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La valutazione del margine delle commesse pluriennali. Il caso Permasteelisa Group
Abstract
This study aims to present and discuss the potentialities of an innovative management accounting method for evaluating and controlling the (infra)annual multi-years contract margin. While mitigating the limitation of traditional project management tools, the proposed method facilitates variance analysis in terms of scheduling life-cycle costs and revenues. The aim is to identify the factors determining the variances and continuously monitor any deviations from the expected margin. The study, which addresses technical core aspects of management accounting, takes advantage of an interventionist research approach through which the researchers worked together with the financial controller to solve a problem of practical relevance. The research context is a multinational contractor specialised in designing, manufacturing, and installing architectural envelopes and interiors. Results suggest that the control on ongoing multi-year contracts performed by the proposed method allows integrating project management and profit planning requirements in a single framework and also supports the information needs of contractors operating on multi-year contract. Furthermore, results confirm the role of
interventionist research for gaining knowledge in the accounting field, narrowing the gap between research and practice.
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This study concerns a global player company operating within the Aerospace and Defence field which has first developed and then deployed a managerial integrated reporting, which attempts to combine traditional financial metrics with Intellectual Capital (IC) and Sustainability performance indicators. The qualitative research approach underlying our investigation is Interpretivism. More specifically, the study was conducted in the light of action research. Data were gathered from in-depth interviews with managers as well as from group discussions. The assumption underlying the present research is that intangibles are the mediating variables which allow to better understand the link between sustainable management and corporate financial performance.
The question of whether the benefits of the earned value management process exceed the costs has not been adequately reported in the literature. Several studies report the costs but ignore the benefits. Others focus on the benefits, but ignore the costs. For example, a widely circulated report by Coopers & Lybrand and TASC (1994) concludes that the DOD regulatory cost is significant, and the requirement for earned value management systems (EVMS) criteria is among the largest cost drivers. However, the benefits of the earned value information derived from criteria-compliant contractors were not considered. Clearly, a report that addresses only the costs or the benefits of earned value may be misleading. This study addresses both the costs and the benefits of earned value. The earned value concept and the related criteria are considered. Based on a comprehensive literature review, studies reporting the costs or the benefits of earned value are summarized and synthesized. The result is a report that facilitates a more complete and objective evaluation of the earned value management process.
Purpose
The purpose of this paper is to provide a reflective discourse about a particular interventionist research project utilising a critical framework.
Design/methodology/approach
The paper uses Alvesson and Deetz's tasks of critical research to analyse the application of interventionist research methodology and address the issues of access, data collection and ethnographical concerns.
Findings
Access issues are expanded to consider the concerns of the researcher and the researched. Interventionist research needs to develop a methodological approach moving beyond the concept of triangulation and to develop the concept of “catalytical” processes, expanding the emic and etic functions of interventionist research. The paper identifies that skills of the researched and the researcher need to be developed and recognises that the skills required are different to those currently possessed by academic researchers.
Research limitations/implications
The paper examines only a single application of an interventionist research project conducted over a short period of time with a specific outcome in mind.
Practical implications
This paper provides a discussion of a working example of an interventionist research project and highlights to researchers and practitioners some of the advantages and disadvantages of undertaking such an approach to solving organisational problems.
Originality/value
The reflective critical discourse as outlined in this paper contributes to the practice of interventionist research by opening up further the discussion of how it can be implemented in practice and what are some of the considerations from both the perspective of practice and the skills base of the participants.
Earned value management (EVM) has provided methods for predicting the final cost for projects. In large part, these methods have not been improved upon since their beginnings and, with one exception, remain unsubstantiated as to accuracy. At the present time, EVM application guidance does not support prediction of final duration for the schedule component of projects.The objective of this research is to improve the capability of project managers for making informed decisions by providing a reliable forecasting method of the final cost and duration. The method put forth and its evaluation make use of a well established project management method, a recent technique for analyzing schedule performance, and the mathematics of statistics to achieve its purpose – EVM, earned schedule (ES) and statistical prediction and testing methods.The calculation method proposed was studied using data from 12 projects. The results for both final cost and duration are shown to be sufficiently reliable for general application of the forecasting method. The use of the method is encouraged; it may be applied irrespective of the type of work or cost and duration magnitude of the project.
Relatively little research has addressed questions on how companies integrate corporate social responsibility (CSR) and management control, and this study attempts to respond to recent calls for further investigation. Taking the perspective, advanced in the extant literature, that CSR can be regarded as a form of management control, the study has the objective to show how a socially responsible initiative, such as the implementation of an employee welfare plan undertaken by a SME, can address control issues. In particular, the company has designed the employee welfare plan as an incentive system. The study adopts an interventionist research (IVR) approach to accomplish with the research objective, and the results of the interventionist case study are interpreted based on the Merchant and Van der Stede object-of-control framework. In particular, results indicate that the implementation of the welfare plan has enabled the application of different types of control and provided incentive-related benefits, suggesting the potential impact of CSR as a management control device.
Performance is linked with implementation of project management techniques. Literature suggests that problems such as inefficiency, poor budgetary issues, improper planning, scheduling and control in projects execution are associated with inadequate implementation of the essential techniques for meeting project deliverables. These shortcomings are prevalent among Small and Medium Enterprises (SMEs) in the developing countries including South Africa. Hence, the primary objective of this paper is to review the critical project management techniques for the improvement of construction project performance especially among SMEs in South Africa. The study is based on previous literature on construction SMEs project performance as well as project management techniques implementation. The literature review centered on both international and South African context. The study revealed that critical path method, work breakdown structure, and earned value management analysis were the most occurring project management techniques from the sampled literature. Findings from this study are envisaged to be beneficial to construction stakeholders in developing relevant project management techniques to improve the performance of SMEs.
The earned value project management method integrates three critical elements of project management: scope management, cost management, and time management. It requires the periodic monitoring of actual expenditures and physical scope accomplishments, and allows calculation of cost and schedule variances, along with performance indices. It allows forecasting of project cost and schedule at completion and highlights the possible need for corrective action.
This paper shows the major aspects of the earned value method and presents graphical tools for assessing project performance trends. It provides logical extensions and useful simplifications to enhance the effective application of this important method in project management.
Purpose
Although management accounting tools and techniques are developed to solve practical problems in organizations, there is a lot of criticism of management accounting research for not having an impact on practice. In interventionist research, the “shaping” of an intervention to solve a practical problem is an important step. The purpose of this paper is to explore how the findings of management accounting research can be reviewed to make them practically applicable in shaping an intervention.
Design/methodology/approach
The paper is based on the author’s experiences with an interventionist research project.
Findings
Systematic literature reviews, which are common in engineering and medicine, bring together the academic knowledge that can contribute to solutions for a specific practical problem, including a definition of the ways in which this knowledge can be applied. Inspired by the methodology for conducting such reviews, this paper proposes how interventionist management accounting researchers can use existing theoretical knowledge in shaping interventions that aim to solve a practical problem. After an intervention, the analysis of the intervention’s unforeseen effects can provide a basis for the refinement of the theory identified in the literature review.
Research limitations/implications
Such a literature review can be organized according to four approaches to taking theoretical knowledge into practice. Unforeseen effects of the intervention can guide the selection of additional theory that helps to interpret these effects and refine normative and academic theory.
Originality/value
In management accounting it is uncommon to review the literature with the aim of shaping a solution for a practical problem. This paper explores how literature reviews that focus on a specific practical problem can contribute to bridging the gap between theory and practice.
As a well established discipline and profession, project management has its distinctive tools and techniques. One of them that has been considered the embodiment of the core principles of project management is the Earned Value Management (EVM). In managing construction projects, the EVM has been considered as a suitable tool and hence, has been implemented in various construction industry but absent in some others. Taking into account the dynamic environment where construction companies have to operate, particularly in turbulence environments as the direct result of recent global economic downturn, this paper explores the potential implementation of EVM in one of the construction industry, the Spanish construction industry. The outcomes confirm the needs for and feasibility of implementing EVM as a structured approach in the industry to reposition the Spanish construction industry with the long term view to increase its project management maturity level as a pathway to gaining competitive advantage.
Earned value project management (EVPM) is an effective tool for managing project performance. However, most studies on extensions and applications of EVPM concentrate on improving final cost and duration estimates rather than improving upon the use of planned value (PV) to predict earned value (EV) and actual cost value (AC). This study proposes a straightforward modeling method for improving the predictive power of PV before executing a project. By using this modeling method, this study develops EV and AC forecasting models for four case projects. Out-of-sample forecasting validation using mean absolute percentage error (MAPE) demonstrates that the proposed method improves forecasting accuracy by an average of 23.66% and 17.39%, respectively, for EV and AC. This improvement on PV's predictive power prior to project execution provides management with more reliable predictive information about EV and AC performance, allowing for effective proactive action to ensure favorable performance outcomes. © 2015 Elsevier Ltd and Association for Project Management and the International Project Management Association.
This paper presents an overview of the existing literature on project control and earned value management (EVM), aiming at fulfilling three ambitions. First, the journal selection procedure allows to discern between high-quality journals and more popular business magazines. Second, the collected papers on project control and EVM, published in the selected journals, are classified based on a framework consisting of six distinct classes. Third, the classification framework indicates current trends and potential areas for future research, which can be summarized as follows: (i) increased attention to the stochastic nature of projects, (ii) enhanced validation of the proposed methodology using a large historical dataset or a simulation experiment, (iii) expansion of integrated control models, focusing on time and cost as well as other factors such as quality and sustainability, and (iv) development and validation of corrective action procedures.
The problem of the gap between theory and practice has been variously addressed in management accounting research. In recent years, new theories have been introduced and researchers have gradually approached field-based research with the aim to help bridge this gap. Several methods have been adopted to carry out this kind of research: questionnaires, interviews, single or multiple case studies, etc. Among them, the case method, in particular, has received increasing attention.
Business integration is certainly an important source of opportunities for firms but also a particularly challenging managerial task. Business integration is usually conceived for achieving technical and strategic complementarities but often fails at delivering the expected value as the importance the post integration phase is undervalued. This article follows the development of Innova Group, from a medium national player to a multinational group. Through a deep qualitative study we show how the persistence of identities, knowledge and practices inhibits the achievement of an effective integration and of the expected advantages. Moreover we show how the visual representation of cognitive models of organizational members in strategy maps offers important benefits as for the reciprocal understanding and strategy development.
Purpose
The aim of this paper is to contribute to understanding how measuring intellectual capital (IC) can favor IC mobilization, examining the role of actors who design and implement the system in influencing managers’ IC learning processes and their take up of IC management practices.
Design/methodology/approach
A constructive case study, in which the researcher was directly involved in measuring IC, is presented. Kolb's experiential learning theory model examines if and how the actors mobilized IC and how the researcher and controller influenced their learning process.
Findings
The paper shows that actors must complete an experiential learning cycle to mobilize IC. The controller's role is pivotal in promoting IC mobilization, provided he/she experiences a deep learning process and he/she moves from “IC counting” to “IC accounting.” The paper also highlights how research intervention contributes to IC mobilization by influencing the actors’ learning process.
Research limitations/implications
The paper is limited to one Italian company, so the results cannot be generalized; they were influenced by the researcher's “strong” interventionist approach and by the model adopted.
Practical implications
Companies introducing IC will become aware of barriers and levers to measuring and mobilizing IC, thus enabling them to devise strategies to avoid the former and take advantage of the latter.
Originality/value
The experiential learning theory model offers an alternative way of understanding how IC measurement produces effects and how the controller and researcher can influence the managers’ IC learning journey thus contributing to mobilization of IC.
Purpose
– The purpose of this paper is to discuss the potentialities of innovative accounting tools in supporting “transparency” and “resource allocation” in public hospitals, by describing the implementation of a pilot project of time-driven activity-based costing (TDABC).
Design/methodology/approach
– An interventionist research (IR) approach has been adopted: two medical doctors, three financial controllers and three researchers were involved. Collection of data used to implement the accounting model is based on hospital databases and interviews.
Findings
– The information produced may allow a higher coherence between resources and activities. TDABC may enhance transparency and support decisions toward a better organization of work and an informed allocation of resources.
Research limitations/implications
– Further studies are required to analyze decisions following the implementation of the TDABC model.
Originality/value
– The accounting literature lacks case studies describing the application of TDABC in hospital settings, despite its good informative potentialities and the limited investment required to introduce TDABC. Moreover, the use of the IR approach and the involvement of medical doctors may help to get coherence between accounting data and clinical work and may support the further diffusion and development of this costing model in hospitals.
This paper sheds light on the relatively unexplored question of how interventionist research (IVR) is actually conducted in management accounting and what kind of tensions it involves. The central starting point of the paper is viewing good IVR as producing contributions that are not only practically relevant but also theoretically significant, implying that an interventionist researcher has to be effective in both the emic and etic domains. The paper has two layers: the underlying interventionist case study of one of the authors and the reflective analysis based on that, to which the research question and the paper's purpose relate. The underlying study was a longitudinal IVR project including extremely close collaboration with the case firm. It contributed to the cost accounting literature on component commonality, advancing it to the earlier uncharted engineering-to-order production context. Based on this underlying study, the reflective analysis focuses on the various ways in which a researcher's intervention functions as the central driver of an interventionist study. Specifically, it elaborates on the view that the process around interventions is a ‘battlefield’ of various competing agendas and interests, which an interventionist researcher should balance in order to start, proceed and eventually successfully complete the research project. The balancing acts form a dialogical series of negotiations, relating to both the theoretical and empirical domains. Theoretical contributions of IVR projects tend to emerge in these dynamic processes, in which the researcher feels high pressure to show competence in both domains. However, the battlefield around interventions, though challenging for all parties, is also a rich and inspiring field of opportunities for exchanging knowledge between researchers and practitioners. Hence, IVR projects offer a potential avenue for producing new knowledge, with the two parties collaborating in the spirit of engaged scholarship.
A new formalism and a corresponding new notation for earned value analysis are presented. With compact, consistent, mnemonic notation, earned value calculations become more transparent and flexible, leading to insights about standard quantities and advances through new measures. As an example of the notation’s utility, it is used to generate a modified earned value approach that weights quantities according to their position in a project’s timeline.
For better implementation of Earned Value Management (EVM) methodology in different types of organizations and projects (e.g. public and private; large and small projects), a model was developed based on a research effort over a 2-year period. The findings include: (1) EVM is gaining higher acceptance due to more favorable views related to both diminishing EVM problems and improving utilities; and (2) a broader approach considering four-factor groups (i.e. EVM users, EVM methodology, project environment, implementation process) together can significantly improve the acceptance and performance of EVM in different types of organizations and projects.
In recent decades the interest of academic researchers in the practical aspects of management accounting has waned. This editorial explores some of the reasons of this development. Over the past few decades we have witnessed the establishment of management accounting in academia as a social science. This has increased the credibility of the accounting academics. However, it has also meant that academic researchers have neglected the technical core of their discipline and its problems and issues which have a direct practical relevance. It is concluded that there is a need for academic researchers to have a stronger focus on the technical core of the subject and to harness the findings of empirical research so that they can be used to develop and support practice.
In this article, we examine the use of visual representations for the business strategy process (from strategic analysis and strategy development to strategic planning and implementation). Starting with a review of literature, we show that visualization can address many of the cognitive, social, and emotional challenges of the strategy process, if visualization is understood as a participatory process and as interactive communication rather than as a static graphic rendering of outcomes. We categorise and position feasible methods that are based on the interactive visual representation of information along the strategy process and highlight their benefits. A conceptual framework and six corporate case studies illustrate how to use strategy visualization systematically. In the conclusion of the article we highlight the potential risks of visualization for strategizing and articulate a research agenda for this emergent domain.
About a decade ago, the constructive research approach (CRA) was proposed by Kasanen et al. (1993) as a specific opportunity for management accounting researchers to engage in solving problems relevant to managers. While the advocates of the CRA have argued in favour of its theoretical contribution potential and have shown that it satisfies the requirements of valid applied research, only very few studies using this particular approach have been published in major research journals. Our objective is to discuss the CRA methodology, both from a descriptive and from a prescriptive or normative perspective. We examine the research processes in two very different CRA studies, Degraeve et al. (2000b) and Tuomela (2000a), using the seven-step model suggested by Lukka (2000). We give practical exemplary methodological guidance for other researchers who wish to try out the CRA or obtain a better understanding of this methodology. While so doing, we also show that the CRA can provide researchers with interesting results obtained in a reliable and valid manner. In this way, we enhance the legitimacy of the CRA.
Interventionist research is not unobtrusive since the researcher deliberately seeks to make an impact on the world in order to gain knowledge. In this chapter we examine the fundamental nature of interventionist research in management accounting, its philosophical anchoring, variations, and forms of output. We also give brief illustrations. The distinguishing character of this kind of research is the need for the researcher to cross the border between the etic (outsider) and the emic (insider) perspectives - there and back again. This shift between differing logics provides opportunities for new insights since the researcher wants to achieve solutions that work in the field and come back with evidence of theoretical significance.
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