Chapter Summary

This chapter reviewed the differences between LIPs managed in developed and developing economies, examined the root causes of poor performances in LIPs managed in developing economies and investigated how common project management techniques and methodologies from developed economies apply to the situation in developing economies. The reviewed literature indicate that LIPs often fail to meet their original estimations and expectations; largely due to factors such as optimism bias, strategic misinterpretation and inadequate planning and estimation arising from the complexities and duration of such projects; but evidences from the online report search shows that LIPs fail more frequently in developing economies than in developed economies.

On the differences between management of LIPs in developing and developed economies, reports show that LIPs managed in both economic regions experience poor performances in meeting their planned objectives.

There were more reports of failed projects in developing economies than on developed economies. Furthermore, a report indicated that over 11,600 LIP have suffered years of delay, cost overruns and some cases abandonment in Nigeria; an example of developing economy; in the last forty years; similar reports were found on projects in Malaysia, Ghana etc. on the contrary, LIPs in developed economies generally reported cases of delays, cost overruns and abandonment but the cases were not in such high numbers as in developing economies. Though, there was no metric to measure the causes of the difference in LIP failure rate in the two regions, comparison was made in terms of the way LIPs are managed in the two economic regions based on relevant literatures found. The comparison was made under the headings;

management and availability of resources, supply chain and infrastructure, development and deployment of suitable techniques, tools and methodologies, influence on decision making process and control of external factors on LIPs. In developing economies, there is lacking in the availability

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of resources such as skilled labour, funds and civil infrastructure for supporting LIP in comparison to developed economies, thus LIPs managed in developing economies are likely to face tougher challenges in managing their resources well. The supply chain process in developing economies face a less stable economic condition, thus, it is fair to expect more emerging changes in the original estimations of the project or else a thorough understanding of the environment is established and adequate measures taken. However, this is not the case in developing economies at present;

hence procurement of materials for project contributes to delay in LIPs more than in developed economies. The use of project management techniques developed in an economically rational environment was found to be not easily applicable in developing economies. Most techniques used by LIPs in developing economies are from developed economies as the management organisations tend to use these techniques to attract funding; these LIPs are most times part sponsored by international bodies who approve funding when they are comfortable and familiar with how the project will be managed.

Furthermore the decision-making process and control of factors external to the projects in developed economies tend to be more advanced than in developing economies.

The literature review shows that projects have continued to perform poorly in developing countries regardless of the availability of extensively developed project management techniques and tools. A review of the techniques, indicate that this lack of significant improvement can be associated with the negligence of the critical factors that could provide better monitoring and control in LIP; such as governance of projects. Project governance is focused on setting the terms of reference for an effective relationship between the key elements in the project; initiating, planning, executing, controlling and closing; to ensure transparency, accountability and most of all, justification for decisions in and between the boundaries of these elements while project management focuses on the development of a project delivery plan and the micro management of project resources according to agreed plan. Several reports argue that project governance has the answers to the long lasting poor performances in LIP as the introduction of corporate

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governance to the corporate world during the poor management issues of 1980 helped in resolving the issues. Therefore, the next chapter will look into project governance to examine its significance, effectiveness, challenges and application.

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CHAPTER 3.0

DOES PROJECT GOVERNANCE REALLY HAVE THE ANSWER TO THE ISSUES OF LIP IN

DEVELOPING ECONOMIES?

3.1 Introduction

From the previous chapter, several reports have suggested poor performance of LIPs in developing countries, despite the existence of numerous project management techniques and methodologies. It was evident from the previous chapter that most of the causes of poor performances in LIPs were due to the way in which the project management techniques and methodologies were applied rather than on the techniques and methodologies themselves; largely due to poor monitoring and control across the four stages of projects. The introduction of corporate governance in the 1980’s, as a response to poor management in the corporate world, helped resolve the management failures at that time by providing a platform for better monitoring and controlling of business activities. Thus there is a growing perception that project governance could provide the solution to the issues of poor performance of LIPs. This chapter will examine the importance of project governance in section 3.2. Section 3.3 will investigate the common practices, examine challenges that may interfere with the adherence to project governance recommended practices in LIPs, and evaluate if project governance provides the answer to the main causes identified to be critical to the performance of LIPs in developing countries.

Section 3.4 will summarize the chapter.