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Performance measurement system for multi-project engineering company

 

FEATURED PAPER

By Dr Boris Titarenko, Moscow State Civil Engineering University,

Dr Sergei Titov, Moscow Technological Institute, and

Dr Roman Titarenko, Moscow State University for Economics, Statistics and Informatics

Moscow, Russia

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ABSTRACT

This paper discusses the difficulty of controlling complex engineering projects with the help of the traditional control tools such as earned value method. The main problem with the controlling engineering projects is that the environment and scope of these projects are various from project to project and the project performance measurement system should adapt and flexibly reflect the variability of the engineering project scope and context. The article is based on the case study of the Russian engineering company that is needed a more flexible project performance measurement system. After the consideration of the limitations of the existing performance measurement methods and tools the authors elaborate the suggestion to improve the adaptability of the traditional earned value method which leads to better control of the engineering projects.

Keywords

Performance management, performance measurement systems, performance metrics, project management, engineering companies, project success factors, multi-project organizations, Russia

  1. Introduction

Increasing competition, complexity and technological advances in the engineering industry have enhanced the importance of performance management for engineering companies. In order to cope with the competition and technological challenges engineering companies try to improve project management systems with the help of better performance measurement systems (PMS). Project management researchers have identified a vast spectrum of different measures that describe the status, outcomes and various success indicators of a project (Bannerman, 2008; Farris et al., 2006; Freeman and Beale, 1992; Ling et al., 2009). The most commonly used project performance measures include schedule, cost, quality, technical performance and client satisfaction. Though according to Shenhar et al., 2001 and Lauras et al., 2010, project PMS should be based on the multidimensional approach, many engineering companies use only a couple of performance measures, such as cost and schedule. The simplification of the engineering project PMSs leads to the poorer control of projects and worse results for engineering companies.

Another issue with the engineering project PMS is the necessity to adapt performance measures to the nature of the projects. Usually an engineering company deals with the different projects that have different scope and are performed in various environments. One project has to cope with the high uncertainty whereas another one can enjoy the lower level of risks. Engineering projects also differ in terms of scale. It is clear that for different engineering projects the company should use different performance measures. High variety of engineering projects requires more flexible system of project performance metrics.

Many practitioners and researchers recognize the importance of project performance measurement and the need for multidimensional and comprehensive approach. As a result many engineering companies try to redesign their PMS (Neely et al., 2005) in compliance with the recommendations of researchers. However, recent research shows that the problems mentioned above are very far from being fully resolved (Cao and Hoffmann, 2010).

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About the Authors

 

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Dr Boris Titarenko

Moscow State Civil Engineering University,
Moscow, Russia

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Dr Boris Titarenko
is a Full Professor at the Moscow State Civil Engineering University and Russian State Social University , academician of Russian Academy of Sciences ( Department of Project Management). He is certified ( level C IPMA) member of Russian Project Management Association SOVNET, Leading Assessor of SOVNET –CERT. His scientific interests include risk management, project manager competence evaluation, project management training, , development of project management systems. Applied research methods are the Expert methods, Hierarchical methods, Model simulation methods, Operational research, Applied statistics, Social network analysis. He can be contacted at [email protected].

 

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Dr. Sergei Titov

Moscow Technological Institute
Moscow, Russia

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Dr Sergei Titov
is a Dean of Economic and Management Faculty of Moscow Technological Institute, Deputy Professor of Project Management Department of State University of Management (Moscow, Russia), visiting Professor at Higher School of Economics (Moscow, Russia), and Senior Fellow in Graduate School of Business of the University of South Pacific (Suva, Fiji). His scientific interests cover project management, strategic management, social network analysis and its application to social and business problems. For his research he uses such tools as business process modeling, social network analysis, qualitative models of economic and management processes, tools and techniques of graph theory and game theory, methods of conceptual modelling. He can be contacted at [email protected]

 

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Dr. Roman Titarenko

Moscow State University for Economics, Statistics and Informatics
Moscow, Russia

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Dr Roman Titarenko
is an Associate Professor in the Project and Innovation Management Department of the Russian State University of Management. His scientific interests include risk management, e-learning systems development, project manager competence evaluation, project management training, building a successful Project Management Office, and development of project management systems. Applied research methods are the Expert methods, Hierarchical methods, Model simulation methods, Operational research. He is also a guest lecturer at foreign Universities in France and Poland. He can be contacted at [email protected]