4.2 The Conceptual Model/Framework
4.2.4 Theoretical Framework
127 making is impaired by a number of constraints, leading to poor project performance.
Further, in expounding on the associations that have been explained on the conceptual framework, it is important to review the theories that have been proposed to shape the impact of cognitive biases on project decisions and performance.
128 (Archer and Tritter, 2013). Critics of the rational choice theory have however argued that individuals are not always able to gather all the information needed in the
development of rationale choices. Moreover, there also exist instances where rational decisions are made but not necessarily for the realization of utility gains (Eriksson, 2011).
Founded on the theory above, it is evident that the nature of choices made by decision makers in mega projects is fundamental for the realization of successful project performance. In the event that project managers in mega projects make decisions based on their self- interest as the first assumption highlights, there is a high likelihood for the development of cognitive dissonance. In particular, when project managers are
concerned about their self-enhancement and presentation, there is a high probability that the decisions that they make will be conflicting with the beliefs and attitudes of other project managers. Consequently, there is a high likelihood of low project performance since all the project managers are not oriented towards the realization of successful project completion. Moreover, the assumption that every individual has adequate
information to aid in rational analysis depicts that project managers are assumed to have enough knowledge and information to make critical decisions in mega projects. The reliance of project managers as key decisions makers without the inclusion of inclusion is likely to contribute to the development of familiarity bias. Precisely, project
managers are likely to base their decisions on familiar mega projects, which increases project risk and the likelihood of cost overruns since the monetary value of projects will be based on underlying worth. The use of such experts as financial advisors is thus necessary in mentoring the effects of anchoring type of bias. Lastly, since the success of mega projects is dependent on the amassed decisions that are made by project managers,
129 the joint establishment of decisions by project managers is vital for the reduction of such biases as optimism and availability bias.
The Resource Based Theory
The theory contends that an organization is able to obtain competitive advantage over its competitors by owning resources that are strategic in nature. In regard to the theory, strategic resources aid in increasing the competitive advantage of an
organizations (Marvel, 2012). The four major characteristics of strategic resources include the fact that they are; valuable, rare, difficult to imitate and non-substitutable (Selznick, 2011). Valuable resources are recognized as those that enhance the
effectiveness of an organization as well as neutralize the opportunities for competitors.
Further, when resources are possessed by few or no competitors are recognized as rare (Wojciechowska, 2016). On the other hand, those resources that are usually protected in a legal manner such as trade -marks as well as those that are developed over time are classified as being difficult to imitate (Wojciechowska, 2016). Moreover, resources are collectively described as non-substitutable when they cannot be duplicated by
competitors (Marvel, 2012). As a result, it is vital to bundle resources together such that it is difficult for competitors to duplicate them.
The resource based theory shows the significance of critical evaluation of resources for the realization of project success. Project managers in mega projects in collaboration with their subordinates require evaluating the resources that are needed from the initiation to the completion phase of projects. Analysis of the resources that are needed in projects will aid mitigating availability, anchoring and optimism bias
respectively. On one hand, rather than making the assumption that a given resource is suitable since similar projects have used the resource in the past, project managers in
130 conjunction with experts will be able to evaluate the most suitable strategic resource to use based on the available options. As a result, there will be elimination of availability bias. On the other hand, evaluation of resources will aid in the reduction of cost overruns. Precisely, cost experts will support project managers in the identification of anchoring bias by noting the distinctions between the estimated prices of resources and the actual prices. Moreover, a suitable scale of managing the utilization of resources in mega projects will also be developed further contributing to the reduction of cost overruns that emerge from inefficient utilization of project resources. Lastly, since most project managers are easily influenced by optimism bias while making decision
concerning mega projects, they are likely to be confident that the supply of resources during the implementation of the project will be adequate. It is thus significant for a resource evaluation to be conducted to ascertain the future supply of resources.
Moreover, it will also aid in the elimination of any dreads that a mega project may fail due to inadequate resources.
Action Based Theory
Based on the theory, actions are described as the conduct that is triggered by an individual in a given context. Desires as well as beliefs are recognized as being vital in the development of the behaviour that is portrayed by individuals (Sassenberg and Vliek, 2019). Both belief and desire are identified to jointly contribute to action.
Individuals thus endeavour to carry out actions that satisfy their innate desires (King and Zannetti, 2013). Additionally, the theory looks at rationality from two perspectives.
On one hand, it is described as the approach of determining the best technique to be applied in the attainment of one’s goals while on the other hand it is the act of responding to the aspects perceived by an individual rather than just focusing on the
131 wants (Sassenberg and Vliek, 2019). Some scholars have however argued that there lacks a consensus of the actual definition of actions and whether some activities such as thinking are recognized as actions (King and Zannetti, 2013). Additionally, there also exist controversies on the causal factors that prompt individuals to portray several actions (Sassenberg and Vliek, 2019). .
In reference to the action based theory, the beliefs and desires of project managers are major influencers of the actions that they will undertake which consequently influence the success of projects. Cognitive dissonance is likely to emerge in the situation that project managers have diverse desires as well as beliefs.
Particularly, in the case where the beliefs, attitudes and conduct of project managers are divergent, there is lack of a common ground for the establishment of project decisions which in return negatively affects project performance. Whilst project managers may possess distinct desires and beliefs, it is vital for them to be jointly embrace rationality by identifying the most suitable approach of executing the project as well looking in to the ideas raised by their counterparts rather than just focusing on their wants.
Harmonization of ideas will aid in the realization of quality mega projects that are completed with thin the stipulated timelines and based on the customer’s needs.
Utility Theory
The theory highlights that the behaviours as well as choices that the made by individuals are based on their individual preferences. The theory employs a utility function that helps to rank individuals’ preferences founded on the gratification that emanate from fulfilling the wants (Chipman, 2014). Utility theory is founded on four major assumptions namely; completeness property of preferences more is better, rationality and mix is better. Based on the first assumption on completeness property of
132 preferences, individuals are able to rank their wants based on the level of satisfaction that they are likely to obtain after fulfilling the wants (Edwards, 2013). The
characteristic where individuals are able to categorize their wants founded on the individual wants is termed as completeness property of preferences. The more is better property on the other hand argues that despite individuals being able to fulfil their preferences, they will still want more since no cost is incurred when disposing want is in excess (Chipman, 2014). On the other hand, the third assumption of mix is better highlights that in the event where an individual is not able to decide to decide on the preferences that they need to fulfil first, it is better to partially fulfilling each of the preferences rather than either one of them (Edwards, 2013). The last assumption on rationality on the other hand indicates that the ordering of individual preferences based on ranks is always fixes irrespective of time or even context (Edwards, 2013).
Utility theory highlights the importance of making choices based on their order of preference. In a similar manner such demographic characteristics of project managers such as the level of experience are expected to direct to identify the choices that need to be fulfilled first when conducting mega projects. Through the experience gained over time, project managers are able to rank the needs of mega projects based on their urgency, which consequently results to the completion of projects with the
required timeline. Moreover, the more is better and mix is better principles of the utility theory is vital to project managers in mega projects in that they shows the significance of combining diverse ideologies in the decision making process. Specifically, when managers involve other experienced personnel in the development of decisions, there is a high likelihood of the eradication of project risk since there are lower instances of recalling of similar issues which leads to availability bias.
133 Contingency Theory of Leadership
The theory advocates that the effectiveness of leadership is dependent on the extent in which the leadership approach is in line with the situation. As a result, there is no single style of leadership that is recognized as being the best (Mcgrath and Bates, 2013). Contingency theory advocates the need to match an individual’s style of leadership with a situation that is compatible. The least Preferred Co-worker (LPC) Scale is recognized as the most suitable scale of recognizing the leadership style of an individual (Willy, 2012). A high LPC score shows that a leader is people-oriented and focuses on the nature on the nature of relationships with other individuals while a low LPC score demonstrates that a leader gives attention to the execution of tasks (Mcgrath and Bates, 2013). Moreover, three key factors are used in the identification of the ideal situation for a leader namely; leader-member relation, task structure and positional power (Willy, 2012). In general, using the LPC scale in combination with the analysis of individual’s leader- member relation, task structure and positional power to identify an individual’s leadership style will aid in placing individuals in the right working capacities, which consequently leads to project success(Mcgrath and Bates, 2013).
Contingency theory depicts that there is no single style of leadership that is required for the successful completion of mega projects and that the most vital aspect is to match individual’s demographics and traits with the project that is moat suitable to them. Specifically, when the project managers who are selected to oversee mega projects have the right demographic characteristics such as experience, there are better equipped to make enhanced decisions since their decisions will be minimally influenced by such cognitive biases as optimism and anchoring. On the other hand, it employing both task-oriented and people-oriented project managers in mega projects will facilitate
134 in ensuring that the decisions in the process of project execution do not only focus on the project itself but also the relationships of the human personnel involved. Human resources are the key determinants of the extent in which mega projects are completed in time and with the anticipated quality.
Strategic Risk Management Theory
The theory proposed by Miller in 1992 postulates that there are five ways of managing the uncertainties that are likely to occur in the future. Uncertainty avoidance is recognized as the first strategy of avoiding risk (Taylor, 2014). In entails the
recognition of the risks that are likely to occur in the future and refraining from being affected by the risk. Control of environmental contingencies is recognized as the second approach which entails controlling of environmental aspects such as political actions (Andersen and Sax, 2020). Cooperative responses on the other hand entail the collaboration of different organizations as a means of eliminating uncertainties. It results to the creation of joint ventures as well as the reduction of company autonomy.
Imitation as the fourth strategy of strategic risk management theory entails the mimicking the strategies set by other organizations for purposes of company survival (Hopkin, 2013). Flexibility is recognized as the last approach which entails the
enhancement of the internal responsiveness of an organization though the development of strategic decisions that focuses on reducing uncertainties (Hopkin, 2013).
Risk management theory highlights the significance of avoiding future uncertainties while undertaking future projects, to increase the chances of successful project completion. Founded on the theory, project managers who are venturesome in nature need to be cautious while tasking tasks during the project implementation phase.
Whilst pursuing risks may be advantageous in some cases, it may also pose a great
135 threat to project performance since negative uncertainties cripple down projects. As a result, venturesome project manages in mega projects need to frequently consult before pursuing any risk, in order to reduce venturesomeness, which is one of the forms of cognitive bias. Moreover, consultation with suitable personnel will also contribute in the reduction of optimism bias, which easily emanates from venturesomeness. On the other hand, project managers need to exercise flexibility while conducting mega projects.
Flexibility entails the establishment of strategic decisions as well as their alternatives in the event of uncertainties. Establishment of strategic decision will enhance quality completion of mega projects within the stipulated time since uncertainties will be managed.
Project Management Competency Theory
Competency theory was developed in 1980 by Henry Gantt and Henry Fayol and focused on the characteristics of leaders such as project managers that contributed to the realization of superior performance (Morris and Pinto, 2010). The theory highlights that a combination of strategic leadership and right resources aided in the successful implementation of project plans within the stipulated standards (Nicholas and Steyn, 2010). Some of the mechanisms that the theory suggests that project leaders needed to adopt include; planning in advance, motivating team members and the provision of a conducive work environment where individuals would be able to
effectively execute their roles. Despite gaining a lot of support from scholars, critics of the theory have argued that the theory has not been able to exhaustively focus on the process of project execution (Curlee and Gordon, 2010).
136 Project management theory shows that project managers in mega projects should
employ such strategies as prior planning and team motivation for the realization of successful project performance. Prior planning will help in the elimination of
controllability bias since project managers will be able to develop a work plan, which stipulates the duties and responsibilities of all the personnel that will be involved in the execution of the project. Moreover, planning in advance helps project managers to develop suitable monitoring and assessment tools thus lowering the impact of scale type of cognitive bias. Further, it is vital for project leaders to be people oriented and to focus on the welfare of their team members through the establishment of an
environment that favours communication and creativity. Communication will allow team members to highlight the strengths and weaknesses of the process of project execution as well as give proposals on possible approaches of enhancing the quality of the projects. Favouring creativity in the process of project execution will also encourage team members to come up with innovative techniques of either executing the project on time or improving customers’ satisfaction. Project Managers’ personality traits thus contribute in the elimination of such cognitive biases as controllability, scale and optimism, which lead to enhanced project success.