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The nature and management of crises in construction projects- Projects-as-practice observations


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International Journal of Project Management 26 (2008) 830–838 www.elsevier.com/locate/ijproman

The nature and management of crises in construction projects: Projects-as-practice observations
Markus Hallgren *, Timothy L. Wilson ¨
? ? ? Umea School of Business, Umea University, S901 87 Umea, Sweden Received 13 June 2007; received in revised form 15 October 2007; accepted 30 October 2007

Abstract The uniqueness of projects introduces aspects of management associated with disruptions that threaten progress and crises that a?ect the organisations that conduct them. The purpose of this paper thus is to review the nature of crises and their remedies that have interfered with project progress of an international construction company. Fifteen crises were studied in a ‘‘projects-as-practice’’ approach. Characterisation was made of both the nature of these crises and how they were managed. ? 2007 Elsevier Ltd and IPMA. All rights reserved.
Keywords: Managing projects; Processes and procedures; Life cycle; Management structure

1. Introduction Management of projects carries a certain allure for individuals who shun routine, work-a-day life styles. The uncertainty associated with producing unique outputs implies that each day can bring new experiences. In this regard, Pavlak [1], for instance, discussed the ?re ?ghting aspects of management associated with disruptions that threaten projects and crises that a?ect organisations. Recently, Hallgren and Wilson [2] reported on project devi¨ ations, i.e., any incident that e?ectively delayed project tasks, their nature and remedy. Although the classical treatment of projects suggests that they can be well-planned in advance cf. [3], there is plenty of room for unanticipated events to interfere with plans. In some cases, these events seem not to matter and thus are tolerated. The Sydney opera house comes to mind; it came in 10 years late and about 1500 percent over budget cf. [4], but is considered an architectural achievement and perhaps a wonder of the modern world. On the other hand,
Corresponding author. Tel.: +46 90 786 77 30. E-mail addresses: Markus.hallgren@usbe.umu.se (M. Hallgren), tim. ¨ wilson@usbe.umu.se (T.L. Wilson). URL: http://www.markushaellgren.com (M. Hallgren). ¨ 0263-7863/$30.00 ? 2007 Elsevier Ltd and IPMA. All rights reserved. doi:10.1016/j.ijproman.2007.10.005
*

projects are frequently bid on a ?xed-time, ?xed-cost basis. Thus, unanticipated events may quickly rise to the level of crises if they happen to lie on the critical path that determines the time for completion. Someone pays for overruns – either it is absorbed by the contractor, or is paid by the funding organisation as an overrun. To put things in perspective, the cost of infrastructural projects can be of the order of one billion euros, conducted over a three-year time span. Thus, a one-day delay represents a cost to someone of one million euros. To paraphrase a former US senator, ‘‘a million here, a million there and pretty soon you are talking real money’’.1 As suggested by Mallak and Kurstedt [5], crises seem inevitable in projects. Consequently, companies that deal in projects on an ongoing basis thus must learn to deal with crises on a regular basis. It is these crises that are the concern of this paper. Its speci?c purpose therefore is to review the nature of critical interruptions that have interfered with project progress of an international construction company and re?ect upon their remedies. It is thought that this exposure will add to the projects-as-practice material for academics and
The essence of this quotation is attributed to Everett Dirksen, former senator from Illinois (en.wikipedia.org/wiki/Everett_Dirksen. Downloaded 26 January 2007).
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the normative literature that assists managers in dealing with crises, especially within construction organisations. The construction industry was selected for study because of its exposure. That is, virtually everyone can identify with its outputs and its tenure; basic, state construction historically dates to the pyramids cf. [3,6]. Its understanding is thus fundamental to understanding crises in projects. 2. Background 2.1. Crises Because they occur across industries, much of the information on crises and their responses tend to be general cf. [5,7–9,11]. Regardless of the approach, however, there are certain things that appear common to industrial crises conceptualisation. They include an assumption of primarily singular events that have the propensity to impart signi?cant injury to the company. Fundamentally, the observation is made that complex organisations somewhere along the line will experience unimaginable events that destabilise the organisation cf. [8]. There is also agreement that tightly coupled systems appear to be particularly susceptible to a cascade of failures, e.g., crises [9–11]. For instance, Hensgen et al. [12] use the operational de?nition of a crisis ‘‘those internal and/or external events that cause stress on organisational resources and pose the greatest threats on any organisation’s security and vitality’’. Reid [13], largely in agreement, has surveyed the literature from a practitioner/consultant’s viewpoint and developed the following concept of a crisis – as any incident that can focus negative attention on a company and have an adverse e?ect on its overall ?nancial condition, its relationships with its audiences, or its reputation in the marketplace (p. 2). It should be noted from these de?nitions – one from an academic standpoint, the other more practice oriented, crises are associated with consequences. Nothing is said about magnitude as a criterion. That is, it does not take a tsunami, an earthquake, a ?re, or a death on site to precipitate a crisis. They may be associated with disasters, but not necessarily so. They are any event or incident that poses a threat to an organisation’s security or has an adverse e?ect on ?nancial conditions, relationships, or reputation in the marketplace. Further, Hwang and Lichtenthal [7] have indicated crises do not necessarily have to be associated with a speci?c event. They identify two types of crises – abrupt crises that strike suddenly and catch management o?-guard versus cumulative crises (their words) that accumulate stressors and eventually erupt. Likewise, RouxDufort [14] allows for a type of crisis that is a process of accumulation of de?ciencies and weaknesses rather than as a sudden and extraordinary irruption. 2.2. Crises in construction projects There are enumerable incidents that can interrupt progress in construction projects. Hallgren and Wilson [2], ¨

for instance, made a study of deviations (their term) in construction projects. Not all deviations, however, are crises. Deviations along the non-critical path for example are handled by using some of the slack available that makes the task non-critical. It is only when the deviation occurs along the critical path, or when it extends the timing of a noncritical task to make it critical, does a crisis occur. It would appear that a relatively high incidence of these crises is possible in the industry. Although ?rms in the industry have been described as loosely coupled systems [15], which would suggest resistance to the ‘‘cascades of failures’’ [9] associated with tightly coupled systems, crises still occur – the consequence of planning introduces tight coupling in activities. Loosemore [16–18] has conducted case studies that focused on behaviour during the crisis period. Within these case studies, he observed both sudden and creeping crises (his terms), which could be expected from the above [7]. Essentially he found that response was shaped by the nature of the crisis, and emotions commonly ran the gamut from initial feelings of helplessness to ?nal feelings of cooperation and con?dence – one case, however, generated just the opposite feelings. He thus was reluctant to propose one generic theory of management because such an approach would oversimplify the process. It was ironic that at a time when e?ective communication was important, it was found less likely and at a time when responsibility and teamwork were important, they were also less likely. Reid [13] approached crises in the industry from a more normative standpoint and suggested two lessons might be learned: ?rst, because of the human element involved, no one is immune to the inevitable. Second, crises do not discriminate – small companies or large, specialised or general, each will see their potential demise at some point. By being prepared, however, at least there is a support system for employees even though there is no one size-?ts-all protocol (p. xiv). That is, crises came from a variety of sources. In the US, on-site accidents were the most common source of crisis in the industry. Surprisingly, fatalities were down the list at number 5; sexual harassment and work stoppages rounded out the list. In dealing with the rhetorical question, ‘‘Can one prevent crises’’? The author was of the opinion that ‘‘in the large majority of cases, the answer is an unquali?ed yes merely by applying an increased awareness. The only exception might be a natural disaster. . . In man-made crises, a warning bell typically is sounded, but it usually falls upon deaf ears’’ [13, p. 8]. 2.3. Dealing with crises Basically, the literature suggests there are two viable options in dealing with crises. The ?rst and preferred, of course, is to prevent them. Reid [13] and others suggest prevention in part is possible [1]. Lagadec [8], on the other hand, de?ned crises as being unimaginable, and thus one would think impossible to prevent; it has been suggested in fact that crises in projects are inevitable [5]. Regardless

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of the case, preparation for unexpected possibilities provides the second option. That is, all crises cannot be foreseen, and so prudent steps are taken to deal with their occurrence. In Reid’s [13] case a crisis management plan and response team was suggested, along with some exercises that could be done in preparation. Mallak and Kurstedt [5] have suggested risk analysis, contingency plans, logic charts and table top exercises as tools useful in preparing for crises. Under girding these approaches are organisations that are not too elegant or specialised [9] and a system that provides communication of initial events as early as possible [9,12,16]. Team responses to crisis management are commonly cited as useful. Engwall and Svenson [19] identi?ed three team formations associated with problems arising in projects – project teams themselves, tiger teams and cheetah teams. These teams can be distinguished on the basis of (1) sanction, (2) mission speci?city, (3) permanence, (4) membership commitment and (5) advance planning. Cases have been made for both the utility of tiger teams [1] and cheetah teams [19,20] as being useful in crises situations. 2.4. Projects-as-practice Because crises tend to be extraordinary and situational, actual practice such as team formation would appear relevant. In that regard, over the last few years Drucker’s [21, p. viii] words, ‘‘What constitutes knowledge in practice is largely de?ned by the ends, that is, by the practice’’ have received increasing appreciation through the interest in micro-activities in the research on organisations. Schatzki et al. [22] called the development ‘‘The Practice Turn’’. Taking a practice perspective means taking the actions of the practitioners seriously. It means treating projects as something people do rather than a structure that is [23,24]. The practice perspective extends both beyond the common understanding of projects into activities within projects and project work and as a phenomenon beyond the walls of the single organisation cf. [25, p. 614]. Doing so, the project-as-practice perspective is complementary, but not substituting for, the commonly recognised normative and process related perspectives on projects [26]. Nevertheless, rather than focusing on success factors and anticipated e?ciency, the practice perspective is interested in the actions of the practitioners [27]. Transferred to research on crises, a practice perspective focuses on what practitioners do in the resolution of crises and which practices they draw upon when doing so. 3. Methodology The practice turn calls for careful methodological considerations. As Geertz [28, p. 6] put it (transferred to projects), ‘‘If you want to understand what project management is, you should ?rst look into what the practitioners do’’. Loosemore [16] in turn suggested that a case study approach can be e?ective in understanding the role

of crises and crisis management in project organisations. In this study, a multiple case approach was used in which cases were followed in the experiences of distributed power plant projects developed by an integrated provider of projects of this type. These observations were in line with the classic ethnographic studies of Mintzberg [29] and Carlson [30] and the stream of ethnographic studies associated with contemporary practice research cf. [22–24,27], which have gained appreciation for producing knowledge based on actual practice in everyday operations. All the information in the general study of course did not relate to crises, which represented a small fraction of observations. The larger portion of the study was on the practice of managing deviations, i.e., when something unexpected occurred and how such a situation was remedied [32]. Within this implementation, deviations from policy and plans occurred [32]. That is, unforeseen interruptions a?ected progress. If these deviations occurred along the non-critical path of the project plan, they posed as crises only if response to them shifted the path from non-critical to critical. Interruptions on the critical path, of course, posed as crises immediately. The ‘‘call’’ on whether a deviation was a crisis or not thus depended upon its location in the project plan, i.e., was it on the critical path or not? That call invariably was made by the project manager who worked at the corporate o?ce, and it represented the ?rst level of coding required to permit systematic analysis of qualitative data cf. [31].2 In the majority of instances (13/15),3 crises in projects were observed during a total of 10 weeks of on-site visits for each project. A range of ancillary methods supported observations. Informal conversations with project principals were noted and recorded in a diary of observations. In this way, the diary provided notes on team conversations as well as those conducted with onlookers. There was full access to the database of plans, emails and reports. Previous agreement gave access to phone calls and other records for the speci?c periods in which the deviations occurred. Subsequently, sixty, formal, semi-structured
Miles [31] recognized the problem of doing justice to a vast amount of qualitative material. Later Eisenhardt and Graebner [33] dealt with the same issue. They suggested that the issue should be managed by just theory building, thorough sampling of cases, pattern match theory and data, in addition to presenting the observations and results with tables. This issue applies to the broader application of our research. Here, we have dealt with the issue by providing the coding as Miles suggested and also attempted to provide sound theoretical arguments on crises as suggested by Eisenhardt and Graebner so that crises cases could be chosen that provide the optimal information on such situations. By using a multicase approach we have sacri?ced some empirical depth but on the other hand as Eisenhardt and Graebner noted ‘‘tables and other visual devices are central to signalling the depth and detail of empirical grounding’’ in multi-case research. In this paper we have the two tables and the ?gure that comply with this recommendation. 3 Two of the crises were common knowledge in the corporation and these details were determined by separate interviews. They are included here because their elements appeared to coincide with observations in the other 13 crises.
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Crises
Abrupt Q1 7, 8, 9 Q2 10, 12, 14, 15 Q4 4, 6, 13 Cumulative

ities, and it also outsourced some engineering and logistic services. 4.2. Planning process The company under study was an adherent to a rigorous planning approach. All plans could be summarised as follows:  Project execution plan.  Area of responsibility plans (electrical, mechanical, civil).  Time.  Design/function.  Operational plan.  Master schedule. n Sub-contractors’ plan. n Working order. n Supervisors’ plan. The planning process typically started with a contract negotiated between the company’s sales team (with some assistance from the project team) and the client. The contract speci?ed the overall project deadlines and performance guarantees for electrical, heat, steam, oil consumption and emissions. A plan in general would be initiated by a junior engineer assigned that responsibility, but soon turned over to the project manager. The project manager would use his/her experience, counting backwards from the contractual ?nish date to set the necessary interim dates. He/she would then estimate deadlines for engineering, procurement, logistics, site execution, sub-contracting, and documentation. Included would be implications for project management, site management and ?nal warranty. Situations varied, but from start to ?nish the project plan would be normally ?nished in two weeks. In a typical situation the project execution plan is broken down according to chapters that cover a summary, the organisation and required resources, the timing, budget, risk evaluation, communications, design, logistics, transfer, quality, guaranty, travel and special conditions. The tasks in this plan exist on a concurrent ‘‘deadline’’ level, and it serves as a communication tool between the various in-house services and sub-contractors. In addition to the execution plan there are other plans of various formality and use. Some plans are brie?y mentioned in the summary of the execution plan while there are other plans that are more detailed. It should be noted that one of the chapters in the project execution plan is one on risk management. That is, the company highlighted potential risks and the potential to avoid them. In its words, the following risk management method ‘‘is implemented in order to avoid cost and time overruns. It includes maximising the results of positive events and minimising the consequences of neg-

Project Overseers plus Site Team

Organisation
Q3 Corporation Staff 1, 2, 3, 5, 11

Fig. 1. Hwang and Lichtenthal crises anatomy [7] adapted to the project management situation.

interviews among participants ranging between 30 min and 2 h were conducted and tape-recorded [2, 32]. From this information, the crises could be coded abrupt or cumulative (Hwang and Lichtenthal terms) and then who was instrumental in handling them – project overseers plus site team, or corporate sta?. Team characteristics were determined by whether the team was formally recognized as a group and set up to handle a situation as an extraordinary task over a period of time, which de?ned the formal groups. Informal groups, on the other hand, handled the crises within the work-a-day responsibilities and were not recognised as formal groups, but collections of individuals contributing their resources to end solutions [cf. 9]. The results of this coding approach are re?ected in Fig. 1. The cases, brie?y described in Tables 1 and 2, were assembled from this information. The stage in the project life cycle came from actual timing of the crises divided by time to complete the project (actual or expected). 4. Observations 4.1. General observations The company that was studied was an international ?rm that focused on construction projects associated with power generation, but also had its own engineering capabilities [32]. Under normal circumstances the company would conduct over 100 projects per year, and the median project size utilised an eight person group as a core, plus sub-contractors, plus consultants and test people. Most importantly for this study, it should be noted that the company utilised elements of a dual structure. That is, a typical project would be organised with a project team consisting of the project manager and three project engineers at the corporate o?ce and a site team consisting of a site manager and engineers situated where the project was being executed. For both the project and the site team there would be additional resources and expertise to utilise. For this, the company maintained in-house legal, human resources and engineering capabil-

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Table 1 Nature of the crises observed in the study Event 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Under-estimate discovery Negotiations dilemma Non-payment of initial amounts Taxation issues Essential component non-compliance Factory shutdown Engine accident Guerrilla attack Transport damages Slow sub-contractor compliance Component nonperformance Client delay Unwillingness to accept transfer Delay in major installation component-1 Delay in major installation component-2 PLC 0.15 0.15 0.15 0.20 0.20 0.40 0.60 0.60 0.75 0.75 0.85 0.90 0.90 0.95 0.95 Utilised resources Local and corporate sales, line management, project team In-house services (sales and legal), project team, line management Project team, in-house services In-house services (sales and legal), project management Project team, sub-contractor design team Project team, site team, human resources Site team, project team, line, logistics, engine manufacturer Site team, project team, line, shipping company Project and site team, in-house services (logistics), subcontractors (manufacturer, logistics) Project and site team, sub-contractors In-house services (sales, engineering), sub-contractor, site team, project team Site team, project team In-house services (sales and legal), project team Site team, project team Site team, project team Security and viability threat Budget de?cit and cost absorption Both cost and schedule completion threatened Cancellation of project. Corporate pro?tability, sales credibility Budget escalation and corporate pro?tability Delay of entire design, overall delay, customer frustration Project schedule delay Death of sub-contractor, project schedule delay, increased costs Safety of site personnel, increased costs, project schedule delay Project schedule delay. Period payment associated with delivery Project schedule delay Project schedule delay Project schedule delay. Final payment jeopardised Penalty for late transfer and less corporate revenue from plant operations Project schedule delay. Cost associated with remobilisation and guarding the plant Project schedule delay. Cost associated with remobilisation and guarding the plant

ative events’’. In the project execution plan the risks include ‘‘late delivery’’ and ‘‘performance warranties’’ – which are speci?ed in the contract and where the cost and consequence of the event are known to all parties. With regard to operations in the projects under study, construction related events were documented in the monthly reports. These reports were reactive, describing the event, what had been done and in some cases what would be done in the future. At the site level, there would be operational plans that determine the coordination of tasks. These operational plans would be closely coordinated to any change in the execution plan (deadlines) which are determined mostly by the project team at corporate o?ce but also together with the site team. The plans at the responsibility level (mechanical, civil and mechanical) are broken down into months, weeks, days and in some occasion’s hours. 4.3. The nature of construction crises The largest single source of crises in this study dealt with contract disputes of one form or another (see Table 1). Nine of the crises studied came from this source – four in concern with clients, three with sub-contractors and two with suppliers. They tended to come early (PLC < 0.2) or late (PLC > 0.75) in the project life cycle. There was one

work stoppage due to a guerrilla attack; three crises came from miscellaneous causes, and one each from a fatality and a transport problem. In addition to causes of crises, there are two other elements that might be considered with regard to crises in construction projects:  whether they were abrupt or cumulative as de?ned by Hwang and Lichtenthal [7] (see Fig. 1), and  where they occurred in the project life cycle. In this study, crises were about evenly divided between abrupt (8/15) and cumulative (7/15). To some extent, abrupt crises tended to occur early in the PLC (1–11 in Fig. 1) while cumulative crises occurred later (4–15 in Fig. 1). In general, crises occurred fairly uniformly throughout the project life cycle (Table 1). 4.4. Management of crises The handling of post crisis operations represents the other dimension of interest in these projects. Fig. 1, in this regard, is drawn somewhat idealistically. That is, a solid line is drawn marking the boundary between ‘‘Project Overseers plus Site Team’’ and ‘‘Corporate Sta?’’. In reality, that division is a fuzzy one. The demarcation represents the tendency toward one group or another to take the ini-

M. Hallgren, T.L. Wilson / International Journal of Project Management 26 (2008) 830–838 ¨ Table 2 Remedies in crises situations Remedy 1 2 Discussions within the project team, with line management and corporate sales o?ce. Use of some bu?ers in the budget. Formal depreciation of the project margin Face to face negotiations with the sub-contractor by project manager and an engineer. Substantial travelling and extensive e-mail correspondence involved. Project was started and an initial down payment made. If the project were cancelled, a prorated amount would be returned to the company An alternative solution where the client paid an extra amount for the delay. This made it possible to continue other negotiations. If the project were cancelled, the amount would not be returned Legal o?ce researched the use and contacted foreign legal authorities in the matter. Situation ?nally was remedied through sales who had had a similar project in the area Extensive re-work required by sub-contractor. Situation preceded by serious discussions between the sub-contractor and client. A matter of understanding reached as the re-work in?uenced related parts of the design Site team worked overtime. Schedule was crunched and activities re-arranged to accommodate delay Pending activities re-planned and rescheduled. New engine ordered, old engine salvaged and repaired Abrupt site de-mobilisation while the project team contacted a ship owner who could pick up the men o? the coast. Client contacted and force majeure claimed Extent of damage established. New equipment ordered while installing the damaged. When the new equipment arrived the damaged items were replaced, allowing for continuous activities in the project. In addition, activities were re-arranged to limit the consequences. Extensive discussions and negotiations with the logistics sub-contractor about responsibility and reimbursement Re-organisation of sub-contractor activities. Continuous negotiations ensued Explained to the customer that the problem was that the transformer would not behave according to speci?cations as long as they could not transmit the power for which it was designed. This explanation included formal letters and discussions Re-planning of future activities Helped the customer save face while attending tasks that could be done but still within the time limit. When enough time had passed the client could not argue for a further delay Overtime work initiated. Finish date renegotiated Overtime work initiated. Finish date renegotiated Team characteristicsa Formal

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Informal. Part of in-house service and project team tasks Formal. Part of in-house service and project team tasks Informal. Solution found outside of the team Formal

3 4 5

6 7 8 9

Informal. Part of in-house service and project team tasks Formal Informal Formal. Part of in-house service and project team tasks

10 11

Informal. Part of in-house service and project team tasks Formal

12 13 14 15
a

Informal Informal Formal. Part of project and site team tasks Formal. Part of project and site team tasks

In each case the teams were temporary teams set up to accomplish a speci?c mission and were dissolved after the mission was competed. Members were not assigned to them full time and they were not planned.

tial action. Further, it would be a rare instance indeed if the project manager were not active in all decisions with regard to the project. Observation in the sample of projects, suggest that corporate sta? were involved in handling all the early crises (1–6) whether they were abrupt or cumulative (Fig. 1). Basically, these situations developed just as the projects were getting started (PLC < 0.4). In special instances later (11 and 13), they were also active. These situations could also be appreciated because they related to some especially sensitive situations involving the customer. Otherwise, the site team plus the corporate project overseers ‘‘owned’’ the situation. Two degrees of formality were used in the organisation of groups to handle the crises – a formal recognition of activities and participation, and an informal one (see Table 2). The actual split was about even (formal 8/15; informal 7/15). There was an indication that formally recognised groups were associated in handling abrupt crises (6/8); informal ones with cumulative crises (5/7).4 Put another way, in those situations where a crisis became suddenly
4 These results are statistically signi?cant at the 0.075 level in a chisquare test.

apparent, a group would be formed to speci?cally handle the situation; on the other hand, crises that crept into operations were handled informally within the framework of ongoing activities. In all situations dealt with here, these groups had a speci?c mission, were dissolved after the task was completed, were not planned in advance, nor were members assigned full time to the task – they had other work to do also. Four examples (one from each quadrant of Fig. 1) will serve to illustrate the observations of projects as they are practiced. In the case of the transport damages (9-Q1) the site team discovered that some equipment was damaged in transit. The project manager was immediately contacted; he, in turn, gave the word to the line management. The equipment damage threatened to delay the nine month long project by three months, thus causing a major cost and schedule overrun. The communication between the site, project and line management continued expeditiously, constantly adding information about the extent of the damage, whether it was repairable and how it could be replaced. Within a day the logistics company and the insurance company became involved. At the site, activities were re-

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arranged; the damaged equipment was used as dummy pieces in the project so that it could go on. Later they would be replaced with the new equipment, thus allowing the site team to continue with operations even though the inattention would have stopped the entire operation. The management of the crisis was ?rst of all focused on ?nding the solution, then on ?nding why it had occurred and last on reporting the incident. In the end, equipment was scheduled to be shipped to the site in time for expeditious completion as the details for assuming responsibility were worked out in parallel. In crisis 10 (Q2), a sub-contractor was lagging behind schedule in getting work completed. Initially, that work did not a?ect the rate of overall completion, but eventually it would. At several times the project manager and the site leader asked the contractor about progress, including sending formal letters in the matter but with no or limited result. After some discussions among the project team and the site team, it was decided that would have a confrontation with the sub-contractor. Consequently, there was a re-organisation of sub-contractor activities, and closer control on progress was exercised through ongoing negotiations. In this situation, the activities of the team were part of in-house services and project team tasks. In crisis 1 (Q3), the cost was under-estimated for a project and not discovered until after the contract had been signed with the client. This matter was serious matter as it put pressure on the margins in the project. Given the seriousness of the situation it required the input from the line management. In the end, lower margins were accepted, but only after some bu?ers and costs had been re-arranged by the project team. Quadrant 4 contained crises that were all cumulative and involved corporate sta?. For instance, crisis 4 involved some taxation issues, which severely threatened that project budget. Sta? accountants had known that at some time international taxation was going to become important on a project. It was not a matter of ‘‘if’’, but ‘‘when’’. Once the crisis emerged in this project, the project team involved sales, legal services and other project members in how they could come to terms with the situation. The legal o?ce researched the approach that might be used and contacted foreign legal authorities in the matter. The situation ?nally was remedied through sales, which had had a similar project in the country, and the ?nal resolution thus was found from sources outside of the team. 5. Discussion 5.1. The nature of constructions crises The purpose of this paper was to review the nature of interruptions that have interfered with project progress in a ‘‘projects-as-practice’’ approach and re?ect upon the remedies that were used in dealing with them. Fifteen cases were collected that in one way or another re?ected internal or external events that stressed organisational resources and

posed threats to the speci?c company’s security and vitality [12]. On the surface, one might be tempted to dismiss the examples as trivial. That is, they were not tsunamis, earthquakes, or ?res. In fact, most of them seemed rather mundane. Crises, however, are associated with consequences. In the special case of projects, interruptions on the critical path become critical. Left to their continuation, they certainly would a?ect cost and timing objectives. Further, they have the ability to focus negative attention on the company and have an adverse e?ect on its ?nancial condition, its relationships with its audiences, and its reputation in the marketplace [13]. Thus, one of the contributions of this paper has been the collection and identi?cation of these crises. Roux-Dufort [13] has suggested that the de?nition used for a crisis a?ects the approach to crisis management itself, and he expressed a special regard for understanding crises that result from an accumulation of de?ciencies and weaknesses rather than as a sudden and extraordinary irruption. In this respect, both abrupt and cumulative situations were noted here. Although generalities cannot be made from the data, it was observed that abrupt and cumulative crises appeared in about equal proportions. Further, they were observed throughout the project life cycle. The majority of these crises had an involvement with contractual disputes (9/15), but others came from a variety of sources, quite unanticipated and in some cases rather spectacular sources such as the guerrilla attack. These sources di?ered from Reid’s [13] list, which could be a consequence of the use of a case study approach compared to a survey, but the possibility also exists that the US work represented a focus on the extraordinary. Regardless of cause, it might appear that a number of crises could have been anticipated. That tends to be the case in retrospective analysis. Who among us has not said to him/herself, I should have thought about that before? The company did exercise risk analysis and management, however, as part of its planning and operational procedures. Because only crises were studied here, one does not know how many crises the risk analysis and planning may have prevented. The important thing is that these crises did happen and tested the organisation’s capability to respond. In this regard, it was the project manager at the corporate setting who had ultimate responsibility in rectifying the situation. 5.2. Management of crises A single company and 15 examples from it are not enough to specify normative practice. Nevertheless, a project-as-practice approach identi?es practice. Thus, these observations are made: Risk management was included in the planning for, and conduct of, projects. The idea behind risk assessment is to be forewarned is to be forearmed. The nature of crises, however, is that they tend to be unanticipated [8]. It is thus likely that the one incident that will cause problems is not on the list. Conse-

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quently, a response system needs to be reactive [13]. One aspect of the company’s risk management program was that it had a report system that documented deviations and their treatment. Because this step was taken, there were people in the organisation aware of previous incidents and what had been done. Thus, there was some learning from past activities. Elements of a dual structure were used in the company’s organisation. One of the problems with tightly structured systems is that incidents of failure in these systems tend to propagate [9–11]. The ?rst order of business in crisis response is to prevent it from becoming a catastrophe and/or causing chaos. Recall that a typical project was organised with a project team at the corporate o?ce and a site team situated where the project is being executed. This duality meant that in those situations of operational crises, the site manager had a ready, responsible respondent with whom to communicate in the event of trouble. Further, the company maintained in-house legal, human resources and engineering capabilities. For both the project and the site team there were these additional resources and expertise to utilise in handling these incidents at the operational level. These sta? members were also the source of expertise and e?ort in the cumulative, or creeping, crises. One consequence of dual structure was ‘‘instantaneous’’ communication of crises between site team and project team. There is common agreement in the literature that a crisis response system requires communication of initial events as early as possible [9,12,16]. A function of the dual structure was that regular communication between site and corporation operations was the norm. Consequently, communication of an extraordinary nature was facilitated and the operational crises received the early communication that was desired. It was the cumulative or creeping crises that were insidious in this respect. Because ‘‘everyone’’ knew of their existence, it was easy for them to receive the ‘‘deaf ears’’ treatment described by Reid [13, p. 8]. Both formally and informally developed teams were used to handle situations. If an organisation is to run a variety of projects, it is likely to experience a variety of crises. The response should ?t the situation. Tiger teams [1], cheetah teams [19,20], ad hoc groups [13] were used as seemed appropriate. In those situations where a crisis became suddenly apparent, a group would be formed to speci?cally handle the situation. On the other hand, crises that crept into operations were handled informally within the framework of ongoing activities. For instance, crisis 4 (quadrant 4) was a cumulative example. Once the crisis became critical, the project team involved sales, legal services and other project members in coming to terms with the situation. That is, it was the task and not some structure that held the team together. Thus, it seems unlikely that a common approach for crisis management is useful in agreement with Loosemore [16]. There are situations that need immediate responses from all necessary and available resources. On the other hand,

there are situations where a more measured approach seems to work. 6. Conclusions As suggested from the literature, both abrupt and cumulative were observed in a project as practice study of an international construction ?rm despite the company’s approach to risk management. Because they do occur, one tends to be sceptical of abilities to anticipate them. As a list of actual observations, some occurrences seemed rather mundane but nevertheless interrupted project progress. In this case, the majority of cases dealt with contract disputes, which is at variance with other observations. The tendency is to believe that perhaps other lists are spectacular oriented. Although a variety of groups were used to deal with these crises, ultimate responsibility for their treatment lay with the corporate project manager in a dual structure organisation. Acknowledgement ? We are grateful to Umea School of Business (USBE) for support and the cooperation of the Research Institute for Project Based Industry (PBI), Turku, Finland and the personnel there are also gratefully acknowledged as well as to the anonymous company that provided access to its projects. References
[1] Pavlak A. Project troubleshooting: tiger teams for reactive risk management. Project Manage J 2004;35(4):5–14. [2] Hallgren M, Wilson T. Mini-muddling: learning from project plan ¨ deviations. J Workplace Learn 2007;19(2):92–107. [3] Nicholas J. Project management for business and technology. Upper Saddle River (NJ): Prentice Hall; 2001. [4] Hall P, Hall PG. Great planning disasters. Berkley (CA): University of California Press; 1982. [5] Mallak LA, Kurstedt Jr HS. Planning for crises in project management. Project Manage J 1997;28(2):14–24. [6] Smith CB. How the great pyramid was built. Washington (DC): Smithsonian Books; 2004. [7] Hwang P, Lichtenthal JD. Anatomy of organizational crises. J Contingencies Crisis Manage 2000;8(3):29–140. [8] Lagadec P. Learning processes for crisis management in complex organizations. J Contingencies Crisis Manage 1997;5(1):24–31. [9] Perrow C. Organizing to reduce the vulnerabilities of complexity. J Contingencies Crisis Manage 1999;7(3):150–5. [10] Orton JD, Weick KE. Loosely coupled systems: a reconceptualization. Acad Manage Rev 1990;15(2):203–23. [11] Weick KE. Educational organizations as loosely coupled systems. Admin Sci Quart 1976;21:1–19. [12] Hensgen T, Desouza KC, Durland M. Initial crisis agent-response impact syndrome (ICARIS). J Contingencies Crisis Manage 2006;14(1):190–8. [13] Reid J. Crisis management: planning and media relations for the design and construction industry. New York/Chichester: John Wiley & Sons, Inc; 2000. [14] Roux-Dufort C. Is crisis management (only) a management by exceptions? J Contingencies Crisis Manage 2007;15(2):105–14.

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M. Hallgren, T.L. Wilson / International Journal of Project Management 26 (2008) 830–838 ¨ [25] Whittington R. Completing the practice turn in strategy research. Organ Stud 2006;27(5):613–34. [26] Cicmil S, Hodgson D. Making projects critical: an introduction. In: Cicmil S, Hodgson D, editors. Making projects critical. New York: Palgrave Macmillan; 2006. [27] Johnson G, Melin L, Whittington R. Micro strategy and strategizing: towards an activity-based view. J Manage Stud 2003;40(1):3–22. [28] Geertz C. The interpretation of cultures. New York: Basic Books; 1973. [29] Mintzberg H. The nature of managerial work. Englewood-Cli?s (NJ): Prentice-Hall; 1973. [30] Carlson S. Executive behaviour. Stockholm: Strombergs; 1951. ¨ [31] Miles M. Qualitative data as an attractive nuisance: the problem of analysis. Admin Sci Quart 1979;24(December): 590–601. [32] Hallgren M. Mellan Plan och Kaos: En Studie av Avvikelser i ¨ Projektintensiva Organisationer (Between plan and chaos: a study of deviations in project intensive organisations), Licentiate thesis, ? ? Department of Business Administration, Umea University, Umea. 2004. [33] Eisenhardt K, Graebner M. Theory building from cases: opportunities and challenges. Acad Manage J 2007;50(1):25–32.

[15] Dubois A, Gadde L-E. The construction industry as a loosely coupled system: implications for productivity and innovation. Constr Manage Econo 2002;26:621–31. [16] Loosemore M. Reactive crisis management in construction projects: patterns of communication and behaviour. J Contingencies Crisis Manage 1998;6(1):23–34. [17] Loosemore M. Organisational behaviour during a construction crisis. Int J Project Manage 1998;16(2):115–21. [18] Loosemore M. The three ironies of crisis management in construction projects. Int J Project Manage 1998;16(3):139–44. [19] Engwall M, Svenson C. Cheetah teams. Harvard Bus Rev 2001;79(2):20–1. [20] Engwall M, Svenson C. Cheetah teams in product development: the most extreme form of temporary organization? Scand J Manage 2004;20(3):297–317. [21] Drucker PF. Innovation and entrepreneurship: practice and principles. London: Heinemann; 1985. [22] Schatzki T, Knorr-Cetina K, Savigny VE. The practice turn in contemporary theory. London: Routledge; 2001. [23] Jarzabkowski P. Strategy as practice: recursiveness, adaptation, and practices-in-use. Organ Stud 2004;25(4):529–60. [24] Jarzabkowski P. Strategy as practice. London: Sage; 2005.


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