, or if the need of the project no longer exists.
When a project is terminated, documentation of lessons learned is made to make
sure that the experiences drawn from the project can be used in future projects
(Antvik & Sjöholm, 2007). The fact that a project is temporary does not mean that
the result of the project also will be temporary. Most projects are undertaken to
create a long lasting result (PMBOK, 2004).

The result of a project is unique because the exact same service or product has
not been provided before. Even if the project is to develop a building that has
been done to similar buildings thousands of times, it will still be a unique result
since the conditions for each individual building is different from each other
(PMBOK, 2004).

A project generally consists of four chronological phases:

1. Initiation – The conditions are analyzed and the project’s objective is specified.

2. Planning – Plans and methods for the execution are developed.

3. Execution – The main work towards completion are done.

4. Closing – The project is evaluated and closed down. (Tonnquist, 2007)

To get efficient feedback from drawn experience, the work in each phase should
be evaluated as the project goes into the next phase. In the closing down phase it

21
is important that the work and result of the project as a total, is thoroughly
evaluated and documented in order to benefit future projects (Tonnquist, 2007).

There are a number of different project types that all have slightly different
characteristics. In general these project types can be divided into two categories;
external and internal projects. In an external project the customer, or project
sponsor, is outside the organization. These projects are often called delivery
projects and starts with the signing of legally binding agreement. The agreement
is drawn up between the customer and the supplier and it contains specific
definitions of what work the project includes (Antvik & Sjöholm, 2007). To
terminate or delay an external project the sponsor must be involved and financial
compensation can be necessary if the agreement have been breached by either
party. Internal projects have a customer within the organization and starts with a
decision from the own organization (Walker, 2007). Internal projects often
consists of development or change in work methods. These projects often have
milestones or decision points where the project is evaluated, and the organization
decides whether it will continue or be terminated (Antvik & Sjöholm, 2007).

3.2 Project Management

Project management is the work methods that are used to control and manage
activities in a project. Project management involves the application of knowledge,
skills, tools and techniques in project activities to meet the project objectives. All
management work is based on processes as: initiating, planning, executing,
controlling and closing (PMBOK, 2004). The project manager is an important role
in the project team. A project manager needs to have the right skills and personal
attributes, and most importantly the skill to be an effective leader, to carry out
the role (Antvik & Sjöholm, 2007). The main task for a project manager is to
integrate all activities and personnel in the project. As the integrator it is not
necessary that the project manager have expertise within all areas, more
important is the ability to bring out the other team members abilities and make
them work together as a team (Briner, Hastings, & Geddes, 1996).

An important part of the project management is to manage the stakeholders in

the project. A stakeholder can be an organization or a person with a will to
influence the outcome of a project and the power to make an impact on the
project (PMBOK, 2004). Stakeholder analysis should be carried out in an early
phase of the project, where stakeholders are identified and classified into key,
primary or secondary stakeholders. The classification is based on their potential

22
motivation and power to influence the outcome of the project (Antvik & Sjöholm,
2007). To develop an accurate and effective stakeholder analysis it is important
that all stakeholders are included and that measures are taken to limit the
potential negative impacts that are identified (Antvik & Sjöholm, 2007). It is
important to identify new stakeholders and address their needs continuously
throughout the project. Continuous stakeholder analysis also facilitates the
management of previous identified stakeholders as their needs and expectations
may change over time (Antvik & Sjöholm, 2007).

Many companies and organizations use a project management system to establish

consistent methods in their work. An integrated project management system also
facilitates the establishment of a certain level of professionalism in an
organization (IPMA). All areas and aspects of project management are included in
the developed systems. There are several different established systems on the
market; two of the most used are International Project Management Association,
IPMA, and Project Management Institute, PMI (Antvik & Sjöholm, 2007). These
systems are developed as handbooks including management activities that should
be conducted in a project, which can be used as a guide for the project
management team in order to ensure that all required plans and activities in the
project are handled (PMBOK, 2004).

3.2.1 Project Management Process Groups

There are five project management process groups required in any project. The
process groups have internal dependencies and are often iterated several times
before a project is completed. A process group involves project management
processes, which are linked together as the outcome of one process becomes the
input in another (PMBOK, 2004). The process groups are not to be considered as
chronological project phases that end when a part or section of the project is
completed. In large projects, with distinct phases or sub-projects, the process
groups are repeated in every phase of the project and there are continuously
interactions between the groups during the project (PMBOK, 2004). The five
process groups identified by PMI are described below;

 Initiating Process Group

 Planning Process Group
 Executing Process Group
 Monitoring and Controlling Process Group
 Closing Process Group

23
 Enterprise Project Initiator or
Environmental Sponsor
Factors

Initiating Process Group

Organizational
Process Assets

Planning Process Group

Executing Process Group

Monitoring and Controlling

Process Group

Closing Process Group

Customer

Figure 2. Adapted form of PMI’s identified interactions between Process Groups.

24
Initiation Process Group

The initiation of a new project is often done external to the project scope. The
decision to start initiation is based on basic descriptions of the scope,
deliverables, duration and forecasts of resources required. This documentation is
handled and further refined in the Initiation Process Group to facilitate the formal
authorization to start a new project. When initiating a phase in a large, multi-
phase project, the processes are carried out to validate assumptions and decisions
made in the original project charter (Gupta, Aha, Nau, & Munoz-Avila, 2008). The
project charter is developed by the project organization, but approval and funding
are handled externally. By reviewing the initiation process at the start of each new
phase or sub-project, the project remains focused and start criteria is verified for
each phase. The sub-project initiation processes also perform further validation
and development of the project scope (PMBOK, 2004).

Planning Process Group

The main concern in the Planning Process Group is to develop and manage the
project management plan. The planning processes include identifying, defining
and managing all parts of the project management plan. These processes are
continuously iterated as new information is discovered in order to keep the
project management plan updated (PMBOK, 2004). An updated project
management plan provides greater precision in schedule, cost and resource
requirements which increase the chances to meet the defined project scope. It is
important that the project team involves stakeholders, who often have useful
knowledge, in the project planning (Gupta, Aha, Nau, & Munoz-Avila, 2008).
Demands and requests by stakeholders must also be addressed as early as
possible in the planning processes. The importance of iterations in the Planning
Process Group is based on that many risks often are easier to identify after most
of the planning has been made. This means that the project team might have to
reconsider the planning concerning schedule, cost or resources with aspects of
new identified risks or opportunities (Gupta, Aha, Nau, & Munoz-Avila, 2008).

Executing Process Group

The Executing Process Group is the processes where the work defined in the
project management plan is executed. The process group involves coordination of
resources and integration of the activities according to the project management
plan (Walker, 2007). There is always a need for some re-planning in a project, due

25
to variances in activity duration, productivity etc. These changes in planning
should be analyzed and when needed trigger an update request in the project
management plan. Analysis of these types of changes is conducted by the
Monitoring and Controlling Process Group (PMBOK, 2004).

Monitoring and Controlling Process Group

The processes used to observe and control the project execution in order to
identify potential problems, and take corrective action, are included in the
Monitoring and Controlling Process Group (PMBOK, 2004). When the project’s
performance is observed and measured regularly, differences against the project
management plan is quickly identified. Identified problems or differences in the
project are investigated and can result in an update of the project management
plan. Through continuous monitoring the project team gain insight into the whole
project’s progress and areas that require additional attention are highlighted
(Guo-li, 2010).

Closing Process Group

The Closing Process Group includes the processes to formally close down all
activities of a project phase or an entire project. The processes also include
handing over the completed product or, if the project is terminated before
completion, close the project and handle the contract closure (Briner, Hastings, &
Geddes, 1996). When the Process Group is completed it verifies that all processes
are completed and establishes that the project or project phase is finished
(PMBOK, 2004).

26
3.2.2 Project Management Knowledge Areas

Project Management

1. Project Integration 2. Project Scope 3. Project Time

Management Management Management

1.1 Develop Project 2.1 Scope Planning 3.1 Activity Definition

Charter 2.2 Scope Definition 3.2 Activity Sequencing
1.2 Develop Preliminary 2.3 Create WBS 3.3 Activity Resource
Project Scope Statement 2.4 Scope verification Estimating
1.3 Develop Project 2.5 Scope Control 3.4 Activity Duration
Management Plan Estimating
1.4 Direct and Manage 3.5 Schedule
Project Execution Development
1.5 Monitor and Control 3.6 Schedule Control
Project Work
1.6 Integrated Change
Control
1.7 Close Project

4. Project Cost 5. Project Quality 6. Project Human

Management Management Resources Management

4.1 Cost Estimating 5.1 Quality Planning 6.1 Human Resource

4.2 Cost Budgeting 5.2 Perform Quality Planning
4.3 Cost Control Assurance 6.2 Acquire Project Team
5.3 Perform Quality 6.3 Develop Project Team
Control 6.4 Manage Project Team

7. Project 8. Project Risk 9. Project Procurement

Communications Management Management
Management
8.1 Risk Management 9.1 Plan Purchase and
7.1 Communications Planning Acquisitions
Planning 8.2 Risk Identification 9.2 Plan Contracting
7.2 Information 8.3 Qualitative Risk 9.3 Request Seller
Distribution Analysis Responses
7.3 Performance 8.4 Quantitative Risk 9.4 Select Sellers
Reporting Analysis 9.5 Contract
7.4 Manage 8.5 Risk Response Administration
Stakeholders Planning 9.6 Contract Closure
8.6 Risk Monitoring
and Control

Figure 3. Adapted form of PMI’s nine Project Management knowledge areas.

27
The PMI, Project Management Institute, has defined nine categories of project
management knowledge areas. In PMBOK (2004) these categories are described
in detail with inputs and outputs from each phase and process. Each of the nine
categories and their purpose are described below.

Project Integration Management

The project integration management is the processes that are used to coordinate
the various elements of the project. Prioritizing between competing objectives
and alternatives are an important task in the integration management. It consists
of develop project charter, develop preliminary project scope statement, develop
project management plan, direct and manage project execution, monitor and
control project work, integrated change control and close project (PMBOK, 2004).

A new project should always start with the development of a project charter. If
the project has an internal customer, the project charter is often developed as an
informal process. In projects with external customers the project charter
development is a much more formal process (Gupta, Aha, Nau, & Munoz-Avila,
2008). The project charter is an authorization of the project, as a result of a
customer request that need to be responded (PMBOK, 2004). Before starting up a
new project it is important to carry out a feasibility study. The cost for this study is
considerably less than the cost for starting up a project that then has to be closed
down because of problems identified at a later stage in the project (Antvik &
Sjöholm, 2007).

An important part of the planning process in a project is the development of a

project plan. The objective of the development of the project plan is to create a
consistent, coherent document that can be used to guide project execution and
control (Gupta, Aha, Nau, & Munoz-Avila, 2008). The plan should include general
plans regarding all areas of the project, such as; project objectives, time schedule,
budget, etc (PMBOK, 2004). The project plan is the main document developed in
the planning process and it is therefore very important to allocate sufficient
amount of time and resources for this process. A project with a poor developed
project plan is most likely to be poorly executed with high costs and delays as a
result (Antvik & Sjöholm, 2007). The integration between the different elements
of the plan is a complex process and is therefore often required to be iterated

28
several times in order to reach a complete and integrated project plan (Antvik &
Sjöholm, 2007).

No matter how well and accurate a project is planned, there will always be
problems, and factors that put the project at risk will always occur. In order to
maintain control and monitor the project effectively it is important that the
project team has a continuous insight to the health of the project (Briner,
Hastings, & Geddes, 1996). The monitor and control work can be carried out
through data collection, to identify trends of the project performance and to
make sure that special attention are given to required activities (Antvik &
Sjöholm, 2007). The main focus in monitor and control should be on comparing
actual project performance with the baseline defined in the project plan (PMBOK,
2004).

The complicity of a project, and the many factors that are involved, makes it
necessary for the project team to have an effective integrated control of changes
(Gupta, Aha, Nau, & Munoz-Avila, 2008). The integrated change control should
focus on influencing the factors that creates changes, determine that a change
has occurred and managing changes when and as they occur. The main objective
with integrated change control is to manage the performance baseline, either by
rejecting or accepting changes and revise the project baseline (PMBOK, 2004).
When changes occur at an early phase of the project it is not likely to be as
expensive as if it is implemented at a later stage. Late changes often lead to much
additional work, which makes the change much more expensive. This also
highlights the importance for the project team to influence the factors that
creates changes in the project (Antvik & Sjöholm, 2007).

Project Scope Management

Project scope management is a process to ensure that the project includes all the
work required, and excludes the work that is not required, to complete the
project successfully. It consists of five major processes; scope planning, scope
definition, create WBS, scope verification and scope control (PMBOK, 2004).

The importance of a well formulated scope of work has been shown several times
in many projects. It is not unusual that a project is rushed into start without the
proper planning and preparation. This often leads to problems for both suppliers
and customers as extra costs and delays are likely to occur (Antvik & Sjöholm,
2007). A clear project scope facilitates for the project organization to realize the

29
actual magnitude of the work and creates an understanding for the achievements
that are required in the project (Briner, Hastings, & Geddes, 1996).

Scope planning is the process of elaborating the work that is needed to deliver the
product of the project. It should be based on the product description and product
requirements from the customer (PMBOK, 2004). The scope planning includes
viewing different approaches to the project, in order to find the most suitable
method for the current situation. The outcome from the scope planning is the
scope management plan that mainly describes how the project scope will be
managed and how scope changes will be integrated into the project (Gupta, Aha,
Nau, & Munoz-Avila, 2008).

In the scope definition, the project’s major deliverables and conditions

documented in the scope statement are analyzed. The analysis should be based
on needs and expectations from stakeholders, and thereby generate
requirements of the project (Gupta, Aha, Nau, & Munoz-Avila, 2008). When more
specified requirements are known, the deliverables are subdivided into smaller,
more manageable groups, through the use of a Work Breakdown Structure, WBS.
By dividing major tasks into smaller work packages, the accuracy of cost, time and
resource estimates are improved. A WBS also makes it easier to assign clear
responsibility to each group of tasks, which is necessary in order for the project
organization to gain control of the project (Antvik & Sjöholm, 2007).

Scope verification is the work to obtain the stakeholders acceptance for the
project scope (Briner, Hastings, & Geddes, 1996). Deliverables and work results
must be reviewed to ensure that it is completed satisfactorily in order to keep a
good relationship with the customer (Walker, 2007). Scope verification differs
from quality control in that it is mainly concerned with the acceptance of the work
results, while quality control mainly focuses on the correctness of the work results
(PMBOK, 2004).

Project Time Management

Project time management includes all processes that are required to ensure a
timely completion of the project. Major processes in time management are
activity definition, activity sequencing, activity resource estimating, activity
duration estimating, schedule development and schedule control (PMBOK, 2004).

30
The time schedule is one of the most important plans in a project. The
development of time schedules should be based on the previously developed
WBS. The level of work in planning, monitoring and controlling schedules in a
project is often directly reflected in the execution and outcome of the project
(Antvik & Sjöholm, 2007). In order to develop realistic and achievable schedules, it
is important that activities are sequenced accurately. The activity sequencing
involves identifying logical relationships and dependencies between the project
activities (Guo-li, 2010).

The process of activity resource estimation involves determining what resources

and what quantity of each resource that will be used in the project. Required
resources can be personnel, equipment and material. This process also includes
determining when each resource will be available to the project (PMBOK, 2004).
There are in general two methods of resource estimation; top-down and bottom-
up. If the project has limited detailed information, the top-down method is often
used. It is carried out by the higher management of the project and is based on
experience from similar projects. The bottom-up method is also called qualitative
based estimations and involves each specific work category in the process. The
bottom-up method is more time consuming to perform, but often generates a
more accurate result (Guo-li, 2010).

The activity duration estimation should be based on the project scope, required
types of resources, estimated resource quantities and the availability of resources.
The result of the process is later used to develop schedules. To get an accurate
estimation of duration it should be carried out by a person or group who is
familiar with the specific activity (Antvik & Sjöholm, 2007).

The development of schedules is often carried out through the use of project
management software. If the previous estimations are made correctly the
schedule development mostly consists of aggregating the information into one
document (Antvik & Sjöholm, 2007). To develop an efficient schedule it is
important that the critical chain is identified and that the lags in the schedule is
used to allocate the projects resources effectively (PMBOK, 2004).

A time schedule without control is fairly useless to the project organization. The
control must be carried out regularly and relatively often in order to detect
deviations early. This makes it possible for the project team to take necessary
actions to avoid longer delays (Antvik & Sjöholm, 2007). The schedule control and

31
development must be an iterative process in order for the project team to have
updated schedules throughout the project (Guo-li, 2010).

Project Cost Management

Project cost management includes the processes of cost estimating, cost

budgeting and cost control. The main objective of cost management is to
complete the project within the approved budget (PMBOK, 2004).

The project budget is very important and influences all areas in both planning and
execution of a project. It is important to keep track of total costs as well as costs
for different work packages in a project (Guo-li, 2010). A professional developed
budget does not only control the project costs, but also creates good conditions
for development of a well functioning cash flow in the project. The consequence
of insufficient cash flow in a project is often connected to large extra costs and
delays as there is a high risk for a temporary stop of the whole project (Antvik &
Sjöholm, 2007).

The cost estimation should be based on the project scope, the WBS and be
connected to the project plan. To reach a correct estimation it is important that
each activity is estimated based on the conditions of the execution of the specific
activity. Since there often are several factors that are uncertain in a project, a
reserve cost can be assigned to activities with a low level of detailed information
or work packages with potential high financial risks (Adisa Olawale & Sun, 2010).

To gain financial control of the project it is important to carry out proper cost
control. The pre-calculated budget is the baseline of the financial aspects in the
project but it is only with an updated and accurate control of the costs that the
budget can be used effectively in a project (Antvik & Sjöholm, 2007). Cost control
should include comparison of planned value and actual cost of each work
package, but also include analysis of the earned value for the costs spent in the
project. A correct performed analysis of the current financial status is necessary in
order to develop forecasts of future, and final, costs of the project (Guo-li, 2010).

Project Quality Management

Project quality management involves all processes and activities in the project
organization to determine quality policies and control that the performed work is
of a satisfying quality. The major processes in quality management are quality
planning, quality assurance and quality control (PMBOK, 2004).
32
The project team must identify which quality standards that are relevant in the
project in order to perform quality control. The identified standards should be
considered the baseline in the development of a quality plan. It is important that
the quality plan not only consist of required levels of quality in different activities,
but also methods to achieve the requested quality (Wei & Yang, 2010).

The objective with quality control is to ensure that the quality plan is
implemented in the execution of the project and that established standards are
met. In order to perform quality control the project team must develop methods
to monitor and control specific activities of the project. It is important that the
implementation and control of the quality plan is carried out thoroughly, since the
quality plan otherwise will be of no use to the project organization (PMBOK,
2004).

Project Human Resources Management

Project human resources management is the processes used to ensure that the
project organization is established in a way that provides the project with good
conditions to succeed. Major processes in human resources management are
human resource planning, acquire project team, develop project team and
manage project team (PMBOK, 2004).

In the early phases of a project it is necessary for the project management to plan
how the project team should be organized and determine what roles that are
required (Al-Maghraby, 2008). Each role in the project team should be assigned
with areas of responsibility, authority and required competence (Antvik &
Sjöholm, 2007). It is important that a role with a defined area of responsibility also
has the authority to make decisions within that area. Responsibility without
authority makes it very hard for middle management to influence the work, which
most likely will affect the project negatively (Walker, 2007).

Staff changes, especially when key-roles are involved, often affect the project
negatively in aspects of time, cost and team development. The project
management should therefore strive to make as few changes as possible in key-
roles of the project team (Al-Maghraby, 2008).

Project Communications Management

Project communications management is the processes used to ensure that

required information is distributed to the right person at the right time. The major
33
processes in communications management are communications planning,
information distribution, performance reporting and manage stakeholders
(PMBOK, 2004).

How communication in a project is handled must be planned in order to perform

effective work and minimize the risks. A communication plan is necessary to
ensure that both internal and external project communication is carried out
effectively. The plan should contain details regarding what type of information
that need to be distributed, who needs to receive the information, the purpose of
the information, the frequency of the distribution and the responsible person to
issue the information (Ramsing, 2009). The communication plan should also
include what meetings are required within the project and a specification of
participants, purpose and frequency for each type of meeting (PMBOK, 2004).

It is important that the project management performs frequently progress

reports, mainly to inform clients and other stakeholders of the status of the
project but also for the management team to keep control of all areas of the
project. A progress report should focus on deviations from the project plan and
contain current status of the project, executed and planned actions, uncertainties
and forecasts regarding cost and time (Antvik & Sjöholm, 2007). When deviations
from the baseline are identified in the progress report, the management team
should include recommended corrective actions in order to bring the project in
line with the project plan (Ramsing, 2009).

Project Risk Management

The main objectives of project risk management is to increase the probability and
impact of events that are positive to the project and decrease the probability and
impact of events that are negative to the project. Risk management include risk
management planning, risk identification, qualitative risk analysis, quantitative
risk analysis, risk response planning and risk monitoring and control (PMBOK,
2004).

All projects have uncertainties that can either turn out to be an opportunity or a
risk. Uncertainties often occur in areas where the management has little
information of the current conditions. By effective management many
uncertainties can be evolved into an opportunity rather than a risk (Antvik &
Sjöholm, 2007). Risk analysis is often carried out early in a project when the
information is highly limited within several areas. To manage risks and

34
opportunities effectively, the analysis must be iterated throughout the project as
more and more information becomes clear to the management team (Kululanga
& Kuotcha, 2010).

The purpose of a risk analysis is to gain control of the uncertainties in the project.
When risks are identified it is therefore important that a strategy is developed in
order to response to the risk (PMBOK, 2004). A response strategy can be to
eliminate the probability or impact of a risk, or to accept the risk and calculate
with a potential extra cost if the risk occurs (Kululanga & Kuotcha, 2010). A
common, and effective, approach to analyze risks is to estimate the probability
and impact of a risk. The risk response is then based on the combined value of
each risk, which leads to a risk management where the response is in relation to
the magnitude of the risk (Briner, Hastings, & Geddes, 1996).

Project Procurement Management

Project procurement management is the processes to control and administrate

contracts and purchase orders from sources external to the project organization.
The major processes in procurement management are plan purchases and
acquisitions, plan contracting, request seller responses, select sellers, contract
administration and contract closure (PMBOK, 2004).

The planning of procurement management should be carried out early in the

project and focus on analysis of which products or services that need to be
purchased. After the initial planning, a procurement plan should be developed
that includes all major procurements that are needed in the project (PMBOK,
2004). The procurement plan is an important tool for efficient procurements
throughout the project. It should be developed based on the project´s WBS and
time schedule in order to include all procurements and to be timely integrated in
the project. The procurement plan includes budgeted cost and required finish
date for each procurement (Eriksson & Westerberg, 2011). Especially important is
the identification of procurements with a long lead time, since they have to be
initiated early. A poorly developed procurement plan, or the lack of one, is likely
to cause high procurement costs and in worst case even force the production to
be stopped (Antvik & Sjöholm, 2007).

In larger projects there are often a procurement manager assigned to control and
handle procurement activities. The procurement manager is responsible to plan
and execute purchases. An important part of the procurement manager’s work is

35
to evaluate quotes in order to achieve cost effective contractors (Eriksson &
Westerberg, 2011). To keep control of the cost forecasts in the project the
procurement manager must follow-up the actual cost in relation to budgeted cost
for each purchase (Antvik & Sjöholm, 2007).

3.3 Benchmarking
Benchmarking is a method of improvement by comparison. There are many ways
to implement benchmarking and the method can be applied in all parts of a
business. A big difference from traditional competitive analysis is that a good
completion of benchmarking not only results in which methods should be used,
but also provides an understanding of how these approaches and methods are
achieved (Camp, 1993).

There are different forms of benchmarking both in terms of what is compared,

and of who the comparison is made with:

Comparison of what?

 Performance benchmarking
Aims to determine the own company’s efficiency related to other
companies, through measurement of times, quality and financial key
figures.
 Process benchmarking
Compares methods and approaches in the own company with successful
companies, to develop more effective working processes.
 Strategic benchmarking
Focus on other companies’ strategic decisions, with the objective to
create an effective strategic plan in the own company.

Comparison with whom?

 Internal benchmarking
Means a comparison with a different department, subsidiary or country
within the same concern.
 Competitive benchmarking
Is a direct comparison against strong competing companies that produces
or provides the same product or service as the own company.

36
  Functional benchmarking
Compares functions or processes with non-competing companies in the
same line of business as the own company.
 Generic benchmarking
Means a comparison of the own company’s processes relative to the
absolute best process, regardless of which line of business it is used in.

(Andersen & Pettersen, 1997)

It is increasingly common for companies to carry out benchmarking that focus on

processes rather than performance. A process-orientated benchmarking focuses
on identifying new ways of working to increase the efficiency. The weakness of
performance benchmarking is that it is often provided as a status report, without
focus on how practices should be changed in order to develop the company
(Andersen & Pettersen, 1997).

There is a great potential to achieve a successful outcome in an internal

benchmarking, since the information is accurate and often readily available. In
large concerns it is common that some departments are better than others, which
creates a potential for improvement that is relatively easy to take advantage of. In
competitive benchmarking there is a risk that the shared information is not
entirely truthful or complete, which is devastating for the whole comparison. This
type of comparison often becomes superficial and overly focused on key figures
(Andersen & Pettersen, 1997). Information-sharing works better in functional
benchmarking in which the two companies do not compete but still have some
common areas where both are in need of development and increased efficiency.
The problem of functional benchmarking lies in finding a common area which is
suitable for comparison between the companies. Generic benchmarking has a
limited use and often requires a lot of work to identify a comparable process.
Once this is completed, however, there is a great potential for innovation and
development of new technologies and approaches (Andersen & Pettersen, 1997).

As a benchmarking process is carried out, a predetermined work model should be

followed. One example of a work model is presented in figure 4.

37
 Plan

Adapt Seek

Analyze Observe

Figure 4. Example of a benchmarking work model.

Plan – Choose and document the process that is subject for benchmarking and
identify measurement parameters.

Seek – Find suitable benchmarking partners.

Observe – Identify and understand the partner’s process, both in terms of

performance and practice.

Analyze – Identify differences in levels of performance, work methods and

conditions.

Adapt – Select which methods that are appropriate to transfer and adapt to the
own company’s conditions.

(Andersen & Pettersen, 1997)

3.4 Context
Ethiopia has a hierarchical society and is a democratic republic divided into nine
federal regions. Ethiopia is a poor country and many Ethiopians live under harsh
conditions. The country has a history of prolonged warfare against the bordering
countries of Eritrea and Somalia, which has further contributed to the poor living
standards of the Ethiopian population (NE). During the period of Haile Selassie as
emperor, many new private businesses started and the economy of the country
was on the rise. However, severe drought and widespread corruption resulted in
famine in the country. The Marxist regime that succeeded Selassie nationalized
many companies which later were bankrupted. The period of 1975-1991, when
the Marxist regime ruled Ethiopia, was a very difficult and poor time for the
38
country's population (Howard, 2010). Nowadays, the majority of the population
makes a livelihood in agriculture, but the agriculture industry is characterized by
outdated methods and low efficiency. The infrastructure in the country is of low
standard and in great need of expansion and maintenance, in order to create
conditions for development in other areas of the society (NE).

Since 1995, parliamentary elections are held every five years but due to
disturbances during the 2005 elections, when leaders of the opposition were
imprisoned, the democracy in Ethiopia has been challenged by several Western
countries (NE). The government recently introduced a new law that forbids
foreign aid to be used in work for development of democracy and human rights,
which caused several countries to cancel their assistance (Howard, 2010). Citizens
can be imprisoned for a long time without a trial verdict, if they are suspected for
a crime. Journalists who are deemed to have violated the censorship in political
articles can also be subject for imprisonment without trial. Since the introduction
of the present form of government in 1991, Ethiopia has a free market economy
(Howard, 2010).

Sweden is, in comparison with Ethiopia, a highly developed country. The living
standards of the Swedish citizens are high, with a well functioning healthcare and
a developed infrastructure. Sweden is a parliamentary democracy with a
ceremonial monarch. General elections are held every four years and there has
been public voting in general elections since 1919 (Everyculture). Sweden has not
been at war since 1814 and a reduction in military expenditure has been ongoing
since the end of the cold war. A big part of the Swedish population is working
within services, silviculture and manufacturing industry. The Swedish industry is in
general categorized by high developed methods and efficiency (Everyculture).

Ethiopian workers are in general more comfortable in situations with clearly

defined tasks and responsibilities than in situations without clear boundaries.
Keeping appointments and punctuality is valued in urban areas, but are not nearly
as important in the rural areas (Howard, 2010). The Ethiopian business culture is
characterized by risk aversion, which may be caused by the number of successful
entrepreneurs that through the years have been imprisoned on charges of
corruption. It is common with a certain mistrust between business people who
have not done business together before. There is a fear that verbal agreements
and promises will not be kept, which has caused cash transactions to dominate
over payment with credit card and checks, which are rarely used (Howard, 2010).

39
Ethiopian businessmen show more confidence in former partners and there is
often a long process before the same trust is built with new partners. Direct
corruption and bribery is rare, which if discovered could provide severe penalties.
Much more common is that one party requests some kind of personal favor after
a reached agreement (Howard, 2010). Courtesy is applied in all business situations
and negotiations take place without raised voices, with maintained respect to the
other party. Diplomacy is valued over directness when an opinion is presented in
a discussion. To direct present a deviant opinion in a discussion can be considered
disrespectful or even rude (Howard, 2010). Leadership in Ethiopian organizations
is often very hierarchically and the management team is expected to have the
most knowledge and take decisions without consulting sub-ordinates in all
situations (Howard, 2010).

Most Swedish workers are more comfortable when they get responsibility for the
task or area they are working with. The knowledge of the workers are highly
respected in many companies and this often results in discussions between
workers and managers in order to reach the most suitable way of solving a
problem (Culture). Decisions are often made in consensus with a close
corporation between the managers and workers. The company organization in
Sweden is often flat, with a short social distance between managers and sub-
ordinates (Culture). Punctuality is of great importance in Swedish business
culture. A late arrival to a meeting is considered very rude and disrespectful to the
other participants. A direct speaking, with clear opinions which is backed up by
empirical evidence, is respected in meetings and discussions (Culture).

Business partners in Sweden are to some extent chosen by previous experiences

of corporation with a certain person or company. Facts and references from
previous work can, however, gain a lot of respect and trust to a new business
relation (Culture). Many business relations in Sweden are built on trust and
payments are usually carried out through invoices that are paid after delivery.
Cash payment is hardly ever used in businesses between companies (Culture).

In recent years, several construction and civil works projects have started in
Ethiopia. It is difficult for domestic construction companies to compete in
contracts for large projects, mostly because of their inexperience but also because
many domestic companies lack the capacity for large projects. A further difficulty
for domestic companies is that they do not meet the preliminary requirements
placed on contractors in projects financed by the World Bank and African

40
Development Bank (EBDSN). As a result, almost all major projects, particularly in
civil works, are signed to foreign contractors. Some domestic construction
companies solve this problem by working with major international companies, as
sub-contractors, in large projects (EBDSN).

Sweden has a long tradition of successful construction companies, both domestic

and in the international market. The Swedish construction industry has therefore
a big majority of domestic companies. There is a limited import of material and
machinery in Swedish construction projects. Problems concerning import and
customs are rare, but an international procurement often involves a long time of
delivery (Boverket, 2005).

Ethiopia’s largest domestic construction company is Midroc Construction Ethiopia,

which is a subsidiary within the internationally established Midroc Group. The
owner of Midroc, Mohammed Al-Amoudi, is half Ethiopian and devotes
substantial resources for both development and sponsorship to build the
Ethiopian society. Because of Midroc's internationally extensive business, the
company is able to compete for contracts of big Ethiopian projects (EBDSN). Many
construction companies are experiencing problems with importing materials to
Ethiopia. There are sanctions of duties and taxes on imports of machinery and
equipment to the country, but a tedious customs administration often cause
delays in construction projects (EBDSN)

Major contextual differences between Sweden and Ethiopia are compiled in table
1 below;

Ethiopia Sweden
Low developed country High developed country
Poverty High living standards
Hierarchically organizations Flat organizations
Diplomacy in discussions Direct speaking in discussions
Inexperienced construction companies Tradition of successful construction companies
Questioned democracy

Tablel 1. Contextual differences between Sweden and Ethiopia.

41
42
4 Empiricism

4.1 Sweden
4.1.1 Context
The Swedish society is well developed in general, with a very high (0,95) Human
Development Index. The HDI is based on life expectancy, education and GDP,
which makes it a good measurement of a country’s development status (Nat).

The Swedish construction industry has many performing organizations and a

strong financial influence on other parts of the society. The construction industry
consists of a few companies that have a large share of the total market, and a
large number of smaller companies with less than 20 employees. The majority of
the companies in the Swedish construction industry have Swedish managers and
Swedish labor. The industry has a strong focus on efficiency, energy-efficient
buildings, safety and environment.

The government controls the construction industry with laws and restrictions that
regulates construction quality, environmental influence, worker conditions etc.
These restrictions and guidelines, together with well organized and developed
construction companies, have contributed to a high standard in Swedish
infrastructure and buildings.

In general there is a high level of knowledge and education amongst the people
that work in the Swedish construction industry, and the employees have a
relatively high salary. Construction managers use computerized tools to facilitate
planning and managing of projects. The production workers are well equipped
with electric hand-tools and laser measuring devices to make their work as
efficient as possible. Construction companies usually have good conditions to
make relatively large profits in most projects.

Most companies have a flat organization where the sub-managers are responsible
for their own unit. The company culture differs a bit in different companies, but in
general there is an open relation between managers and sub-ordinates.

43
The studied project

The studied project is a reconstruction of an office building located in central

Stockholm. The building is five stories and the project includes reconstruction on
every floor, without changing the framework and facade. The total time for
execution of the project is one year. The location of the project means short
transportations of material but also logistic problems due to lack of space for
establishment and material stock on site. The project was in the final stage with
only limited production left during the study.

Midroc Project Management is an organization that exclusively works with project

management. The organization has no construction workers employed, but uses
sub-contractors with construction workers for each individual project. MPM
usually work as an EPC-contractor with a cost plus-contract.

4.1.2 Project Management

Figure 5. Overview of MPM’s Project Management System.

44
Midroc Project Management AB has a computerized system for management in
construction projects. The project management system consists of four phases in
the construction process, with PMI’s 9 knowledge areas integrated in the system.
The four phases of the construction process are described with general actions
and checklists to facilitate the elaboration of required plans and documents. Each
phase is broken-down into smaller processes that are described with; inputs -
tools and techniques – outputs. The system allocates a clear responsibility for the
outputs of each process to a specific role or person in the project team. The
project management system also consists of templates for plans and documents
that are required in the project.

4.1.2.1 The four phases

Handing
Analysis Design Production
over

Figure 6. The four major phases in MPM Project Management System.

The four phases all include different activities and deliveries of the project. The
analysis phase involves the establishment of a project plan that includes
descriptions, blueprints, schedules, cost budgets, risk analysis and reference
objects. Templates are used in the establishment to ensure that all parameters
are included. Throughout the analysis phase focus is on feasibility, market, risks
and financial parameters.

The three remaining phases all consists of the sub-phases; initiating, planning,
execution and control and closing. In the design phase focus is on establishing
correct blueprints with the required level of detail, in order to carry out the
production successfully. The design phase is an iterative process that includes the
project management team, the client and external experts. The design leader is
responsible for the design phase to be planned and executed according to the
project manager’s directives.

During the production phase, the main focus is on coordination of the production
work and ensuring that schedules, quality, cost and risks are handled according to
the plans established in the project plan. The production leader is responsible for

45
the production phase to be planned and executed according to the project
manager’s directives.

The handing over phase includes planning and execution of final inspection and
functional testing of the building. It also involves to compile and handing over
documents, as final blueprints and inspection report, to the client and authorities.
The handing over phase ends with an evaluation of the own organization’s
performance throughout the whole project.

4.1.2.2 The nine knowledge areas

Midroc Project Management’s work methods are described below. The
investigation was based on PMI’s nine knowledge areas and how the activities in
each area of knowledge are carried out in MPM projects. The information was
gathered through reviewing the Midroc Project Management System, interviews
and observations on the construction site.

Integration

For each new project, MPM establishes a project plan. The project plan is the
general managing document for the execution of the project. The extent and
detail of the project plan varies with the complexity and size of the project. To
ensure the quality of the project plan, it is based on a template with the minimum
required contents. The project plan includes a briefing of the conditions and
documents from which the project originates. It also includes plans and
documents for project scope, time, cost, quality, human resources,
communication, risk and procurement. In the early phase of a new project the
plans and schedules are focused on general descriptions, and are further detailed
later in the project. The project plan is established by the project team, lead by
the responsible project manager. Before the project goes into the next phase, the
project plan is reviewed and approved by the regional manager.

In MPM projects there are no standard routine for stakeholder analysis.

Experienced problems regarding permissions from authorities, requests from the
client and current and future tenants caused delays and increased the cost in the
studied project. The strongly influential external stakeholders in the project also
affected large parts of the project planning and production progress by
unexpected demands and requests.

46
To control and develop internal work methods every project compiles a project
control report in time of production start. After the production has started, a new
report is compiled every six months. The report is always made by a person who is
external to the project. The purpose of the report is to ensure that established
management system, work methods, regulating documents and templates are
used in current projects. The report is also made to identify potential
improvements in the management system and current work methods. The project
control report reviews all project documentation and determines whether plans
and regulating documents are applied in the project. The result of the review is
reported to the company management.

Scope

MPM define the project scope through identifying appropriate phases for the
project and determining the required outcome of each phase. The most suitable
way to break down the project into smaller work packages and deliverables are
investigated. This is made as a WBS which is later used in the development of time
schedules and budgets. The project scope is developed with a close contact
between the client and the performing organization.

In a few projects there have been problems with defining a distinct project scope
at an early stage of the project. These problems are primarily due to insufficient
contact with, or obscurity from, the client and future tenants of the building. In
the studied project the scope was distinctly defined, but not consistent with the
building’s actual design. This gap between documents and reality was caused by
access restrictions, made by the current tenants of the building, during the project
planning.

Time

A number of schedules are established in a MPM project; project schedule,

procurement schedule, design schedule, production schedule and a detailed
schedule over the current situation in the production. One person in the project
team is responsible for each schedule and the project manager is overall
responsible for the development of schedules. All schedules are developed
through the same method and include the same phases. MPM uses a
computerized aid, MS-Project, to facilitate the development and control of time
schedules. All schedules are usually assembled in one MS-Project document,

47
which requires a certain level of computer skills amongst the employees to be
able to view and print one specific schedule or part of schedule.

Define Determine Assess Estimate Develop Schedule

activities sequence resource duration schedule control

Figure 7. The phases of MPM Project Time Management.

To define the activities, the WBS is broken-down into a detailed activity list. The
activities are then properly sequenced with internal dependencies. The
dependencies are used to ensure that the schedule can handle that one particular
activity has to be finished before the next can begin. After resources have been
assessed and duration for each activity has been estimated, the schedule is
developed. The schedule development is based on the previously completed
phases. During the execution of the project, controls are made to manage the
schedule. The most important part of the controls is the comparison of the
schedule against the actual time spent in the project. Control of production
schedule is made on a weekly basis.

In MPM projects, the regional manager has a high ambition in development of

schedules. The computerized aid, MS-Project, has a number of functions that can
be used to facilitate the schedule control during the execution of the project. In
many projects however, these functions are not used which makes the schedule
less effective when it comes to comparison and control against actual spent time.
The required level of computer skills to fully be able to use MS-Project is in
general not met by the actual level of computer skills amongst the employees.

Cost

Cost management in MPM consists of calculation, budgeting and control. In the

start phase of the project the costs were calculated, based on a template for the
project account plan and the project’s WBS. The calculation generates a project
budget which includes all costs in the project. Cost control is carried out through
the use of a template and includes program changes and relocations as well as
forecasts and reports of project costs. Program changes are monitored
continuously throughout the project. Relocation of costs is made to make sure
that costs are correctly located in the budget, according to which activity that
48
carried the actual cost in the project. The cost forecasts are based on
performance reports that include information concerning spent costs in relation
to completed work. Cost control reports are distributed continuously both
internal and to the client.

The template for cost control works very well and allows the project manager to
have good control of the costs in the project. Since the template is advanced, it
sets high demands on the user to input correct data. The project manager is
responsible for the cost control reports and ensures that the reports are
distributed to the right people in- and outside the organization. The review of the
reports is focused on activities that deviate from the cost budget. Cost control
reports are made monthly or more often if the client specifically requests it.

Quality

In the studied project, a plan was developed regarding quality, safety, health and
environment, which all are subordinate to the project plan. The quality plan was
developed early in the project and is based on a template, to make sure that all
required parameters and documents are included. The project manager is
responsible for developing the plan, which is used as a guiding document
throughout the execution of the project. The plan also consists of a number of
required controls that need to be executed during the project. It is developed
according to ISO standards in environment, quality and guidelines to quality plans.
To handle safety and health in the project, the plan includes lists of activities with
potential risks for the executing workers.

Human Resources

Human resources management in the project consists of three different activities;

organizational planning, staff acquisition and team development. The
organizational planning involves determining which roles that is required in the
project. When a list of roles is developed, every role is assigned with areas of
responsibility that includes which decisions every role is responsible for. The staff
acquisition is about investigating what competence and other demands that are
required for each role. Appropriate persons are then assigned to the roles in the
organization plan. The project manager is responsible for team development in
order to determine common goals and methods, and to create a good work
environment, within the project team.

49
In MPM’s management system every project role is described with general tasks
and responsibilities. The project organization has an appropriate level of
responsibility for each team member. The sub-managers can make decisions
without consulting the project manager which makes the work efficient. Instead
of consulting in every decision, the project manager is informed of the recent
performed activities on a weekly basis. It is of great importance that the members
of the project team stays in the project throughout the project execution. In
projects where key persons have been replaced during a critical phase, the
projects suffered losses in time, cost and future efficiency.

Communications

The formal communications in the project are mostly carried out through
meetings between different parties of the project. The ways of communication
and frequency of meetings are regulated in a communication plan that is
developed at an early stage in the project. There are three categories of meetings
which all involves different people and handles different issues. All meetings have
records that are based on a general template, which might be adjusted to a
current issue. Each meeting category has a predefined list of participants and a
distribution list of the meeting record. The three meeting categories are;

A – Meeting between the project manager and the client, where the project
manager reports the current status and issues in the project. The client makes
decisions regarding project principles and program issues. Decisions regarding
issues from B-meetings are also made by the client. A-meetings are usually held
monthly, but can be held more often if the project is in an intense phase.

B – Meeting between the design manager and the design consults. Design
activities are coordinated and remaining tasks are allocated to the appropriate
consult. Decisions are made regarding issues from C-meetings. B-meetings are
usually held monthly.

C – Is a non-decision making meeting where different technical issues and

coordination of the production is discussed. The meetings are usually held once a
week or when an issue needs to be discussed. Participants on these meetings
vary, but the production leader and sub-contractors usually participate.

Every month a project status report is consolidated by the project manager. The
status report is based on information from middle managers regarding current

50
status in design, production, procurement, cost and time. The report is distributed
to internal managers, clients and other stakeholders of the project. The
communication in the project works well with an honest approach to reports and
forecasts regarding time schedules and cost control.

Risk

A risk analysis was carried out during the early phase in the project. Potential risks
in the project are identified and evaluated regarding the probability that the risk
occurs and the consequence of it. Each identified risk is graded from 0-10 in both
probability and consequence. The grade places the risk in a matrix where the risks
with high probability and/or severe consequences are highlighted and in need of
an action plan. MPM’s ambition is that an action plan for a risk is proportional to
the probability and consequence of the risk. A template is used to grade and
document identified risks in the project.

In the studied project a general extra cost were added to the budget for minor
unexpected risks. When larger risks are identified a more extensive analysis are
made, which often results in two budget alternatives. The first alternative
includes the risk activity and is therefore more expensive, and in the second
alternative the activity is excluded from the contract. The risk analysis in the
studied project underestimated the magnitude of risks, which caused delays and
therefore increased the cost of the project. The risk analysis was made in the
beginning of the project and is not properly managed and continuously iterated
throughout the entire project time.

Procurement

Project procurement is carried out by the procurement manager in general.

Procurement of large or critical sub-contractors is supported by MPM’s
procurement department.

Plan Plan Request Choose Contract Contract

procurement requests quotes contractor administration closeout

Figure 8. The phases of MPM Project Procurement Management.

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The procurement plan is developed based on the project plan and sub-ordinate
plans as schedule, budget, risk analysis and the project’s WBS. The procurement
plan involves analysis where critical procurements, in aspects of long lead times,
extensive volumes and technical advanced contracts, are identified. The
procurement plan also includes identifying appropriate procurement forms for
each contract. A template is used in the development of the procurement plan to
ensure that all aspects of each contract are included.

The request planning is based on templates for each type of contract request and
specific selection criterions are identified when necessary. Before requesting a
quote, it is defined which contractors that should be requested. Competitive
tendering is always applied in procurement of contractors. MPM’s ambition is to
request quotes from at least one contractor that has not been procured in any
previous project. Tender evaluation is based on a template with selection criterion
that is adjusted to each contract.

To choose contractor, each tender is evaluated according to the predefined

selection criterion. After the first evaluation the 2-3 lowest tenders are chosen to
be reviewed in more detail. To ensure that the tender includes all required
activities, it is also reviewed by the production leader before a contract proposal
is sent out. The contract is based on a template and adjusted to the specific
contractor. When the contract is signed, the production leader takes over the
responsibility to manage the contractor during the execution of the contract. All
documentation concerning the contract is archived in case of a future dispute.
When the contract is closed out a formal confirmation is sent to the contractor. If
the project team for some reason wants to cancel the contract before the delivery
is complete, MPM’s procurement department is always contacted for
consultation.

MPM’s project teams focus strongly on achieving successful procurements. In

most projects the actual procurement cost is less than the budgeted cost, which
increases the profit of the project. The methods of procurement are well
functioning and well implemented in MPM’s work methods.

52
4.2 Ethiopia
4.2.1 Context
The Ethiopian society is not highly developed and the country’s HDI is 0,42 which
is considered low (Nat). The Ethiopian construction industry has a widespread
problem concerning cash flow in projects. As a consequence of this problem,
there are a lot of half-finished buildings that are on hold until the owner manages
to finance further production. Due to the cash flow instability in projects, many
sub-contractors and suppliers demand cash or check payment in advance to
performed work or delivery.

In the Ethiopian construction industry, a big part of the labor and managers have
insufficient knowledge and skills within the construction area which often causes
delays and low performing quality. There are a large number of labors in projects,
but old-fashioned work methods and outdated tools often make the efficiency in
production low. The history of long communism governance is shown in the
morale of many workers, both in poor work efficiency and in the high rate of
absence that many projects suffer. A large part of the material and machines that
are used in the construction industry must be imported to Ethiopia since the
domestic manufacturing is highly limited. Import is often time consuming because
of tedious customs administration and long transports on low standard roads.

Ethiopia is one of the few African countries that never have been colonized, which
many Ethiopians are very proud of. This fact, however, has the consequence of
lack of influence from developed countries which has made the Ethiopian
development slow and with overall lower standards than many other African
countries. Many Ethiopians are very proud of the country’s history and have the
opinion that there is no need for other countries to influence the Ethiopian
industry and development. Expatriates that are involved in Ethiopian construction
projects are therefore often treated with a certain level of skepticism.

The studied project

The studied project involves constructing a 10,000 ha rice field in Gambela region,
located in the southwest of Ethiopia. It also includes construction of a rice factory,
five farm centers and camps on site for employees working in the project. The
project is the first of a planned total construction of 200,000 ha rice fields. The
time for execution of the first project is approximately five years. Because of the
extent and location of the project, there is a very long mobilization period. The
53
project has been ongoing for one and a half year and is currently still in the
mobilization phase.

In the area of the studied project there are contradictions between different
ethnical groups. The major contradiction with a long history is between
lowlanders and highlanders. The Gambela area, where the project is located, is in
the lowland with poorly developed cities and villages. Projects in this area are
often influenced by higher educated highlanders who come there to work. As late
as a couple of years ago there was a violent outburst where many highlanders in
this area were killed by lowlanders. This contradiction can of course lead to
problems when a construction project starts in this area. Several different ethnical
groups are represented in the project organization, which also can cause
difficulties in communication and integration in the project management.

The location of the project create problems since generators have to be used for
electricity and all material and machines must be transported a long way to reach
the construction site. A new concrete batching plant also have to be constructed
in order to execute all the concrete works. The climate in the area where the
project is located also creates a problem since there is a five months long rain
period stretching from June to October. During this period in 2010 all major work
in the project was stopped due to unworkable conditions.

The owner of the studied project, Saudi Star Agriculture Development, is

specialized in agriculture projects. SSAD carries out projects as an EPC-contractor
where they employ their own managers for certain parts of the project and uses
sub-contractors for others.

4.2.2 Project Management

SSAD’s work methods are described below. The investigation was based on PMI’s
nine knowledge areas and how the activities in each area of knowledge are
carried out in the studied SSAD project. The information was gathered through
interviews and observations on the construction site.

SSAD does not have an implemented Management System to control the project
management. Guidelines and work methods for different activities and phases in
the project are developed gradually by the program director as the project goes
on. The managers for the different areas largely base their work structure on their
individual experience, without applying an overall management system that
includes the whole project. There is a resistance, within the higher management,

54
to implement new methods and structures in the project management activities.
Implementation of plans and guiding documents is not prioritized and in many
cases considered superfluous.

Integration

The project plan in the studied project is under development, but not completed
and therefore not implemented in the project management. The project plan
includes a briefing of the conditions and documents from which the project
originates. It also includes plans and documents for project scope, time, cost,
quality, human resources, communication, risk and procurement. The project has
been ongoing for one and a half years without an implemented project plan,
which has caused an overall insufficient planning and control of the project.

Since the project plan is developed late in the project, and due to the lack of
planning and control that the project suffers, some parts of the plan are already
outdated. The basic guidelines and documents in the project plan are adequate
but not implemented in the project management.

The general issue that is related to many of the perceived problems is the lack of
planning in the project. The production started long before the required plans and
organization was established, which has made it even harder to implement
structure and control in the project management retrospectively.

A very extensive and professional feasibility study was made eight months into
the project. The report includes guidelines and conditions concerning all aspects
of the project management that needs to be addressed. Implementation of the
result of the feasibility report is, however, not conducted.

Scope

The scope of work included in the project is defined by identifying appropriate

phases and required deliverables of the project. The activities included in the
project are then identified by a WBS where major deliverables are broken down
into smaller and more manageable work packages and deliverables. The WBS is
later used in the development of time schedules. The project scope of the studied
project was developed after the production started which caused confusion in the
early stage and also caused a late development of time schedules.

55
Since the project is internal, with SSAD both as client and as the EPC-contractor,
the total scope of the project is quite clear. A problem is, however, that the higher
management shows a lack of comprehension to the extensive work the project
means. This fact causes problem in all aspects of the project management and
particularly in time and cost management. There is also a clear problem regarding
demarcation in scope of work for sub-contractors. This causes confusion and
creates problems in areas where several different contractors are involved. The
coordinating management of sub-contractors is weak, which partially is a
consequence of the sub-contractors vague scope.

Time

The time schedules established in the project are; project schedule, design
schedule and production schedule. The development of schedules are made by
the planning manager and approved by the project manager. The computerized
aid, PrimaVera, is used to facilitate the development of schedules.

Define Determine Estimate Develop Schedule

activities sequence duration schedule control

Figure 9. The phases of SSAD Project Time Management.

To define the activities, the WBS is broken-down into a detailed activity list. The
activities are then properly sequenced with internal dependencies. The
dependencies are used to ensure that the schedule can handle that one particular
activity has to be finished before the next can begin. When the duration for each
activity has been estimated, the schedule is developed. The schedule
development is based on the previously completed phases.

The schedule control that is supposed to manage the schedules during the
execution is not carried out, which has made comparison between schedule and
actual performed work impossible. The current schedules in the project are not
updated and since the project currently is close to 6 months delayed, the
schedules need to be updated in order to carry out proper time management and
schedule control.

The original schedules were developed after the project had started which caused
inefficient production in the beginning. Although the original schedules were

56
professional and accurate developed, the lack of schedule control and general
planning caused a large delay in the project. The rain period, which stretches from
June to October, was not included in the time schedule, which caused even
further delays.

A problem regarding time management is that many sub-contractors and some

internal managers underestimates the time it takes to complete a contract, or
part of contract. This means that higher management receives inaccurate
information which impairs the time planning even further. The reason for
inaccurate time schedules is also often caused by predetermined finish dates by
the higher management. This means that time managers and middle managers
are forced to cut time in the schedules which results in time schedules that are
impossible to meet.

Cost

The studied project has no integrated project budget. After the production started
a rough estimation of the total cost was made in order to be granted bank loans.
This estimation is however not detailed calculated and it is not implemented in
the project management. Funds to the project are assigned through requests to
the owner, without control of progress or forecasts in the project.

Since there is no integrated budget, it is impossible to conduct cost control and

procurement against budget. The lack of budget means that there is no
knowledge in the project management organization, of how much funds the
project needs to be completed. There is no cost control independent from budget,
which means that the project management organization has no exact knowledge
of where in the project the used funds have been spent. A project cost center
structure is developed, but it is not implemented in the cost control management.

Quality

In the studied project a plan is developed regarding quality, safety, health and
environment. The quality plan is used as a guideline for the sub-contractor, who is
responsible for surveillance and quality control. There is, however, no control
from the project management organization that the guideline is followed and
implemented in the sub-contractors work.

The safety, health and environmental plans are developed, in which a very
extensive study regarding the environmental impact of the project is included.
57
The plans are documented but not yet implemented in the overall project
management.

Human Resources

There is a very extensive organization connected to the studied project. The

organization chart is detailed and clear on how the organization is structured. The
structure of responsibilities and authorities for the different roles in the
organization is however not that clear. Middle management has very little
authority to make decisions which affects the project progress negatively. The
lack of assignment of responsibility in some areas of the organization also creates
confusion and decreases the efficiency in the project.

The project in general is highly controlled from the top of the organization. Middle
management is forced to verify and establish close to all decisions with the top
management, which makes the efficiency low and the progress in the project
slow. The staff acquisition in the project organization has in some cases caused
that persons with insufficient knowledge and skills in the area of construction
projects have been assigned to key-roles.

The project organization has suffered many restructurings, both through

personnel who have been replaced and through personnel who have been
assigned to new roles in the organization. Some roles have remained vacant for
several months during restructurings. These restructurings, especially when key-
roles are involved, have highly affected the project regarding progress and
planning for future activities. One of the reasons to the overall lack of planning
and control management in the project is the shortage of educated personnel in
the management team.

Communication

The studied project does not have an implemented communication plan and
distribution of information is not working well. A first draft to the communication
plan has been developed, but it is not ready to be implemented as a guiding
document in the project management. The lack of a plan for how the
communication is to be carried out is clear, which causes confusion and much
information never reaches out to the responsible person or others involved in the
issue. Much information also seems to be kept from distribution in order for the
higher management to be in individual control of the project.

58
Reports regarding progress and schedule forecasts from the production
organization to higher management are often not completely accurate. If the
production is way behind in progress, this information is in some cases withheld
and an inaccurate report is sent to the project manager.

Meetings between managers in the performing organization and the higher

management are not held on a regular basis and these meetings are, in the
current situation in the project, held very seldom. The reason for this lack of
frequent meetings is not clear, but the large distance between the site location
and the office may have an influence. Frequent production meetings are not held
which has caused confusion regarding production progress, prioritized activities
and coordination of sub-contractors. A large reason for the confused situation in
the production organization is that the role of the production manager currently is
vacant.

A status report for the project is consolidated by the project manager every
month. The status report includes current status and information regarding
progress, design, procurement, time, schedules, cost and production. The report
is distributed to the client and internal managers. The last three months however,
no status report has been consolidated due to production stop during rain period
and a period when the project suffered from shortage of funds.

Risk

A risk analysis was developed early in the project. The risk analysis is rough and
the identified risks are not classified regarding probability and consequence of the
possible outcomes. Each identified risk is assigned with rough mitigation
measures. The risk analysis is not implemented in the project management and
several of the early identified risks have occurred, with a big impact on the
project, since the proposed mitigation measures never were executed.

A detailed risk analysis with aspects to existing local villages and possible new
settlements in the area of the project is under development. The analysis consists
of all identified risks that the project can cause to nearby settlements. The risks
are classified from 1-5 in both probability and consequence of the possible
outcome. Mitigating measures are investigated in proportion to the classification
of each risk. The risk analysis is not yet completed and therefore not implemented
in the project management.

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Procurement

The studied project has no developed procurement plan, mainly as a consequence

of inadequate, and lack of, updated time schedules and budgets. Procurement in
the project is carried out through a purchase request from the production
organization to the procurement manager. The methods of procurement
management has big weaknesses and the lack of planning often causes problems
in the production when material, machines and parts are delivered too late or not
at all.

Procurement of sub-contractors is not carried out by the procurement manager.

Most of the sub-contractors are procured by higher management that has a direct
contact with the manager of the sub-contractor. Since the production and
procurement managers have very limited influence and control regarding
procurement of sub-contractors, the control and coordination of sub-contractors
are weak.

The weakness in the procurement methods is partially caused by insufficient

planning, or lack of planning, but also by shortage of funds in the project. The
shortage of funds has limited the production largely and even forced the
management to stop the whole project for a period. The reason for the situation
with shortage of funds is unclear, but decisions regarding this matter are on a
company strategic level.

Very large procurements in the studied project were made several years before
the machines are to be used in the production. The reasons for these timely
inaccurate procurements are unclear, but the lack of a procurement plan is
certainly one of them. The large procurements that were made too early highly
increased the cash flow problem in the project.

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5 Analysis

The analysis consists of identified and evaluated strengths and potential

improvements in the Swedish and Ethiopian operations. Areas that are suitable
for benchmarking were also identified. Focus in the analysis was on potential
improvements that should be prioritized to start with in order to develop work
methods and create efficient projects. The context regarding culture and general
conditions is strongly connected to the way a project is managed in both
countries. These factors were also in consideration throughout the analysis. The
analysis was based on previously presented empiricism and theory.

5.1 Sweden
The Swedish society is highly developed in general which also means that the
construction industry use well developed methods. Improvements that can be
identified in the Swedish project management methods are therefore few and
often involve details rather than extensive organizational changes.

Swedish organizations are according to (culture) often flat with balanced authority
and responsibility assigned to middle managers. With required authority assigned
to middle managers, the project organization has good conditions to be effective
and processes that require decision-taking is less time consuming than in a top
managed organization.

Many Swedish organizations have an integrated project management system,

which creates consistent work methods and facilitates the project control for the
management team. The management system, according to IPMA (2010), also
ensures that required planning and documents are handled before the project
execution starts.

The methods for project control are highly developed in general, but the actual
level of control in projects is often limited by the computer skills of the personnel.
Control methods are according to Antvik & Sjöholm (2007) important in order for
the developed plans to be effective throughout the project.

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The identified strengths and improvements in Swedish project management are
compiled in table 2 below;

Strengths Improvements
Project Management System Time – schedule control
Human Resources – authority/responsibility Stakeholder analysis
Procurement – procurement plan Risk – analysis
Cost – control Human Resources – staff changes
Communication – project status report

Table 2. Strengths and improvements in Swedish project management.

5.1.1 Strengths
Project Management System

The Swedish case company, Midroc Project Management, has a well integrated
and developed management system. The management system has established a
consistency in the work methods of all MPM projects and facilitates the general
control of operations for the higher management. Since it is built up as guidelines
and consists of checklists it also works as a self control for the management team
in each project. The management system is well adapted to the management
team’s reality, which makes it very useful and appreciated by the different project
managers. A system with this level of integration is according to IPMA (2010) an
effective tool to establish a high level of professionalism and consistency in a
company.

Human Resources – authority/responsibility

The human resources in MPM are organized to be as effective as possible

throughout the organization. Each role has a clear assigned area of responsibility
and the authority to make decisions within that area, which according to Walker
(2007) is a condition for a project organization to be effective. Walker (2007) also
means that the responsibility assigned to the middle management makes the
decision-making less time consuming. It also makes it possible for the project
manager to take focus off the daily management and instead concentrate on long
term planning and control.

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The management culture in Sweden is influenced by trust and respect for the
knowledge of the workers. The workers often have greater experience and
knowledge of a specific work than the management. The big responsibility and
authority that often is assigned to workers and middle management is based on
their high level of skill and knowledge within construction.

Procurement – procurement plan

The MPM methods for handling procurement are highly developed with an
assigned manager who is responsible for all procurements. The main reason for
the well functioning procurement is the development of a procurement plan at an
early stage in the project. As Antvik & Sjöholm (2007) has stated, an important
part of the plan is to identify the purchases with long lead time. This is also
included in MPM’s procurement plan, with all required actions of each major
procurement integrated with the major time schedule for the project.

Cost - control

An effective cost control is, according to Guo-Li (2010), a decisive factor that
creates good opportunities for a project to be successful. The cost control in MPM
projects are highly detailed with relocations and forecasts of high accuracy. The
reports from cost control are also distributed to concerned stakeholders in- and
outside of the project organization which according to Antvik & Sjöholm (2007) is
important to maintain a positive attitude towards the project. The effective cost
control in MPM is based on the developed template which highly facilitates the
work involving cost control.

Cost control is strongly connected to the budget, which sets high demands on the
budget in order to conduct effective cost control. The accuracy of the MPM
budgets should therefore also be seen as a strength together with the methods of
cost control.

Communication – project status report

The project status report that the MPM project manager consolidate every month
is necessary for the client to get information of the progress in the project. Antvik
& Sjöholm (2007) also means that the status report is useful for the project team
itself in order to keep control of all aspects of the project. Since the report
includes status information regarding time, cost, procurement and production it
clarifies which areas that currently needs to be prioritized. The status report is
63
based on honest evaluations and forecasts, in order to be an effective tool for the
project management team. As stated in Culture (2010), Swedish organizations
prefer a direct way of presenting information as opposite to some other cultures
where diplomacy is highly valued in discussions and reports.

5.1.2 Potential areas of improvement

Time - schedule control

MPM project organizations have a high ambition in schedule control. The

computerized aid, MS-Project, has potential to control and manage time
schedules in many aspects. Many members of the MPM project teams do not
have the required level of computer skills to fully use the potential of the software
and the higher management’s ambition is therefore not met. Schedule control is
carried out in minor scale, but there is a potential for improvement by reaching a
higher level of computer skill throughout the organization. The schedule control is
important and according to Antvik & Sjöholm (2007) the project team has little
use of a schedule that is not effectively controlled.

Stakeholder analysis

Without the development of a stakeholder analysis early in the project Antvik &
Sjöholm (2007) means that large problems that cause high costs and delays are
likely to occur later in the project. The stakeholder analysis in MPM projects are of
insufficient extent and are not iterated throughout the project, which according
to PMBOK (2004) is a condition for the analysis to be an effective tool in the work
of the project management team. The stakeholder analysis should include
measures to limit negative impact from identified stakeholders. Many of the
experienced problems caused by stakeholders as authorities and tenants could
have been avoided if an efficient stakeholder analysis had been made earlier in
the project.

Risk - analysis

Risk analysis is developed early and mainly correctly in MPM projects. However,
there is problem in that the magnitude of risks in some cases is underestimated,
which leads to insufficient mitigating measures to handle these risks. Kululanga &
Kuotcha (2010) states that risk management must be carried out continuously
throughout the project in order to identify and handle new risks as well as to keep
control of previously identified risks. The risk management in MPM tends to be

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concentrated to the early phase of a project, which can cause problems as risks
occur in a later stage of the project.

Human Resources – staff changes

According to Al-Maghraby (2008) staff changes, especially when key-roles are

involved, always causes problems in the project organization and usually affects
planning processes and future progress negatively. In some MPM projects the
project manager role has been reassigned for reasons that the project
organization could not control. These changes have had several negative impacts
on both progress and control of the project. When changes like this occur it is,
according to Walker (2007), important that a proper handover is planned so that
the negative impact on the project is minimized.

5.2 Ethiopia
The Ethiopian society, and construction industry, has according to Howard (2010)
many areas with opportunity for improvements. The identified improvements in
Ethiopian project management methods are therefore very extensive in some
areas.

Since many construction companies have a short-time focus it is likely that most
companies do not have an integrated management system. This leads to a project
specific management where different managers within the same company, use
different methods and have different approaches. This method of project
management is according to IPMA (2010) likely to result in low consistency and a
highly varying level of professionalism in the project management.

The planning processes are often neglected in Ethiopian projects, and the
execution of the project is often started without a developed project plan. This is
often shown by the many stopped projects, which have resulted in a lot of half-
finished buildings in Addis Abeba and other Ethiopian cities. The planning
processes are according to PMBOK (2004) highly important, and projects with no
developed project plan often suffer delays and increased costs as a consequence.

Ethiopian construction projects are often highly managed from the top, with very
little authority assigned to middle managers. This is according to Howard (2010)
connected to the Ethiopian culture and flat organizations are very rare in the
Ethiopian construction industry. A top managed organization is according to
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Antvik & Sjöholm (2007) less effective than a flat organization and many
processes have a slow progress in a top managed organization.

The priority of project control is not high in Ethiopian projects, which together
with the neglected planning often causes several problems for the Ethiopian
project management. The approach with a low priority of control is according to
Howard (2010) connected to the Ethiopian culture, and problems are often solved
as they occur rather than by controlling and planning to avoid them. Projects with
insufficient planning and control are according to Gutpa (2008) highly likely to
suffer severe delays and increased costs in the execution of the project.

A general problem in the Ethiopian construction industry is the low level of

knowledge and experience amongst workers. This contextual condition has a
significant negative impact on the efficiency in project execution. The level of
knowledge and skill amongst workers is according to Walker (2007) a very
important factor to reach a successful completion of a project.

The identified strengths and improvements in Ethiopian project management are

compiled in table 3 below;

Strengths Improvements
Adaption and Flexibility Project Management System
Communication – project status report Integration - planning
Human Resources – authority/responsibility
and staff changes
Cost – budget and control
Time – schedule control
Procurement – procurement plan
Communication – communication plan
Scope
Risk - analysis
Implementation of plans

Table 3. Strengths and improvements in Ethiopian project management.

5.2.1 Strengths
Adaption and Flexibility

In the Ethiopian case company, Saudi Star Agriculture Development, the higher
management has an approach that prioritizes an early start of execution rather
66
than taking the time to plan the project. This fact together with problems caused
by the location of the construction site, the weather conditions and the high rate
of absence amongst workers, forces the project management team to be adaptive
and flexible. Since the middle management are used to these conditions, methods
to handle sudden changes and new directives have been developed. The middle
management on the construction site is effective in adapting to new situations
which creates possibilities to fairly good progress in the project, even without
sufficient plans for the execution. The project did, however, have a potential to
reach a significantly faster progress if proper planning had been done at an early
stage.

Communication – project status report

The SSAD project manager consolidates a project status report every month,
which includes information regarding progress and identified issues that the
project currently is limited by. Antvik & Sjöholm (2007) mean that the status
report is useful for the project team itself in order to keep control of all aspects of
the project. Since the report includes status information regarding time, cost,
procurement and production it clarifies which areas that currently needs to be
prioritized. The reports are not as useful as they could be since the included time
schedules are outdated and forecasts often are too optimistic and therefore
impossible to meet. The reports are not completely honest which according to
Howard (2010) originates from the Ethiopian culture, where diplomacy is valued
high and it is considered disrespectful to direct present a deviating opinion, e.g. a
forecast that means a delay in relation to the original time schedule.

5.2.2 Potential areas of improvement

Project Management System

Since the SSAD project organization does not have an implemented project
management system, there is no consistent work method established in the
organization. According to IPMA (2010) an integrated project management
system facilitates the work for the management team and also establishes a
certain level of professionalism in the organization. The lack of a management
system mostly effects the integration between different areas of the management
team since all managers use different methods, based on their own experience. It
also affects the ability for the project manager to control and monitor the
different areas of the project since there is no consistency in the management
methods.
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Integration – planning

The planning processes that usually are conducted when a new project starts
were not prioritized in the SSAD project. The project execution were launched to a
start without proper development of a project plan, which according to Antvik &
Sjöholm (2007) often causes delays, high costs and general execution problems in
the project. The lack of an implemented project plan has caused problems in all
project management areas and has made it impossible for the management team
to have the required control of project activities. The development of a project
plan started about a year into the project execution, but the implementation of a
new project plan in an ongoing project is very hard to conduct successfully.

Human Resources – authority/responsibility and staff changes

The SSAD project organization is highly managed from top of the organization,
which according to Walker (2007) leads to slow processes in decision-taking and
therefore often causes delays in the project. Since the middle management have
responsibilities without the proper authority, the whole organization becomes
passive and slow in decision-making processes. Key roles in the management
team are in some cases assigned to persons with insufficient knowledge of
construction projects, which also causes an inefficient leadership of the project.

Staff changes, which Al-Maghraby (2008) means always have negative effects on
project time and costs, have been made several times involving key-roles of the
management team. The staff changes have also caused much confusion since key-
roles have been vacant for several weeks before a new person is recruited to the
team.

Cost – budget and control

Guo-Li (2010) clearly states that a project budget influence all areas of a project,
both within planning and execution. Since the SSAD project do not have an
integrated budget it is impossible to conduct cost control, which causes a high
level of uncertainty in the financial management of the project. The lack of budget
also means insufficient planning of cash flow in the project. This fact has
contributed to shortage of funds which forced the management to stop the whole
project for a few months. The lack of budget and cost control makes forecasts of
final project cost impossible to carry out, which according to Guo-Li (2010) is an
important factor in managing a project successfully.

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Time – schedule control

The time schedule is one of the most important plans in a project and according
to Antvik & Sjöholm (2007) the time schedule becomes useless to the
management team without a properly conducted schedule control. The lack of
schedule control in the SSAD project has made the original time schedules
inaccurate and outdated which means that the project currently is managed
without a comprehensive time schedule. The consequences of managing a project
without an accurate time schedule is according to PMBOK (2004) often connected
to long delays and inefficiency in the executing organization. Several contextual
factors also cause uncertainties in development of time schedules. The high
absence, the rain period, the lack of skill and shortage of funds all have impacts on
the time schedule. These uncertainties mean that the there is a higher level of
schedule control required in Ethiopian projects than in Swedish projects.

Procurement – procurement plan

The lack of a procurement plan in the SSAD project is strongly connected to lack of
a developed time schedule and budget. The project has suffered large delays and
cash flow problems due to lack of a procurement plan, just as Antvik & Sjöholm
(2007) states as a likely consequence in projects with poorly developed
procurement plans. The reason for the low priority in development of a
procurement plan is mainly contextual, as planning overall has a low priority in
the SSAD project. The insufficient procurement plan has caused both stop in
production and cash flow problems. This occurred mainly because procurements
with long lead time were initiated too late and because very large purchases were
made several years too early. These areas have a great potential for
improvements and the development of a procurement plan should be highly
prioritized in future projects.

Communication – communication plan

There is a clear problem in the project regarding communication, both internal

between middle managers, and between higher management and middle
management in general. Since the project has no integrated communication plan,
it is according to Ramsing (2009) likely that required information never reaches
the concerned persons, which cause inefficiency and increases the risks in the
project. The lack of meetings also causes confusion in the project team, since
there is no effective forum to solve important issues.

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The restriction of information from higher management and the somewhat
inaccurate progress reports are, according to Howard (2010), based on cultural
issues. Howard (2010) means that Ethiopian leaders are expected to have total
control and information is therefore often withheld in order to keep the individual
control of the project. Ethiopians prefer a diplomatic way of discussing problems,
which sometimes lead to a dishonest report if the truth can be interpreted
negatively to an individual.

Scope

The total scope of work in the project is quite clear, but the management team
shows a lack of understanding for the large extent that the scope means. A clear
developed scope also leads, according to Briner, Hastings & Geddes (1996), to the
required level of understanding of the scope. This suggests that the reason for the
underestimation of the work is caused by insufficient knowledge and experience
rather than lack of scope planning. The underestimation has largely affected the
project, since planning in general was neglected due to the perceived narrow
scope.

The scope of work for sub-contractors has been unclear throughout the project
and has caused a lot of confusion and inefficiency in work areas that involve more
than one sub-contractor. According to Gupta, Aha, Nau & Munoz-Avila (2008) the
confusion between sub-contractors would not be an issue if a proper scope
definition had been developed early in the project.

Risk - analysis

The risk analysis in the SSAD project was roughly developed early in the project
with assigned mitigating measures for each identified risk. Although there was a
low level of detail in the analysis, the main problem in risk management was that
the proposed mitigating measures never were executed. Kululanga & Kuotcha
(2010) clearly states that an effective risk management must be based on iterative
risk analysis throughout the project. As a consequence of the neglected analysis,
several identified risks occurred and caused delays and increased costs in the
project. The underestimation of the project scope is likely to have influenced the
risk management which made the risk analysis less prioritized by the management
team. The most severe risks are likely to have been avoided if the risk analysis had
been properly managed and iterated throughout the project.

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Implementation of plans

Although much of the planning was neglected in the early phases, several plans
and guidelines have been developed later in the project. The developed plans are,
however, not implemented in the management work. In order to improve the
methods of project management in the studied project, these plans need to be
implemented and managed effectively throughout the project. The empirical data
shows a certain level of skepticism to expatriates, which may be one of the
reasons to the slow process of implementation since most of the plans and
guiding documents have been developed by expatriates in the project.

5.3 Benchmarking
The identified potential areas of improvement that are most suitable for
benchmarking between the Swedish and Ethiopian operations are presented in
table 4. The analysis found that improvements suitable for benchmarking are, in
this case, weaknesses in Ethiopian project management that are matched against
strengths in Swedish project management.

In benchmarking between Swedish and Ethiopian operations it is important to

take the differences in culture into account. Direct implementation of Swedish
methods in Ethiopian projects can cause problems and some methods must
therefore be adapted in order to work effectively in another context. MPM and
SSAD are two subsidiaries within the same main company, which makes internal
benchmarking most suitable for the studied companies. Internal benchmarking
has, according to Andersen & Pettersen (1997), a great potential to achieve
successful improvements since the conditions for an honest exchange of
information are good. In development of new work methods, Andersen &
Pettersen (1997) also means that benchmarking should be focused on processes
rather than performance. The most effective method for MPM and SSAD should
therefore be internal process benchmarking.

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 Areas suitable for benchmarking
Project Management System
Human Resources – authority/responsibility
Cost – budget and control
Procurement – procurement plan

Table 4. Areas suitable for benchmarking.

Project Management System

The project management system in MPM is highly developed and integrated in

the methods of management. The SSAD methods are based on individual
experience and a management system is likely to provide consistency and
establish a higher level of professionalism throughout the project organization.
The benchmarking of a management system should include an evaluation of
which areas that needs to be adapted in order to be effective in the Ethiopian
context.

Human Resources – authority/responsibility

The empirical data shows that the balance between responsibility and authority is
higher prioritized in MPM than in SSAD. The low authority that is assigned to the
middle management in SSAD projects is mainly caused by cultural factors. The
higher management in Ethiopian projects is often involved in all decisions, in
order to keep total individual control of the project. To succeed with an
implementation of assigning authority to middle management, the benchmarking
should focus on the increased efficiency that it creates. Since the higher
management´s involvement in all decisions is very time consuming for the project,
there should be a high potential for improvement by benchmarking against the
MPM methods in assigning authority to middle management.

Cost – budget and control

The MPM project has a detailed budget with highly developed methods of cost
control. The low priority that budget and cost control has in SSAD suggests that
there is a high potential for improvements by benchmarking the methods and
benefits of MPM’s cost management. The difference in context and culture is not
likely to affect an implementation of the MPM cost management methods into
the SSAD operations.

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Procurement - procurement plan

Insufficient planning of procurements has caused several problems in the SSAD

project. Delays in project execution due to late deliveries and preliminary stops
due to cash flow problems are both issues that could have been avoided with a
proper developed procurement plan. The MPM procurement plan is highly
developed and is an important factor to increase the profit in projects.
Benchmarking of the development of a procurement plan is an extensive process
that is strongly influenced of processes for development of budget and time
schedules. The benchmarking of procurement plan should therefore have a wider
focus and include processes in cost and time management in order to identify
necessary conditions for an effective procurement plan.

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74
6 Discussion
6.1 Discussion regarding method

The author’s approach to the studied issue was to evaluate the methods of
project management in MPM and SSAD operations, based on the nine categories
that are developed by Project Management Institute. The empirical data in the
evaluation was gathered through informal interviews with key-role persons in
both of the studied projects and through observations on the construction sites.

A potential weakness in the method of the study is that only one project in each
company has been studied, which means that conclusions may not be
representative for the companies in general. It is, however, likely that both MPM
and SSAD have the ambition to manage all their projects using the same methods,
in order to gain consistency in the company operations.

The empirical data from the MPM project was partly based on their management
system, which provided detailed information of how project management is
conducted in MPM. Since SSAD has no management system, the empirical data
was exclusively based on the interviews and observations on site. This fact may
have caused that all MPM activities came to the author’s knowledge, while
performed activities in SSAD may have been overlooked. The observations of the
SSAD project was conducted over several weeks, both on site and in the project
liaison office, which is likely to have contributed to a high level of correctness in
the empirical data.

Most interviews in the SSAD project were held with expatriates. This may have
given an excessive negative picture of the project management, since most
expatriates are used to different, more controlled work methods. The interviewed
expatriates, however, have an extensive experience of construction management
from projects in Africa and Asia which suggests that their statements are objective
and professional. The approach and method of empiricism in the study has,
according to the author, created good conditions for a reliable empirical data
input to the study.

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6.2 Discussion regarding conclusion

There is a big difference in conditions and context between Swedish and Ethiopian
construction projects. The differences in development and society in general also
includes construction projects, which means that methods of project
management in Sweden are more developed than in Ethiopia.

The studied projects are very different from each other and the extensive
Ethiopian project involves many issues that do not occur in the smaller Swedish
project. Factors like rain periods and the extreme location affects the Ethiopian
project in a large scale. These factors require high developed methods of planning
and control in order to reach a successful execution of the project. The main
approach and initial analysis should, however, be conducted by the same
methods regardless of the size of the project.

The Swedish operations have a consistent organization which facilitates the

implementation of a management system largely. It takes a long time to reach an
effectively integrated management system, which complicates the
implementation in SSAD since many employees only are contracted for one single
project. The higher management should, however, be able to implement general
guidelines even though the consistency in contracted managers is low.

Many problems in the SSAD project originate from issues regarding culture and
general development in society. The high influence of expatriates in the project
means that people with several different religions and culture must interact and
find a way to communicate that everyone understands. Ethiopians are also proud
of their own people and country, which can complicate implementation of new
methods and management systems since most changes are suggested by foreign
personnel. The lack of educated personnel in the Ethiopian construction industry
also causes problems and inefficiency as new methods are to be implemented.

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7 Conclusion

The conclusion was based on the analysis and focus on the areas that should be
prioritized in the work of improving project management methods. The
identification of prioritized areas was based on which areas that are most suitable
to start with, and which improvements that has the greatest potential positive
effect on the project management.

The areas that are prioritized for benchmarking are successful methods in the
Swedish operations that are matched against weak methods in the Ethiopian
operations. The priority is also based on which areas that has the greatest
potential positive effect on the Ethiopian project management. The most suitable
method of benchmarking between the case companies, MPM and SSAD, is
internal process benchmarking.

The study has resulted in several areas of improvement in Ethiopia and only a few
areas in Sweden. This is mainly caused by the differences in development and the
extensive differences in the construction industry between the two countries.
Financial status, education and culture in general are all contextual factors that
highly affect approaches and methods in project management. These factors has
also caused that the identified improvements in the Ethiopian operations are
much more extensive than the improvements identified in the Swedish
operations.

Many Ethiopian companies are top managed which is strongly connected to the
culture and company traditions in the country. The lack of authority assigned to
middle managers is a problem since most managers have responsibility of a
certain area but not the authority to take decisions within that area. Swedish
organizations are more flat and authority is assigned to middle managers in a
large extent. This is also connected to the higher level of knowledge and skill
amongst workers and middle managers, which makes it effective to allocate
authority in the organization.

The planning processes are not prioritized in Ethiopian projects. Many

organizations start the execution of a project without sufficient planning, which is
shown by the many half-finished buildings where the production is stopped in
Addis Abeba. The Swedish construction industry is highly focused on extensive
77
planning in the early phases of projects. This approach is mainly developed by the
Swedish companies’ many years of experience within construction, which most
Ethiopian companies are in lack of.

Project control is not prioritized in the Ethiopian culture and problems are solved
as they occur rather than by controlling the project to avoid problems. This causes
several problems in the Ethiopian projects that could have been avoided if an
efficient project control were conducted. The Swedish culture is, however,
strongly connected to control and construction companies often have well
developed methods to control their projects. This is, just as the approach to
planning, developed through the companies’ extensive experience within
construction.

Prioritized areas of improvement in Swedish and Ethiopian project management

methods and prioritized areas for benchmarking are compiled in table 5 below;

Sweden Ethiopia
Stakeholder analysis Project Management System
Risk – analysis Integration - planning
Time – schedule control Human Resources – authority/responsibility
Cost – budget and control
Time – schedule control
Procurement – procurement plan
Implementation of plans

Benchmarking
Project Management System
Human Resources – authority/responsibility
Cost – budget and control
Procurement – procurement plan

Table 5. Prioritized improvements and benchmarking.

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Prioritized areas of improvement

SWEDEN

Stakeholder analysis

The present method of stakeholder analysis underestimates the influence of

several stakeholders, which has caused delays and affected the execution plan
negatively. The stakeholder analysis in MPM projects should be more extensive
and iterated throughout the project in order for the management team to be able
to manage stakeholders effectively.

Risk - analysis

The MPM risk analysis is concentrated to the early phases of the project and the
magnitude of risks is often underestimated. The risk management should include
analysis that is iterated throughout the project as new risks may occur and more
information is available to the management team. It is also important that each
risk is evaluated, in order to ensure that sufficient mitigating measures are taken
in relation to the magnitude of the risk.

Time - schedule control

The time schedules in the MPM project are well developed and the higher
management has a high ambition regarding schedule control. The actual
performed schedule control is, however, limited by the insufficient computer skills
amongst middle managers. In order to increase the efficiency in schedule control,
middle managers need to reach a higher level of computer skills and increase the
priority of schedule control.

ETHIOPIA

Project Management System

The lack of a management system in the SSAD project causes an inconsistency in

work methods and general approach by the project management. Each manager
use methods based on their own experience, which can be effective but also
provides the project manager with little ability to control and monitor all areas of
the project management effectively. The SSAD organization should develop and

79
implement a management system in order to establish a higher level of
professionalism and increase the control of their projects.

Integration - planning

The planning processes are not prioritized in the early phases of the SSAD project.
The lack of a proper developed project plan has caused problems in all project
management areas and made it impossible for the management team to have the
required control of project activities. A higher priority of the planning processes
and the development of an integrated project plan would create significantly
better conditions for a successful execution of the project. The development of
planning processes should be considered with a high priority in the work of
improving the SSAD management methods.

Human Resources – authority/responsibility

The SSAD project is highly managed from the top of the organization, which leads
to time consuming processes as decisions has to be made. The middle
management has responsibility for their assigned area, but not the authority to
make required decisions within their responsibility. This causes inefficient
leadership on all levels of the organization. The balance between responsibility
and authority should be established in the initial phase of the project, in order to
create efficient leadership by the middle management.

Cost – budget and control

The lack of an integrated budget has caused severe financial problems in the SSAD
project. It also makes it impossible to conduct cost control, which leads to
insufficient management of all financial aspects of the project. The management
team should develop a budget early in the project and prioritize cost control in
order to avoid cash flow problems and reach a successful completion of the
project.

Time - schedule control

The insufficient schedule control in the project causes confusion and inefficiency
in all activities of the project. The schedule control is of great importance since it
affects all other plans in the project. The schedule control should be higher
prioritized throughout the project in order to reach an efficient management.

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Procurement – procurement plan

The procurement plan is strongly connected to the schedule and the budget. As a
consequence of the insufficient integrated budget and the low prioritized
schedule control, a procurement plan was never developed in the project. The
problems caused by the lack of procurement plan are severe, including shortage
of funds and temporary stops in production. The priority of the procurement plan
development should be increased together with the priority of budget and
schedule control.

Implementation of plans

Several planning processes that were neglected in the initiating phase of the
project have been conducted at a later stage. The developed plans are of high
quality but need to be implemented in the project management in order for the
project team to be able to use them effectively. Implementation is always hard,
but the SSAD management team needs to develop a method for implementation
of plans to be able to manage the project effectively.

Prioritized areas for benchmarking from Sweden to Ethiopia

Project Management System

The MPM management system is highly developed and well implemented in the
project management methods. SSAD has no developed management system and
the current management methods are highly unstructured. This suggests that
there is a high potential for improvement by benchmarking. It is, however,
important that culture and context are taken into account, so that only suitable
methods for SSAD are transferred and implemented in the organization.

Human Resources – authority/responsibility

The balance between responsibility and authority is successful in MPM projects,

and should contribute to a higher efficiency in SSAD projects as well. The culture
of higher management’s extensive influence on all decisions must be handled if
new methods of assigning authority are implemented.

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Cost – budget and control

The MPM method of budgeting and controlling cost is effective and provides
accurate financial forecasts. By an effective benchmarking, these methods should
be able to be directly transferred and implemented in the SSAD methods of
project management.

Procurement - procurement plan

The high developed procurement plan is an important factor that often

contributes to increase the profit in MPM projects. The process used to develop
the procurement plan is likely to increase the profit in SSAD projects as well if it is
directly transferred and implemented.

Future studies

To create good conditions for implementation of new work methods it is

important that issues regarding culture and context are evaluated. The following
questions must be answered in order to succeed with an implementation of
improvements and benchmarking in the Ethiopian organization;

 how the implementation should be conducted

 what methods or parts of methods that can be transferred directly and
which parts that must be adapted in order to work in the new
environment
 if expatriates should be involved in the implementation and if so, what
role should be assigned to expatriates

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86
 Appendix 1 – Template for interviews

Description of the project, your role in the project?

Project organization?

Functions, roles (different groups/departments)?

How well do the project work as a whole? – problems/strengths?

Plans, analysis, documents? – do you have guidelines of what to do? – are they
done?

Do you have any problems within/ do you have plans to handle:

Integration

Scope

Time

Cost

Quality

Human Resources

Communication

Risk

Procurement

Are the plans applied to the production?

What would you have done differently if the project was restarted?

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