Available online at www.sciencedirect.com
International Journal of Project Management 27 (2009) 629–637
www.elsevier.com/locate/ijproman
Impact of corporate strengths/weaknesses on project
management competencies
Zeynep Isik a, David Arditi a,*, Irem Dikmen b, M. Talat Birgonul b
a
Dept. of Civil, Architectural and Environmental Engineering, Illinois Institute of Technology, 3201 South Dearborn Street, Chicago, IL 60616, United States
b
Dept. of Civil Engineering, Middle East Technical Univ., 06531 Ankara, Turkey
Received 22 June 2008; received in revised form 27 September 2008; accepted 2 October 2008
Abstract
The project is at the core of the construction business. Project management can be used as a tool to maximize the success of projects
and ultimately the success of construction companies. It is therefore worthwhile to explore the factors that can enhance project management competencies. In this study, it was hypothesized that ‘‘project management competencies” are influenced by ‘‘corporate strengths/
weaknesses”. ‘‘Corporate strengths/weaknesses” was defined as a second-ordered construct composed of three latent variables including
the company’s resources and capabilities, its strategic decisions, and the strength of its relationships with other parties. The data obtained
from a questionnaire survey administered to 73 contractors were analyzed using structural equation modeling (SEM). The results of the
study verified the hypothesis suggested.
Ó 2008 Elsevier Ltd and IPMA. All rights reserved.
Keywords: Corporate strengths/weaknesses; Project management competencies; Company resources and capabilities; Strategic decisions; Strength of
relationships
1. Introduction
The construction industry is a project oriented industry. Effective project management is key for the successful accomplishment of sophisticated projects [1,2].
Jaselskis and Ashley [3] state that construction projects
commonly experience uncertainty because of shortages
in resources and the nature of the project. The factors
that are conducive to successful project management
are abundantly discussed in the literature. For example,
Munns and Bjeirmi [4] suggest that the factors of success
in project management include commitment to complete
the project, appointment of a skilled project manager,
adequate definition of the project, correctly planning
the activities in the project, adequate information flow,
accommodation of frequent changes, rewarding the
*
Corresponding author. Tel.: +1 312 5675751; fax: +1 312 5673519.
E-mail addresses: [email protected] (Z. Isik), [email protected] (D. Arditi),
[email protected] (I. Dikmen), [email protected] (M.T. Birgonul).
0263-7863/$34.00 Ó 2008 Elsevier Ltd and IPMA. All rights reserved.
doi:10.1016/j.ijproman.2008.10.002
employees, and being open to innovations. The environment in which the project takes place was also taken into
account by many researchers [5–7]. That the use of the
appropriate management techniques contributes to successful project management is also stressed by many
researchers e.g., [4,8,9]. The literature appears to emphasize project-related factors at the expense of companyrelated factors such as a company’s resources and capabilities, its strategic decisions, and the strength of its relationships with other parties.
It should be kept in mind that a company is an organization that supports the many projects undertaken by the
company, generally in different geographical locations
and administered by quite autonomous project managers
but relying heavily on the support of the head office. In that
sense, every project is somewhat influenced by the policies
and culture of the central company organization. The
objective of the study reported in this paper is to explore
the impact of corporate strengths/weaknesses on project
management performance.
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Z. Isik et al. / International Journal of Project Management 27 (2009) 629–637
Corporate strengths/weaknesses are defined in the study
to reflect three dimensions: the company’s resources and
capabilities relative to finances, technical and human capital, research and development, receptiveness to innovation;
its strategic decisions relative to differentiation, market/client/partner selection, investment, organizational and project management; and the strength of its relationships
with other parties such as clients, unions, and the government. Project management competencies are defined by
the factors set forth by different researchers e.g., [2,4], the
Project Management Body of Knowledge (PMBoK) [10]
and the suggestions of construction professionals contacted
in a pilot study. All relevant factors are described in detail
in the next two sections. A questionnaire survey was
administered to a number of construction companies to
test the hypothesis that corporate strengths/weaknesses
have a significant impact on project management competencies. The hypothesis was tested using structural equation modelling (SEM), a statistical tool described later in
the paper.
2. Corporate strengths/weaknesses
Construction companies should be cognizant of their
strengths and weaknesses in order to overcome the challenges of increased competition. However, the intangible
nature of corporate level characteristics makes it difficult
to assign them as strengths/weaknesses [11]. Based on a literature review and the responses of experts in a pilot survey, the corporate strengths/weaknesses were defined in
the study by three constructs including a company’s
resources and capabilities, its strategic decisions, and the
strength of its relationships with other parties. These variables are described below.
2.1. Resources and capabilities
In the language of traditional strategic analysis, a company’s resources and capabilities are the strengths that
companies can use to conceive of and implement their
strategies [12,13]. A company’s resources and capabilities
may be defined as its tangible and intangible assets. They
include the company’s financial resources, technical competencies, leadership characteristics, experience, and image
in the industry, research and development capabilities, and
innovation tendencies.
Financial resources indicate a company’s credibility and
reputation among clients and suppliers as well as its
strength in the market in terms of its capacity to carry
out projects [14]. Having strong financial resources may
enable a company to get into more risky situations which
in turn have higher benefits. The financial strength of a
company is indicated by profitability and turnover and
generally by the ratio of the company’s liabilities to equities. The majority of construction projects are funded by
the owner who pays the contractor periodically, who in
turn pays the subcontractors, the suppliers and other par-
ties of the project for services rendered. The success of this
routine depends on the financial strength of the owner as
well as of the contractor [15].
Technical competency refers to the physical assets of a
company such as machinery and equipment and the extent
of technical knowhow available that is necessary to undertake specific projects. According to Shenhar and Dvir’s [16]
project management theory, fulfilling technological specifications is one of the major factors in the achievement of
success in a project [17,18]. According to Warszawski
[14], a company’s technical competency can be assessed
by analyzing the company’s preferred construction methods, the experience of its technical staff, the productivity
and speed of its construction activities and the quality of
the company’s output.
Leadership involves developing and communicating mission, vision, and values to the members of an organization.
A successful leadership is expected to create an environment for empowerment, innovation, learning, and support
[7]. Researchers have examined the links between leadership styles and performance [19,20]. Fiedler [21] has
emphasized the effectiveness of a leader as a major determinant in success or failure of a group, organization, or even
an entire country. It is argued that the negative effects of
external factors in a project environment can be reduced
by the training end equipping of leaders with different skills
[22–24]. Organizations require leadership for any of their
decisions or actions [25].
Experience can be achieved only if the lessons learned
from completed projects are kept in the organizational
memory and used in future projects [26]. Organizational
learning is difficult for companies because of the fragmented and project-based structure of the industry. This
difficulty can be altered by knowledge management activities and a continuous organizational learning culture [27].
The image of the company provides an impression of the
products, services, strategies, and prospects compared to its
competitors [28]. Contractors in the construction industry
have to portray an image that addresses the expectation
and demand of the clients and users like in all other market
oriented industries. A positive image may enable higher
profitability by attracting better clients and investors and
increasing the value of the product [29].
Research and development capability has a positive
impact on competitive advantage in response to the
increased requirements of the globalized industry. The
dynamic and rapid changing nature of the industry forces
construction companies to develop and adopt new technologies in order to survive in a competitive environment.
Innovation capability constitutes the link between the
company and the dynamic environment of the industry
[30]. The construction industry is not static and introverted
any more. Globalization and higher rates of competition
between companies force construction companies to
change. Innovation capability is an important factor in
achieving cost leadership, focus, and differentiation, hence
enhancing competitiveness as stated by Porter [31].
Z. Isik et al. / International Journal of Project Management 27 (2009) 629–637
According to Arditi et al. [32], innovations are rather incremental than radical in the construction industry. Also construction is a supplier dominated industry. Construction
companies are dependent on other industries (e.g., construction material, manufacturers, equipment manufactures and others for technological innovations such as
new construction processes and methods). Alternative corporate structures, financing methods etc. can also be considered as potential innovation areas in the construction
industry [32].
2.2. Strategic decisions
The literature on strategic decision making is spread
over a wide range from an individual strategist’s perspective to strategic management techniques, to the implementation of these techniques in real situations [14,33–35]. The
strategies selected for this study (see below) represent the
characteristics of the construction industry as a projectbased organization.
Differentiation strategies refer to the differentiation of
products or services that provides competitive advantage
and allows a company to deal effectively with the threat
of new entrants to the market [36]. Many new construction
companies enter the industry every year because starting a
new company does not require a large investment; consequently the construction industry becomes more competitive and forces existing companies to seek advantages
over competitors by means of differentiation strategies that
allow them to undertake projects that the new entrants cannot do.
Market, project, client, and partner selection strategies
are related to characteristics of such as market conditions,
the location and complexity of the project, the financial stability of the client, and potential partners that have capabilities that the company does not possess.
Project management strategies can be developed by
referring to the mission of the company and the company’s
business environment. The managerial functions of a project include activities such as planning, cost control, quality
control, risk management, safety management, to name
but a few. In order to achieve project goals, adequate strategies have to be set up relative to these functions.
Investment strategies occur along several dimensions
such as capabilities of the company (resources), pricing
(financial decisions), product (construction project-related
factors), and finally research and development [37].
Organizational management strategies involve decisions
pertaining to the company’s reporting structure, planning,
controlling and coordinating systems, as well as the management of the informal relations among the different parties within the company [12].
2.3. Strength of relationships with other parties
The strength of a company’s relationships with other
parties constitutes a social dimension of project environ-
631
ment [38]. The strength of relationships with the parties
involved in typical construction projects such as public or
private clients, regulatory agencies, subcontractors, labor
unions, material dealers, surety companies, and financial
institutions constitute an important aspect of a company.
The strength of these relationships is related to the mutual
satisfaction of the parties, i.e., the realization of the expectations of the parties. The primary relationships that are of
more importance than others include relationships with
construction owners (both public and private), labor
unions, and regulatory agencies. But the subtle difference
between favoritism and the strength of relations has to be
distinguished while assessing this criterion.
Relationships with clients rely on the communication and
negotiating skills of company executives. The difficulty of
achieving strong relationships between clients and contractors has always been a matter of concern, but recently the
importance of cooperation and trust between clients and
contractors has been understood somewhat better [39].
The awareness of the influence of good relationships on
performance encouraged contractors to recognize clients’
basic expectations relative to cost, time and quality [40].
On the other hand, good relationships are characterized
by timely payments on the part of the owner, fewer claims
on the part of the contractor, and the absence of legal
disputes.
Relationships with labor unions relates to the human
resources management of the company. Contractors
should pay attention to formulating fair employment policies and to recognize labor rights. Labor unions have the
right to strike in case the company engages in serious labor
practices [41]. Smooth labor relations minimize disputes
and strikes, and prevent potential delays.
Relationships with the government depends on the compromise of the government policies and the implementations of regulatory agencies with the companies in the
construction industry. In general terms, bureaucratic
obstacles set by regulatory agencies to maintain standards
in companies’ day-to-day operations (e.g., codes, inspections, approvals, etc.), and companies’ difficulties in
obtaining preferential financial support are some of the
government-induced problems. On the other hand, tax
incentives, and relaxation of customs duties to allow the
import of some materials and to prevent shortages are
encouraging government actions [42].
3. Project management competencies
The project is at the core of the construction business
and project management can be used as a tool to maximize
the success of a project [3]. The implementation process is
normally uniform across all projects even though each project is unique [10,43]. Nine project management knowledge
areas were identified based on a review of the literature and
a limited number of interviews with construction professionals during the pilot study of the research. The selection
of these factors was based on their potential to impact the
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Z. Isik et al. / International Journal of Project Management 27 (2009) 629–637
success of a project through the implementation process.
Various project management success factors were identified
in the literature such as communication, control mechanisms, feedback capabilities, troubleshooting, coordination, decision making, monitoring, project organization,
planning and scheduling, and management experience
[44–46]. However, in this study, project management competencies were investigated rather than the success factors.
Therefore the project management areas described briefly
below were considered with their potential influence on
project success.
Schedule management enables the project to complete on
time by the use of a series of processes, including activity
definition, sequencing, resource estimating, duration estimating, schedule development and schedule control [10].
A project manager has to be familiar with the project environment and the conditions that may be the cause of
potential delays.
Cost management activities include planning, estimating,
budgeting, and controlling the costs of the project [10]. All
these activities ensure the lowest possible overall project
cost consistent with the owner’s investment objectives.
Quality management refers to the activities that determine quality policies, objectives, and responsibilities. The
processes of a quality management system include quality
planning, quality assurance, and quality control [10]. Construction companies are incrementally implementing total
quality management (TQM) for improving customer satisfaction, obtaining better quality products and higher market share. The main success of TQM depends on the
commitment of top management and willingness to change
the quality culture [47].
Human resources management is an inevitable dimension
of project management since it is people who deliver projects. People are the predominant resource in an organization and there is a positive association between human
resources management practices and achievement of outstanding success [48,49]. Organizing and managing the project team are the main duties of human resources
management.
Risk management processes include identification, analysis, responses, monitoring and control of risks. Considering
the complex, dynamic and challenging nature of construction projects, risk in a construction project is unavoidable
and affects productivity, performance, quality and budget
significantly. However, risk can be transferred, accepted,
minimized, or shared [50]. Proper management of risk
has the potential to decrease the effects of unexpected
events [18,51].
Supply chain management is the network of different parties, processes and activities that produce products or services [52]. The owner, consultants, contractor,
subcontractors and suppliers constitute the supply chain
in construction. Higher success can be achieved by increasing the quality of communication between different parties
and team operation among different parties [47]. A number
of public sector construction initiatives in the UK, includ-
ing the Latham Report [50] and the Egan Report [53]
emphasized the benefits of improving supply chain
management.
Claims management is of particular importance because
the construction activity involves a large number of parties,
an environment conducive to conflicts. Documentation,
processing, monitoring and management of claims are a
part of contract life cycle [10]. Claims and disputes between
construction owners, contractors and other participants
can be avoided by clearly stated contractual terms, early
nonadversarial communication, and a good understanding
of the causes of claims [54].
Knowledge management is defined as a vehicle fuelled by
the need for innovation and improved business performance and client satisfaction [53,55,56]. The capability of
a company to cope with sophisticated projects is the result
of a successful knowledge management [14]. Therefore it is
essential to keep information on best practices in order to
learn lessons and not to duplicate the mistakes.
Health and safety management aims to reduce the number of accidents and accidents’ effects on project costs such
as the cost of insurance, inspection and conformance to
regulations [57]. Potential solutions to health and safety
problems include providing safety booklets, safety equipment, and a safe environment; appointing a trained safety
representative on site; training workers and supervisors;
and using new technologies [57,58].
4. Research methodology
A questionnaire consisting of questions about the latent
variables and their constituent variables explained in the
preceding sections was designed to analyze the influence
of ‘‘corporate strengths/weaknesses” on ‘‘project management competencies”. The questions were designed to seek
the perceptions of the respondents relative to company
resources and capabilities, strategic decisions, the strength
of the company’s relationships with other parties, and project management competencies in the company. An example question would read ‘‘How successful do you think
your company is in schedule management?” The respondent would rate the answer on a scale of 1–5, where 1 represents ‘‘not successful” and 5 ‘‘very successful”.
The questionnaire was administered via e-mail and faceto-face interviews to 185 construction companies established in Turkey. The target construction companies were
all members of the Turkish Contractors Association
(TCA) and the Turkish Construction Employers Association (TCEA). The 185 companies received an e-mail
describing the objective of the study, inquiring about their
willingness to participate in the study and requesting a
face-to-face interview with an executive of the company.
Forty seven questionnaires were completed, the majority
of which were administered by face-to-face interviews.
The rate of response was 25%. However, considering the
fact that there were other construction companies in the
industry which were not members of TCA or TCEA but
Z. Isik et al. / International Journal of Project Management 27 (2009) 629–637
showing similar characteristics with the member companies
of these two associations in terms of size and type of work
undertaken, a decision was made to expand the survey by
including 26 additional similar companies selected individually through personal contacts. At the end of the extended
survey, there were 26 more completed questionnaires,
bringing the total number of respondents to 73. The variables associated with the survey questions were described
in the preceding sections and are presented in Fig. 1.
5. Data analysis
The data collected from 73 respondents were analyzed
using a software package called EQS 6.1, a structural equation modeling (SEM) tool. SEM is a statistical technique
that combines a measurement model (confirmatory factor
analysis) and a structural model (regression or path analysis) in a single statistical test [59–61].
The first step in SEM is the validation of the measurement model through confirmatory factor analysis (CFA).
While conducting CFA, construct validity should be satisfied by using content validity and empirical validity tests.
Once the measurement model is validated, the structural
relationships between latent variables are estimated [61,62].
Financial resources
Technical competency
Leadership
Experience
Company image
R&D capability
Innovation capability
633
Content validity tests rate the extent to which a constituent variable belongs to its corresponding construct. Since
content validity cannot be tested by using statistical tools,
an in-depth literature survey is necessary to keep the
researcher’s judgment on the right track [63]. An extensive
literature survey was conducted to specify the variables
that define latent variables. The model was tested in a pilot
study administered to industry professionals and academics. Based on the input of these subjects, the model was
restructured, eliminating some of the variables and adding
recommended ones. Content validity was thus achieved. In
the proposed model, ‘‘corporate strengths/weaknesses” is
considered to be a three-dimensional and 2nd order construct composed of ‘‘company resources and capabilities”,
‘‘strategic decisions”, and ‘‘strength of relationships with
other parties”; its effect on ‘‘project management competencies” is tested. In other words, the structure of the model
involves a second order construct whereby a latent variable
(corporate strengths/weaknesses) is represented by three
latent variables (company resources and capabilities, strategic decisions, strength of relationships with other parties)
(Fig. 1). The second order approach is recommended by
Hair et al. [64] as it maximizes the interpretability of both
the measurement and the structural models. The heavy
0.54
0.51
0.70
0.63
COMPANY
RESOURCES
AND
CAPABILITIES
0.71
0.75
0.75
0.94
0.67
Schedule management
0.70
Cost management
0.70
Quality management
Differentiation strategies
0.68
Market selection strategies
0.65
Project selection strategies
0.73
Client selection strategies
0.70
Partner selection strategies
0.73
0.66
Project management strategies
0.71
0.77
Investment strategies
0.68
0.80
Human resources management
0.65
STRATEGIC
DECISIONS
0.93
CORPORATE
STRENGTHS/
WEAKNESSES
0.93
PROJECT
MANAGEMENT
COMPETENCIES
0.66
Risk management
Supply chain management
Claims management
Knowledge management
0.91
Health and safety management
0.65
Org. management strategies
Relations with clients
0.61
Relations with government
0.59
Relations with labor unions
0.79
0.72
STRENGTH
OF RELATIONSHIPS
WITH OTHER
PARTIES
Fig. 1. Structural equation model.
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Z. Isik et al. / International Journal of Project Management 27 (2009) 629–637
arrow in Fig. 1 defines the direction of the influence
between two constructs, while light arrows define the
dimensions of latent variables. Empirical validity tests follow content validity.
Scale reliability is the internal consistency of a latent
variable and is measured most commonly with a coefficient
called Cronbach’s alpha. The purpose of testing the reliability of a construct is to understand how each observed
indicator represents its correspondent latent variable. A
higher Cronbach’s alpha coefficient indicates higher reliability of the scale used to measure the latent variable
[65]. According to the EQS analysis results, Cronbach’s
alpha values were, 0.84 for ‘‘company resources and capabilities”, 0.88 for ‘‘strategic decisions”, 0.71 for ‘‘strength
of relationships with other parties”, 0.93 for ‘‘project management competencies”, and 0.95 for the ‘‘overall model”,
all well beyond the threshold of 0.70 recommended by
Nunally [66] indicating that scale reliability has been
achieved. The reliability of the ‘‘corporate strengths/weaknesses” construct was also observed to be 0.93, which justifies the use of a three-dimensional construct with a twostep approach.
Unidimensionality refers to the degree to which constituent variables represent one underlying latent variable.
CFA was used to test for unidimensionality. Initially,
CFA was conducted independently for each construct.
Once each construct in the model was deemed unidimensional by itself, then unidimensionality was tested for all
possible pairs as recommended by Garver and Mentzer
[61] and Dunn et al. [63].
Convergent validity is the extent to which the latent variable correlates to corresponding items designed to measure
the same latent variable. If the factor loadings are statistically significant, then convergent validity exists. Fig. 1
shows the factor loadings marked next to light arrows corresponding to the five constructs of the model; note that all
of the factor loadings are significant at a = 0.05.
Another way of assessing construct validity is the goodness-of-fit of the model. A number of fit indices are available, but Marsh et al. [67] propose that ideal fit indices
should have: (1) relative independence of sample size; (2)
accuracy and consistency to assess different models; and
(3) ease of interpretation aided by a well defined continuum
or pre-set range. Many fit indices do not meet these criteria,
because they are adversely affected by sample size [68]. The
non-normed fit index (NNFI) considers a correlation for
model complexity [59]. The comparative fit index (CFI) is
interpreted in the same way as the NNFI and represents
the relative improvement in fit of the hypothesized model
over the null model. The root mean squared error of
approximation (RMSEA) is an estimate of the discrepancy
between the observed and estimated covariance matrices in
the population [64]. The v2 compares the observed covariance matrix to the one estimated on the assumption that
the model being tested is true. But, when the sample size
is small, it is difficult to obtain a v2 that is not statistically
significant; in such situations, the ratio of v2 to degree of
Table 1
Reliability value and goodness of fit indices of the overall model.
Fit indices
Recommended
value
Overall
model
Cronbach’s alpha
Non-normed fit index (NNFI)
>0.7
0 (No fit)-1
(perfect fit)
0 (No fit)-1
(perfect fit)
<0.1
0.95
0.87
<3
450/
315 = 1.43
Comparative fit index (CFI)
Root mean-square error of
approximation (RMSEA)
v2/Degree of freedom
0.86
0.08
freedom (dof) is to be examined. Based on the stated criteria and the suggestions made by Garver and Mentzer [61],
Bentler and Yuan [68], and Jackson [69], (1) the nonnormed fit index (NNFI); (2) the comparative fit index
(CFI); (3) the root mean squared error of approximation
(RMSEA) and (4) the ratio of v2 to dof were selected in this
study since they are less affected by sample size compared
to other goodness-of-fit indices. Bentler [70] also recommends using robust methodology in EQS to handle nonnormality and to avoid the limitations of small sample size.
Robust analysis leads to corrected v2 statistics and fit indices. In this study, robust analysis is performed and robust
statistics are presented in Table 1. According to the values
presented in Table 1, the v2 to dof ratio was satisfactory as
it was smaller than 3, the threshold suggested by Kline [59].
The CFI and NNFI values of 0.87 and 0.86 also demonstrate a good fit of the model to the data. Moreover, the
RMSEA value was found to be satisfactory as it was below
the recommended value of 0.10 [59]. All in all, the measurement model shows a good fit to the data.
In the second step of the analysis, SEM tests the hypothesized relationships between the validated constructs. The
relationship between the latent variables was hypothesized
with a heavy arrow in Fig. 1 which represents the direction
of the influence. The path coefficient marked on this heavy
arrow is calculated for a 95% confidence level and can be
interpreted similar to a regression coefficient that describe
the linear relationship between two latent variables [70].
According to the model, ‘‘corporate strength/weaknesses”
has a significant impact on ‘‘project management competencies” with a path coefficient of 0.93.
6. Discussion of the findings
All criteria including Cronbach’s alpha values, factor
loadings, path coefficients and goodness of fit indices which
were used to measure the reliability and fit of the model
were found to be highly satisfactory as shown in Table 1
and Fig. 1. The hypothesis set in the study that ‘‘corporate
strength/weaknesses” which is defined by ‘‘company
resources and capabilities”, ‘‘strategic decisions” and
‘‘strength of relationships with other parties” is a key factor
in the development of ‘‘project management competencies”
Z. Isik et al. / International Journal of Project Management 27 (2009) 629–637
is therefore verified by the findings. The influence of the
determinants that take a project to success or failure has
been investigated by several researchers e.g., [2,45,71–73],
the majority of whom pointed out the importance of ‘‘project management competencies” among other criteria.
Based on the findings, it can be stated that ‘‘corporate
strengths/weaknesses” plays an important role on the success of projects since it has a direct and significant influence
on ‘‘project management competencies”. The positive influence of company wide characteristics on project management competencies is also supported by other studies.
According to the strategic management literature, companywide characteristics are defined as the strengths of a
company and the strengths of a company have the potential to be translated into an opportunity for the company
as well [12,13].
‘‘Company resources and capabilities” which is one of
the determinants of ‘‘corporate strengths/weaknesses” with
a factor loading of 0.94 (Fig. 1), depends on the size of the
company and the competitive environment in which the
company operates. In order to have a positive impact on
project success, company resources and capabilities should
be valuable, rare, inimitable, and should lack of substitutes
[12,74]. Based on their higher factor loadings in Fig. 1, it
can be stated that ‘‘leadership”, ‘‘company image”,
‘‘research and development capability” and ‘‘innovation
capability” are important resources and capabilities. While
leadership is of importance in the execution of all project
management activities, ‘‘company image”, ‘‘research and
development capability”, and receptiveness to ‘‘innovation” can be considered as sources of competitive advantage. Leadership in developing and using innovative
management techniques is expected to affect at least some
project management competencies.
‘‘Strategic decisions”, with a factor loading of 0.93 is
a major indicator of ‘‘corporate strengths/weaknesses”,
and in turn impacts project management competencies
significantly. Emphasizing the importance of strategic
decisions, Child [75] states that companies can achieve
higher organizational success by adopting different competitive positioning alternatives based on strategic decisions. The strategic decisions construct in the study was
represented by eight constituent variables, all closely
related to competition. All have the power to manipulate
the course of action in a project. Market/project/client/
partner selection strategies conducted along with differentiation, investment and organizational management strategies can constitute important corporate strengths (or
weaknesses), which in turn can impact project management competencies. For example, differentiation strategies that add uniqueness and value to a company’s
competitive arsenal [76] can have an impact on almost
all project management competencies. Market, project,
client, partner selection is likely to impact project management competencies such as knowledge management,
risk management, claims management and cost management. The influence of investment strategies on cost
635
management is obvious. Similarly, the effect of organizational management strategies on the human resources
and knowledge management competencies of project
management is well established.
‘‘Strength of relationships with other parties” was also
found to be loading significantly on ‘‘project management
competencies”. The positive influence of strong relationships with other parties was also discussed and confirmed
in the literature e.g., [77–80]. The strength of the relationships between the contractor and the client facilitates the
operations and helps to achieve better performance.
According to Pinto and Mantel [78] and Dissanayaka
and Kumaraswamy [79], good relationships between a construction management firm and the client’s representatives
expedite the operations and help to achieve success. Considering the sophisticated nature of the industry and the
cultural values of the society, the relationship of a construction company were assessed not only with the client,
but also with government agencies and labor unions. On
this account, the communication and negotiation skills of
company executives have to be stressed. The strength of
a company’s relationships with other parties is expected
to impact project management competencies such as quality management, claims management, human resources
management.
7. Conclusion
The impact of corporate strength/weaknesses on project
management competencies was investigated in this study.
According to the model presented in Fig. 1, corporate
strengths/weaknesses are defined by the latent variables
‘‘company resources and capabilities”, ‘‘strategic decisions” and ‘‘strength of relationships with other parties”.
It was hypothesized that ‘‘corporate strengths/weaknesses”, so defined, impacts ‘‘project management competencies”. In order to test this hypothesis, a questionnaire
survey was administered to 73 Turkish construction companies. A two-step SEM model was set up to measure the
five latent variables (project management competencies,
company resources and capabilities, strategic decisions,
strength of relationships with other parties, and corporate
strengths/weaknesses) through their constituent variables
and to see if the hypothesized relationship holds (Fig. 1).
According to the findings of the SEM analysis (Fig. 1
and Table 1), Cronbach’s alpha coefficients of all the latent
variables were well over the 0.70 min set by Nunally [66]
which indicated that the internal reliability of the individual constructs was quite high. The internal reliability of
the overall model was also found to be 0.95 which is an
excellent result. CFA showed that all factor loadings presented in Fig. 1 were significant at a = 0.05. Limitations
due to the small sample size are overcome by using robust
methodology and the goodness of fit indices presented in
Table 1. The indices consistently indicated a good fit, considering the recommended values. As a result, it can be
concluded that the hypothesis set at the beginning of the
636
Z. Isik et al. / International Journal of Project Management 27 (2009) 629–637
study was verified by the statistically significant (a = 0.05)
and very strong path coefficient (0.93) shown in Fig. 1.
Beyond the success criteria commonly mentioned in previous research on project management e.g., [2,4,45,
72,73,81], the considerable influence of corporate
strengths/weaknesses was confirmed by the finding of this
study. This finding adds a different perspective to success
criteria in project management, and is particularly important since construction is largely project-based. Based on
the findings of the study, it can be stated that companies
should adjust their resources and capabilities, their longterm strategies and their relationships with other parties
to better serve the needs of the individual projects. Indeed,
in the dynamic environment of the construction industry,
companies have to behave farsighted in order to survive.
Ample leadership qualities should be acquired in addition
to being open to innovation and fostering research and
development. Tactical considerations which are short-term
have to be complemented by long-term and strategic decisions. Finally, strong relationships (may be exploring partnering relationships) should be developed with prospective
clients, unions, and government.
Further research that incorporates a more detailed view
of project management competencies such as the IPMA
Competence Baseline [82] could reveal new insights into
technical, behavioral, as well as contextual competencies.
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