Roger Klev holds a PhD degree in industrial economics from NTNU. He is currently working in leadership and organizational development in Praxes AS (where he is the owner and CEO). He has been Research Director in SINTEF and Associate Professor at NTNU. In recent years, he has worked with leadership and business development in the Reinertsen Group. For 25 years, Roger Klev has assisted a wide range of Norwegian organizations in a variety of development processes, including Norsk Hydro, Reinertsen Group, BackeGruppen, BN Bank and Marintek.
With both a business and a global perspective, this book presents new research on challenges in the project manager role, changes and collaboration in projects. The authors also provide insight into what it takes to deal with challenges, based on wide-ranging research in project management and leadership over the past 20 years.
Wenche Aarseth, PhD, is Associate Professor in project management at Norwegian University of Science and Technology (NTNU).
Asbjørn Rolstadås is Vice-Dean of the Faculty of Engineering Science and Technology and Professor at the Department of Production and Quality Engineering at NTNU.
Roger Klev holds a PhD degree in industrial economics from NTNU. He is currently working in leadership development and organizational development in Praxes AS (where he is the owner and CEO).
PROJECT LEADERSHIP CHALLENGES Their nature and how they are managed
PROJECT LEADERSHIP CHALLENGES
Asbjørn Rolstadås is Vice-Dean of the Faculty of Engineering Science and Technology and Professor at the Department of Production and Quality Engineering at NTNU. He has more than 30 years of experience in research, education and consulting in project management. He has published 15 books and some 300 scientific articles on production engineering, production management, productivity and project management. Asbjørn Rolstadås has been a key resource in the development of the Norwegian academic community in project management. In 2014, he was awarded the King’s Medal of Merit for his contribution to the field.
This book is concentrating on leadership in projects, in particular project managers and their leadership responsibilities. Project leadership concerns how the project manager creates direction, progress and cooperation to ensure that the organization does the best possible job in achieving the project’s goals.
Wenche Aarseth, Asbjørn Rolstadås and Roger Klev
Wenche Aarseth, PhD, is Associate Professor in project management at Norwegian University of Science and Technology (NTNU). She is responsible for the specialization in project management and is a member of the doctoral board at the faculty of Engineering, Science and Technology at NTNU. Wenche Aarseth heads the Executive Project Leadership Programme. For fifteen years she has worked with organizations such as the large global oil company Statoil, Norwegian Public Roads Administration (Statens vegvesen), Norwegian Directorate of Public Construction and Property (Statsbygg), and several of the largest Norwegian finance institutions. She has in-depth experience in the development and implementation of leadership development programmes in project management.
Wenche Aarseth, Asbjørn Rolstadås and Roger Klev
ISBN 978-82-450-2130-1
Omslag med klaff.indd 1
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PROJECT LEADERSHIP CHALLENGES
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Wenche Aarseth, Asbjørn Rolstadås and Roger Klev
PROJECT LEADERSHIP CHALLENGES Their nature and how they are managed
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Copyright © 2016 by Vigmostad & Bjørke AS All Rights Reserved Graphic production: John Grieg, Bergen ISBN: 978-82-450-2130-1 Cover design by Kaja Vik Cover photos: © Kaja Vik (top) © leofrancini / yayimages.com (bottom left) © Wavebreakmedia / yayimages.com (bottom right) Thank you to Project Norway and members for invaluable help with the survey presented in this book. We would particularly like to thank the following from NTNU: professor Bjørn Andersen, Tonje Berg Hamnes, Nina Lødøen and Kaja Vik. Inquiries about this text can be directed to: Fagbokforlaget Kanalveien 51 5068 Bergen Tel.: 55 38 88 00 Fax: 55 38 88 01 e-mail: fagbokforlaget@fagbokforlaget.no www.fagbokforlaget.no All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the publisher.
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PREFACE This book is about leadership and management. It is confined to leadership and management in projects, and it focuses on the project manager and his or her leadership responsibilities. It presents new research results as well as existing theory and practice. Project leadership is different from project management. It involves establishing project organization as well as managing the project execution. In somewhat simplified terms, we may say that project leadership includes project management (methods/techniques), managing people and organization of the project. Project leadership concentrates on the project manager – how he or she creates direction, motivation and cooperation to ensure that the organization does the best possible job in realizing the objectives of the project. Project leadership and project management overlap. It is neither possible nor necessary to define clear dividing lines between them. The distinction is whether we focus on the leadership role or on the organization model itself. This means that when we discuss the leadership role in this book, we need to include some material that has traditionally been regarded as project management. This applies to stakeholders, organizational models and contracts, for example. We do not address traditional project management, but include a brief section as background material. We hope that this book will be useful both for experienced project managers and those who are about to assume the role of project manager. Trondheim, 20 June 2016 Wenche Aarseth
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Asbjørn Rolstadås
Roger Klev
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CONTENTS Part 1 PROJECT CHALLENGES Chapter 1
INTRODUCTION ....................................................................................
15
Chapter 2
PROJECT CHALLENGES SURVEY ..............................................................
17
Chapter 3
SURVEY CONCLUSIONS ......................................................................... 3.1 3.2 3.3 3.4 3.5 3.6
Managerial and leadership challenges in projects .................................... The challenging changes ................................................................... Is ethics no challenge?....................................................................... Size matters .................................................................................... Project types and industrial differences ................................................. Staff members and project challenges...................................................
27 27 29 31 33 33 34
Chapter 4
CRITICAL SUCCESS FACTORS .................................................................. 4.1 4.2 4.3
Project goals ................................................................................... Project success and project management success ................................... Critical success factors ......................................................................
37 37 39 39
Part 2 PROJECT LEADERSHIP AND MANAGEMENT Chapter 5
LEADERSHIP AND MANAGEMENT ........................................................... 5.1 5.2
Definitions ...................................................................................... Projects in business development ........................................................
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Chapter 6
THE PROJECT MANAGER ROLE ............................................................... 6.1 6.2 6.3 6.4 6.5 6.6
The management profession .............................................................. Leadership skills............................................................................... Leadership style – situation based leadership ......................................... Leadership and motivation ................................................................. Transformational leadership ............................................................... The project manager’s leadership ........................................................
53 54 56 58 59 61 62
Chapter 7
THE GLOBAL PROJECT MANAGER ........................................................... 7.1 7.2 7.3 7.4 7.5
Globalization................................................................................... Challenges in managing global projects ................................................ Global project success factors ............................................................. Case study ...................................................................................... Cultural understanding .....................................................................
65 65 67 69 71 77
Part 3 THE PROJECT ENVIRONMENT Chapter 8
THE PROJECT PROCESS ......................................................................... 8.1 8.2
Project life cycle ............................................................................... Project execution model ....................................................................
83 83 86
Chapter 9
STAKEHOLDERS .................................................................................... 9.1 9.2
Stakeholder types ............................................................................ Stakeholder management ..................................................................
89 89 91
Part 4 HOW TO MANAGE CHALLENGES Chapter 10
MANAGEMENT OF CHANGES .................................................................
99 10.1 Changes and variations ..................................................................... 99 10.2 Contingencies ................................................................................. 101 10.3 Cost engineering ............................................................................. 103
Chapter 11
THE DECISION PROCESS ........................................................................ 107 11.1 Uncertainty and risk .......................................................................... 107 11.2 Decision support.............................................................................. 115
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contents 9
Chapter 12
ORGANIZATIONAL COMPLEXITY............................................................. 119 12.1 Organization ................................................................................... 12.1.1 Project organization models ........................................................... 12.1.2 The project organization ................................................................ 12.1.3 Project management office ............................................................ 12.2 Collaboration .................................................................................. 12.2.1 Project collaboration .................................................................... 12.2.2 Collaboration management ........................................................... 12.2.3 Collaboration versus competition ..................................................... 12.2.4 Business understanding ................................................................ 12.2.5 Collaboration strategies ................................................................ 12.2.6 Collaboration models ................................................................... 12.3 Conflict and communication ............................................................... 12.3.1 Communication .......................................................................... 12.3.2 Active listening ........................................................................... 12.3.3 Mental models and conflicts ........................................................... 12.4 The project team .............................................................................. 12.4.1 Team versus group ....................................................................... 12.4.2 Contribution to team work ............................................................. 12.4.3 Team development phases ............................................................. 12.4.4 Goal oriented team development ..................................................... 12.4.5 Team models ..............................................................................
119 119 125 127 131 131 132 133 137 137 138 141 141 142 144 146 146 147 149 151 152
Chapter 13
TECHNOLOGICAL COMPLEXITY .............................................................. 157 13.1 What is project complexity? ................................................................ 157 13.2 Taxonomy for project complexity ......................................................... 161 Chapter 14
CONTRACTING ..................................................................................... 165 14.1 Contract formats .............................................................................. 165 14.2 Contract management ...................................................................... 172
REFERENCES ........................................................................................ 177 INDEX .................................................................................................. 191
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LIST OF FIGURES Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 2.7
Size of organization of respondent ..........................................................18 Size of project of the respondent .............................................................18 Type of project the respondent is engaged in ..........................................19 Role of the respondent in the project .......................................................19 Degree of individual challenge experienced ........................................... 20 Challenge index for each challenge factor................................................21 Challenge index for each challenge factor and the size of the organization .............................................................. 22 Figure 2.8 Challenge index for each challenge factor and the project size ............... 23 Figure 2.9 Challenge index for each challenge factor and type of project ................ 23 Figure 2.10 Challenge index for each challenge factor and the respondent’s project role. .......................................................... 24 Figure 2.11 Average individual challenge index ........................................................ 24 Figure 4.1 Success criteria for owner and project organization ................................ 40 Figure 5.1 Project leadership and project management .......................................... 46 Figure 5.2 Business model ...................................................................................... 49 Figure 7.1 Best practice that contributes to successful global projects .................... 73 Figure 8.1 Project life cycle ..................................................................................... 84 Figure 8.2 Project phases and steps in a construction project.................................. 85 Figure 8.3 Project execution model......................................................................... 87 Figure 9.1 Stakeholder types .................................................................................. 90 Figure 9.2 Stakeholder matrix ..................................................................................91 Figure 9.3 SWOT analysis ....................................................................................... 94 Figure 11.1 Risk management process .................................................................... 112 Figure 11.2 Risk matrix design ..................................................................................113 Figure 11.3 Risk matrix example .............................................................................. 114 Figure 11.4 Decisions and uncertainty ......................................................................115 Figure 12.1 Project organization with full authority .................................................. 121 Figure 12.2 Weak matrix organization .....................................................................122
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list of figures and tables 11
Figure 12.3 Figure 12.4 Figure 12.5 Figure 12.6 Figure 12.7 Figure 12.8 Figure 12.9 Figure 12.10 Figure 12.11 Figure 13.1 Figure 13.2 Figure 13.3 Figure 14.1
Balanced matrix organization ................................................................123 Strong matrix organization ....................................................................124 Project execution organization ..............................................................126 Relational management process ...........................................................135 Ladder of inference ...............................................................................145 Isomorph group structure .....................................................................153 Specialization group structure ..............................................................153 Network group structure.......................................................................154 Hierarchical group structure .................................................................154 Domains of Cynefin framework (Snowden & Boone, 2007) ....................158 House of Project Complexity (Lessard, et al., 2013) .................................160 Taxonomy for project technological complexity .....................................162 Price formats.........................................................................................167
LIST OF TABLES Table 4.1 Table 5.1 Table 7.1 Table 10.1
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Ten most important success factors ....................................................... 42 Competence requirement for a project manager .................................... 48 Success factors in a global environment ................................................. 69 Cost engineering steps .........................................................................104
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part 1
PROJECT CHALLENGES Some would argue that there is no such thing as a project without challenges. To be a project manager and leader is all about managing challenges. The success of a project depends on how the leader deals with challenges. To be better prepared project managers and leaders can learn from others. Part 1 will therefore present findings from a survey about what project managers find most challenging, followed by critical success factors and what leads to success.
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Chapter 1
INTRODUCTION This book builds on new empirical research from a survey amongst Norwegian projects. Project managers, project owners and project team members were asked what they see as their project management and leadership challenges. A total of 146 responses were obtained. As you will see from Chapter 2, the main challenges identified are related to scope changes, the decision process and managing organizational complexity. Project management literature mostly covers such topics quite unilaterally by presenting methods and tools that deal with management challenges. The organizational and relational aspects are less covered fields in project management. Sources of such challenges could be wide-ranging. They include preparations in the earliest phases, scope definition, and involvement of stakeholders in decision-making. Sources also include obtaining a common understanding of the scope amongst the key stakeholders and recruitment of the project team. In Chapter 3 we discuss these sources more in-depth. Traditional project management practice fails to address many fundamental sources of these challenges, particularly in complex projects where the number of organizations is high. More sophisticated efforts to recognize and manage the sources of these challenges are required and such efforts need to encompass organizational capabilities, including human and organizational aspects. This is the basis of this book. Due to the findings from the survey, we have given some of the challenges more in-depth explanations than others.
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Chapter 2
PROJECT CHALLENGES SURVEY Projects exist in many different forms. There are small and large projects, straightforward and complex projects, organizational and technological projects etc. Projects also exist in almost all industrial sectors. Project management is not just about methods, techniques or how to resolve technical challenges. Being project manager is also about managing change, challenges, people and organizations. The basis for the survey was a genuine desire to find out more about the project manager role and the most challenging issues in his or her role. Obviously different individuals (dependent on their competence, culture, motivation etc.) may perceive this multifaceted problem of managing or executing a project differently. How difficult a person or an organization finds this task, may be characterized by the challenges they experience. To study this we made a survey that was sent to project managers, project owners and project participants in Norway. Questionnaires were distributed through Project Norway on December 9, 2015. By January 14, 2016, a total of 146 responses was received. Project Norway is a national arena for exchange of experience and network building, and serves as an external reference to projects of various businesses. Project Norway is a cooperation in which academia, the research community and Norwegian business and management organizations are participants and partners. Project Norway’s goal is to develop and disseminate new knowledge in project-oriented activities through research, collaboration and knowledge sharing between industry, government and academic institutions. The center collaborates with leading international organizations and activities and contributes to mark Norwegian project expertise in the international arena.
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Figures 2.1 to 2.4 give demographic data for the Small responses concerning the 6% size of the organization of the respondent, project size, type of project and the role Medium 26% of the respondent in the project. 68% of the respondents worked in large organizations, 26% worked in Large 68% medium-sized organizations and only 6% worked in small organizations. A Figure 2.1 Size of organization of respondent. small organization has less than 20 employees; a medium sized organization Project size has 10 to 250 employees, Small 23% and a large organization has more than 250 employees. 53% of the respondents worked in large proLarge 53% jects, 24% in medium sized projects and 23% in small Medium projects. A small project is 24% defined as a project with a total budget of less than Figure 2.2 Size of project of the respondent. 5 mill. NOK. A medium sized project has a budget between 5 and 50 mill. NOK, and a large project has a budget of more than 50 mill. NOK. Size of organization
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chapter 2: project challenges surVeY 19
Project role
Type of project
Staff member 15%
Owner 18%
R&D 40% Construction 48%
Oil&Gas 12%
Figure 2.3 Type of project the respondent is engaged in.
Manager 67%
Figure 2.4 Role of the respondent in the project.
48% of the respondents worked in construction projects, 40% in research and development projects and 12% in oil and gas projects. 67% of the respondents worked as a project manager, 18% were the project owner and 15% worked as a project staff member. There were 16 questions in the survey. In all questions, the respondent evaluated the major challenges in the project. It was scored on a scale from 1 to 6 where 6 denoted the largest challenge and 1 the smallest. Each question had a different area where the respondent scored the degree of challenges met. We call these areas challenge factors. The challenge factors for the 16 questions were: 1. 2. 3. 4. 5. 6. 7. 8. 9.
Definition of goals and success factors Scope changes Competence of the project organization Relationship to project owner Relationship to suppliers External communication Contracting and contract changes Teambuilding and motivation Conflict management
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10. Planning and control 11. Risk management 12. Ethical issues 13. Cultural aspects 14. Decision process 15. Technological complexity 16. Organizational complexity The average score for a respondent of the 16 questions could be interpreted as the degree of overall challenge that the respondent experienced. Figure 2.5 shows the distribution of this individually perceived challenge for each of the 146 respondents. It has the shape of a flat S-curve with values that varies from 1.6 to 4.5. The average value is 2.87. The average score of all respondents for a given challenge factor express how challenging the factor is. We defined a challenge index by subtracting the overall average score (for all 16 factors) from the average score for each single factor and then multiplying by 100. The overall average (2.87) represents a “normal” challenge for all the respondents. The challenge index is then an expression of how the challenge factor deviates from the “normal” value. A positive index indicates that the factor is more challenging than “normal”, and a negative challenge index Individual challenge distribution
Degree of challenge experienced
5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
Figure 2.5 Degree of individual challenge experienced.
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chapter 2: project challenges surVeY 21
Project challenges 80 60 40 20 0 -20 -40 -60 -80 -100
ity ex nt ity ni r Su ng a act pp nd ing lie co r n De rela tro fin tio l n i Ri tion ship sk of m an goa ag ls Co eme m nt Te pete Ow am nc ne bu e il rr el din at g C i Co ult on sh nfl ur a Ex ip i te ct m l asp rn a na ect al s co g m em m e un nt Et ica t hi ca ion l is su es pl
om
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Figure 2.6 Challenge index for each challenge factor.
indicates less challenge than “normal”. Figure 2.6 shows the challenge index for each challenge factor. It is sorted so that the most challenging factors appear at the left end of the diagram. As seen from Figure 2.6, the three most challenging factors were:
• Scope changes • Decision process • Organizational complexity In Chapter 3 we discuss the main findings more in-depth. Chapters 10, 11 and 12 study these three factors in further detail. The three least challenging factors were:
• Ethical issues • External communication • Conflict management
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Project challenges for different size of organization 100 80 60 40
Large Medium Small
20 0 -20 -40 -60 -80 -100
Or
ga
ni
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op ec cis han z i Te ati on ge s ch on p no al roc es lo co m gi s p ca l c lex om ity p Pl an Co lexi nt ty ni r n ac Su g pp an tin lie d c g o r De rela ntro fin tio l n i Ri tion shi p sk o m fg an oa ag ls Co em m en T pe t Ow eam tenc ne bu e il rr el din a g Co Cult tion nfl ur sh a Ex i i te ct m l asp p rn al ana ect s co g m em m e n un t Et ica hi t ca ion l is su es
-120
Figure 2.7 Challenge index for each challenge factor and the size of the organization.
We also studied if there was any difference in challenge dependent on size of organization, the size of the project, the type of project or the role of the respondent in the project. Figures 2.7 to 2.10 show the results. As can be seen from Figure 2.7, large, medium sized and small organizations all find the three main challenges to be scope changes, decision process and organizational complexity. This will be discussed further in Chapter 3. Even with different project sizes, the three main challenges remain in addition to technological complexity and contracting (large projects). This will be discussed further in Chapter 3. How to manage technological complexity and contracting will be discussed in Chapters 13 and 14. It also seemed that construction, oil and gas and research and development projects experience the same three main challenges, though contracting appeared as an additional challenge in oil and gas projects.
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Sc
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op ec ha c is i n Te zati ion ge ch on pr s o no al lo co ces m gi s pl ca l c ex om ity p Pl an Co lexi nt ty ni Su ng ract in pp an lie d c g r r on De ela tro fin tio l n i Ri tion shi p sk m of g an oa ag ls Co em m en T pe t Ow eam tenc ne bu e il rr el din at g C Co ult ion u n s Ex flic ral a hip t te rn ma spe n c al co age ts m m men un t Et ica hi t ca ion l is su es
an
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no
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chapter 2: project challenges surVeY 23
Project challenges for different project size
100
50 Large Medium Small
0
-50
-100
-150
Figure 2.8 Challenge index for each challenge factor and the project size.
Project challenges for different type of project
Construction Oil&Gas R&D
50
0
-50
-100
-150
Figure 2.9 Challenge index for each challenge factor and type of project.
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Projects challenges for different project role 150
Owner Manager Staff member
100 50 0 -50 -100
Or
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op e cis cha z Te at ion nge ch ion s no al pro lo co ces gi ca mpl s l c ex om ity p Pl an Co lex nt ity ni r n a Su g pp an ctin lie d c g o r De rela ntro fin tio l n Ri ition sh ip sk m of g an oa ag ls Co em m en T pe t Ow eam ten ne bu ce i rr el ldin a Co Cul tio g n n t Ex flic ural ship te t m as rn al ana pec co g ts m em m un ent Et ica hi t ca ion l is su es
-150
Figure 2.10 Challenge index for each challenge factor and the respondent’s project role.
Individually experienced total challenge 40 30 20 10 0 -10
iu m Sm all
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Figure 2.11 Average individual challenge index.
Project owner, project manager and staff members also experienced the same three main challenges: scope changes, decision process and organizational complexity.
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chapter 2: project challenges surVeY 25
We then studied how the individually experienced challenge varies dependent on the role of the respondent in the project, the type of project, the project size, and the size of the organization where the respondent is employed and the results can be seen in Figure 2.11.
The main findings of the survey described above, showed that the respondents considered scope changes, decision process, and organizational complexity as the major challenges in a project. At the same time they did not feel that ethical issues represented any problems. In the next chapters we will discuss these findings further. Chapters 10–14 present how to manage these challenges.
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Roger Klev holds a PhD degree in industrial economics from NTNU. He is currently working in leadership and organizational development in Praxes AS (where he is the owner and CEO). He has been Research Director in SINTEF and Associate Professor at NTNU. In recent years, he has worked with leadership and business development in the Reinertsen Group. For 25 years, Roger Klev has assisted a wide range of Norwegian organizations in a variety of development processes, including Norsk Hydro, Reinertsen Group, BackeGruppen, BN Bank and Marintek.
With both a business and a global perspective, this book presents new research on challenges in the project manager role, changes and collaboration in projects. The authors also provide insight into what it takes to deal with challenges, based on wide-ranging research in project management and leadership over the past 20 years.
Wenche Aarseth, PhD, is Associate Professor in project management at Norwegian University of Science and Technology (NTNU).
Asbjørn Rolstadås is Vice-Dean of the Faculty of Engineering Science and Technology and Professor at the Department of Production and Quality Engineering at NTNU.
Roger Klev holds a PhD degree in industrial economics from NTNU. He is currently working in leadership development and organizational development in Praxes AS (where he is the owner and CEO).
PROJECT LEADERSHIP CHALLENGES Their nature and how they are managed
PROJECT LEADERSHIP CHALLENGES
Asbjørn Rolstadås is Vice-Dean of the Faculty of Engineering Science and Technology and Professor at the Department of Production and Quality Engineering at NTNU. He has more than 30 years of experience in research, education and consulting in project management. He has published 15 books and some 300 scientific articles on production engineering, production management, productivity and project management. Asbjørn Rolstadås has been a key resource in the development of the Norwegian academic community in project management. In 2014, he was awarded the King’s Medal of Merit for his contribution to the field.
This book is concentrating on leadership in projects, in particular project managers and their leadership responsibilities. Project leadership concerns how the project manager creates direction, progress and cooperation to ensure that the organization does the best possible job in achieving the project’s goals.
Wenche Aarseth, Asbjørn Rolstadås and Roger Klev
Wenche Aarseth, PhD, is Associate Professor in project management at Norwegian University of Science and Technology (NTNU). She is responsible for the specialization in project management and is a member of the doctoral board at the faculty of Engineering, Science and Technology at NTNU. Wenche Aarseth heads the Executive Project Leadership Programme. For fifteen years she has worked with organizations such as the large global oil company Statoil, Norwegian Public Roads Administration (Statens vegvesen), Norwegian Directorate of Public Construction and Property (Statsbygg), and several of the largest Norwegian finance institutions. She has in-depth experience in the development and implementation of leadership development programmes in project management.
Wenche Aarseth, Asbjørn Rolstadås and Roger Klev
ISBN 978-82-450-2130-1
Omslag med klaff.indd 1
09.11.2016 10:37:04