Efficiency and Effectiveness
Contents |
Abstract
Projects, programs and portfolios are driven by or aligned with organizational strategies and each have their own purpose to achieve strategic goals. Organizational goals are achieved with project management.[1] One of the keys to success when it comes to the achievement of project objectives or making a personal change, is the goal setting. [2] When setting a goal, there are two important concepts that one needs to have in mind; efficiency and effectiveness.
Efficiency shows how productively resources are used to achieve a goal and effectiveness is a measure of the relevance of the goal.[3] Efficiency is about doing things right and effectiveness is about doing the right thing.[4]
When working on or managing a project, it is important to be aware of these to concepts in order for the project to be successful. Projects have five levels of success, one of them being project management success, which implies the project’s efficiency. The other four levels; process, product, business and strategic success, will be referred as the project success. The project success implies the project’s effectiveness.[5]
The purpose of this article is to emphasize the importance of the awareness of efficiency and effectiveness when working on, or managing a project. It will dive deeper into the concepts and explain at what stage projects can thrive, at what stage they can survive or whether they are unlikely to survive. The importance of the two concepts will be explained further and what can be done if a project is lacking one of them or both.
Efficiency vs. Effectiveness
It is common to confuse the meanings of efficiency and effectiveness and they are sometimes even considered as synonyms, but the two concepts take on very different meanings.[6] Efficiency and effectiveness are in a way measurements and are often used to measure performance, though they can be used in a lot of different circumstances. In principle, efficiency is about doing things right and effectiveness is about doing the right thing.[4] When looking through the project management lens, efficiency can also be described by performing in the best possible way with the least resources, time and effort. Efficiency would be about achieving a purpose by producing an intended result. So, effectiveness is more about the long term strategy and the goals, while efficiency is about the process. (ref video)
How is it relevant for projects, programs and portfolios?
Organizational performance is measured by the effectiveness and efficiency of its managers' work of using available resources to satisfy customers and achieve organizational goals.[3] Projects, programs and portfolios are driven by or aligned with organizational strategies and each have their own purpose to achieve strategic goals. Relevant programs and projects are selected with portfolio management, the work is prioritized and required resources are provided. Organizational goals are achieved with project management.[1] One of the keys to success when it comes to the achievement of project objectives is the goal setting[2] and when setting a goal, it is important to have both efficiency and effectiveness in mind.
When working on or managing a project, it is important to be aware of these to concepts in order for the project to be successful. Projects have five levels of success, one of them being project management success, which implies the project’s efficiency. The other four levels; process, product, business and strategic success, will be referred as the project success. The project success implies the project’s effectiveness.[5]
There are a lot of things that can affect the effectiveness of a project, but first and foremost, it is important that the project is relevant, that is, its goals and objectives are aligned with the organizational strategy. Therefore, the project's effectiveness is also in the hands of the portfolio management.
Research shows that a lot of projects fail due do two reasons; project failures, i.e. not doing the project right, and portfolio failures, i.e. not doing the right project.[7]
Project efficiency and effectiveness
For a project to be at its best it has to be both effective and efficient as previously mentioned. But projects can also be only either one of those, or neither. The following examples explain all four cases and it can be good to take a look at Figure 1 while going through the cases.
High effectiveness & high efficiency
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For a project to thrive, it is important that it is both high in efficiency and effectiveness. In this case right things are being done and things are done the right way. The goals that are set are relevant and right and the resources are used well. This results in an quality output that the customers want and the price is affordable.[3] In this case they are driving fast to the right place.
High effectiveness & low efficiency
If a project is effective but it is not efficient, i.e. the project is successful but the project management is unsuccessful, the project can survive. As in the example above, the right goals are set, but in this case things are not done right. The resources are not used quite well which results in an output that the customers want, but is too expensive.[3] In this case they are driving slow to the right place.
Low effectiveness & high efficiency
If a project is efficient but not effective, i.e. the project is unsuccessful but the project management is successful, the project not last long and in fact it will die rather quickly. The goals that are sets are not right or relevant, but the available resources are used well to achieve the goals, which results in a really good output, but the customers do not want it.[3] In this case they are driving fast to the wrong place.
Low effectiveness & low efficiency
When a project is both lacking effectiveness and efficiency, both the project management and the project are unsuccessful. They are pursuing the wrong goals and using resources badly to achieve those goals. This results in a low quality output that customers do not want. In this case they are driving slow to the wrong place.
Application/Improvement
As mentioned above, project effectiveness reflects in the project success and its efficiency reflects in the project management success. When looking at the project efficiency, we are focusing on the process of the project which relates to the present. When looking at project effectiveness, we are focusing on the achievement of the project goals, or the value of the project, which relates more to the future. As the efficiency of the project has to do with the present, it is common that people find it easier to increase efficiency than effectiveness, as effectiveness is more about the outcome and has to do with the future. (ref youtube)
What to think about before projects start and in beginning of a project
Projects need to be constantly monitored, but if the foundation is solid, it will most likely be easier to monitor the project and prevent lack of efficiency and effectiveness. Following is one way to a foundation for achieving high efficiency level[8];
- Objectives: The objective or goal of the project has to be clear to everyone working on the project. It has to be clearly outlined and aligned with organizational goals and strategy.
- Communication: The communication has to be effective and right approaches have to be used to ensure that the goals are understood.
- Involvement: All team members have to be involved as much as possible. It can be really encouraging for the team to participate in decision making and planning when working on the project.
How to know if a project is efficient and effective?
One way to estimate project's efficiency and effectiveness is to make an assessment table, like the one below, or similar. The table uses customer satisfaction to evaluate effectiveness and resources to evaluate efficiency. This tool makes it easier to see if either needs improvement.[9]
![Figure 2: Assessment table[9]](/index.php/File:Assessment.png)
Annotated bibliography
References
- ↑ 1.0 1.1 Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). (pp. 16,17). Project Management Institute, Inc. (PMI).
- ↑ 2.0 2.1 Dye, L. D. (2010). Goal setting and achievement thinking—the key to project and professional success. Paper presented at PMI® Global Congress 2010—North America, Washington, DC. Newtown Square, PA: Project Management Institute. https://www.pmi.org/learning/library/goal-setting-achievement-thinking-success-6535
- ↑ 3.0 3.1 3.2 3.3 3.4 G. R. Jones and J. M. George. (2019). Essentials of Contemporary Management, eight edition. McGraw-Hill Education.
- ↑ 4.0 4.1 Banister-Hazama, D., Moreci, J., & England, K. (2012). Increase project team effectiveness: step-by-step. Paper presented at PMI® Global Congress 2012—North America, Vancouver, British Columbia, Canada. Newtown Square, PA: Project Management Institute. https://www.pmi.org/learning/library/increase-project-team-effectiveness-steps-6070
- ↑ 5.0 5.1 Bannerman, P. L. (2008). Defining project success: a multilevel framework. Paper presented at PMI® Research Conference: Defining the Future of Project Management, Warsaw, Poland. Newtown Square, PA: Project Management Institute. https://www.pmi.org/learning/library/defining-project-success-multilevel-framework-7096
- ↑ Mildred Golden Pryor. (n.d.). Effectiveness and Efficiency. Reference for business. https://www.referenceforbusiness.com/management/De-Ele/Effectiveness-and-Efficiency.html
- ↑ Linenberg, Y. & Rynn, D. (2005). Improving project success through effective project selection: the efficient frontier technique. Paper presented at PMI® Global Congress 2005—EMEA, Edinburgh, Scotland. Newtown Square, PA: Project Management Institute. https://www.pmi.org/learning/library/improving-project-success-efficient-frontier-technique-7576
- ↑ Dinsmore, P. C. (1989). Boosting productivity on projects: building up from the basics. PM Network, 3(7), 23–25. https://www.pmi.org/learning/library/boosting-productivity-projects-5097
- ↑ 9.0 9.1 Leonard, D (2009) Back to Basics, Table Talk: A Simple Table Can Assess Project Effectiveness and Efficiency, Quality Progress, July, p 72
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