Project Management Approaches for Dynamic Environments

Abstract

This paper investigates the properties of projects conducted in rapidly changing environments. These projects are challenged by the rapid introduction of new unknowns as they progress. One might say they are more akin to stacking worms than stacking bricks. The difficulties posed by these projects are identified and the literature is reviewed for suitable approaches. Available here: http://espace.library.uq.edu.au/view/UQ:175094

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Project Management Approaches for Dynamic Environments
Simon Collyer
UQ Business School, University of Queensland, Brisbane, Australia
Abstract
This paper investigates the properties of projects conducted in rapidly changing
environments. These projects are challenged by the rapid introduction of new
unknowns as they progress. One might say they are more akin to stacking worms
than stacking bricks. The difficulties posed by these projects are identified and the
literature is reviewed for suitable approaches.
Keywords:
Project Management; Dynamic
Introduction
This paper sets out to investigate the nature of projects conducted in fast changing
environments. Examples and theory are used to illustrate the nature and challenges
of this category. Suitable management approaches are identified under the following
headings: Planning, Experimentation, Lifecycle, Controls, Culture, Communication,
and Leadership style. The paper closes with recommendations for further research.
In this paper control is taken to mean the mechanisms through which resources are
managed to achieve objectives [1], and is different to the PMBOK ‘technique’ [2]
which is strictly focused on bringing activities in line with a plan [3].

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The Dynamic Project Dimension
For the purposes of this paper, dynamic is taken to mean characterised by constant
change [4]. In the project management context dynamism is taken to be a dimension
of a project that represents the extent to which a project is influenced by changes in
the environment in which it is conducted. This paper argues that this is a non-binary
dimension that applies in varying degrees to all projects, so strictly any given project
is neither ‘dynamic’ nor ‘not dynamic’. All projects have some degree of dynamism,
so the dimension is not dichotomic. Therefore the ideas in this paper may be applied
in varying degrees to any project as deemed appropriate. For the sake of simplicity
though, for the remainder of this paper, a dynamic project is taken to be one that is
necessarily subject to higher than normal levels of change due to the environment in
which it is conducted.
The business environment is changing at an increasing pace [5-7]. Rothwell and
Zegveld [8] went so far as to say we are in the midst of a technology explosion. They
argued that 90% of our technical knowledge has been generated in the last 55 years,
and that technical knowledge will continue to increase exponentially. Perrino and
Tipping [9] reported “the pace of technology is accelerating, raising the stakes and
risks for managing innovation, and requiring early warning and shorter response
time..”. Change, in all forms of technology and business processes, can be regarded
as increasingly pervasive and providing challenges even where high technology is
not a core business, such as in mining [10]. Consider how the Australian Submarine
project was challenged by developments in the IT industry between the 1980’s
design phase, and sea trials decades later [11].
Here I will investigate dynamic projects from a theoretical point of view. Gray and
Larson [12] argued that projects conducted in highly uncertain environments are a
key unresolved project management issue and present the following challenges:

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 planning for uncertain outcomes
 balancing flexibility with reliability and accountability
 balancing decision quality against decision speed
 timing scope freeze during rapid change.
Pich, Loch and De Meyer [13] describe a type of project that encounters unknown
unknowns and how it is best suited to what they called a ‘learning’ strategy which
involves scanning, problem solving and flexibility. They argue that this is distinct from
projects conducted in well understood environments which are suited to
‘instructionism’, and distinct from ‘selectionism’ where the most fruitful initiative is
chosen after a pool of trials. Turner and Cochran [14] espouse the ‘goals and
methods matrix’ that describes four different types of project according to how well
defined the methods and goals are. Projects can have poorly defined goals (‘Fire’) or
poorly defined methods (‘water’), or both (‘air’).
Shenhar and Wideman [15] describe a type of project that involves high levels of
uncertainty, using technologies together for the first time. They call these ‘high tech’
[15]. They also describe a type of project that actually creates new technologies,
called ‘super high tech’.
Shenhar [16] describes how ‘low technology’ projects are
typically performed in construction, production and utilities, and high technology
projects in the computer, aerospace and electronics industries. He offers building and
bridge construction as examples of low technology projects. The key difference to
Shenhar is the level of development work involved, in that low technology projects
have little, and high technology projects have considerable levels and usually require
prototyping. Shenhar and Wideman [15] argue that another key difference is the
number of design cycles. In low technology projects they say there is typically only
one cycle with a freeze before development, and with high technology there are at
least two, typically three cycles.

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Cioffi [17] suggests that ‘projects’ be placed on a spectrum of ‘newness’ from
operational to project. I have adapted this idea in Figure 1 to illustrate the sliding
scale of unkowns that applies to projects. Unkowns in this sense refer to any aspect
of the project, including the methods to achieve it, the objective, and the environment
it has to operate in.
The Guide to the Project Management Body of Knowledge (PMBOK) [2] describes
‘progressive elaboration’, where planning is developed in greater detail as the project
progresses. Using progressive elaboration to fill knowledge gaps, it might be possible
to move a project to the left in Figure 1, thereby achieving the objective in a more
predictable fashion. However, rapid changes in the environment, including tools and
methods, and attempts to innovate, act to push the project to the right, increasing
unknowns. The two forces of exploration and change act against each other
continuously throughout the project. The challenge is to conduct exploration at a
greater rate than the emergence of environmental change. It is also important to
ensure that the amount of change created by the exploration and implementation is
not counterproductive overall. An example of Project A in Figure 1 might be a
production line where there only variable is the colour required. Project B might be a
house construction where there are more unknowns at the start but most are
resolved in the early stages. Project C might be a software development project for a
new business. The client’s business processes, and the technologies used in the
project, change during the course of execution, thereby affecting the methods used
and goals.
Projects conducted in environments with higher levels of dynamism may be more
likely to pose some of the attributes of Shenhar’s [16] high technology or super high
technology categories with uncertainty at the start, but also include even more
challenging high levels of change along the way. In dynamic project environments,

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significant proportions of the methods and goals are changed by external forces out
of the project’s control. The effort to resolve unknowns at the start of the project is
severely challenged by the introduction of additional unknowns along the way,
because what is learned can become obsolete in less time than it takes to learn.
Materials, methods and goals are always moving, making projects more akin to
stacking worms than stacking bricks. Table 1 attempts to describe the difference
between operational work, classic project work, and projects with a strong dynamic
dimension.
The rate of resolving unknowns is especially critical on these projects. As soon as
one engages in adjustment of scope to suit an uncontrollable environment one runs
the risk of ‘resolution lag’. The rate at which unknowns are resolved must not only be
sufficient to deal with those that existed at the start, but also those that appear during
execution. For instance, assuming linear production and resolution of unknowns, the
resolution rate must at least be equal to the appearance rate, plus enough to resolve
unknowns that existed at the start (i.e. number at start divided by the duration). The
appearance rate will be quite high in a highly dynamic environment. Furthermore,
unknowns may appear in inconvenient bursts, and certainly after planning is
‘complete’. Therefore, the rate of unknown resolution is a particular hazard for
projects conducted in dynamic environments.
Illustration
Two examples are provided to help illustrate the challenges of projects conducted in
dynamic environments. Two subunits of a single parent organisation were selected
on the basis that they had contrasting levels of dynamism. Both sub units had a mix
of project types, but each appeared to have a higher proportion of one type. One sub
unit had a higher proportion of projects utilising the ‘instructionist’ approach and the
other more utilising the ‘learning’ approach. In this paper one will be referred to as
the ‘static environment’ and the other as the ‘dynamic environment’, as a means to

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represent the relative levels of dynamism in each. Following is a description of
challenges encountered by the higher levels of change in the dynamic environment.
 Product Lifespan: The average mean time to failure (MTTF) was three to four
years compared to several decades in the static environment. This meant that in
a given year one third of the products had to be replaced. There was very little
that could be called ‘operational’. At any given point more than half of the
environment was either being replaced or being planned for replacement. This
also presented the significant risk that materials would expire before the final
product was fully operational.
 Rate of Introduction of New Materials: Most materials had only become available
in the last three or four years, and were completely unknown less than a decade
previously. By contrast most materials used in the static environment had been
well understood for several decades, centuries, or even millennium, and the
implementation methods were well understood and tuned.
 Difficulty Finding and Managing Skilled Labour: Change led to a perpetually low
level of knowledge about the properties of new materials, and how they should be
implemented (methods), and therefore difficulty finding qualified resources. A
significant amount of study and certification was required to stay qualified in using
an endless stream of new materials. It was regarded as almost impossible to stay
qualified and perform effectively as a manager at the same time. Staff promoted
to management had to quickly decide between giving up their qualifications or
giving up good management. If they chose to be an effective manager, they had
to do so without completely understanding the work their staff performed. This
made it more difficult to manage, understand issues, and gauge performance.
 Level of Integration with Customer Industry. While some organisations can
execute relatively vanilla products for a range of contrasting clients, projects in
the dynamic environment required significant customisation and understanding of
the client business.

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 Changing Goals: Because customers were also operating in an environment of
uncertainty and change, their requirements also had a tendency to change
rapidly.
 Affect on Planning: In the dynamic environment new events that compromised
plans arose rapidly throughout project delivery. The quantity of change made
detailed plans difficult to maintain. In the time it took to adjust the plan, additional
changes would occur. Analysis and decision making had to be conducted more
rapidly than the emergence of new changes. Plans with excessive detail were
found to be misleading and abandoned in favour of a higher level or rolling wave
approach. Even in the static environment, there could be too many unknowns at
the start to be resolved by the deadline, so the rapid introduction of new
unknowns in the dynamic environment was doubly challenging.
 Morale: In the dynamic environment, well before a product or service was
produced, thoughts had turned to the next generation, making the current goal
seem less valuable or important. This made it difficult to maintain quality focus, or
celebrate end points for reward and recognition. This in turn affected job
satisfaction, morale and motivation. Lower product quality meant that deployed
products required regular changes to continue their usefulness, and reliability. By
comparison the visible achievement of a building lasts decades after it is
complete.
 Levels of Interdependence. Projects were often intertwined with other projects
and an existing dynamic environment. A change in one project had significant
impact on other projects. The highly integrated nature of the environment,
combined with high rates of change, made forward planning very challenging.
 Dependency on business units with much lower levels of dynamism who
therefore may not respond as quickly, or understand the challenges being faced.
Project Management Approaches for Dynamic Environments

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The intention here is to review literature to provide a broad overview of approaches
that might be used to better deal with dynamic environments. Approaches were
broken down as follows.
 Environment Manipulation – Making dynamic static
 Planning Approaches for Dynamic Environments
 Scope Control for Dynamic Environments
 Controlled Experimentation
 Lifecycle Strategies
 Management Controls: Input, Behaviour and Output, Diagnostic, Belief,
Interactive and Boundary
 Culture and Communication for Dynamic Environments
 Categorisation
 Leadership Style.
Environment Manipulation – Make Dynamic Static
The most obvious approach to deal with the challenges of a dynamic environment is
to attempt to make it more static by resisting change. This could be achieved by:
 freezing objective and design. Rejecting change requests
 reducing or delaying adoption of new (esp. unproven) technologies or techniques
 extending the life of existing systems.
In highly dynamic environments the benefits of the ‘make static’ approach are
countered by challenges such as:
 lost opportunity and productivity though delayed implementation of new
approaches, materials or business objectives, that provide significant benefits,
despite the challenges
 reduced business competitiveness, especially when competing organisations
offer, or make use of, new systems which are often more effective

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 reduced business compatibility when an organisation falls too far behind best
practice, and find it difficult to recruit staff familiar with their environment.
Sometimes technology used on a previous project simply does not exist any
more, and new ones have to be used.
 low material life-spans (low MTTF) and life-cycles (period before manufacture
ceases permanently). This means that most materials, and therefore products,
have to be replaced within three to four years, with a next generation
material/product. Next generation materials/products usually have differing
properties to the original, and this has a flow on affect to dependant products.
While standards may be used extensively, some variations in properties are
deemed necessary to achieve improvements.
An industry with a strong public safety requirement may be attracted to the ‘make
static’ approach. This requirement can help justify funds to test and implement
strategies, and this can mitigate the reliability disadvantages of early adoption;
consider the medical and the aircraft construction industries as examples.
Conversely the IT industry cannot easily leverage public safety to justify costs, so it
trades reliability for faster delivery, of new functionality, at lower costs. Jones argues
that technology product lifecycles are now measured in months, compared to the car
industry in years (about five), and in construction “change in product technology is
very limited and products such as steel girders and electrical cable may remain in the
mature stage indefinitely” [7]. Although the ‘make static’ approach has merits, it also
has limitations, and so other approaches are a necessary part of the mix.
Planning Approaches for Dynamic Environments
Project management, as defined by the bodies of knowledge, is focused mostly on a
“management-as-planning” view of control [18-20] and appears to be an appropriate
approach for projects with clear goals and methods [14]. However, Koskela and

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Howell [18] argue that for speedy projects, “traditional project management is simply
counterproductive; It creates self-inflicted problems that seriously undermine
performance”. The problem is that events arise at faster rates than that at which it is
practical to re-plan [5, 19, 21, 22]. Attempting detailed long term planning for these
projects can waste time and resources, and lead to false expectations.
Lampel [23] described the emergent or learning version of strategy. Motorola's
multibillion-dollar Iridium project [24] could be considered a success on the basis it
was ‘on time’ and ‘on budget’ from an engineering point of view, but was a
catastrophic commercial failure because it did not adjust to what was being learned
about the changing business environment. By contrast the movie Titanic was
severely over budget and over time and touted as a $200 million flop, yet became the
first movie to generate over $1 billion in revenue. High levels of detail in a plan may
in fact discourage adjustment to a changing environment. Clearly the type of project
discussed in this paper is more suited to the emergent approach [25] or as the
PMBOK [2] describes it, “progressive elaboration”, where the planning detail is
progressively developed as more is learned.
Payne and Turner [26] suggested different levels of planning according to project
type, and developed a project categorisation system called the Goals and Methods
Matrix described in Table 2. They described how to adjust planning according to
project type [14, 26]. Projects are categorised based on two variables:
1. how well known the goals are, and
2. how well known the methods are.
While they agreed that projects with well understood methods and goals lend
themselves to detailed up-front planning (e.g. bridge construction) they argue that
using this approach for projects with unknown goals or methods will increase the
chance of failure [26]. They found that for projects with unknown goals and unknown
methods planning should have:

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 a high level project definition report, with level of detail proportional to project size
 a milestone plan and project responsibility chart, where milestones represent the
lifecycle
 lower level detail developed use rolling wave planning.
Damon [27] described filming on the streets of Tangiers without crowd control. They
made a basic plan, that would be easy to change, anticipating there would be
problems they could rectify either during execution or in later iterations, e.g. post
production editing. So a high level plan was developed and then high levels of
communication used during execution, in multiple iterations, with expectations of
unpredictability.
Scope Control for Dynamic Environments
Failure rates increase with project size [28, 29]. The author argues that this
phenomenon is compounded in dynamic environments. The McIntosh and Prescott
review [11] of the troubled Australian Submarine Project stated, in regard to its
combat system, that “the main problem is the extremely rapid rate of technological
change, which can give rise to new technologies which could do the job far better
emerging during the course of the contract”. For a dynamic environment breaking the
project into stages, starting with the smallest possible scope in the first, mitigates
against the negative impacts of environmental change. It also works as a proof of
concept which is important in an uncertain and changing environment. Finally, it
allows different parts of the project to be run in different ways. Components less
subject to change can be run using a more detailed planning approach, and
components subject to higher change using the learning approach.
Controlled Experimentation
Organisations in environments with high levels of unknowns should benefit from
experimentation, discovery and selection processes. Pich, Loch and De Meyer [13]

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relate how NASA used this approach to develop the lunar module in the 1960’s.
Sobek [30] relates how car manufacturers develop a number of prototypes in
parallel, choosing the ones that give the best market reaction. More recently Cleland
[31] relates how Kmart initiated a package of low cost probes, monitoring progress
and then switching resources to the most promising projects once feasibility had
been evaluated. The key advantage here is the ability to confirm an approach with
feedback from the real world, allowing either customisation or cancellation, thereby
optimising resourcing. Pfizer’s disappointing heart medication, Viagra, turned into a
success because they took the time to investigated its side effects [32].
Researchers can not just sit down and write a plan guaranteed to deliver a cure to
cancer. They experiment, identify likely possibilities, and methodically eliminate dead
ends. The time spent testing the ideas that don’t work out is just as important as the
time spent testing the ones that do. The ability to select more promising ideas is
enhanced by the elimination of others. Sometimes, as was the case with Viagra,
researchers start with a completely different objective, but keep in mind alternate
applications [32]. A perpetual portfolio of initiatives (fixed scope experiments) can test
ideas and eliminate dead ends.
This fundamental principle underpins species survival, where natural selection
provides gene mutations, which are in effect experiments allowing us to adapt to a
changing environment [33]. In the case of management, however, teams working on
projects that are not ultimately selected for completion should not be punished but
rather share in the rewards, fostering motivation and information sharing. At the very
least they should not be punished for failure due to uncontrollable events [33]. The
key to controlled probing is to set clear limits in the form of an agreed deliverable
(e.g. feasibility report), time limit, and stage-gate in the form of a review meeting. The

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gates allow management to cancel or refocus as required, before excess effort is
wasted [7]. See Figure 2 on low cost probes for an illustration of this approach.
Dodgson [34] talks about the essential ingredients of innovation being option-
creating; playing - choosing/selecting; and doing - implementing “experimenting,
feedback loops, prototyping, failing”. Acha, Gann and Salter’s [35] study of four cases
argued there were managerial precepts for the management of research and
development in project-based environments including:
 attaching small amounts of research work to “safe” projects
 using high profile projects to attract talent
 using supplementary liaison devices to fill gaps in organisational structure for
specialist skills groups: Skill group meetings, mentoring programmes, incentives.
 creating time-off to build and integrate capabilities.
 developing a separate career structures to encourage capability development in
both management and technology.
Lifecycle Strategies
Many researchers argue that the approach should be tailored to the project type [24,
26, 36-40]. Molin [41] distinguishes between the ‘planning approach’ to projects, in
which a well-defined path to predetermined goals is assumed, and the ‘learning
approach’ which “sees the project as an ambiguous task with changing objectives as
the project proceeds”. So the ‘planning approach’ relies on a directive style of control
where a plan is developed and execution is controlled using it. The learning approach
uses a more participative style [25]. The optimum approach for a project should be
chosen according to environment and the type of project being undertaken. Clearly
the types of project discussed in this paper would favour the emergent style, which
appear to be more adaptable.

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The ‘waterfall’ lifecycle has strictly limited overlap between phases, and high levels of
planning and process control. This is suitable for projects with a well understood
scope and enabled using proven technologies. This approach is favoured in the
construction industry. In unpredictable environments waterfall does not allow
sufficient adaptability to permit maximisation of benefits. Novice managers might
believe this approach is lower in risk but in environments with high levels of
unknowns it can have a higher risk of failure because of the time and effort required
to be invested before environmental incompatibility is discovered. High levels of
control inhibit the adaptability needed to maximise business benefits in dynamic
environments.
In the rolling wave approach the plan for each phase is completed at the end of the
preceding phase. This allows for improved environmental adaptation. With the
‘iterative’ approach all phases run in order many times over. Successive releases
evolve into a more complete product [42, 43]. This is a good way to reveal unknowns
and adapt to a changing environment. Iterative is also known as ‘spiral’ or
‘incremental’. See the spiral approach in Figure 3. When there is limited knowledge
about how a product might interact with its environment, an ‘iterative’ approach is an
effective way to test and collect that information, and minimising resource
expenditure on bad choices. Some versions of the ‘iterative’ approach use feedback
as the primary control mechanism, rather than planning [44]. The feedback is driven
by regular tests and releases of the evolving product. Agile development for instance
tries to keep scope small, and to deliver early and often [44]. It focuses more on
communication than process [44]. The Standish Group claim their research indicates
this approach will increase project success rate [28].
Shenhar explains how engineers dealt with uncertainty using repeated design cycles
followed by a design freeze. He found that projects in his ‘high technology’ category
were “characterized by long periods of development, testing, and redesign” [39] with

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two or three design cycles, before a freeze in the second or even the third quarter of
the project's duration. This is a version of ‘iterative’ where only the design, prototype
or pilot cycles are repeated, and the main execution phase (to build the production
product) is only carried out once.
Highly dynamic environments pose a design freeze dilemma. Rapid and perpetual
environmental changes tempt excessive design adjustments. As military leaders
lament, striving too long for a perfect plan can result in the endeavour being overrun
by circumstances, before anything useful is produced [45, 46] i.e. a good plan
executed in time is better than a perfect plan hatched in a prison camp. Some key
approaches are to:
 proceed first with the components least subject to change. Finalise the most
variable components last [47].
 use fast and repeated design/development cycles allowing the project to adapt at
a higher speed than environmental changes. Refer to previous discussion on the
rate of resolution of unknowns [39] .
 have the discipline to freeze the design in time to meet the overall objective.
Break into stages if required and defer unmet requirements to later stages [39].

build in maximum flexibility so the product can be further adapted in later stages
[12, 15, 39, 48].
Management Controls: Input, Behaviour and Output
Snell [49] described three types of management control: behaviour, output, and
input. Project management, as defined by the various bodies of knowledge, is
focused on behaviour control as a way of directing and regulating actions from above
[19]. A process such as a project plan is developed and adherence to the process is
monitored, and deviations corrected. This works best if a well understood and stable
process can be created, so its effectiveness is dependant on what is described as
“task programmability” [50]. Bonner, Ruekert and Walker [51] found that excessive

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behaviour control can reduce productivity. Sometimes the cost of surveillance is
simply greater than the benefits of adherence [5, 19, 21, 22]. Enforcement of strict
behaviour controls can offend workers, thereby affecting morale, or stifling creativity
[51].
Sometimes the controls just don’t exist. What is the process to create a unique work
of art, or to create ground breaking research? Sometimes the actual control
measurements can be inaccurate or inappropriate, resulting in unexpected and
counterproductive behaviour. Managers may lack the knowledge or experience to
develop the right controls. In order to achieve the measurable objectives workers
bypass other less measurable, but more important, objectives. If the process is
flawed, even if the employee can see it is flawed, it may be difficult to correct.
Burdening workers with onerous processes and few incentives could discourage
adaptation to a fast changing environment. Other control techniques, not covered
well in the various bodies of knowledge, also need to be considered [19, 39].
Another form of control described by Snell [49] is output or outcome control. Targets
are set, thereby providing direction and discretion for staff [49]. Rewards are
developed to reinforce achievement of the targets. Where behaviour control is
difficult to define, or expensive to monitor, output control should be considered as an
alternative. Consider the researcher working on a disease cure. There is no way to
define for the researcher the steps required to achieve the solution, but the result is
clearly defined and contains rewards that guide and motivate the researcher to the
desired outcome. The danger with output control is that mistakes are harder to
prevent early as they are not discovered until the output is produced and measured.
Another problem is that sometimes outputs can be difficult to measure e.g. improving
morale. However, for project management in fast changing environments, a simple
statement of the goals, deliverables or milestones, combined with appropriate

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motivation may be a more effective approach than the development and following of
a highly detailed project plan.
If process and output control are unattractive for the reasons described above, then
input control might be considered [49, 52]. In dynamic environments, where defining
behaviour or measuring output is difficult, an organisation might be better to evaluate
staff on values, motivation and compliance with traditions [1]. George and Jones [53]
confirm this. Snell describes it as “the knowledge, skills, abilities, values and motives”
[49] of employees. Examples include staff selection, training and socialisation [52].
For instance a university will not have a step-by-step checklist to achieve ground
breaking research, and will not even be able to predict exactly what research results
are achievable, but they can select academics with a track record of achievement.
The ‘science of sales’ may be elusive but an agency can have success selecting
successful sales professionals. An advertising company can provide training and
induction and then allow staff freedom to achieve.
Ouchi [53] explains that although it would be viable to create behaviour controls for a
warehouse picker, it would require a very complex system to achieve the same for
the foreman’s job, which is more subtle. A better approach might be to select
foremen for the job who have previously demonstrated a high level commitment to
the organisation’s objectives. Input control minimises ‘divergence of preference’
thereby enhancing the ability of employees to work together [52]. The same could be
applied to project work. Rather than attempting to control staff with a complex and
detailed project plan, it may be better to select staff that have experience with the
work and demonstrated a commitment to achieving the objective. Figure 4 provides
guidance on control selection. The project manager should optimize the mix of
controls according to their viability. For instance academia has evolved to have a mix
of input control (selecting academics with a track record), lower levels of process

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control (to give them freedom), and higher levels of output control, in the form of self-
satisfaction, and recognition for publications and discoveries.
Ouchi argues that in reality management “do not transmit control with any accuracy
from top to bottom” [1] and therefore coordination is a more appropriate description of
the process. Careful selection of controls may involve an acceptance that managers
have less control than they would like, but that it is better to optimize than focus on a
single unrealistic approach.
Management Controls: Diagnostic, Belief, Interactive and Boundary
Simons [48] speaks about the difficulty controlling work in organisations that demand
flexibility, innovation, and creativity. He describes four types of management control,
including diagnostic controls which are formal feedback systems to monitor
outcomes, and correct deviations from goals, to keep performance within limits. He
argues that belief systems, in the form of mission and value statements, and strategic
goals, can supplement diagnostic control [48]. He also describes interactive control
which constitutes formal strategic discussion based on data, which he argues is good
for fast changing environments because they are monitored constantly and
discussed in regular face to face meetings [48]. Interactive controls are most useful
where there is strategic uncertainty, or when data, assumptions and plans need to be
continually challenged and debated [48].
Finally Simons [48] described boundary control systems which allow innovation
within set limits and might include codes of conduct, workplace health and safety
regulations, gender equity and anti-racism regulations. Boundary controls are useful
for projects with many unknowns as a way allowing staff flexibility of behaviour, within
reasonable boundaries.
Culture and Communication for the Dynamic Environment
There is evidence dynamic projects might benefit from a culture that is:

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 organic and informal, supplementing formal [39, 53-55]
 egalitarian with a flat management hierarchy [7, 56-60]
 supporting of experimentation [61]
 sharing of rewards for experimentation [33]
 tolerant of failure [55]
 valuing experimentation and the elimination of ‘dead ends’ [58, 61].
Categorisation
While there is some merit in a standardised approach, such as consistent reporting,
resource management, and training, there is an increasing belief that customisation
will make a project more successful [24, 26, 36-40]. Payne and Turner’s [26] study
shows that managers tailoring their procedures reported better results. Simply
identifying the project as having significant levels of dynamism is a worthwhile
prerequisite to applying the approaches outlined in this paper. Some of the measures
that might be applied to identify high levels of dynamism might include:
 product life-spans
 rate of introduction of new materials or methods
 rate of necessarily changing requirements
 levels of interdependence with other projects and an existing environment.
Leadership Style
There is evidence that dynamic projects may gain benefit from selecting their project
manager according to how well suited they are to the type of project [62]. Specifically
they would benefit from managers with flexibility, the ability to trade-off extensively,
and the ability to find trouble, even if its not readily apparent [15, 39]. If a project
deals with high levels of new material then the project manger’s subject matter
knowledge needs to be correspondingly high [17]. Hands on managers are beneficial
on innovative projects, even if to the extent of meddling [55].

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Discussion and Further Research
This paper supports the BOKs and aims to build on the current state of thinking. It is
accepted that dynamism is one of an infinite number of project dimensions, However,
it is argued that it is one of increasing importance, and one not well studied,
exclusively, in project management theory. Further study would benefit from
development of an instrument to measure dynamism in projects. Table 3 summarises
some of the project management approaches available to deal with dynamic
environments. The approaches identified here are likely to be far from
comprehensive so identification of new approaches, along with more thorough
investigations, would be useful. The investigation of organisations currently operating
in dynamic competitive environments would seem to have the most merit. The initial
observation of these organisations makes them appear chaotic, but the author
believes they consciously or unconsciously adopt a range of approaches ideally
adapted to this type of environment, simply through natural selection in a tough
business environment. An in-depth qualitative investigation would tease out some of
these approaches. Finally, a quantitative investigation into the merits of all
approaches identified would a significant goal to achieve.
Conclusion
As more industries encounter higher rates of change they will seek management
processes to help them cope. Through experimentation and from empirical evidence,
many learn that the classic process orientated approaches benefit from fine tuning in
these environments. From a theoretical point of view it is hoped the ideas here will
prompt further investigation of project dynamism, and from a practical point of view
this paper has begun to identify approaches to help in their management.
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Figure 1: The Race to Resolve Project Unknowns
Usually classed as
operational.
Knowns
Unknowns
High levels of
unknowns.
‘Learning project’
Typical project
Progressive Elaboration/Exploration
Environmental Changes & Innovation

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Figure 2: Low Cost Probes
Initiative 1
Initiative 2
Initiative 4
Initiative 3
Initiative 5
X
X
X


More testing/
Planning
More testing/
Planning
Completion
X

Redirect Resources into
more promising initiatives

Initiative 6
Reuse resources
for new initiative
Low cost probes with clear
limits (gates) and deliverables.

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Figure 3: The Spiral Lifecycle
Gate1 – Are we on track?
Yes. Funds allocated
Stage gates prevent
runaway projects,
allowing redirection or
cancellation
Gate2 – Still on track?
Spiral approach gathers
feedback early allowing
better match to
environment
Plan
Execute
Test/ Feedback

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Figure 4: Control Selection – Based on Ouchi [1], Eisenhardt [52] and Snell[49]
Input Control Process Control
Output Control
e.g. Rewards &
recognition.
More effective if
measurable.
e.g. Plans,
procedures, and
check-lists.
Requires
predictable
environment
e.g. recruitment,
training and
induction.
Rely on when
process or goals
hard to define.

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Table 1: The Dynamic Project Category
Work Type Description
Operational Established controls. ‘Operational’ processes.
Lower levels of unknowns.
Classic Project Requires the creation of new controls, usually a project plan, for
a significantly new body of work, usually only carried out once.
May have high levels of unknowns at the start but most
resolved early, and few new unknowns arise during execution.
Dynamic Project Requires the creation of new controls that are changed
regularly during execution.
Has high levels of unknowns at the start and a high rate of new
unknowns throughout. Must resolve the unknowns at a faster
rate than they appear, and in time for completion.

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Table 2: Turner and Cochrane’s Goals and Methods Matrix [14, 26]
Task Programmability (Understanding of Methods)
Goals Well Defined Goals not well defined
Methods not well
defined
Product development “Water” Research &
organisational change
“Air”
Methods well
defined
Engineering “Earth”
Systems Development
“Fire”

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Table 3: Approaches for Dynamic Projects
Environment
manipulation
(Make Static)
Make static if viable, else develop a static core that permits
higher rates of change around the edges.
Scope Break into stages that are as small as possible.
Planning
Approach
The emergent exploratory approach is more suitable.
Controlled
Experimentation
Consider multiple low cost trials with information sharing, and
shared rewards. For each, used strict fixed scope and stage
gates. Refocus resources into most promising initiatives.
Lifecycle
Try multiple design cycles with freeze, pilots and prototypes.
Consider iterative development with client feedback looping back
into design improvements for subsequent versions or stages.
Controls
Avoid over relying on process control. Supplement output control
if measurable, and input control.
Culture
Promote flexibility and experimentation. Use flat structure.
Communication
Implement concrete measures that promote faster, more open
and less formal communication as a supplement.
Leadership Style
Use of leaders with high levels of subject knowledge. Use fast
informal and participatory style.