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Why is Trust Important to Project Management?

In 1994 the Natural Sciences and Engineering Research Council (NSERC) established a Chair in collaboration with the Social Sciences Research Council (SSHRC) of Canada and a number of industry partners . This Chair had a five-year mandate to identify better ways to manage projects. Working closely with industry, a research program was established and a number of research initiatives undertaken over this five-year period. These research initiatives studied such topics as contacting, team effectiveness, distributed project teams , value engineering, schedule acceleration, predictability of project outcomes in the early stages of project definition, project performance assessment, time to market, cost reduction, and incentive schemes for contracts. Other topics included research into risk identification and apportionment, dispute resolution, and the meaning of contract clauses. All of the research findings had one common factor.

The common factor in all of the findings in the first five years of research was trust. This in itself was an interesting discovery. It led to a review of the available literature and to an assessment of the potential impact of trust on the practice of project management. The potential implications appeared to be profound. Some of the potential areas of impact included better client relationships, accelerated time to market, reduced risk premiums in contracting—and thus, lower project costs and more effective communication. The last item alone made further exploration of the trust phenomenon worthwhile, as communication breakdowns account for most, if not all, project failures.

With some trepidation, the need for the study of trust was presented to industry sponsors of the research program as a potential next phase in the work of the Chair holder. The proposal was immediately accepted and a plan to apply for renewed funding from NSERC and SSHRC was made on this basis. The proposal for a second term of federal funding for the Chair was made and accepted. The potential impact and value of the research had been assessed and accepted.

The Research Program

The Color Trust Model

The extensive research conducted by others into trust has been done largely from the perspectives of disciplines such as family psychology, sociology, criminology, education, and anthropology. More recently, and generally only in North America, theorists in business studies have started to explore the trust phenomenon . So far, none of the models developed to explain trust have had general applicability. The ones that deal with specific situations could not address many of the situations that we identified in our research.

A review of the research findings identified two distinct situations where different trust types appeared to be needed in varying mixes . One of these was based on answering the question, "Can you do the job?" and the other was based on, "Will you take care of my interests in a predictable way?" A third element that was based on a more volatile, "Does this relationship feel right?" also needed consideration. From this review, three trust types, their behaviors, and their patterns were identified and a new model for explaining trust was developed. This model is the foundation of a new research stream of significant interest to industry sponsors.

The Trust model presented here was developed by Hartman with the assistance of Dr. Elke Romahn. Romahn was a research associate working for the author. To better understand the model that is presented in this chapter, it is useful to review whether we even need such a model. The argument that is put forward is that trust influences virtually every aspect of project management and is perhaps even more important in project management than in operations management. This added significance stems form the very nature of projects today. They are fast-paced and of short duration. They involve organizations, groups, and individuals who have never worked together. Worse, they involve groups that have worked together and who are still fighting over the last experience! We have little time and often little inclination to address the social niceties of getting along or even learning to trust one another. The consequence is that we end up with either difficult relations that lead to communication breakdown and hence to project failure, or we pay a price in additional work, churn, and premiums to offset the perceived risks.

The Need for a Trust Model

The trust phenomenon has moved from an item of curiosity in the management world to one that many organizations and senior managers are taking very seriously indeed. The driver for this is in two parts that are closely inter-linked. There is a continuing and increasingly challenging need to remain competitive. And technology is doubling every few years . With the growth in technology we see several things taking place. First, we see the need for increased specialization, leading to many corporations redefining core business. This has, in turn , led to outsourcing previously sacrosanct activities such as payroll, information systems (IS) and information technology (IT), training, and more.

Product development too, has been significantly affected by the need to specialize. All of today's manufacturing businesses are integrators of previously manufactured goods to add value and produce their "final" product. Any example will serve. Computers are composed of components manufactured by others. The central processing unit chip is assembled from materials produced and refined by others. Eventually we end up with sand from which the silica was produced. Even this was processed using manufactured goods (excavation equipment, screens, conveyors, computers, and so forth). So we come full cycle.

The growth in technology has forced us into a position where we increasingly rely on our suppliers. This tightening relationship has led to situations that place a company in jeopardy if one or more of their suppliers are at risk. A common response has been to develop long- term relationships, often structured around and codified in an alliance agreement.

Trust Types

Trust in the literature seems to be defined in the context of a given relationship. This makes the efficacy and relevance of any definition dependent on the situation in which it is used. A further area of debate lies in the intrinsic complexity of trust as it has both an emotional (human?) and more analytical (clinical?) component to it. Consideration of where the elements of trust lie led to identification of three distinct types of trust. Rather than being black and white, it seems that trust has a spectrum of colors!

Three distinct but connected types of trust were identified for this model, each representing a specific dimension of what constitutes our personal perception of trust. Table 1 shows this basic construct. Also shown in this table is how the three primary trust types can be mixed—just like colors.

Table 1: Colors of Trust (Hartman 1999)
Trust Type	Color	Blend	Label
None	Black	—	Absence of Trust
Primary	Blue	—	Competence
Primary	Yellow (Gold)	—	Ethical
Primary	Red	—	Emotional
Secondary	Green	Blue and Yellow	Business
Secondary	Orange	Yellow and Red	Social
Secondary	Purple	Red and Blue	Sales
Comprehensive	White	Red, Yellow, and Blue	Balanced

A particular challenge in a project environment lies in the temporary nature of the organization. The time available to build trust is severely limited by the window in which the project must be completed. It is further hampered by the fact that there is a high degree of randomness in the assembly of the organization, especially if we include all suppliers and contractors involved. Not only do we face the challenges of inter-company language and cultural differences, but also we probably have teams and groups of people who are involved for one reason only. They are available and have some or all of the necessary skills to complete the project.

This and other specific challenges of project delivery put special pressures on trust building that an operational environment does not necessarily have. The model is explained in more detail by Hartman (1999, 2000).

The Mechanics of Trust in a Project World

If the lack of time to develop trust in a project world is a significant problem, it certainly is not the only one. Conventional project management has developed a set of tools and processes that address integration management, scope management, scheduling and cost control, quality, communications, human resources, teams, procurement, and risk management (Project Management Institute 2000). There are many ways of describing this set of tools and processes.

Trust as Part of the Project Management Delivery Process

Trust (not specifically defined) has emerged as an ingredient in project success and business success research in various arenas. If we consider a few random elements of project management it is relatively easy to see the impact of trust on the effectiveness of the process. First, let's consider intuitive connections.

Effective communication is easier and more likely to be complete between people who trust each other.
Contract relationships, and as a result, contract administration, are easier if we can trust the contractor and the contractor can trust its client.
Discovering and implementing cost-saving ideas will occur more readily if the participants can expect fair compensation and can be sure that their interests are being taken care of in the process.
Teams work better together if the people in them can trust each other.
Identifying client needs (the REAL ones) is easier if we have open communication, which is dependent on a high level of trust between the client and the supplier.
Schedules and estimates are more likely to be accurate if the contributors feel that their honest opinion will be considered and valued (trusted).
Progress reporting is more honest in a trust-based environment.
We are more likely to be successful project managers if our team trusts us, and if our clients and suppliers do so also.
We are more likely to be accepted as manager of a project (and have the resulting authority and influence on stakeholders) if others can trust us to do our jobs well.

These random examples are intended to illustrate the insidious nature of the trust phenomenon. To explore these in more detail, the first and last elements are considered specifically in the light of the Trust model described earlier.

The cost of trust was investigated in one project. Using the construction industry as the community to study, the cost of exculpatory clauses was investigated. About 150 companies across Canada participated. The cost of five well-known and broadly used exculpatory clauses was investigated. Specifically, the participants assessed the direct and indirect premium linked directly to these clauses. With surprising consistency, the cost of including these was seen to be an average of 9 percent in a buyer's market and 19 percent in a seller's market. The median of all situations was about 15 percent and the value was close to zero. These results were the costs as manifested in contracts and as identified through expert opinion and empirical data collected from practitioners (Master's Thesis by Mohammed Khan, Supervisor: Francis Hartman 1998).

This study was reworked to validate the findings—they appeared to show an inordinately high wastage of money. The new study confirmed the figures to within 1 percent (Master's Thesis by Ramy Mohammed, Supervisor: Francis Hartman—in progress).

The mechanics of trust were a clear focus for a study. The study involved development of the theoretical model outlined earlier (Principal Investigator Francis Hartman, Assistant: Elke Romahn). This theoretical model was developed—it was based on extensive literature review, and was then tested against "classic" models used to describe trust behaviors in the literature. The model continues to evolve . The next step is to develop and validate metrics for assessing both trusting and trustworthiness in the context of the three types of trust. This second phase is under way. Development of a model that will help us understand the mechanics of trust will then be developed (Ph.D. thesis by Dean Sheppard, Supervisor: Francis Hartman).

The impact of trust on contract relationships is being investigated as a follow on from earlier studies on the effectiveness of business relationships in a project context. This empirical study is using data collected from practitioners, based on cases and expert opinion (Ph.D. thesis by Ramy Mohammed, Supervisor: Francis Hartman—under way).

Another aspect of trust is the role it plays in leadership and project management in organizations exposed to rapid change. Increasingly, today's critical projects are happening in such an environment, and the demands on project managers as leaders are changing. Part of this study into the nature of leadership is also looking at trust and its part therein (Master's thesis by Scott Bartsch, Supervisor: Francis Hartman—under way).

It is likely that the effective formation of distributed teams will be affected by a number of factors. One important one is trust. The formation of these teams, spread geographically , is being studied—this study is primarily survey based (Ph.D. thesis by Connie Guss, Supervisor: Francis Hartman).

The impact of trust levels on perceptions of project success is also of interest. This project is in the planning stages (Potential researcher: Master's Thesis by Roch DeMaere, Supervisor: Francis Hartman).

The role of trust in accurate and useful progress reporting will also be studied (Master's thesis by Liwen Ren, Supervisor: Francis Hartman).

A number of other projects are in planning or under way that will investigate aspects of trust in project management processes and tools. Samples include:

Measurable benefits of trust in: speed, innovation, cost, quality, team effectiveness, competitiveness , and sustainability of performance (in planning stages—a complex set of projects).
Assessment of trust in a project context: inter- and intra-individual, team, management, group , and organizations. Likely based on Delphi method and grounded theory (in planning stages—again, a complex problem!).

Trust is at the headwater of business effectiveness. Projects are increasingly the business value delivery vehicle. Understanding how to work in different trust relationships will help us be more effective at balancing the conflicting issues that normally arise on projects. Significant financial support from industry to develop this research is also an indicator!

The rational behind one of the previously mentioned projects will be described further.

Trust and Communication

Open communication has been identified as an important ingredient in effective teams (Cahoon and Rowney 1995), as well as a factor in project success (Pinto and Slevin 1998). In order to communicate effectively with another person, we need to have the right level of comfort . This is largely situational. Consider the following:

Selecting a specific technical vendor: competence trust is needed here. We want to be sure that the engineering or other technical service will be completed competently and properly. If the specialist asks intelligent questions and we feel that we are communicating what we see to be the problem, then we are normally reassured that the future holds an appropriate technical solution for our project! How we behave in terms of contracting (cost plus fee, open-ended, or a stipulated price contract) will depend on the level of ethical trust we have, but will likely not affect our communication. This picture will be different if we have concerns over being charged for unnecessary work, in which case our communication will likely take on a different hue: we will communicate our concern and set up a defense system against the perceived risk.
In the situation of seeing a specialist consultant or advisor about business issues on our project, we certainly need both ethical and competence trust to be present. Depending on the nature of our issues and our relationship with the specialist, we may also need a degree of emotional trust. This latter element is sufficiently well understood since "desk-side manners" are taught in some business schools .
In a project environment, we see problems in defining the project properly and in many other arenas stemming from a number of causes that can be reassessed in the light of the Trust model. To communicate on technical matters, we need only have competence trust in place. This trust will likely evolve as the people who are communicating gain a common language and understanding of the problem to be addressed. The completeness of the communication, elimination of defensive behavior (such as hoarding key information), and willingness to volunteer suggestions will only come as ethical trust is built. It is only then that such communication is seen as safe. If we add emotional trust—typically developed through socialization —we can reach an even higher plane of effectiveness in communication on a project between team members . With these three types of trust in place, and balanced, we have white trust and the potential for highly effective project teams to form and deliver a very successful outcome.