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Lund Institute of Economic Research Working Paper Series

Project selection from an ethical point of view


2006/7 Nikos Macheridis

Nikos Macheridis, Lund University, Department of Business Administration, P.O. Box 7080, SE-220 07 Lund, Sweden, e-mail Nikos.Macheridis@fek.lu.se

Abstract
The question raised in this paper is how project selection can be made from an ethical point of view. The purpose of this paper is to develop a theoretical framework that can be used in project selection from an ethical point of view. The starting point in the paper is that project selection based on the evaluation process where a proposed project is evaluated both on strategic level and operative level. In the paper this evaluation relates to ethical concepts and approaches. In the paper is it also proposed that project selection will be based on evaluation of the ability of project management to manage a proposed project in an ethical way.
Keywords: Project selection, ethical, evaluation process, strategic, operative,

project management
Jel codes: M00, M21

ISSN 1103-3010 ISRN LUSADG/IFEF/WPS-006/7-SE

1. Introduction
Project is an established way to carry out work in organizations. An important reason has to do with the increased amount of knowledge and experiences from the empirical life and from the research in the project area that provides tools to organize, plan and carry out projects in an effective way. Knowledge and experiences in the area of project indicate also project areas with lack of knowledge. One such area is project selection from an ethical point of view. This has to be made in the beginning of the project life cycle before the work to accomplish the project starts (Shtub, Bard & Globerson, 1994, name this phase conceptual design and Maylor, 2005, name this phase design the project). Payne (2003) defines ethic1 as the conception of what is right and fair conduct or behaviour. Thus, ethics actualizes questions about relations between people and to existence as a whole. One way to define project ethics is through to relate to Payne. Project ethics is a field of special ethics, dealing with ethical considerations and ethical dilemmas arising in a project, in the same case as e. g. business ethics, research ethics and medical ethic. Nyln (1996), who studies enterprises not project, gives a concrete ground to define project ethics. Project ethics has to do with what is good or bad in the operations of projects and with the principles that decide what is right or wrong in different project situations. Interest to project selection from an ethical point of view is connected with a common consciousness in organizations that decisions and actions, e.g. unclear accounts, bonus and questionable payments2, in organizations have ethical consequences. Non ethical acting can lead to negative economical consequences that are difficult to repair. Ethics can contribute to support the companys brand name and develop goodwill that in next phase will lead to more selling. Ethical character and virtue of organizations affect organizational performance, financial or non-financial (Chun, 2005). Good ethical behaviour with stakeholders will also contribute to long terms business relations. Ethics is direct related to transactions costs (Luft, 1997; Thomsen, 2001), e. g. costs to follow up and control deliveries from a specific supplier increase depending on trust or rather the lacking of trust to this supplier. Another example is that good ethical behaviour will reduce costs depending when employees dont discharge their duties.

It is usually that ethics and moral are used as synonyms. There is however a difference between those two concepts. Ethics refers to principles with moral while moral refer to how we in fact behave. The duty of moral is to give guidelines to acting so that we can take the responsibility of our way to live. Moral exist in all the people, independent if the individual is aware of it or not. On the other hand is not sure that all people have an ethic (Hermern, 1990). The same is also valid with project ethic. Project moral is something that all the members of a project team have. 2 Those events attract attention to relation between ethics and the law. Same cases are both illegally and unethical e. g. dishonesty in accounting. Same cases are comprehend as unethical, e. g. increased bonus to managers in spite of loss or decrease profits, but it is not sure that those case are illegal . It is important to have in mind that the law set limits for an organization to carry businesses. What is right against the law isnt necessary right from an ethical point of view (Hermern, 1990). Law and ethics are not one the same and the extent of one's ethical obligation in a business context are to abide by the requirements of the law (Salbu, 2001). Ethical guidelines shall not compensate the law. At the same time the law is not enough as guide for all situations. Unclear boundaries between ethics and law create ethical dilemmas.

The interest in project ethics is increased in the same way as the interest in ethics is increased in organizations in generally3. Same reasons to that can be mentioned. One reason is that ethics put trust for the project and project manager in focus (Wilder & Soat, 2001; Wong & Cheung, 2003). According to Meredith & Mantel (2005) ethics in project management leadership refers to a holistic vision of leadership which means that the managers must learn to transcend their own immediate interests and the boundaries of the own project. That supports Nicol (1996), put requirements on managers social responsibility. Another reason is that ethics can make clear which tools can be valid in relations between the project team and project stakeholders. According to McManus (2004) a successful delivery of project result is directly related to the way project management involves stakeholders in a project process. It is not enough with rules and procedures. Requirements on responsibilities, trust, reliance and business practice are also necessary. A third reason that can be mentioned is that ethics gives a base to project manager to manage and control the project in a way that project team members can comprehend as positive. This is an important prerequisite in order to get project team members to work more effective. Code of ethics for project managers4 gives contribution to this aid. Thomsen (2001) defines ethical business codes as a set of principles which a company adopts in order to influence the behaviour of its employees. According to Thomsen ethical business codes can facilitate coordination of economic behaviour. To summarize the discussion above: project selection from an ethical point of view is important because project scope, project complexity, project environment etc. can lead to ethical consequences which are connected with economical, organizational and social consequences. When project selection is based on an ethical point of view ethical thoughts and questions during the project life must be identified and analyzed in order to evaluate the effects both on project process and on project result. The question raised in this paper is therefore How can project selection be made from an ethical point of view? In order to deal with this question a conceptual framework is developed. The purpose of this paper is thus to develop a theoretical framework in order to support project selection from an ethical point of view. In the literature mentioned above ethics is usually analyzed from an organizational perspective. Start point in this paper is project management perspective5. This paper is divided in five parts. Next part is a literature review in order to present an overview of project selection and an overview of ethical concepts and ethical
There are many common points between project ethics and ethics in a common organizational context. Same differences can however declare. One difference is that project ethics is valid during the project life cycle. In a project oriented organization it is important that there is a project ethics that can be used in several projects independent the circumstances in the specific project. Another difference is related to characteristic of a project that it has a clear objective. Project ethics connects stronger to project result than ethics in common organizational context do. The risk can be that the focus is more on project result than ramifications in terms project of ethic. 4 Meredith & Mantel (1995, table 3-2, p 131) reproduce a code of ethics proposed for project managers in one of PMI annual symposia. Many companies and professional groups publish a code of conduct to provide clarity to business ethics (Gray & Larson, 2003). The functions of codes of ethics are also discussed by Payne (2003). 5 It must been noticed that literature that relate ethics to project management is increased, e. g. Nicol, 1996; Loo, 2002; Gray & Larson, 2003; Kadefors, 2004; Booth & Schulz , 2004; etc.
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approaches. In the third part project selection from an ethical point of view is discussed. The focus is on areas that lead to ethical considerations or ethical dilemmas both at the strategic level and at project level. Project selection from an ethical point of view put requirements to project management. In the fourth part in this paper ethical considerations regarding project management is discussed. In the last part conclusions are drawn and areas for further research are discussed.

2. Literature review
Project selection is well treated both in project management literature (Meredith & Mantel, 2005; Gray & Larsson, 2003; Shtub, Bard & Globerson, 1994; etc) and as research area (Dey, 2006; Lawson, Longhurst & Ivey, 2006; Flaig, 2005; Lefley, 2004; Daniel, Hempel & Srinivasa, 2003; etc). According to Meredith & Mantel (2005) Project selection is the process of evaluating individual projects or groups of projects, and then choosing to implement some set of them so that the objectives of parent organization will be achieved (p 41). The authors notice that choosing a number of projects, a portfolio, is more complex. According to Shtub, Bard & Globerson (1994) evaluation criteria in project selection depends on project size, expected duration, underlying risk, required resources or other factors. They concern that project selection is a complex process, consisting of many interrelated decisions. Shtub, Bard & Globerson (1994) discuss, in their book, different models that can be used in project selection. According to Lawson, Longhurst & Ivey (2006) many project selection models take into account projects financial aspects, risk considerations, or ranking projects by using scoring models. According to Dey (2006) decisions regarding evaluation and selection of industrial projects based upon customarily on marketing, technical and financial information. In summary, project selection is based on project evaluation on two levels (table 1). A strategic level that focus to evaluate the project from the view of the base organisation and to evaluate the project related to environment in which the project will be carried out. An operative evaluation at operative level (or project level) that focus on project result and on project process. The range of uncertainty is important in the decision of project selection.
Table 1. The levels of project evaluation in project selection decision. Levels on project evaluation in project selection Strategic level Operative level Focus Base organization Environment Project results Project process

Project selection is a strategic decision (Shtub, Bard & Globerson, 1994; Meredith & Mantel, 2005). It is related to organization goals, needs, ongoing projects etc. It is also related to market requirements and environmental circumstances. Lefley (2004) highlights the importance to capture not only financial benefits but also benefits of a strategic nature, e. e. competitive advantage, by project selection. Dey (2006) maintains

that projects transform organizations vision into reality. Therefore, in order to remain competiviness, organizations must select and implement right projects efficiently. Dey considers that environmental and social factors are becoming of increasingly importance in project selection. Labuschange, Brent & Claasen (2005) agrees that social and environmental considerations are of the same importance as economic factors. Project selection is based on evaluation of expected project results and the evaluation of coming project process. A main question in such evaluation is how the project process will proceed and what will happen during the project life cycle. The aim is to identify and analyze areas that will affect the project process in an unwanted way and lead to negative consequences on project constraints which are time, cost and quality. Thus are cost, time and quality basic criteria traditionally used in project selection because those criteria can be used as tools to estimate the success or not of a proposed project (Yu, Flett, Bowers, 2005). Time and cost related to project process while quality relates to project results. The decision of project selection takes into account uncertainty and risk considerations (Lawson, Longhurst & Ivey, 2006). The literature and the research in the area of project selection highlight areas that must be analyzed and evaluated in order to support the decision of project selection. Those areas can be categorized to different levels of project evaluation (table 1). In part three those areas are discussed. Project selection from an ethical point of view is not necessarily to be different from project selection described above. Even in project selection from an ethical point of view a project must be evaluated on a strategic level and on an operative level. The differences is that the focus in this evaluation is moved from financial, technological and organizational requirements to consider also requirements that support project selection based on ethical evaluation. In an ethical evaluation is not enough to start from the own organization and analyze the consequences on project constraints. Norms and values affect the perception of a situation and which facts are relevant. Values as responsibility, integrity and trust are of vital importance. Therefore project selection from an ethical point of view must also be based on ethical concepts and approaches as evaluation tools. When we look at project selection from an ethical point of view it is important to identify and analyze ethical considerations and ethical situations that can lead to ethical dilemmas during the project life cycle. According to Gray & Larson (2003) ethical dilemmas consider situations where it is difficult to determine whether conduct is right or wrong. Nyln (1996) refers ethical problems to situations or actions that the involved actors consider are bad or wrong. An ethical dilemma arises in situations in which actors consider that the consequences of alternatives ways to act are complex and equivocal. When ethical dilemmas arise it is not unusual that ethical principles collide to each other because they support different ways of acting e. g. centralization and rationalization that at the same time will support improvement in work conditions and job satisfaction and at the same time increased wages and salaries. The situation is more complicated because activities have also to be evaluated in regard to costs. One way to manage ethical dilemmas is by using superior ethical principles e. g. professional ethics and ethical norms on society or business level.

If the specific ethical considerations and ethical dilemmas will be in different projects depends on environmental circumstances, project stakeholders, type of project etc. The base organization has the responsibility to evaluate a project before project selection and see that there are ethical policies and a common basis of valuation that can be implemented in a project. It is the project manager that has the responsibility to implement ethics in a project and manage ethical considerations during the project life cycle. Accordingly project ethics corresponds to ethics in base organization and to ethics in the society.

2.1 An overview of ethical concepts and approaches


There are many concepts and approaches in the area of ethics that can be used in an ethical evaluation. Below are same important ethical concepts mentioned. The function of ethical concepts and approaches is to make easier both for project management, project team members and other project stakeholders to capture the content of the ethic. One advantage is that ethical principles guideline to manage ethical considerations and tackle ethical dilemmas because those concepts and approaches are tools to structure the ethical discussion (Brytting, 1998). Essential in the ethical discussion is the concept of responsibility. Garca-Marz (2005) defines responsibility as the capacity for anticipation of and response to social expectations and demands. Responsibility includes not only economic but also ethical, social and environmental aspects. According to Nyln (1996) responsibility can be categorized6 in the economic responsibility; the responsibility to carry on business. Legal responsibility; the responsibility to follow legislation and agreement. Ethical responsibility; the responsibility to deal with project team members and other project stakeholders in a fair and honest way. Finally the philanthropic responsibility; the responsibility to contribute to increase the quality of life for other people, e. g. users of project result. Those categories rank in the same order as they are mentioned above, the economic responsibility in the bottom. Categorization of responsibility makes it easier to relate to leadership. Leadership can be categorized depending on category of responsibility. Unmoral leadership means that project management prioritize the economic responsibility and the success of the project. Legislation makes difficult to obtain success. Amoral leadership means that follows rules and regulations but dont consider ethical consequences of acting. Project management has a legal responsibility against project stakeholders. Moral leadership means that project management base relations to project stakeholders on justice and respect. Moral leadership considers earnings from an ethical point of view. Another important ethical concept is trust. Kadefors (2004) considers trust as a psychological state, not behaviour, and it is not equivalent to co-operation which does not necessarily require trust. According to Gray and Larsson (2003) trust can be seen as lubricant; maintain smooth and efficient interactions. According to Shek-Pui Wong & Cheung (2004) trust is often associated with situations involving personal conflicts, outcome uncertainty and problem solving. In general there is an optimal level of trust in each situation. A concept related to trust is credibility. Garca-Marz (2004) defines
Following discussion is based on Nyln (1996). Nyln refers to Caroll A. B. The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders. Business Horizons, 1991, July-aug, pp 39.48.
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credibility as the trust in the expectations placed in the organization. Garca-Marz writes that the credibility of the organization, and with that, trust, depends directly on its capacity to respond to the trust placed in it; in other words, its responsibility (p 210). According to Brytting (1998) trust is something that an organization has while credibility is something that stakeholders have to an organization. Trust is of vital importance in a project depending on the interactions between project team members and between project team members and project stakeholders in each project. Kadefors (2004) supports that arise of trust require three qualities ability, benevolence and integrity. Every one of those qualities affects the interactions between actors in a project. Ability refers to skills, competencies and characteristics as relevant to the specific situation. Benevolence is the extent to which a trustee is believed to do good to the trustor. Integrity involves a perception that the trustee adheres to a set of principles, e.g. fairness, reliability and openness that the trustor finds acceptable. In the area of ethics there are different approaches that treat the question what are right or wrong. Payne (2001) discuss deontological ethics which has as starting point that action is held to be morally right or wrong based on the action itself, rather than any particular consequence or set of consequences springing engaging in the action (Payne, 2001:83). According deontological ethics decisions must follow fundamental ethical principles without to take into account the consequences of actions. The other is consequentialist ethics which also attract Paynes attention. According to Chun (2005) consequentialist ethics pays attention to businesslike cost/benefit relationships. The focus can be directed to individual desires and interests, to same groups e. g. employees and suppliers, or to collective welfare. The third is virtue ethics. According to Chun virtue ethics focus on character traits, not on a particular decision. Chun view virtue as ethical character. A virtuous person chooses or rejects decisions and actions because they are of a certain ethically relevant kind. Virtue ethics relates to ethical relativism. According to Loo (2001) relativism is based in the belief that there are no universal ethical rules that apply to everyone everywhere. Rather, an ethical decision depends on decision maker, on the actors culture, on language and on varies in different contexts. When project selection is evaluated from an ethical point of view it is important to related acting during the project life cycle to ethical approaches. Acting is based on ethical considerations, e. g. if project scope is right or wrong and how ethical the way to achieve the project scope is. Through to relate actions to different ethical approaches relates ethics to objectives and to rationality of project organization. Those can different types of actions lead to different principles to manage the project. According to Brytting (1998) actions can be placed in a matrix. The one dimension is the rationality of the action. In one side rational actions with certain objectives and in other side actions that cant be controlled in a rational way. On the other dimension what make an action important. In one side actions that are important because of the actors own inner conviction and on the other side actions that the importance of the action depends on the environment. Brytting relates deontological ethics to actions that are rational and base their importance on the actors own inner conviction. Acting is based on values and norms. Project team members take own responsibility for their actions. The task of the project

management is to formulate objectives rather than to specify how to achieve the objectives. Ethical relativism relates to actions that arent rational but meaningful because of the actors inner conviction. In this case project members act based on feelings rather than rationality. Consequentialist ethics propose actions that are rational but the actions are meaningful because of environmental considerations. Projects in which these types of actions are usually are characterized by specialization and hierarchical structure. The project life cycle is predictable. The ability of project management to plan and coordinate is important. Virtue ethics relates to actions that arent rational and the importance of action is based on environmental considerations. Praxis is important for an actor which means that this type of action is usually in projects of repetitive character. Finally, project selection from an ethical point of view must distinguish between business ethics, professional ethics and personal ethics (Payne & Landry, 2005; Arnold et. al., 2005). In a project all three can exist at the same time. Business ethics is used to illustrate desirable behaviour in an organization. Business ethics give the settings for which behaviour and which actions in the organization or in the organizations environment are ethical acceptable. Professional ethics deal with ethical values and rules that serve a whole professional group, e. g. auditors and priests. One important purpose of professional ethics is to keep the trust of the public to the professional group. Personal ethics deals with the moral and ethical values in every individual7. Ultimately it is the personal ethics that has to be putting in contrast to ethical frame of rules that exist on organizational or professional level. The best alternative to act for an organization is not necessarily the best for the business as a whole. This is one of the reasons for an organization to develop ethical policies and guidelines.

3. Areas for ethical evaluation in project selection


In this part project selection from an ethical point of view is discussed. The focus is on areas that can actualize ethical considerations or ethical dilemmas in a proposed project. Project selection viewing from an ethical point of view can be more or less complicated. In the same project arise situations that are more or less ethical complicated. Other situations than discussed in this paper can also be actualized. The contractor has to identify and analyze those areas in order to evaluate the impact of ethics to support project selection decision.

3.1 Areas for strategic ethical evaluation in project selection


One area that is discussed in literature and research in project selection is project scope. Ethical considerations actualized when the scope of the project and requirements on specifications related to project scope are discussed in order to formulate and eventually sign an agreement. One reason is that the expected project result put requirements on
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Ethics is related to common sense because of the reason that is simple to define ethical conflicts in terms of something that is well-known as common sense. That usually means that rationality is used as measure, e. g. cause behind actions. The problem in this case is that ethics converts to private affair. By following the own sense behaviour expresses the own personal values. Common sense can be affecting by many factors e. g. psychological mechanisms. Therefore must the organization have ethical policies and guidelines that prevent the individual to solely use common sense. (Brytting, De Geer & Silfverberg, 1997; Gray & Larson, 2003).

ethical considerations, e. g. if barriers to link to porno web sides will be installed when a web side will be delivery. Another reason can be that the project scope can lead to ethical considerations that project management has to manage during the project life cycle, e. g. if the agreed price is to low the consequences can be difficulties to pay fair salaries to project team members or to take measures that improve conditions of work and increase work satisfaction during the project life cycle. Therefore it is important to investigate if the project scope collides with ethical values. Another area that is discussed in literature and research in project selection is client/orderer. From an ethical point of view it is obvious that the contractor will deal with the client in an exemplary way, e. g. to sow consideration for and have patience during the project life cycle. Even a client that the contractor has a project with only once or a client with a low project price must be deal with the same way. In both cases trust to the contractor will strengthen. One possible consequence is that the collaboration between the contractor and the client will works in a positive way during the project life cycle. Another possible consequence is further project inquires. Negative reputation will have the opposite effect. In this case the contractor has to have a good think if the proceed project will be accepted. A third area that is important in project selection is to make a stakeholders analysis and evaluation. Project stakeholders are the actors that have interest, put requirements on or have expectations from the project. MacManus write project managers should encourage active consultation and participation of as many stakeholders as possible, by engineering them in the ongoing dialogue, and involving them in a strategic process, to generate a feeling of consensus and ownership of the process and the outcomes throughout the organization (MacManus 2004:884). One important reason to carry out an ethical project stakeholders analysis is to identify the ethical consequences that will affect project selection decision. The ethical responsibilities is not only limited to the legislation. Project stakeholders expect also that the contractor and the project management will accept and follow ethical guidelines that guarantee that the project management will behave ethically and consider the ethical rights of project team members and other project stakeholders. Brytting, De Geer & Silfverberg (1997) and McManus (2004) propose relevant questions in order to investigate who and how different project stakeholders are affected by the project: who is affected directly? In which way is she/he affected? In which degree is she/he affected? Who is affected indirectly? In which way is she/he affected? In which degree is she/he affected? Which ethical requirements arises different project stakeholders? Which ethical responsibilities take the different project stakeholders? Who is likely to mobilize for or against what is intended? Whose behaviour has to change for the effort to succeed? etc. Even different project stakeholders can make their own ethical evaluation of a project in purpose to e. g. decide if they will engage in a specific project or not. Project stakeholders can have not only different but also contradictory interest and different understandings of what is ethics. Project management must weigh together requirements and wishes from different stakeholders in order to attain a strong compromise. One possible way to manage this situation is by examine different interests and the actions that those interests should lead to by relating to different ways of ethical

thinking f. ex. consequentialist ethics and deontological ethics. Another navigable way is by relating to ethical concepts like responsibility, integrity, trust, human rights etc. McManus (2004) means that ethical project stakeholders analysis must give guidelines to if and how the base organization as the contractor and the project management in the proposed project can gain stakeholders trust and commitment. Good co-operation with project stakeholders is of crucial importance to carry out a project successfully. If stakeholders trust the project managements, it will facilitate the relations between project stakeholders and project management. Ethical project stakeholder analysis will help project management among others to motivate and defend measures against different stakeholders or to find ways in order to attain social ambitions without to renounce economical considerations. Brytting (1998) mention factors that affect trust between project management and project stakeholders. Formulation and implementation of guidelines for social responsibility, environment policy, etc. will strengthen trust between project management and project stakeholders. As a result cans transactions cost, e. g. cost for control activities, during the project life cycle be reduced. It is difficult for a project management that loses the trust of stakeholders to restore it. It will be noticeable in situations as recruitment of project teams members, relations with suppliers etc. A further area that the ethical project selection has to analyze and evaluate is project environment e. g. occurrence of questionable payments, does values exist that are not common accepted, and possibilities to co-operate with the society and take an ethical responsibility. Sustainable development is a guiding star in this case. Labuschange, Brent & Claasen (2005) mean that the goals of sustainable development, e. g. social equity, economic efficiency and environmental performance, are guidelines to ensure that projects are managed according to practices that will contribute to sustainable development. Literature and research emphasize the necessity of risk identification analysis in project selection. A traditional risk analysis focuses usually on economical, technological or organizational circumstances that eventually will affect a project in a negative way. An ethical evaluation of project selection must be directed on ethical risk analysis. Nicol (1996) means that an ethical risk analysis must take ethical, religious and other areas of practice, beliefs and attitudes that affect the way organizations and people interact into account. The point of an ethical risk analysis is to analyze a project using ethical concepts and ethical approaches in order to identify ethical situation that will lead to ethical dilemmas, e. g. ethical risk for users or negative reactions from project stakeholders. In the same way as a traditional risk analysis, project management has to evaluate those situations. Consequently project selection must be grounded on the base organizations and the project management ability to manage ethical risk.

4.2 Areas for operative ethical evaluation in project selection


Phases in project life cycle are discussed in project management literature (Gray & Larson, 2003; Meredith & Mantel, 2005; Shtub, Bard & Globerson, 1994; etc). Project selection requires analysis and evaluation of the proposed project. How will the project process proceed if the proposed project starts? At the literature and research in the area

of project selection identifies areas (table 2) that has to be evaluated in project selection decision. Ethical evaluation focuses on ethical considerations and ethical dilemmas.
Table 2. Areas for operative ethical evaluation in project selection Project life cycle Planning phase Situations that actualize ethical considerations Recruitment of project team members Design of project organization Plans development Relations with the orderer/client and with other project stakeholders Decision making and acting Project control Project documentation and report Collecting personal data Relations with the orderer/client and with other project stakeholders Decision making and acting Evaluation of the project Termination of project group Relations with the orderer/client and with other project stakeholders Decision making and acting

Implementation phase

Reflection phase

Following discussed areas can usually be related to different phases in project process. First are two areas that finds currently during the project process discusses, however with vary content and importance from one phase to another. Project selection has to take into account the possibilities to develop and maintain ethical relations with project stakeholders and the possibilities for project management and project team members in the proposed project to make decisions and act in an ethical way. In both cases are questions regarding responsibility frequent. During the project life cycle it is important to have an ethical perspective in relations to project stakeholders, e. g. supplier and public organizations. This is not new or strange. Ethical values regulate relations between people in different social situations. Those values arent always articulated, accepted by all stakeholders and it is not sure that everyone is conscious about those values. The function of the values is to guide how to set limits and to make clear which behaviour or action is not allowed. Values can also guide through to inform which behaviour or action is allowed in a specific situation. A problem in many situations is that values give room for different actors to interpret values in their own way and to act according to their own interpretation. One way to manage this problem is by design of project organization in order to support a specific way of ethical thinking. Other ways are by ethical policies and code of conduct. Through that ethics is not navigated by common sense. Ethics is important for making decision and acting during the project life cycle. Project management, project team members and project stakeholders must consider relevant norms and long term as short term consequences that decisions and actions can lead to. 10

For project management it is important to identify how different project stakeholders relate to a specific decision or action. A decision that is durable from an ethical point of view must be inside of boundaries of project stakeholders long terms interest. Furthermore project management must defence a decision or an action both from a deontological ethics point of view and from a consequentialist ethical point of view. Start point is always to put the question if an action is legal or not. The question if an action is wrong or right is irrelevant if an action is not allowed. The same is also valid if an action is indispensable. An action can be valuated and compared with other actions only when an action is allowed since indispensable and not allowed actions can not be compared with each other. Management of an organization has make clear for project management for a proposed project which rules they must follow, e. g. legislation, and which rules shall follows, e. g. rules that regulate relations in different social situations. In other case project selection has to be reconsidered. In a project same decisions can affect project process directly and other decisions indirect, e. g. decision to promote social activities in hope to increase efficiency by increased relations between project team members. Important is also that decision making dont collide with concepts as trust, human dignity, autonomy etc. In general, it is usual that many people have difficult to make unpleasant decisions, e. g. decisions related to integrity or to human dignity. Projects that beforehand the management of an organization can estimate that project management or project team members often has to take unpleasant decisions put requirements on base organisation to support the project management and project team members in those situations. Questions regarding responsibility actualize often ethical considerations. Project management and project team members can witness ethical dilemmas when different categories of responsibility, e. g. economic responsibilities and ethical responsibility, must be considered at the same time. A consequence can be that the individual avoids making a decision which can affect the progress of project process or an opinion in the mind of project stakeholders that the project management is not powerful enough to support project team members in their decision making and acting. Shortcoming of responsibility, even if it is on individual basis, can have negative consequences for the whole project organization. A problem is often that design of project organization focus on possibilities to get or to allocate responsibility while responsibility to function effective in organisation assumes also that the individual take their responsibility. One reason of this can be that the individual has difficult to se his own contribution to project result. Another is that norms that focus on rationality, cost reduction and mass production dominate while an ethical perspective in project management is not always considered. Ethical considerations during the planning phase Three areas, actualized in planning phase, are usually considered in project selection the recruitment of project team members, the design of project organization and plans development. Especially in intercultural projects are the consequences of those areas visible. People with different cultural background have different view on how to behave against other people, about male and female behaviour, the womans position in a network, what is right or wrong, etc. Individuals can make ethical valuations in different ways, e. g. thinking in the way of consequentialist ethic.

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The project managements obligations as employer against the project teams members are governed by legislation and by agreement between the parties on the labour market. Project management and proposed project team members must trust each other to enter into a co-operation. In a project organization with low degree of trust the probably consequence will be that project team member will be less engaged in the project and/or that the project management will increase control and supervision. In a project organization with high degree of trust the probably consequence will be that the engagement of project team members is high and/or the need of control and supervision is less. Different ethical ways can develop tensions that move the focus from effective project work and has the consequences that project team members dont coordinate their activities and performances. The task of project management is to coordinate both the values shared by project team members and project stakeholders. Individual values must place in a project context so that the projects ethical objectives can be part of the individuals view of what is desirable. The task of project management is also to develop an ethical policy for human resource that include both the physical and the socio-cultural work environment, no tolerance against discrimination, basing on respect and trust, and possible guidance to manage crisis and conflicts. Ethical evaluation of project selection must also put the question how ethics affects the design of project organization. One reason is that by an organizational design the project management aid to support certain actions, e. g. design project organization in such way that gives possibilities to control that project team members perform activities in accordance with project plans in contrast to organizational design that give project team members possibilities to perform actions based on own initiatives and creativity. Once again different types of actions are connected with different ethical ways of thinking. Project organisation can be designed to support those actions that are rational and the meaning of those actions follows environmental influences or support actions that are rational but the meaning of actions is based on project team members own conviction. Project managers must analyze if the proposed design of project organization support desirable way of ethical thinking and types of actions. In project management literature (Gray & Larson, 2003; Meredith & Mantel, 1995) the need to develop plans (time scheduling, guarantee quality etc.) is established. Ethical requirements from project stakeholders, project complexity, uncertainty of how to manage different situations etc. arises the need to develop also a plan for an ethical strategy in a project. It can include ethical policy, code of conduct, ethical education, ethical audit, etc. The projects ethical strategy will base on the ethical analysis of project stakeholders and will be in harmony with ethical policies for the whole organization. In the ethical strategy of the project it is important which view on human being that is communicated. Different views on project team members and on project stakeholders relate to ethical concepts responsibility and trust in different way, e.g. compare management in one case based on control and in the other based on the fundament that project team members take initiatives, are creative and take responsibility for their actions. Ethical considerations during the implementation phase Ethical evaluation of project selection must estimate and evaluate the implementation phase of the proposed project. Usually project management activities during 12

implementation phase are related to follow up and control what is happen. Control of a project is an area that actualises ethical considerations. That is related to project managements view on project process and on design of project organization. From an ethical point of view it means a mechanical view on project process that control and division of work as limits for responsibilities are marked out. The problem is the difficulties for individual project team members to put their own performance in a context and estimate the contributions to expected project outcomes. It is badly from an ethical point of view if project team members apprehend that the only important in a project is the accomplishment of objectives. This behaviour strengthens by measures as punishment of deviation or if project team members dont participate in decision making. During the implementation phase, project management continuously has to documentation and present project progress. When the project process doesnt follow plans and the project results dont grow desirable it is tempting for project management to paint a more positive picture of the project. An ethical policy to documentation and report project progress is based on trust, responsibility, autonomy and other relevant ethical concepts. Through that documentation and report take into account not only the interest of project management and the interest of base organization but also the interest of all project stakeholders. Long term considerations balance with short terms considerations. In many projects an essential activity in the implementation phase is collecting personal data, f. ex. costumer analysis projects or it-projects in purpose to build up data base. Collecting personal data is a sensitive activity. One reason is the legislation in the area. The other reason that makes many people sceptical to such activities is that people are of the opinion that it violates the individual integrity. The rumour of a company or of project management affects both the output of those activities and the cost to carry out those activities. The loyalty of project stakeholders depends heavily on trust to project management. Ethical considerations during the reflection phase Two situations on reflections phase are closely related to ethical considerations and have to be considered in project selection. The one has to do with the final evaluation of the project and the other with the termination of project team. A function with a final evaluation is to provide knowledge to next project. The risk is that positive experiences emphasizes while mistakes either neglected or presented in a positive way. Project management can easy walk into the trap when they have to evaluate their own contribution to project success or failures. Project evaluation can be sensitive when people are criticized. A way to manage these situations is through to relate to ethical values as respect and human dignity. A final evaluation of project from an ethical point of view can lead to a balance sheet in which ethical aspects includes. A reason is to highlight ethical investments, e. g. education in ethics or development of code of conducts. Another is to include costs or incomes affected by ethical decisions. A third is to highlight if and how ethical aspects have affect decision making during the project life cycle. Decisions lead to actions and in the next phase to consumption of resource. A final evaluation from an ethical point of view considers the contributions from and the affects on different project stakeholders.

13

One of characteristics in a project organization is that the project team has to dissolve when a project is completed. For lot of project team members and project stakeholders can that lead to feel restless or to uncertainty what they are going to do in the future. There are often short terms considerations, e. g. efficiency of individual performance, that are taken into account in this situation. There are also ethical considerations that relate to how the project management and top management of base organization deal with project team member and with employees in the organization. Ethical policies are important e. g. to avoid bad rumour that can lead to difficulties to recruit project team members in another project.

4. Ethical evaluation of project management


Project selection from an ethical point of view put project management in centre. Areas discussed in part three arise the requirement that an ethical evaluation of project selection has to include also an ethical evaluation of the ability of project management to manage ethical dilemmas and ethical considerations if and when they will actualized if the proposed project will start. According to Nicol (1996) project managers must conduct their work in an ethical manner in order to earn and maintain the trust, commitment and engagement of project stakeholders. McManus (2004) states that project managers can reduce credibility and cause damage to the team or project by their behaviour. Thus, it is suitable to complete the evaluation levels in project selection (table 1) with a third level, project management, that focus on the ability of project management to manage a proposed project in an ethical way. Different ethical approaches deontological ethics, consequentialist ethics and virtue ethics can be relevant in a proposed project. A project manager must put high requirements to the principles behind an action (deontological ethics), e. g. in the quality work during the project process, as to consequences that an action can lead to (consequentialist ethics), e. g. when the importance of project result for various stakeholders is estimated. Actions that dont fulfil the requirements of deontological ethics and consequentialist ethics are not ethical defensible. Ethical thinking in terms of virtue ethics is of crucial importance. A reason is that the project manager is the leading part in a project. The project managers virtues (virtue ethics), e. g. an honest person as project manager bring consequences both for the project process and for the project result because project managers virtues can affect which priorities or which decision he/she makes. Relating to Booth & Schulz (2005) who view ethics as attribute of managers and as attribute of organizations can the importance of ethics for a project manager can be viewed in two dimensions. The one is ethics related to role as project manager. The focus is on individual behaviour. Ethics as attribute of managers means that e.g. beliefs and individual preferences are important. In this matter are project managers professional ethics and personal ethics important. Relevant ethical values are e. g autonomy and integrity. Professional ethics and personal ethics are crucial when a project manager e. g. will specify what is ethical acceptable in relations to project stakeholders. Ethical dilemmas can arise when the project manager relates ethical consequences of decisions and actions to project constraints (time, cost and quality). Nogeste & Walker (2005) mean that the triangle of cost time and quality is not so relevant to catch intangible project outcomes that ethical consequences often are.

14

The other dimension relates project management to base organization and to environment in which a proposed project will be carried out. Business ethics is important. Ethics as attributes of organizations means that factors as ethics training, rewards and sanctions, values, procedures and rules, affect the ethical environment in the organization. Relevant ethical values are e. g trust and justice. Shortcoming of ethical policies and guidelines in the base organization will lead to obstacles for project managers to manage a project in an ethical way, e. g. weak support from the top management in decision making concerning an ethical dilemmas can lead to difficulties in relations with same project stakeholders. Booth & Schulz (2005) states that a strong ethical environment may lead to a general tendency for managers to act in the interests of their organizations, e.g. reduces project managers tendency to continue a failing project. Chun (2005) who discuss ethical character and virtues of organizations mean that virtues of organizations emphasizes the links between virtual ethical character and business outcomes. Outcomes can be financial but also non financial, e.g. employees satisfaction and loyalty, which will lead to financial outcomes in the long term. The individual project manager must be aware of which responsibility - economic, legal, ethical or philanthropic - he/she takes. It is related to his/her leadership unmoral, amoral or moral. Project management has the responsibility to make actors involving in a project aware of their responsibilities and which ethical considerations arise when a project is viewing from an ethical point of view. In this case it is necessary with a language that makes it easier to catch, makes clear and helps to understand what is happening and the importance of it. To encourage and eventually affect the ethics of project team members through different measures, e.g. education in ethics, ethical policies and code of conducts is of the same importance. The task of project management is also to provide guidelines that help project team members and project stakeholders to structure and manage ethical dilemmas.

5. Conclusions and further research


The discussion in this paper belongs to area of project selection. The contribution of this paper to knowledge body of project management is project selection from an ethical point of view. The starting point in the paper is that project selection based on the evaluation process where a proposed project is evaluated both on strategic level and operative level. In the paper this evaluation relates to ethical concepts and approaches. In the paper is it also proposed that project selection will be based on evaluation of the ability of project management to manage a proposed project in an ethical way. This paper can be practical useful for an organization because project selection relating to ethics on strategic level and ethical areas during the project process are discussed. From an empirical point of view a recommendation can be made project selection would give rise to specify which ethical considerations can be expected in a proposed project. Furthermore the contractor should also enclose to project selection decision which requirements the specific ethical considerations in a proposed project put on project management. Another way to express it is that project selection from an ethical point of view will be reflected in the recruitment of project manager in a proposed project. From a theoretical point of view more research is needed to develop concepts and theoretical frameworks to analyze project selection from an ethical point of view. As 15

mentioned in part two project selection is a well established research area. Feature research will benefit from existing knowledge in the area and contribute to the body of knowledge in the area by related to ethical concepts and approaches. Kadefors (2004) and Shek-Pui Wong & Cheung (2004) studies trust. Responsibility is an ethical concept that also could be object for a study that should focus on the significance of responsibility in the context of project selection. Arnold et. al. (2005) focus on personal ethics versus professional ethics while Payne & Landry (2005) focus on business ethics and professional ethics. The interaction between business ethics, professional ethics and personal ethics could be another object for a study that focuses on the significance of this interaction in the context of project selection. Chun (2005) studies ethical character and virtue of organizations. Project evaluation relating to ethical approaches focuses on the significance of ethical approaches in the context of project selection could also be a third object for a study. A furthermore object of the study will directed to measurable project specific ethical indicators to use in project selection decision. This paper provides same evidence for the importance of those indicators. This study gives also same indication of which kind of indicators are appropriate in project selection from an ethical point of view.

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School of Economics and Management Lund University


Working Paper Series
Editors: Hans Landstrm & Ulf Elg

Year 2006 2006

No Author 7 6 Nikos Macheridis Mats Alvesson Dan Krreman Andres Sturdy Karen Handley Diamanto Politis Jonas Gabrielsson Johan Anselmsson Ulf Johansson Niklas Persson Mats Alvesson Laura Empson Martin Fougre Agneta Moulettes Johan Anselmsson

Title Project selection from an ethical point of view Unpacking the Client(s): Constructions, Positions and ClientConsultant Dynamics

2006 2006

5 4

Entrepreneurial Decision Making: Examining Preferences for Causal and Effectual Reasoning in the New Creation Process. A conceptual framework for understanding Customer-based brand equity and price premium in grocery categories The Construction of Organizational Identity: Comparative Case Studies of Consulting Firms Development and Modernity in Hofstedes Cultures Consequences: A Postcolonial Reading Customer perceived service quality in the supermarket and the discount store Examination of a service quality measurement scale in a Swedish context Fantasies of leadership - identity work The Social Construction of Successful Practical Selling - A study of how sales persons at CR Ltd construct selling as successful An Integrative Framework for Evolving A Socially Responsible Marketing Strategy A study of inter-firm market orientation dimensions in Swedish, British and Italian supplier-retailer relationships The Survival of the Unfittest: Delinquent corporations and the production of organisational legitimacy through symbolicdiscursive fit. Isomorphism, Isopraxism and Isonymism - Complementary or Competing Processes? Knowledge Management and Organizational Learning: Fundamental Concepts for Theory and Practice

2006 2006 2006

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Sveningsson, Stefan Larsson, Magnus Norn, Catharina

2005 2005 2005

7 6 5

El-Ansary, Adel Cerne, Annette Elg, Ulf Svensson, Peter

2005

Erlingsdottr, Gudbjrg Lindberg, Kajsa Sanchez, Ron

2005

2005

Tarnovskaya, Veronika Elg, Ulf Burt, Steve Politis, Diamanto Gabrielsson, Jonas

The Role of Corporate Branding in a Market Driving Strategy

2005 2004

1 10

Exploring the Role of Experience in The Process of Entrepreneurial Learning

Braunerhjelm, Pontus The Relationship Between Domestic and Outward Foreign Oxelheim, Lars Direct Investment: The Role of Industry-Specific Effects Thulin, Per Alvesson, Mats Hardy, Cynthia Harley, Bill Andrn, Niclas Jankensgrd, Hkan Oxelheim, Lars Macheridis, Nikos Nilsson, Carl-Henric Stafsudd, Anna Reflecting on Reflexive Practices in Organization and Management Theory Exposure-Based Cash-Flow-at-Risk under Macroeconomic Uncertainty Managing Project Complexity - a managerial view The (Non-)Significance of Quantitative Management Research: The Demise of Popper in View of a HypothesisVerifying Publication Norm. Societal, Organizational and Individual Factors Influencing Womens Entry to Professional Organizations Exploring the Symbolic Dimension of Co-Branding: When Hershey Met Betty A market and network based model for retailers foreign entry strategies The Specific Costing Problems of Project Form How those can be managed with activity based costing Interlevel Learning Dynamics: Balancing Exploitation and Exploration Within and Between Organizations Development & Intelligence 2003-2053 The impact of changes in the corporate governance system on the boards of directors experiences from Swedish companies Collectivity a cultural and processual view Do Exchange-Rate Regimes Matter for Monetary-Policy Autonomy? The Experiences of 11 Small, Open European Economies in the 1980s and 1990s Understanding ethical closure in organizational settings - the case of media organizations Managers Doing Leadership: The extra-ordinarization of the Mundane The quality of bond markets. The dynamic efficiency issue Age Matters. Segmenting Swedish Markets by Generational Cohorts

2004

2004

2004 2004

7 6

2004 2004 2004

5 4 3

Elg, Ulf Jonnergrd, Karin Bengtsson, Anders Elg, Ulf Ghauri, Pervez Sinkovics, Rudolf R. Macheridis, Nikos Holmqvist, Mikael Larsson, Rikard Dedijer, Stevan Jonnergrd, Karin Krreman, Mats Svensson, Claes Alvesson, Mats Krreman, Dan Forsbck, Jens Oxelheim, Lars Krreman, Dan Alvesson, Mats Alvesson, Mats Sveningsson, Stefan Oxelheim, Lars Rafferty, Michael Schewe, Charles Carlson, Benny

2004 2004 2003 2003

2 1 10 9

2003 2003

8 7

2003 2003 2003 2003

6 5 4 3

2003 2003 2002 2002 2002 2002

2 1 5 4 3 2

Noble, Stephanie M. Schewe, Charles D. Sveningsson, Stefan Alvesson, Mats Landstrm, Hans Oxelheim, Lars Randy, Trond Kalling, Thomas Alvesson, Mats

The Globalization of Values. A Comparison of the United States and the Kingdom of Jordan Managing Managerial Identities. Organizational Fragmentation Discourse and Identity Struggle Why do European Venture Capital Companies Syndicate? The Effect of Internationalization on CEO-Compensation Enterprise Resource Planning Systems: Strategic and Organisational Processes. Up-or-out versus Fun-and-profit: A Study of Personnel Concepts and HR Themes in two IT/Management Consulting Firms. Information Technology in Supplier-Retailer Relationships. Some Possible Consequences The Business Model: A Means to Understand the Business Context of Information and Communication Technology Exchange-Rate and Interest-Rate Driven Competitive Advantages in the EMU. On the Static Efficiency of Secondary Bond Markets. Market Orientation in Retailing: An Approach Based on Interand Intra-Firm Activities Managers in the Context of Strategic Content Industrial Organization Theory and Resource-Based view Predictions for the Selection of Managers Food Retail Buying Processes. A Study of UK, Italy and Sweden Retail Buying; Process, Information and IT use. A Conceptual Framework Identity Regulation as Organizational Control: Producing the Appropriate Individual (published in Journal of Management Studies, Vol 39 (5): pp 619-644, 2002) The Impact of Foreign Board Membership on Firm Value: A Study of Corporate Governance in Scandinavia. (Forthcoming in Journal of Banking and Finance Recognizing Macroeconomic Fluctuations in Value Based Management. (Forthcoming in Journal of Applied Corporate Finance.) The Meaning and Antecedents of Market Orientation in a Distribution Network Beyond Body-counting - a Discussion of the Social Construction of Gender at Work, with the Scandinavian Public Sector as an Example. Knowledge Work: Ambiguity, Image and Identity (Published in Human Relations,vol 54 (7): pp 863-886, 2001) Strategy as a Disciplinary Technology. Discursive Engineering in the Newspaper World

2002 2001 2001 2001 2001 2001

1 9 8 7 6 5

Johansson, Ulf Hedman, Jonas Kalling, Thomas Andrn, Niclas Oxelheim, Lars Oxelheim, Lars Rafferty, Michael Elg, Ulf Stavsudd, Anna

2001 2001 2001

4 3 2

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2001

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2000 2000

8 7

2000 2000

6 5

2000 2000

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Larsson, R Lubatkin, M Henriksson, K

Achieving Acculturation in Mergers and Acquisitions: A Case Survey Study When Communities of Practice Came to Town. On Culture and Contradiction in Emerging Theories of Organizational Learning. Strategic Identity. Visions as Catalysts for Competence Dynamics (published in Advances in Applied Business Strategy, vol 6A (2000) pp: 121-146)

2000

Eneroth, K Malm, Allan, T

2000

Alvesson, Mats Professionalism and Politics in Management Consultancy Johansson, Anders W Work (forthcoming in T Clark & R Fincham (eds): Critical Consulting: Perspectives on the Management Advice Industry. Oxford: Blackwell) Elg, Ulf Johansson, Ulf Alvesson, Mats Alvesson, Mats Pushkala, Prasad, Birdsell, Judith M Zerbe, Wilfred Oxelheim, Lars, Stonehill, Arthur Randy, Trond The Contributions of International Alliances when Managing the Firms Set of Interorganizational Dependencies. (Published in the Journal of Strategic Marketing, 9 pp 93-110 2001) Methodology for Close up Studies. Struggling with Closeness and Closure Beyond Neo-Positivists, Romantics and Localists. A Reflexive Approach to Interviews in Organization Research Translated Myths: The Mirroring of Institutional Expectations in the Formal Structure of the Canadian Breast Cancer Research Initiative (CBCRI) Finance-Specific Factors and Theories of Foreign Direct Investment (Published in International Business Review, Vol. 10, (4), 2001)

1999

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