Should project management be based on theories of economics or production?

Koskela, LJ; Ballard, G

Abstract

According to adherents of lean construction, project management theorists and practitioners, when drawing from the concepts and principles of economics, have neglected the management of production. The consequences of this
neglect are said to include poor control (low reliability) of handoffs between design, supply and construction
specialists, and a tendency to promote adversarial relationships – reducing value delivered and increasing waste. There is increasing agreement in the construction community that these problems must be solved and that the
production perspective must be integrated into project management theory and practice. But how is it best to do so?
Is it a matter of supplementing existing project management theory and practice with an additional perspective, or
should we start from a conceptualization of projects as temporary production systems? This paper explores the
alternative of subordinating the economics-based theory of project management to the theory of production. A recent
synthesis of an economics-based project management approach is critically assessed, and an alternative, production-based
approach is outlined.

Citation

Koskela, L., & Ballard, G. (2006). Should project management be based on theories of economics or production?. Building Research and Information, 34(2), 154-163. https://doi.org/10.1080/09613210500491480

• Journal Article Type: Article
• Publication Date: Mar 1, 2006
• Deposit Date: Jun 21, 2010
• Journal: Building Research and Information
• Print ISSN: 0961-3218
• Publisher: Routledge
• Peer Reviewed: Peer Reviewed
• Volume: 34
• Issue: 2
• Pages: 154-163
• DOI: https://doi.org/10.1080/09613210500491480
• Keywords: contract management, lean construction, production management, production, project management, risk management, theory of production, theory of project
• Publisher URL: http://dx.doi.org/10.1080/09613210500491480
• Additional Information: References : Abdelhamid, T. and Mossman, A. (eds) (2005) Lean Construction Journal, 2(1) [Special Issue: Relational Contracting] (available at: http://www.leanconstructionjournal.org) Arrow, K.J. (1969) The organization of the economic activity: issues pertinent to the choice of market versus nonmarket allocation, in The Analysis and Evaluation of Public Expenditure: The PPB System, Vol. 1. U.S. Joint Economic Committee, 91st Congress, 1st Session. Washington, D.C., US Government Printing Office, pp. 59–73. Ballard, G. and Howell, G. (1998) Shielding production: essential step in production control. Journal of Construction Engineering and Management, 124(1), 11–17. Ballard, G., Tommelein, I., Koskela, L. and Howell, G. (2002)Lean construction tools and techniques, in Best, R. and De Valence, G. (eds): Design and Construction: Building in Value, Butterworth-Heinemann, Oxford, pp. 227–255. Barnes, M. (2002) Keynote Speech: A long term view of project management – its past and likely future, in 16th World Congress on Project Management, Berlin, Germany, 5 June 2002 (available at: http://www.pmforum.org/library/papers/2002/longtermpm-barnes.pdf). Dahlman, C.J. (1979) The problem of externality. Journal of Law and Economics, 22, 141–162. Feyerabend, P. (1999) Conquest of Abundance – A Tale of Abstraction Versus the Richness of Being, University of Chicago Press, Chicago, IL. Galbraith, J.R. (1995) Designing Organizations: An Executive Briefing on Strategy, Structure and Process, Jossey-Bass, San Francisco, CA. Hopp, W. and Spearman, M. (2000). Factory Physics, 2nd edn, McGraw Hill, New York, NY. Johnston, R.B. and Brennan, M. (1996) Planning or organizing: the implications of theories of activity for management of operations. Omega, 24(4), 367–384. Koskela, L. (2000) An exploration towards a production theory and its application to construction. VTT Building Technology, VTT Publications 408, Espoo (available at http://www.inf.vtt.fi/pdf/publications/2000/P408.pdf) Koskela, L. and Ballard, G. (2003) What should we require from a production system in construction?, in Molenaar, K.R. and Chinowsky, P.S. (eds): Proceedings of the Construction Research Congress, Honolulu, HI, US, 19–21 March 2003, American Society of Civil Engineers, Honolulu [CDROM]. Koskela, L. and Howell, G. (2002a) The theory of project management: Explanation to novel methods, in Formoso, C.T. and Ballard, G. (eds): Proceedings of IGLC-10: 10th Conference of the International Group for Lean Construction, Gramado, Brazil, 6–8 August 2002, pp. 1–11. Koskela, L. and Howell, G. (2002b) The underlying theory of project management is obsolete, in Slevin, D., Cleland, D. and Pinto, J. (eds): Proceedings of PMI Research Conference 2002, pp. 293–302. Koskela, L., Ballard, G. and Howell, G. (2003) Achieving change in construction, in Martinez, J.C. and Formoso, C.T. (eds): Proceedings of the 11th Annual Conference of the International Group for Lean Construction, Blacksburg, VA, US, 22–24 July 2003, Virginia Polytechnic Institute and State University, pp. 51–64. Koskela, L., Howell, G., Ballard, G. and Tommelein, I. (2002) The foundations of lean construction, in Best, R. and De Valence, G. (eds): Design and Construction: Building in Value, Butterworth-Heinemann, Oxford, pp. 211–226. MacNeil, I. (1974) The many futures of contract. Southern California Law Review, 47, 691–816. Mintzberg, H. (1983) Structure in Fives: Designing Effective Organizations, Prentice-Hall International, Englewood Cliffs, NJ. Moore, D. (2002) Project Management: Designing Effective Organizational Structures in Construction, Blackwell, Oxford. Morris, P.W.G. (2002) Science, objective knowledge and the theory of project management. Proceedings of ICE. Civil Engineering, 150, 82–90. Shewhart, W.A. and Deming, W.E. (1939) Statistical Method from the Viewpoint of Quality Control, Graduate School, Department of Agriculture, Washington, DC. Simon, H.A. (1996) The Sciences of the Artificial, 3rd edn. The MIT Press, Cambridge, MA. Smith, P.F. (1999) Functional use analysis, in Best, R. and De Valence, G. (eds): Building in Value: Predesign Issues, Wiley, Sydney, pp. 167–187. Williamson, O. (2000) Empirical microeconomics: another perspective (available at: http://www.haas.berkeley.edu/ bpp/oew/emap14edw.pdf). Williamson, O.E. (1985) The Economic Institutions of Capitalism, Free Press, New York, NY. Winch, G.M. (2002) Managing Construction Projects: An Information Processing Approach, Blackwell, Oxford. Winograd, T. and Flores, F. (1986) Understanding Computers and Cognition: A New Foundation for Design, Ablex, Norwood, MA.