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Change Management

Change management operates at two levels: within the organisation and within the project. For the former, the challenge is to gain acceptance in the wider organisational and environmental context for implementing PRG processes and structures. At the project level, change is usually associated with a variation in project scope which impacts project activities, including project risk management. Both require careful management of the attitudes of the personnel involved.

WITHIN THE ORGANISATION

There are a number of models that provide guidance to effect organisational change. Among the well-known are the following (see Gareis 2010):

• Levy and Merry (1986). A distinction is made between '1st order change' and '2nd order change'. With the former, changes are implemented within the organisation's existing paradigm and hence are rarely noticeable. Changes in the latter result in a paradigmatic shift and bring about 'discontinuous, deep structural and cultural change' (Gareis 2010: 315).

• Heitger and Doujak (2008). A two-dimensional matrix is used to manage change. The vertical axis shows the demands for change while the horizontal axis indicates the potential to change according to change types such as survival, repositioning, renewal and learning.

• Lewin (1947). A three-phase model changes the current state of stability to a new state of stability. The transformation is achieved through procedures of unfreezing, moving and refreezing the organisation. It requires drivers to initiate and complete the necessary changes.

• Kotter (1996). Attention is given to overcoming resistance to change and providing effective leadership. Change is managed by addressing issues such as urgency, vision and strategy development, communications, empowerment and anchoring new approaches.

• Gareis (2010) commented on the practicality of using the above models: they are quite general and vague on how change occurs or is implemented. Renn (2010) focused on psychological factors that influence the acceptance of change. He identified five factors that he found 'almost intuitively plausible' (p. 231); even more so when considered in the context of introducing governance as shown below.

• Attractiveness of information source. This is heightened when there is dose similarity between the viewpoints of the source and receiver. For example, governance is achieved when employees understand its benefits as a result of completing an awareness and education programme.

• Sympathy or empathy of the receiver for the source. The receiver identifies with the source or its motivation. This could occur when the organisation is performing poorly and the introduction of better governance will lead to improvement.

• Credibility of the source. Perceived as competence, expertise, objectivity and impartiality. A 'change co-ordinator' (Stare 2010) may be appointed who meticulously and impartially documents a change agenda and drives progress.

• Suspicion of an honest motive. Receivers do not detect any hidden agenda or motives. Principles of governance are dearly articulated and decisions are justified and made transparent.

• High social status or power of the source. Determined by the relative positions of the source and recipient. Governance is initiated at the highest level and guided by various authorities in the organisation. This gives credibility that governance is achieved through consensus in the organisation's best interests.

Mueller (2009) suggested applying institutional theory to give legitimacy to governance. 'Legitimacy aims to ensure that actions carried out and decisions taken during governance are performed in way that achieves legitimacy within its context.' Legitimacy itself 'is a generalized perception or assumptions that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions' (p. 88). There are three forms of legitimacy that can affect an organisation. Under pragmatic legitimacy, governance is justified on the basis of self-interest and achieving high benefits for shareholders/stakeholders. With moral legitimacy, governance supports actions that are highly ethical and fall within the broader norms of society. Finally, cognitive legitimacy assumes that governance is understood within the organisation because its actions are predictable, meaningful and self-evident.

According to Mueller (2009), an organisation will act and make decisions about governance that balance benefits maximisation (pragmatic legitimacy), moral appropriateness (moral legitimacy) and ease of understanding in the wider organisational context (cognitive legitimacy). Some organisations show a greater propensity towards one or other form. For example, technology companies tend to emphasise pragmatic (exploiting technology breakthroughs) and moral (improving quality of life through technology) legitimacy.

WITHIN PROJECTS

Stare (2010: 195) lamented the absence of current information and knowledge about the topic of project change management: 'Despite the awareness that changes are an important factor in the efficient execution of projects, an examination of the literature shows that the area of change management is poorly addressed.' Change can be brought about deliberately or by chance. With the former, change is usually linked to variations in project scope (Gareis 2010). It introduces risks and the need for scope control, i.e. can the project's objectives and other parameters be managed within the new risk environment? If not recognised in a timely manner, risks will have a negative impact on the project schedule, costs, quality and so on.

When a request for change is initiated, a formal change management process takes effect. The process itself involves generic steps starting with documenting the request, evaluating it, gaining approval and implementing the change (Stare 2010). How effective change procedures are can be determined by a project audit. The auditor is seen as 'another' project manager since he/she independently gathers information about the project, reviews progress against goals and develops best-practice criteria. The focus of the audit is on project management effectiveness and efficiency. Its main focus is on the project scope statement to establish how the project has met the objectives as laid out in the statement and how changes have been managed. The following are examples of topics and questions for a project audit:

• Business planning: were project risks identified?

• Organisation-wide culture: did top management provide support to project risk management?

• Project team: did they perform the role of 'risk managers'?

• Project risk identification, assessment and response: was there a systematic process?

• Key project risk processes, decisions and milestones: was there quality assurance and control and were decisions implemented?

• Resources: any constraints and how were they managed?

• Safety and reliability: were safety tests in place and executed?

• Project scheduling: were they adjusted for risks?

• Project monitoring: were risks mitigated and reduced?

Relevance of Change Management to Project Risk Governance

The introduction of PRG requires a formal change management system to be established and implemented at the organisational level. This may require organisations to rethink their governance structures and individuals to re-learn their roles and relationships. When senior management involves itself in project risk decision-making, the organisational culture also changes. They 'buy into' the concept of, and commit to, PRG. As a prerequisite, senior management should demonstrate their understanding and be able to accurately describe their governance approach. This becomes an important predictor of PRG performance.

When change is imposed at the project level it introduces new risks. If not recognised in a timely manner, they will lead to negative impacts on the project schedule, costs, quality and so on. The key challenge for project managers is to identify these risks as part of ongoing risk control and monitoring procedures and to respond in a cost-effective manner. Barkley (2004) provides an interesting perspective of how project risk management is changing. Project risk planning (i.e. planning project by project) is moving towards preparing the organisation towards adopting a risk attitude to everything that is being done, on a continuous basis.

 
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