Efficiency and Effectiveness
Abstract
Projects, programs and portfolios are driven by or aligned with organizational strategies and each has 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 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 two concepts in order for the project to be successful. The project management success implies the efficiency of the project and the project success, or the portfolio management success implies the project effectiveness.[5] The levels of projects effectiveness and efficiency can tell if the project is likely to thrive, or just survive, or if it is more likely to die/fail.
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. It addresses what is good to have in mind before starting a project and how to know if a project that has already been started is effective or efficient along with ways to increase both effectiveness and efficiency if the project is lacking either one.
Contents |
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.[7]
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 has 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 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 two 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, the project must be 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.[8]
Why think about efficiency and effectiveness in a project?
Project efficiency and effectiveness levels
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
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 a 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 set 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
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.[7]
What to think about at the beginning of projects
First of all, it is important to make sure that the project is relevant and the project objectives are aligned with the organizational strategies and goals. Projects need to be constantly monitored, but if the foundation is solid, it will most likely be easier to monitor the project and prevent a lack of efficiency and effectiveness. Following is one way to a foundation for achieving high efficiency level[9];
- Objectives:
The objectives of the project have to be clear to everyone working on the project. It has to be clearly outlined and aligned with organizational goals and strategy. The more clear the objectives are, the more effective they are. One way to make clear objectives is to use the SMART framework; then the objectives must be Specific, Measurable, Achievable, Realistic and Time-bound; SMART[10]. - Communication:
The communication has to be effective and the 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.
One idea to track the process when working on the project is using dashboards.
It is also a good idea for project managers to have in mind the PMI Talent Triangle, which focuses on three skill sets; Technical project management, Leadership and Strategic and business management. Technical project management is about the technical aspects of performing the manager's role. Leadership is having the knowledge, skills and behaviors that are needed to guide, lead and motivate the project team and achieve organizational goals. Strategic and business management is about the knowledge of and expertise in the industry and organization that enhanced performance and better delivers business outcomes.[11]
How to know if a project is efficient and effective?
One way to estimate project 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.[12]
![Figure 2: Assessment table[12]](/index.php/File:Assessment.png)
How to increase efficiency?
KPIs
How to increase effectiveness?
Limitations
Annotated bibliography
Following references may be beneficial for further reading on topic addressed in this article.
- 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
In this article Banister-Hazama, Moreci & England introduce three steps to increase project team effectiveness. The three steps they write about are the identification of organizational responsibilities, project manager's responsibilities and the responsibilities of each team member. They explain that success is often seen as a team effort, but failure is a result of an individual and more successful projects can be produced by creating more effective teams. They assumes the entire organization will be involved in the effort.
- Bridges, J. How to Write Effective Project Objectives Every Time. (2019, Dec 4th). Projectmanager. https://www.projectmanager.com/training/how-to-write-effective-project-objectives-every-time
This article explains the meaning of projects objectives, why we should care about their effectiveness and how to write effective project objectives. The difference between goals and project objectives is explained, and few types of goals are introduced.
NOT COMPLETED
KPI - https://www.projectmanager.com/training/8-essential-kpi-metrics-teams
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
- ↑ 7.0 7.1 Dave Osh. (2015, August 23). Effectiveness vs Efficiency [Video]. Youtube. https://www.youtube.com/watch?v=z1kb56vywQU
- ↑ 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
- ↑ Bridges, J. How to Write Effective Project Objectives Every Time. (2019, Dec 4th). Projectmanager. https://www.projectmanager.com/training/how-to-write-effective-project-objectives-every-time
- ↑ Project Management Institute, Inc.. (2017). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th Edition). (pp. 56,57). Project Management Institute, Inc. (PMI).
- ↑ 12.0 12.1 Leonard, D (2009) Back to Basics, Table Talk: A Simple Table Can Assess Project Effectiveness and Efficiency, Quality Progress, July, p 72
