Project Sponsorship

Abstract

Project Sponsorship relates to and differs from Project Management, as well as defines the role of sponsor by linking it strongly with principals such us leadership, risk-taking and strategy planning.

A Project Sponsor could be a range of providers and entities supporting the goals and objectives of an individual or company. In Engineering projects, sponsor is the most influential individual (or the mentor) who would be involved and therefore would contribute technically or strategically in them.

Project Sponsorship is based primarily on exchange theory between sponsors and project owners. Hence, uncertainty about the true worth of a sponsorship deal and its potential to deliver on the desired objectives and vice versa can underlie risks between both sites. Thus, Project sponsorship is also strongly connected with risk identification.

In Engineering projects, sponsorship illustrates the definition, decision, justification, agreement and security of overall budgets, resources and timescales that respond to the aim of each project\case. A fundamental factor to achieve projects success (operationally, economically or financially) is the adjustment of a well-orientated strategy and portfolio direction that are inseparable principals of project's sponsorship.

Furthermore, despite the importance of stakeholders who are actively involve in project governance, a project sponsor's duty is to set an inclusive framework which defines the roles, relationships and positions of internal and external stakeholders inside and outside of the project’s governance structure.

Definition of Sponsorship

Project sponsorship is defined as the ownership of projects on behalf of a client or organization in terms of corporate accountability. It is strongly connected with leadership and it is improved by awareness of different leadership, styles, models etc. It is also closely connected to delegating responsibility and related techniques. Project Sponsorship and Project Management are linked crucially together and are mutually dependent roles, but the key difference between them is that Project Sponsorship mainly involves in other important issues such us authorizing changes in scope, phase-end reviews and go/no-go decisions when risks are particularly high. Although Project Management literature often discusses the role of the Project Executive Sponsor, it fails to describe the factors contributing to effective Project Sponsorship, a role that is increasingly associated with Project success. This failure is exacerbated by research focusing on either the structural or the behavioral factors are most commonly defined as key project roles. Project sponsorship could be provided by number of organizations, including international scientific unions and committees, intergovernmental entities, national space agencies, private companies and in some cases, could by provided by an individual.

Role and Contribution of Sponsorship in Projects

Defining pojects' sponsorship, or simpler the sponsor’s contribution in a project lifecycle is vital. Considering the sponsor as a person or group that provides financial resources, its contribution begins from the conception of a project and ends with a completion of it. Begging with the conception of a project as an idea, the contribution of sponsor starts with the selection of the most profitable one by defining what is and what is not to scope. Having selected the idea and starting it through a project charter, sponsorship mainly contributes in financing it. The financing area of a project is within the top responsibilities of the project sponsor. Thus, sponsor should ensure that a project has enough and sufficient financial resources to go about its operation. Whether the project is on a preliminary level or due to a change in process, it is the project sponsor’s duty to see if the project is well equipped resource-wise and arrange for the same if otherwise. Moreover, in case of additional funding or alternative financial resources for the project, project sponsorship should contribute to facilitate it. While project’s implementation, sponsorship strongly corresponds with project success and overall communication to the project team. In other words, sponsor needs to “champion it” by achieving the goals and “communicate it” to the organization, stakeholders and upper management by serving as an escalation path. In Engineering project scenarios, any potential change in project operation must be introduced and approved from project sponsorship. The project manager merely presents the change process to the sponsor, along with recommendation and information on how it impacts the current project plan and timeline. The sponsor should contribute to facilitate any changes that have to be made if they find it suitable.

Sponsors as risk-takers

Sponsorship is primarily based on achieving goals by satisfying clients needs and on performing an overall profitable result. Hence, at some point, it can be assumed that sponsorship is based on exchange theory and the premise that the financial resources exchanged between sponsors and properties are valued fairly and equitably. Determining what constitutes a “fair exchange” between sponsors and properties that probably fund them, a plethora of uncertainties and risks is easily observed. Uncertainty about the true worth of sponsorship deal and its potential deliverables, or about the relationship between partners who will involve in project are some of the obstacles that can occur. However, the main obstacles exist in project sponsorship during a project’s lifecycle are strongly linked with “risk” and are mainly associated with strategic compatibility, goal convergence, commitment, trust, economic and interpersonal satisfaction and so forth. Some of the most important and probable risk issues surrounding project sponsorship can be listed below.

• The risk associated with the sponsorship’s failure to achieve an appropriate return on investment, called the “Financial Risk”;

• The risk that the anticipated benefits from the sponsorship are not realized due to human errors, system failures, inadequate procedures or controls

in sponsorship management, called the “Functional or Operational Risk”;

• In case of alliance or partner sponsorship that fails, a negative outcome results for one ore more parties, called the “Relational Risk”;

• The risk associated with a negative image transfer between sponsorship-partnership and can cause bad reputation to sponsor’s image and vice versa, called “Reputational Risk”;

• The risk associated with the chance that the combination of units, within the investments, fails to meet financial objectives and can be eliminated only by holding investments that do not depend on the same circumstances to return a profit, called “Portfolio Risk” ;

• The risk of negative consumer responses to a sponsor being associated with multiple events.

Risk behavior refers to decision-making behaviors in contexts associated with uncertain outcomes*. In project sponsorship, such as behaviors could be expressed from some individual characteristics (i.e risk preferences, risk perceptions and so on) and from some organizational characteristics (i.e group composition, cultural risk values). Moreover, problem-related characteristics (such as problem familiarity and problem framing) are also included in terms of sponsorship risk decision-making. All these characteristics could be used to define a project sponsor as a risk-taker or as the one who avoids the risk and could be also used for shaping a sponsors-decision making profile. Concluding, in almost all the projects both sponsors, and managers are those who need to identify risks and then decide in which way each stage of the project will accomplished.

Sponsorship commercialization

In some projects, especially in big ones such us business, government or engineering projects, a significant proportion of the financial resources is captured of marketing budgets. Thus, another aspect of project sponsorship that unfolds, is sponsorship as marketing communicational tool. Somehow, well handled sponsorship could achieve success by changing or strengthening customers’ perceptions because of its credibility, or due to its ability to create commercial intentions. Furthermore, when companies or projects’ stakeholders support these kind of promotion practices and activities, the sponsorship’s prestige is benefited and as a result it improves the whole projects’ image.

Regarding the “image” of a project, sponsorship aims to improve it in several dimensions. A common image-improvement scenario is the Socio-sponsorship, the sponsorship of a charitable organization for instance, that can benefits associations and the overall prestige and reputation of a project. Another scenario, common in sport projects, is the event or individual (athlete or team) commercialization. Event commercialization refers to the sponsor-initiated commercial activity surrounding special events, mostly including the communication activity. Attitudes toward event commercialization reflect consumer reactions to these activities and can benefit the prestige and status of the events’ or the athlete’s image, as well as can target the market of the event through emotions and feelings that evoked. Consequently, a positive “image” of a project reflects a corresponding positive image of sponsorship.

Sponsorship exposure could be defined as the amount of time clients may receive a sponsors’ message. Exposure might occur during a sponsored event or in the mass media. Although sponsorship commercial exposure could provide a positive feedback both in project’s outcome and in sponsors framework, it needs to be moderated. Considering a business project, on the one hand, its commercial exposure could increase the likelihood of tempting more consumers. On the other hand, if the commercial attitude is over exposed, there is a likelihood of damaging sponsors credibility and prestige in case of projects’ failure in achieving its goals.

All in all, sponsorship commercialization is a fundamental step toward the development of comprehensive framework of sponsorship effectiveness. On the contrary, sponsorship commercial exposure could have a negative impact on sponsor image, especially if consumers, clients or projects’ stakeholders perceive a low fit or high project commercialization. Consequently, sponsors should take sponsorship exposure into account when deciding on sponsorship communication.

Strategy and Portfolio Direction

Sponsorship represents a unique component of a projects' integrated marketing strategy. When such a stretegy leads to project success, project sponsorship frequently generates a favorable image for the sponsor (as an individual or as a group) both at corporate or at market levels. Considering the success of project as a sponsorship building tool, the use of a single sponsorship strategy is becoming increasingly rare, whereas complex portfolios with multiple sponsorship properties are becoming ubiquitous. A sponsorship portfolio is a collection of brand and/or company sponsorships comprising sequential or simultaneous involvement with events, activities and individuals (usually in sport, art, charity and engineering projects) utilized to communicate with various audiences. In most cases, a sponsorship portfolio includes properties that are distinctive in image, sometimes even seemingly incompatible. In an already existing sponsorship portfolio, the addition of a new sponsorship property is likely to increase customer’s preference. Furthermore, the addition of a new sponsorship property to an existing portfolio is considered as a part of marketing or operational strategy. The properties exist in a sponsorship portfolio as an analogy, could be identified as follows:

• Evaluation of previous sponsorships from consumers or clients;
• Interaction between sponsorship and the sponsored project or firm after its accomplishment;
• Multiple projects assessment and in some cases communication effects;
• Some empirical evidence regarding how clients and/or consumers respond to sponsorship strategies;
• An association network with market.

Sponsorship Relationship

In many competitive and complicated business environment, an increasing number of sponsors and/or sponsored parties refer to one another as partners while processing a project. Such partnerships reflect the complexity of sponsorship relationship. Thus, the strategic role of sponsorship is recognized as well as the potentials of creating value from a sponsorship relationship. From a dynamic perspective, it can be assumed that sponsorship relationship is a long-term, inter-organizational relationship that adapts and develops over time. However, sponsorship relationship could be investigated from a strategic perspective as well, considered as a strategic alliance. Such as strategic alliances likewise, could be assumed as long-term relationships based on mutually beneficial agreements in which resources, knowledge and skills are shared. A strategic sponsorship alliance is developing and growing over a project life cycle through stages. Each stage has its own characteristics. Sponsorship relationship cannot move to the next stage unless certain characteristics are present:

• The formation stage, in which the partners are identified, negotiations are carried out, and the alliance's strategy is formulated;
• The operation stage, in which the partners start to operate the alliance and implement the agreements; and
• An outcome stage, in which the alliance either becomes mature and stabilizes or continues to change and reform.

The reason why sponsorship relationships are more and more necessary in todays engineering industry, is because most projects are extremely complex and financial demanding. Thus, projects’ objective achievement is strongly connected with strategic alliances and stable sponsorship partnerships with financial contribution.

Sponsorship category relatedness (SCR)

Apart from the aforementioned, there are many strategies that could be applied in project sponsorship area. Considering an engineering project a widespread portfolio direction strategy is based on the associative network memory theory. More precise, applying this theory the “thematic organization packets” in human memory allow connections between episodes whenever these episodes share common structures, even though their contexts are unrelated. Firstly, sponsored properties in a portfolio share the brand and afterwards, a strategy may successfully relate one property to another in memory via features common to both sponsorships, despite the differences in their respective program content. As a result, when a new property is added to sponsorship portfolio, one is likely to correspond a projects’ concept in its memory that ties it to a specific sponsor profile. Sponsorship category relatedness (SCR), refers to a degree of similarity between individual sponsorship in a portfolio. The structure of this sponsorship category is based on few common properties that could meet on projects of the same domain but in different orientation. For instance, two or more different construction projects, two or more business projects and so on are sharing common sponsorship properties, because they are members of one category respectively. Considering now each domain as a category and every project as a unique member of it. A general image for each domain is easily created, and thus the most common figures of each are visible. This superordinate structure creates prototypes that correspond to groups of examples and are instrumental in guiding attention. Similarly, sponsorship creates prototypes on a basis of project categories. Such as prototypes are used as tools when new sponsorship strategies are to be done, resulting to an additional sponsorship property in portfolio.