Lecture06 reading client_expectation_alignment

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Running head: EXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 1

Explaining Project Success with Client Expectation Alignment: An Empirical Study

Thomas G. Lechler1

Ting Gao2

1 Associate Professor, Stevens Institute of Technology

2 PhD Candidate, Stevens Institute of Technology

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EXPLAINING PROJECT SUCCESS WITH CLIENT EXPECTATION 2

Abstract

This study examines the management of client expectations during project implementation. The

problem is that expectations of clients may change over the course of a project and may lead to

disagreements and consequently to project failures. Based on stakeholder theory, we derive the

concept of client expectation alignment. It represents processes to continuously involve clients to

express their expectations, set their expectations, and adjust inappropriate expectations. With

data from 206 projects, we analyze the relationships between client expectation alignment, goal

changes, client support, and project success. Using structural equation modeling (SEM), the

analyses reveal mediating effects of project goal changes and client support of client expectation

alignment on project success. The study also identifies three important factors that facilitate the

expectation alignment process: client competence, project team competence, and project

manager’s formal project decision authority. The results expand the stakeholder theory and offer

a conceptual and empirical basis for research in project management. The results direct project

managers to the mechanics and the specific challenges in achieving client expectation alignment

and its consequences for achieving project success.

Keywords: client expectation alignment, goal changes, project success, stakeholder

theory

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Explaining Project Success with Client Expectation Alignment: An Empirical Study

Projects always involve multiple stakeholders whose interests and needs should be

considered in managerial decisions to ensure project success (Cleland, 1986; Mallak, 1991;

Turner, 1999; Olander and Landin, 2005; Takim, 2009). Among them, clients play an important

role in projects because they are the ones for whom a project is usually intended and made use

of. Actually, no project would exist without clients. They determine project scope, influence

project implementation and test a project’s result (Project Management Institute, 2004). Clients

are also considered one of the most important stakeholders to decide project success criteria

(Struckenbruck, 1987; Atkinson, 1999). However, project managers report that it is hard to

satisfy their clients’ needs or meet their expectations (Darnall & Preston, 2010). Deane, Clark

and Young (1997) also identified five levels of potential gaps between project outcomes and

customer needs or expectations. The problem is that clients cannot always clearly describe their

expectations at project start especially when projects are complex and face high levels of

uncertainty (Ojasalo, 2001). Another reason is that their expectations may change over the time

of the project execution through learning process in the dynamic business environments of

projects (Zeithaml, Berry, & Parasuraman, 1993). Concepts of quality management, like the

house of quality (Griffin & Hauser, 1992), are used to identify explicit and unspoken needs and

expectations. Meeting those expectations would lead to client satisfaction only if they remain

stable over the implementation of a project, which is unusual in project settings.

Client or customer expectations have been most investigated in the customer satisfaction

and dissatisfaction and relationship marketing literatures (Oliver, 1977; Olson & Dover, 1979;

Parasuraman, Berry, & Zeithamel, 1991; Walker & Baker, 2000). Although the importance of

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managing client expectation is increasingly recognized by practitioners in project management,

only a few studies directly investigate client expectation or its dynamics in project management

literature (Deane, Clark & Young, 1997; Darnall & Preston, 2010). Following relationship

marketing literature, we focus on the dyadic relationship between project management team and

clients. Our first goal is to introduce the concept of client expectation alignment from a process

related perspective. It represents those processes to manage client expectations which can lead to

improved interactions and further better performance. The second goal is to identify important

determinants, which can facilitate the management of client expectations. The third goal of this

study aims to derive important implications for the practice and research of project management.

The paper is organized in six sections. The first section lays a theoretical foundation based

on a comprehensive literature review to define client expectation alignment and its relationship

to goal changes and client support. The second section explains the conceptual model and

hypotheses. Section 3 describes the data collection methods, research design, and data analysis

methods. Section 4 gives the results of our empirical test of the hypotheses. Discussion and

implications of the results follow.

Literature Review

Effects Induced by Instable Client Expectations

A growing awareness of the instability of client expectations is found in a number of

research settings (Frame, 1987; Zeithaml, Berry, & Parasuraman, 1993; Kreiner, 1995; Yao &

Murphy, 2002). For example, Zeithaml, Berry, & Parasuraman (1993) state that the needs,

desires, and expectations change in response to new experiences, specific circumstances or

predicted services.

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The instability of client expectations may cause harmful results to projects. A project may lose

its relevance when changes of client expectations during project implementation are ignored or

disregarded (Kreiner, 1995). The downside of adapting to changes of client expectations is the

problem that if the project is hypersensitive to its clients and adapts itself to every change of

client expectations, it will face many changes (Kreiner, 1995). Not surprisingly, clients or

customers are always in a situation where they would like to introduce changes during project

implementation (Globerson, 1997). Kreiner (1995) also described clients as those fighting for

their right to keep suggesting additions to, changes in, or new directions for the project, almost

up to the time of delivery. Especially, the changes of client expectations are effecting goal

changes. Project goal changes occur when clients realize new needs, especially in high value,

complex industrial products and systems projects (Hobday, 2000). Many empirical studies

confirm that the definition of project goals is important for project success (Rubenstein,

Chakrabarti, O’Keefe, Souder, & Young, 1976; Pinto, 1986; Thamhain & Wilemon, 1986;

Larson & Gobeli, 1987). Frequent goal changes could have a strong negative impact on project

performance (Dvir & Lechler, 2004; Murphy et al., 1974).

The research also shows that instable client expectations lead to a loss of client support

(Baccarini, Salm, & Love, 2004). The value of the project to the clients is reduced when their

expectations are not met and consequently their support to the project is lost. Client support is

essential to project success, and thus loss of client support may bring detrimental results to

projects (Villachica et al., 2004). As Takim (2009) stated, the lack of client support is a factor

contributing to project failure.

Reasons for Instability of Client Expectations

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The significant influence of instable client expectations brings the need to explore its

reasons. In this section, we develop a theoretical explanation for the dynamics of client

expectations. We consider two assumptions to explain the instability. The first assumption is

related to information asymmetry, and the second is related to the clients’ motivation to

maximize value.

Information asymmetry exists between project clients and the project team. As insiders,

project manager and project team members are in a position to know more about the project than

their clients are. Information asymmetry between clients and project team is an important reason

to cause instability of client expectations. The clients do not have access to the same information

as the project manager, and do not know if the project represents their interests and follows an

appropriate process to deliver a product that will meet their needs. The existence of information

asymmetry between them creates the potential for mistrust (Turner & Muller, 2004). As a

response, the clients may adjust their expectations to a more demanding level out of fear that the

project team will seek to maximize the team’s utility rather than theirs (Parasuraman et al.,

1991). In addition, without updated knowledge of the project value proposition and the project

status from the project team, clients may change their expectations to impose new requirements

since they have no idea of the impacts that these changes will have on projects (Gil, Tommelein,

& Schruben, 2006).

From a traditional economic perspective, researchers state that a major aim of consumers

is to maximize their utility or value (Fishburn, 1987; Eatwell, Millgate, & Newman, 1987). As

Machina (1987) stated, consumers always choose that “prospect” which maximizes the value of

their individual utility function at a particular point in time. Also from the stakeholder

perspective, stakeholders can be seen as supplying the firm with critical resources and in

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exchange expecting their interests to be satisfied (Hill & Jones, 1992). As for customers, they

supply the firm with revenues and expect value for money in exchange. Clients try to maximize

their value in any situation they encounter. On one hand, typically, clients do not have a clear

understanding of what they want from a project. They may feel something is wrong or needs an

improvement, but do not know what kind of improvement this should be. Also, they may be

unfamiliar with that kind of project or they do not have the knowledge to understand the

technological design. As a result, clients may just have fuzzy or implicit expectations and are not

able to clearly specify their needs at the start (Ojasalo, 2001). However, when they could clearly

express their needs at a later stage or new ones reveal through their experiential learning during

the project implementation, clients will change their expectations to maximize their value. Even

if clients have clear expectations at an early project stage, they might not be satisfied with their

past choices at a later project stage particularly with increasing project duration. Their changed

expectations depend on their experiences, or temporal dependencies and their dissatisfaction with

their past choices (Huber et al., 1997).

Thus, as clients are motivated by value maximization, their change of expectation is

contingent on new information they perceive from the environment (Zeithaml et al., 1993;

Kreiner, 1995). This is also the reason why researchers argue that client needs are dynamic and

misunderstood (Frame, 1987; Parasuraman et al., 1991).

Client Expectation Alignment

According to relationship marketing literature, managers can to some degree influence

customers or clients expectations through mediated and interpersonal communications to achieve

a better relationship (Morgan and Hunt, 1994). The relationship is characterized by concern, trust

and commitment which will bring acquiescence and cooperation from clients (Buttle, 2001). We

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access this issue from a process perspective. We define client expectation alignment as the

processes to bring client expectations into alignment with project objectives and project team’s

ability to meet the requirements. These alignment process help build trust and relationship

commitment between project management team and clients and control for the instability of

client expectations. The processes may include allowing clients to express their expectations,

setting their expectations, and adjusting inappropriate expectations. All these processes rely on

information sharing and mutual understanding (Rogers, 1986). As Reich and Benbasat (2000)

argued that such information sharing over time causes the individuals to converge to achieve the

mutual understanding and further support. Since alignment is achieved by maximization of

mutual information, a regular two-way communication between project team and clients is

especially important.

Client expectation alignment is the key to manage client expectation with the intent to

reduce goal changes. To align client expectations with the reality of the project, clients have to

be constantly persuaded to maintain realistic value expectations. Their perceived value of the

project will be shaped, reminded, and reinforced, leaving no necessity to change. Taylor (2006)

suggested that educating the client to have a realistic expectation of how the project will progress

is a key to ensure client satisfaction. Client expectation alignment is an important educational

process. Moreover, client expectation alignment through communication, especially when the

communication is timely, can serve to promote trust by overcoming information asymmetry and

clarifying misunderstanding (Etgar, 1979; Moorman, Deshpande, & Zaltman, 1993; Turner &

Muller, 2004; Pinto, Slevin, & English, 2009). Parasuraman et al. (1991) also stated that open,

regular, two-way communication paves the path for trust. Research suggests that when trust is

established, client expectations tend to stay stable (Anderson & Narus, 1990; Morgan & Hunt,

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1994; Yao & Murphy, 2002). Clients are likely to buy into the project product and process or

keep their expectations if they believe the project team is trying to be fair and behave as

expected. Therefore, client alignment through regular mutual communication should help

stabilize expectations and further reduce the frequency of goal changes during project

implementation.

Client expectation alignment can also help increase support from clients. According to

the theory of planned behavior, a person’s behavior is driven by an intention to perform a

behavior and that intention can be predicted from three factors: attitude toward the behavior,

subjective norms, and perceived behavioral control over the performance of the behavior (Ajzen,

1991). Since client’s support of a project can be considered a behavior choice, the forces that

govern general human behavior can be relevant to this specific behavior. Client expectation

alignment mainly influences the attitude of the clients to get their support. The attitude refers to

“the degree to which a person has a favorable or unfavorable evaluation or appraisal of the

behavior in question” as Ajzen (2005, p.118) states “people intend to perform a behavior when

they evaluate it positively.” On one hand, the alignment process will bring client expectations

into alignment with project objectives. When clients believe the project team strives to meet their

expectations, they tend to have a favorable evaluation of the project and try to cooperate and

commit to achieve the common goals. On the other hand, during the alignment process, the

assumptions held by the clients for the project are realistic and consistent with the deliverables

promised by the project team. In this case, once a project is faced with difficulties, clients with

prepared minds will not evaluate project unfavorably and will continue to support the project

rather than be disappointed. Therefore, client expectation alignment helps the project to gain the

necessary commitments and buy-in from the clients through managing their expectations.

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Model Development and Hypotheses

Based on the previous discussion about theoretical background and literature review, we

drew the conceptual framework of our study in Figure 1. As it shows, we use a multidimensional

approach for assessing project success, which was recognized by many other researchers (Pinto

& Mantel, 1990; Tatikonda & Rosenthal, 2000; Shenhar, Tishler, Dvir, Lipovetsky, & Lechler,

2002; Lechler & Dvir, 2010).

Figure 1. Conceptual framework of this study

Goal changes in our study are the changes that reflect a change in the project goals with

high importance and high frequency. It is typically caused by the conscious decisions of

stakeholders as we assume in this study that clients are one of main reasons for goal changes

(Baccarini et al., 2004). These frequent goal changes are harmful to the project. Project goals are

supposed to provide direction for the project team. Frequent goal changes may break down

efforts and cause difficulty in efforts to implement the project. As Williams (1999) recognized,

goal changes will result in product and project complexity while continuous changes may make

it extremely difficult to deliver the project in a stable way with constrained elements assigned to

a project. Thus, project progress may be hindered because of ad hoc changes or even terminated

(Baccarini et al., 2004). A few empirical studies have demonstrated the direct negative effects of

goal changes on project success (Murphy, Baker, & Fisher, 1974; Lechler, 1998; Dvir & Lechler,

Client Competence

Project Authority

Goal Changes Project Success . Efficiency . Effectiveness . Customer Satisfaction . Economic SuccessClient Support


Team Competence ++

-

+

-+

+

+

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2004). For example, Lechler’s study (1998) showed that a lack of continuity in goals is

significantly related to failed projects. Therefore, we expect a negative impact of goal changes in

all measures of project success.

Hypothesis 1: Goal changes are negatively related to project success.

The basic idea of project stakeholder theory is that the project has relationships with

many constituent groups and the support of these groups needs to be considered and maintained.

As clients are one of the primary stakeholders in the project, their support is important to project

success. When clients support the project, they will share a vision of common success measures

with the project team. In addition, their support will bring their commitment and buy-in to the

project that lays the foundation for successful development and implementation efforts of the

project team (Karlsen, 2002; Villachica, Stone, & Endicott, 2004). On the other hand, lack of

client support is often reported to be a factor contributing to project failure (Takim, 2009).

Therefore, we propose that client support will positively impact the success of project.

Hypothesis 2: Client support is positively related to project success.

In this study, client expectation alignment means the processes to bring client

expectations into alignment with project objectives. These processes include the extensive

involvement of clients to express their expectation, timely communication between the project

team and clients to increase shared understanding of the project and the like.

Taylor (2006) suggested that educating the client to have realistic expectations of how the

project will progress is a key to ensure client satisfaction. Some empirical studies have also been

conducted to test the effect of client management on project success. They find that client

involvement (Dvir, Lipovetsky, Shenhar, & Tishler, 1998; Deakin, 1999; Hyvari, 2006), client

consultation, and client acceptance (Pinto & Prescott, 1988), or client communication (Mo & Ng,

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1997; Gopal, Mukhopadhyay, & Krishnan, 2002) are critical success factors. Quality

improvement tools and techniques in project management also help heighten awareness of the

importance of gathering input from the customer (Kumar & Wolf, 1992; Jonker, 2000; Jugdev &

Müller, 2005). Pinto and Slevin (1988) emphasized the importance of interaction with the

project’s clients throughout the duration of the project. Further, researchers confirmed the role of

interaction with clients through different kinds of projects such as new product development

(Gruner & Homburg, 2000), design and build project (Mo & Ng, 1997; Chan, Ho, & Tam, 2001;

Deakin, 1999), defense development projects (Dvir et al., 1998), offshore software development

(Gopal et al., 2002), the high-technology projects (Hobday, 2000), and the large engineering

design project (Gil et al., 2006). For example, Gruner and Homburg (2000) found intensity of

customer interaction and closeness with customers to be significant in early and late stages of

new product development (NPD) projects.

In sum, we expect the processes to align client expectations will increase the efficiency of

the project, improve the effectiveness, and ensure client satisfaction and economic success.

Hypothesis 3a: Client expectation alignment has a strong positive effect on project

success.

In our conceptual discussion, we demonstrate that managing client expectations is an

effective way to reduce client induced goal changes. In practice, especially in software project

management, managing user expectations has been considered increasingly important.

Researchers point out that managing user expectation is to ensure that the assumptions held by

the user for a software project are realistic and consistent with the software deliverable promised

by the project team (Baccarini et al., 2004; Ginzberg, 1981). These expectations “must be

correctly identified and constantly reinforced in order to avoid failure” (Schmidt, Lyytinen, Keil,

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& Cule, 2001). That is the function of client expectation alignment. Client expectation alignment

is about managing the promises. Project goals will have a better chance of staying stable when a

project team’s promises reflect the project actually delivered rather than an idealized version. At

the same time, project teams should help clients set expectations at a reasonable level before the

project starts, and then reinforce their expectations and get their buy-in throughout the project.

Therefore, client expectation alignment is the key to manage client expectations to reduce the

frequent goal changes through educating clients to have realistic expectations, reinforcing their

perceived value of project and clarifying misunderstanding between clients and the project team.

We expect a negative effect of client expectation alignment on goal changes.

Hypothesis 3b: Client expectation alignment has a strong negative effect on goal

changes.

Client expectation alignment is expected to increase support from clients based on our

conceptual discussion. When clients’ expectations are aligned with project objectives, their

attitudes toward the project are also influenced in a positive way. According to the theory of

planned behavior, while the clients are aware that the project team is striving to meet their

expectations, they are willing to cooperate and commit to achieve shared goals. Their favorable

evaluation of the project also ensures a necessary buy-in and support during the implementation

of the project. Therefore, we propose:

Hypothesis 3c: Client expectation alignment has a strong positive effect on client

support.

We also expect client expectation alignment to relate indirectly to project success through

client support and goal changes as mediators. Indeed, as client expectation alignment reduces the

frequency of goal changes, project success will be improved since the negative impact of goal

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changes on project success is reduced. Similarly, as client expectation alignment increases client

support, it becomes increasingly likely that the client support will increase project success.

Considering the findings from prior empirical literature that client management has

significant direct effects on project performance, we expect that client expectation alignment will

still have significant direct effects on project success. Stated differently, we expect the

relationship between client expectation alignment and project success will be partially mediated

by goal changes and client support.

Hypothesis 4a: Client support partially mediates the relationship between client

expectation alignment and project success.

Hypothesis 4b: Goal changes partially mediate the relationship between client

expectation alignment and project success.

Since client expectation alignment is so important, we explored important factors that

might facilitate the alignment processes. We take into consideration the competence and

authority of relevant stakeholders including clients, project team, and the project manager.

In Cleland and Ireland’s (2004) book, competency is defined as being properly qualified

and capable, adequate for the stipulated purpose. Individuals’ competency depends on their

knowledge, skills, and attitudes. Since a project is usually conducted within the context of some

technology, we consider the technical knowledge of clients and the project team as part of their

competence. We also consider sufficient training and understanding of project team.

Cleland and Ireland (2004) define authority as the power to command others to act or not

to act. Project managers’ authority may be defined by their position and their competency. With

high competence or authority, clients, the project team, and the project manager have more

capabilities to influence each other and tend to have a shared vision of success criteria. In the

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client expectation alignment processes, when both clients and the project team have more

relevant technological knowledge, it is easier for them to communicate and achieve a common

understanding of the implementation process, its complexity, and its limitations. The clients’

expectations will be more realistic accordingly. The project manager with sufficient power builds

the foundation to align client expectations with project objectives since authority will be needed

to make change decisions about the project to align project with client expectations or to

negotiate with clients to bring their expectations in alignment with the abilities of the project

team to deliver the project. Thus, we expect client competence, project team competence and PM

authority will positively influence the client expectation alignment.

Hypothesis 5a: Client competence is positively related to client expectation

alignment.

Hypothesis 5b: Project team competence is positively related to client expectation

alignment.

Hypothesis 5c: Project manager authority is positively related to client expectation

alignment.

Methodology

Research Sample and Data Collection

The proposed model was tested based on a sample of project data collected between 2001

and 2006 in the United States. A detailed questionnaire was developed to collect information on

success factors of project management. The collection was assisted by project team members

and/or project managers. They were asked to select a single successful or failed project that was

recently completed within their organizations, or that was close to completion, with a budget of

at least $500,000 and duration of at least six months. These individuals were then given three

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identical questionnaires, which they were asked to distribute to the project manager, a core

project team member, and the senior manager responsible for the funding of the project. The

questionnaires were independently completed by the different participants. As a result, at least

two members of each project we selected responded to the survey, which resulted in over 600

surveys and a sample of 249 projects. Thirty-nine percent of our respondents are project

managers, thirty-six percent are project technical team members, and nine percent are project

administrative team members. Seventeen percent are other members. The multiple respondents

help to avoid the common rater variance and reduce the expected value of correlation between

systematic sources.

The sample included different kinds of projects. As shown in Table 1, we used the project

manager’s response about type of project. In our sample, 39% of the projects are new product

development projects, IT/IS projects count for 34%, and construction projects and R&D projects

are 8% separately. The sample also includes 5% organizational projects, 1% investment project,

and 6% other kind of projects we did not specify in our questionnaires. In sum, our sample

provides a representative cross-sectional distribution of projects conducted in U.S industry.

Table 1: Distribution of project types

Project type Frequency Frequency (%)

New product development 98 39

Software/IT development 38 15

IT system project implementation 47 19

Construction 19 8

Investment project (capital

equipment) 2 1

Organizational projects 12 5

R&D 19 8

Others 14 6

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Total 249 100%

Research Measures

The questionnaires used in this study include 199 single items and some quantitative

measures of project-specific characteristics. Out of these, 67 items were directly taken from

Pinto’s questionnaire, with permission of the author. The remaining items were developed with

the help of some experienced project managers. Each item was assessed on seven-point rating

scales with a range from “strongly disagree” to “strongly agree.” All constructs and items

relevant to this study are listed in Table 2. We applied existing and validated measurement from

prior literature. Those constructs consisting of multiple items were tested for composite validity

using factor analysis and Cronbach’s alpha. The Cronbach’s alpha scores ranged from 0.83 to

0.95, well above the acceptable scale levels as suggested by Van de Ven and Ferry (1980).

Project Success. There is no commonly accepted framework to measure project success.

Reviewing the project management literature, Brown and Eisenhardt (1995) and Tatikonda and

Rosenthal (2001) identified two dimensions of new product project performance: (1) the

operational success, and (2) market success. Pinto and Mantel (1990) provided three aspects that

were concerned with internal efficiency and external effectiveness of project performance: (1)

the implementation process itself; (2) the perceived value of the project; and (3) client

satisfaction with the delivered project. Shenhar et al. (2002) suggested another three success

criteria: (1) meeting design goals; (2) benefit to the customer; and (3) benefit to the organization.

Following our previous study (Lechler & Dvir, 2010), we use a four-criterion success measure:

efficiency, effectiveness, customer satisfaction, and economic success. The four criteria are

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confirmed by the exploratory factor analysis using our sample and the Alpha values of the four

success scales are between 0.85 and 0.95 indicating high reliability of the success measure.

Client Expectation Alignment. We measured this construct by integrating items from

the scales of client consultation and client acceptance developed by Pinto and Prescott (1990). In

their study, client consultation means communication and active listening to concerned parties

and potential users. The items measuring this construct include “the clients had been given the

opportunity to provide input early in the project development stage,” “the client were told

whether or not their input was adopted into the project plan.” Therefore, this process helps

clients express their expectations, which is necessary for the project team to align the project

objectives with the client expectations. The typical items for client acceptance are “potential

clients had been contacted about the usefulness of the project output,” “adequate advanced

preparation had been done to determine how best to ‘sell’ the project to the clients,” and the like.

From expectation perspective, these activities allow the project team to keep clients’

expectations realistic and aligned with the abilities of the project team to deliver the project. In

addition, two-way communication and mutual adaption between the project team and the clients

reflected in those two constructs are necessary to pave the way for our concept of client

expectation alignment. Thus, we include items from both of these construct as measures of client

expectation alignment. The result of exploratory factor analysis showed only one main factor

underlying the items, which suggests undimensionality of the created measurement construct

(Hair, Anderson Jr., Tatham, & Black, 1998). The reliability of this measure is 0.89 and suggests

a good reliability of this scale to measure.

Goal Changes. Two items are used to measure this construct. This scale emphasizes the

frequency and the magnitude of the change in project goals. The alpha of this variable is 0.85.

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Client Support. The item used to measure this variable is “In case of difficulties, the

clients supported the project team.” If the clients can support the project team in case of

difficulties, they must have high support of the project. Therefore, this item represents the scale

to measure client support.

Client Competence. Client competence mainly measures the technical competence of

the clients using the item “During the negotiation process the client appeared knowledgeable

regarding the technical aspects of the project.”

Team Competence. Three items are used to measure team competence. One item is

about sufficient training, another one is about technical competence and the third about the

project understanding of the project team. The alpha of the construct is 0.83.

Project Manager’s Authority (PM authority). PM authority is measured by four items

describing the sufficiency of project manager’s authority to negotiate with clients, make

necessary decisions and make change decisions to achieve the project goals. The alpha of PM

authority is 0.84.

Table 2: Measurement

Scale Alpha Items

Efficiency 0.85 1. The project was completed on schedule.

2. The project was completed within budget.

Effectiveness 0.95 1. The project met all technical specifications.

2. The project does what it is supposed to do.

3. The results of this project represent an improvement in

client performance.

4. The project is used by its intended clients.

5. The project has a positive impact on those who make

use of it.

6. Important clients, directly affected by the project,

make use of it.

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7. Clients using this project will experience more

effective decision making and / or improved

performance.

Customer satisfaction 0.91 1. The clients were satisfied with the process by which

this project was completed.

2. The clients are satisfied with the results of the project.

Economic success 0.89 1. The project was an economic success for the

organization that completed it.

2. All things considered, the project is a success.

Client expectation alignment 0.89 1. Potential clients had been contacted about the

usefulness of the project output.

2. The clients had been given the opportunity to provide

input early in the project development stage.

3. The limitations of the project had been discussed with

the client (what the project is not designed to do).

4. The clients were told whether or not their input was

adopted into the project plan.

5. Clients know whom to contact when problems or

questions arose.

6. The clients (intended users) were kept informed about

the project’s progress.

7. Adequate advanced preparation had been done to

determine how best to “sell” the project to the clients.

8. There was adequate documentation of the project to

permit easy use by the clients (instructions, manuals, etc).

9. An adequate presentation of the project had been

developed for the clients.

Goal changes 0.85 1. Project goals were often changed.

2. At least one major project goal was changed

considerably.

Client support N/A 1. In case of difficulties, the clients supported the project

team.

Client competence N/A 1. During the negotiation process, the client appeared

knowledgeable regarding the technical aspects of the

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project.

Team competence 0.83 1. The project team was sufficiently trained.

2. The project team was technically competent.

3. The people implementing the project understood it.

Project manager’s authority 0.84 1. The authority allocated to the position of project

manager was sufficient.

2. The project manager had enough authority to negotiate

agreements with project clients (internal or external)

regarding the terms, conditions, and or deliverables of the

project.

3. The project manager had sufficient authority to make

all the necessary decisions to achieve the project goals.

4. The project manager had the authority to change

objectives in order to achieve the project goal.

Data Analysis

Because the variables in this study were conceptualized at the project level, individual

scores had to be aggregated to the project level by taking the average of project members’ scores.

We calculated the within unit agreement rwg(j) to justify our aggregation. The rwg(j) statistic

estimated the consistency of judgments made by project manager, project team members and

senior managers in a project for each relevant variable. The average rwg(j) values for all scales

were above the generally acceptable level of 0.70 (George, 1990) except for those of 43 projects

which showed a lower agreement among project team members. Therefore, we deleted the data

of those 43 projects and aggregated the left 206 project teams. There were no big differences in

the distribution of type of respondents and projects. All further analyses in our study were based

on the sample of 206 projects.

The mediational hypotheses were tested using a structural equation modeling—LISREL.

The advantage of LISREL is to allow simultaneous analysis of hypothesized causal relationships

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for multiple variables (Jöreskog & Sörbom, 1993). It greatly simplifies the modeling of

mediation by allowing one to incorporate measurement error and provides modeling of

nonrecursive structures (Brown, 1997) which are two limitations of multiple regression models

(Baron & Kenny, 1986). LISREL can also give a diagram of all relationships among variables,

compute indirect effects and handle missing data in a better way. Multiple criteria were used to

evaluate the fit of the structural equation model such as chi-square, adjusted goodness of fit

index (AGFI), and the comparative fit index (CFI). To accept the model, the following criteria

have to be satisfied: a chi-square with P above 0.05 (Browne & Cudeck, 1993), AGFI > 0.90

(Baumgartner & Homburg, 1996), and CFI > 0.85 (Bentler & Bonett, 1980).

Results

Descriptive Statistics

Descriptive statistics and zero-order correlations are provided in Table 3. Consistent with

prior studies, goal changes are negatively correlated with all success measures (r between –0.33

and –0.4) while client support are significantly positively correlated with success (r between 0.53

and 0.77). Other significant correlation includes the relationship between client expectation

alignment and project success (r between 0.40 and 0.65). As we expect, client expectation

alignment is significantly negatively related with goal changes and positively related with client

support. Finally, the correlations suggest that client competence, team competence, and PM

authority significantly relate to client expectation alignment with a correlation coefficient of

0.50, 0.60, and 0.38 respectively.

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Table 3: Descriptive Statistics and Correlations Among the Measured Variables

1 2 3 4 5 6 7 8 9 10

1. Efficiency 1

2. Effectiveness 0.55** 1

3. Customer

satisfaction 0.65** 0.86** 1

4. Economic success 0.66** 0.88** 0.86** 1

5. Goal changes -0.33** -0.35** -0.37** -0.40** 1

6. Client support 0.53** 0.60** 0.77** 0.66** -0.31** 1

7. Client expectation

alignment 0.39** 0.65** 0.61** 0.58** -0.31** 0.59** 1

8. Client competence 0.23** 0.33** 0.36** 0.35** -0.17* 0.35** 0.50** 1

9. Team competence 0.50** 0.55** 0.52** 0.55** -0.42** 0.46** 0.60** 0.34** 1

10. PM authority 0.45** 0.44** 0.50** 0.52** -0.28** 0.36** 0.38** 0.19** .419** 1

Mean 4.32 5.52 4.99 5.08 3.79 4.79 5.24 4.88 5.41 4.60

Std. Deviation 1.72 1.28 1.55 1.68 1.55 1.08 1.00 1.36 1.07 1.21

Minimum 1.00 1.05 1.00 1.00 1.00 1.00 1.56 1.00 1.83 1.00

Maximum 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00

Note: * Correlation is significant at the 0.05 level (2-tailed).

** Correlation is significant at the 0.01 level (2-tailed).

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Tests of the Research Hypotheses

We applied LISREL analysis to test the interaction of our model variables

simultaneously. The results of the structural equation model are presented in Figure 2. Fit

indexes suggested that the model fitted reasonably well (χ2 = 2.19, df = 1, P–value=0.14, AGFI

= 0.94, CFI =1.00). Parameter estimates are from the completely standardized solution and are

significant at P < 0.05 or better. Since all tests achieve or exceed the required fit criteria, the final

structural equation model is accepted.

Figure 2. Results of the structural equation model

Hypothesis 1 stated that goal changes would be negatively related to project success. The

significantly negative path coefficient (-0.14) of goal changes on project success supports this

hypothesis. The high positive impact (+0.59) of client support on project success fully supports

our second hypothesis H2. As the positive path coefficient (+0.24) shows project success is

significantly affected by client expectation alignment. Hypothesis 3a describing the direct impact

of client expectation alignment on project success is supported. The signs of the path coefficients

indicate negative effect (-0.32) of client expectation alignment on goal changes and positive

effect (+0.56) of client expectation alignment on client support. Thus, Hypothesis 3b and 3c

proposing the effects of client expectation alignment on goal changes and client support are also

fully supported.

Goal Changes Project

Success Client Support


+0.59

+ 0.24

-0.32

+0.56

-0.14

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Table 4: Direct and Indirect Effects to Project Success

Project success

Direct Indirect Total

Client expectation alignment +0.24 +0.38 +0.62

Goal changes -0.14 -- -0.14

Client support +0.59 -- +0.59

Hypothesis 4a and 4b proposed that client expectation alignment would be mediated by

goal changes and client support to influence project success. Baron and Kenny (1986) defined

that a variable functions as a mediator when it meets the following conditions: (1) variations in

levels of the independent variable significantly account for variations in the presumed mediator

(i.e., Path a); (2) variations in the mediator significantly account for variations in the dependent

variable (i.e., Path b); and (3) when paths a and b are controlled, a previously significant relation

between the independent and dependent variable is no longer significant, with the strongest

demonstration of mediation occurring when path c is zero. In our model, Condition 1 was

assessed by H3b and H3c and was supported. Condition 2 was assessed by H1 for the effect of

goal changes on project success and H2 for that of client support on project success. Condition 2

was also met for both mediators. Condition 3 was assessed by the significance test of indirect

effects of client expectation alignment on project success. LISREL gave the direct effects of

client expectation alignment on project success (+0.24), total effects (+0.62), and total indirect

effects (+0.38) as shown in Table 4 and significant tests of these effects. Since we proposed two

mediators, we followed Brown’s (1997) suggestions to decompose the total indirect effects of

two mediators into two specific indirect effects. The specific indirect effects of client expectation

alignment on project success via goal changes (0.05) and client support (0.33) were significant.

Since three conditions for a mediational effect to be present were met, Hypothesis 4a describing

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the mediational effect of goal changes and 4b describing the mediational effect of client support

are fully supported.

The exploratory hypothesis H5, proposing facilitating factors of client expectation

alignment, was tested by a linear regression model using stepwise method. Stepwise regression is

a procedure in which the most correlated variable is entered into the equation first, and then

remaining variance in dependent is explained by the next most correlated variable and so on. The

results of the regression model are shown in Table 5. All three determinants are significantly

related with client expectation alignment. Project team competence is the most important

determinant. The three variables in total account for 50% of variance in client expectation

alignment. We also tested the collinearity among independent variables and it was not a problem

in the model. Therefore, Hypothesis 5 is supported.

Table 5: Regression Results With Client Expectation Alignment as the Dependent Variable

Variables entered Step 1 Step 2 Step 3

Project team

competence

0.62**

(0.05)

0.51**

(0.05)

0.43**

(0.05)

Client competence 0.33**

(0.04)

0.32**

(0.04)

PM authority 0.17**

(0.05)

F value 118.82** 88.22** 64.30**

R2 0.38 0.48 0.50

R2 change 0.10 0.02

Notes:* p<0.05 ** p<0.01

Standardized betas are given with standard errors in parentheses.

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Discussion

Prior literature suggests that taking into account the needs and requirement of project

stakeholders is an essential element of project success (Cleland, 1986; Diallo & Thuillier, 2005;

Olander & Landin, 2005). Our study supports this view. In addition, we suggest that dynamics of

client expectations drives the need for managing client expectations. We developed a conceptual

model of instability of client expectations to understand its effects and possible reasons. The

instability of client expectations may cause a project to lose its relevance and client support or it

may lead to frequent goal changes, both of which are harmful to project performance. We made

two assumptions to explain why clients change their expectations: one is information asymmetry,

and the other is value maximization. Understanding the underlying reasons that cause clients to

change their expectations helps us to propose that client expectation alignment will stabilize

client expectations. It is the processes to align client expectations with project objectives over

project implementation. Our result showed a significant and highly positive relationship between

client expectation alignment and all project success criteria including efficiency, effectiveness,

customer satisfaction, and economic success.

Moreover, we explored how alignment processes influence project success through

reducing goal changes and increasing client support. Goal changes and client support are

proposed to mediate the effects of client expectation alignment on project success. The

mediational effects are fully supported. However, goal changes have a weaker mediational effect

(7% of the total effects) while client support has a much stronger mediational effect (54%). One

possible reason is that negative effects are usually hard to detect while positive effects are

overestimated in empirical studies. The results confirm the findings in the literature of change

management. The study supports the argument of researchers (Gil et. al, 2006; Hobday, 2000;

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Eckert, Clarkson, & Zanker, 2004; Baccarini et al., 2004) that clients are the main causes for

change requests in projects due to instability of their expectations. The negative effect between

goal changes and client success is consistent with other researchers (Murphy et al., 1974;

Lechler, 1998).

Our results also confirmed the significant effect of client support on project success,

which is a general success factors suggested by stakeholder theory. Combing these findings, we

can see that client expectation does not only influence project success directly, but it is also

mediated through goal changes and client support to improve project performance.

Finally, it is worthwhile to note that three factors were found to be important to facilitate

the alignment processes: client competence, project team competence, and PM authority. These

three factors explain about 50% of variance in client expectation alignment. They represent

important preconditions to align client expectations with project objectives.

Implications and Outlook

In this paper, we focus on management of client. Specifically we are interested in

management of client expectations represented by client expectation alignment. By analyzing the

interactions between client expectation alignment, client support, goal changes and project

success, this study contributes to stakeholder theory. Stakeholder management is an important

part of the management of an enterprise and the management of a project. From stakeholder

management perspective, a project needs to simultaneously satisfy a variety of its stakeholders

each of whom has its own desires and expectations with respect to the project. However,

stakeholder expectation does not often appear as a separate construct in stakeholder literature.

Our study showed that client expectation is an important construct for study because researcher

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can use client expectation to explain stakeholder influence or behaviors. In our case, dynamic

client expectation is a driver for project change.

The results of this study also showed that the management of client expectations has

significant effects on project success both directly and indirectly through goal changes and client

support. Although prior literature indicated that client management could positively influence

project success, we have proposed the mediating effects for the first time. The analysis provides

insights into the role of client expectations on goal changes and client support and their stability

for project performance. Project management research should consider both direct and indirect

effects of client expectations on project success.

This study makes a contribution to the practice of project management in two ways. First,

according to our study, management of client expectation helps improve project performance.

The results also suggest the nature of alignment processes. One important suggestion is allowing

clients to express their expectations from the start and during the project. A second suggestion is

rather than tailoring the project to meet the client’s unrealistic expectations, the project team may

attempt to educate their clients to let them know what is achievable through the project by

intense communication. The clients become more realistic when they understand the

implementation process, its complexity and its limitations. Once they become committed to the

project, they will tend to support the project even in difficult situations. Second, our study shed

light on the management of change. Prior literature provides many prescriptive suggestions to

manage changes caused by clients such as making more explicit to clients the economic impact

of changes, formulating contractual arrangements to shape the behavior of the parities

(Dayanand & Padman, 2001) or frequent meetings with clients to discuss the status of the project

(Pitsis, Clegg, Marosszeky, & Rura-Polley, 2003). However, our study explored mechanisms to

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stabilize client expectations. Our results showed that management of client expectations did

reduce goal changes. Therefore, this study helps the practitioners who struggle with frequent

change requests from clients to understand their issue in a deep way and develop their own

alignment process accordingly.

Although the study offers several new insights, some limitations should be noted. One

limitation is that although we proposed a conceptual model for reasons of instable client

expectations, we were not able to directly test our theoretical model. Another limitation is the

common method variance problem, which is attributable to the measurement method itself

(Podsakoff, Mackenzie, Podsakoff, & Lee, 2003). One potential source of the common method

variance is common rater problem, which means the same person is asked about his or her

activities and outcome. Since we collected project data from at least two members of a project

team, this doesn’t seem to be a significant problem. Another potential source is related with the

same questionnaire we used for collecting all of data. We conducted a Harman’s single-factor

test, and there was not a primary factor emerging from the confirmatory factor analysis.

Therefore, the common method variance in our paper does not pose any significant problems.

Another limitation is the absence of a direct measure of client expectation. Finally, the design of

this study is cross-sectional, which limits our ability to draw causal inferences.

From this study, we gain some suggestions for further research. First, we introduced an

operational definition for our core variable: client expectation alignment that needs to be more

accurately defined and operationalized. At least alternative measurement models should be

tested. Second, we explored the effect of management of client expectations in this paper, and it

was found to be beneficial to the project. A further direction may be how to manage expectations

of different internal and external stakeholder groups and its effect on project success. Third,

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project uncertainty may be a factor that could be added to our suggested model as a moderator

variable. When the project is under high uncertainty, the completion of the goals involves high

risks. In this situation, aligning client expectations with project objectives to get necessary

commitment and buy-in from clients is more important for the project than under lower

uncertainty. Fourth, the existence of significant direct effect between client expectation

alignment and project success indicates more mediating factors except goal changes and client

support. We may develop a more complete theory about instability of client expectations to find

more significant mediators that help us understand the role of client expectation alignment in

project management.

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Lecture06 reading client_expectation_alignment

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