Int. J. Business Excellence, Vol. 19, No. 2, 2019
Customer centric success measures in project
management
Matti J. Haverila*
School of Business and Economics,
Thompson Rivers University,
900 McGill Rd., Kamloops, BC, V2C 0B8, Canada
Email: mhaverila@tru.ca
*Corresponding author
Kai C. Haverila
John Molson School of Business,
Concordia University,
1450 Guy St., Montreal, QC H3H 0A1, Canada
Email: kaihdaa@gmail.com
Abstract: This research investigates 3,129 system delivery projects in the
facilities management industry with an aim to understand customers’
perceptions of customer relationship quality, satisfaction, repurchase intent and
the role of the value for money construct in the customer satisfaction and
repurchase intent context. To test the hypotheses, the partial least squares (PLS)
structural equation modelling was used to test the theoretical model. The
findings show a significant and positive relationship between the relationship
quality and customer satisfaction as well as between customer satisfactions and
repurchase intent. Furthermore, it was discovered that the value for money
construct is not directly related to customer satisfaction; instead it was found to
partially mediate the customer satisfaction and repurchase intent relationship.
The study contributes to an increased understanding of the customer
perceptions regarding relationship quality, customer satisfaction and repurchase
intent and the role of value for money in complex system delivery projects.
Future research opportunities will be discussed as well.
Keywords: project management; relationship quality; customer satisfaction;
repurchase intent; value for money.
Reference to this paper should be made as follows: Haverila, M.J. and
Haverila, K.C. (2019) ‘Customer centric success measures in project
management’, Int. J. Business Excellence, Vol. 19, No. 2, pp.203–222.
Biographical notes: Matti J. Haverila is a Professor of Marketing at the
Thompson Rivers University in Kamloops, British Columbia, Canada. His
research interests are in the mobile communications, marketing and R&D of
technology intensive products as well as in customer satisfaction, loyalty and
defection. His recent writings have appeared in Journal of Marketing
Management, Journal of Strategic Marketing, International Journal of Product
Development, and Asia Pacific Journal of Marketing and Logistics.
Copyright © 2019 Inderscience Enterprises Ltd.
203
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M.J. Haverila and K.C. Haverila
Kai C. Haverila is a PhD student at the Concordia University in Montreal,
Quebec, Canada and has published articles in International Journal of Mobile
Communications and Academy of Marketing Studies Journal.
1
Introduction
Project managers and directors are constantly occupied with managing projects in terms
of the quality of relationship between the supplier and the customer aiming to achieve
project success. Project success is important to companies due to the fact that projects
have become more strategically important for companies (Liu and Wang, 2014; Shenhar,
et al., 1997). The assessment of project success is more increasingly considered using
various customer perceptions like customer satisfaction and repurchase intent in addition
to the iron triangle of project success measures of scope, time, and costs. These measures
have received a lot of attention in project management research (Atkinson, 1999), but
have been indicated to have a narrow view of project perspectives due to the limited
focus on only three aspects (Bronte-Stewart, 2015) and also due to being too simplistic in
nature to capture the inherent complexities of project management (Liu et al., 2016).
While it is true that research increasingly recognises the multidimensional nature of
project success (Jonasson and Ingason, 2017; Joslin and Müller, 2015; Shenhar et al.,
2001), few studies have tried to clarify how the linkage between relationship quality,
customer satisfaction and repurchase intent works in project management and particularly
what is the role of the value for money construct in this context. Also, the focus of the
research is often on the project team’s viewpoint, whereas previous research has
investigated project management performance from the customer’s perspective only to a
limited extent.
The first objective of this study concentrates on identifying the impact of the quality
of relationship on customer satisfaction while the second objective focuses on the impact
of customer satisfaction on repurchase intent. Thirdly, the role of the value for money
construct is investigated to assess whether the value for money construct has a direct
impact on customer satisfaction or whether the value for money construct possibly has a
mediating role in the customer satisfaction and repurchase intent relationship.
The specific projects studied were the installation of building maintenance control
systems (heating, ventilation, air conditioning, security) in large facilities. In the context
of system delivery projects, customer perceptions (i.e., customer satisfaction and
repurchase intent) contend with how the procuring company perceives the supplier’s
system delivery performance and the relationship between the system contractor and
customer. Specifically, we examined how the customers perceive the supplier’s project
management performance in terms of customer satisfaction, repurchase intent and value
for money.
The purpose of this paper is to develop a theoretical framework of the perceived
quality of relationship, customer satisfaction, repurchase intent and the role of the value
for money and test the hypothesised relationships using questionnaire-based empirical
evidence. We focus on three main research goals. The first is to explain how the
perceptions of relationship quality are associated with customer satisfaction and the
second about how customer satisfaction is related to repurchase intent, and the third goal
is assessing the role of value for money in this context.
Customer centric success measures in project management
205
This research paper proceeds as follows. After the introduction, the literature review
is conducted and the hypotheses are set. Following this, the methodology section,
including the introduction of the firm, questionnaire development, and method of the
study are presented. Next, the results are presented, and the analysis of the hypotheses is
conducted. The results are discussed in light of previous literature. Finally, the
managerial implications, research limitations and future research opportunities are
discussed.
2
Literature review
2.1 Customer satisfaction in projects
Many project management dimensions have been considered as critical for the success of
projects. Quite often the project team’s internal perceptions of the project management
system have been discovered as being critical success factors (Loo, 2002) in addition to
project management processes and decisions (Cooke-Davies and Arzymanow, 2003), and
project management standardisation (Milosevic and Patanakul, 2005).
The prior literature has investigated variables related to project success from the
project team’s or project manager’s point of view (Belassi and Tukel, 1996; Pinto and
Mantel, 1990; Slevin and Pinto, 1987). However, the customers do not necessarily have
access to the same kind of operational knowledge of project management that the project
team has. Obviously, customers have their own perceptions of the project management
performance and, perhaps more importantly, the outcome of the project. Although
customer satisfaction remains a somewhat ambiguous concept in project management
(Ahola et al., 2008), the way the customers perceive the project delivery is crucial for the
assessment of project success, and thus also for project managers and teams. The
evaluation of customer satisfaction has been found to be one of the best practices in
project management (Loo, 2002).
Complex systems and integrated solutions are gaining popularity when project-based
organisations are trying to serve their customer needs (Brady et al., 2005; Davies et al.,
2006; Gann and Salter, 2000). There are certain requirements that are necessary in project
management such as the integration of the project and business processes, knowledge
flowing fluently between the customers and suppliers (Gann and Salter, 2000), and a
good relationship between the supplier and customer (Grover et al., 1996; Kern, 1997;
Lee and Kim, 1999).
Complex systems require new kinds of capabilities from the firm delivering the
project since the delivery occurs over an extended project lifecycle (Brady et al., 2005).
Furthermore, the ownership and development of skills regarding how to create value
for the customers in turn-key projects, and how customers in fact evaluate and
compare the project suppliers in terms of benefits and sacrifice is becoming more
and more critical (Ahola et al., 2008). In the context of service-dominant logic
(S-D logic) this means that both the supplier and the customer are concerned with
the application of their competencies, i.e., the knowledge and skills for the benefit
of the project thus embracing the value-in-use and co-creation of value concepts
(Vargo and Lusch, 2008).
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2.2 Customer satisfaction and repurchase intent in projects
It has been claimed that project success goes further than meeting time, scope, and budget
constraints. Shenhar et al. (1997) argue that success indicators should also incorporate the
project’s impact on the customer, organisational effects, and the new opportunities the
project opens. It is obvious that project efficiency factors like the cost, scope, and time
goals can be assessed instantly; other aspects of success can only be appraised after the
project has been closed. Thus, criteria other than cost, scope, and time should be
incorporated in the project assessment including organisational benefits and benefits to
stakeholders as well as the characteristics of the project product (Atkinson, 1999;
Bronte-Stewart, 2015).
Due to the fact that project success may be defined in different ways by different
project stakeholders (Lim and Mohamed, 1999; Munns and Bjeirmi, 1996; Shenhar et al.,
2001), the assessment of project success can be complicated. This is true in spite of the
fact that the stakeholders agree on the project success measures. Customer satisfaction
and repurchase intent, while strategic in nature (Bronte-Stewart, 2015), are typically
measured after the project has closed and can be problematic to measure in an objective
fashion (Diallo and Thuillier, 2004). While this might be the case, one could also claim
that why should customers be satisfied if they have not received tangible benefits through
the executed project (Allen, 2004). The long time frame and the long-term impact of a
project can be the reasons why these other dimensions of success are more difficult to
measure. Customer satisfaction and repurchase intent are measured after the completion
of the project but it is also true that the complete state of customer satisfaction and
repurchase intent may not be known until the customer has used the installed system for a
certain period of time.
The benefits of customer satisfaction have received a vast amount of interest in the
marketing discipline (Anderson and Sullivan, 1993; Bernhardt et al., 2000; Morgan and
Rego, 2006). The contemporary thinking is that high satisfaction causes higher
repurchase intentions and loyalty among customers (Lam et al., 2004; Mittal and
Kamakura, 2001). In addition, higher satisfaction and loyalty causes more revenue, cash
flow, and profitability (Ittner and Larcker, 1998). Eventually these benefits lead to higher
stock prices and a higher market valuation of the firm (Aksoy et al., 2008; Anderson
et al., 2004; Anderson and Sullivan, 1993; Gruca and Rego, 2005). As a result of higher
satisfaction, more repeat business from the customer base should also be achieved in the
context of project management.
Where earlier studies have looked at the role of various success factors in the
different phases of research and development (R&D) projects (Pinto and Slevin, 1988,
1989; Pinto and Mantel, 1990; Pinto and Prescott, 1988), their viewpoint has been that of
the project itself, not how the customer perceived the project. It has been discovered that
the role of the various success measures might vary during the project. The customary
iron-clad success measures (time, cost and an acceptable level of performance) are
perceived to be relatively more important in the early stages of the project. The more
subjective and context-specific customer benefits and related success measures (e.g.,
customer satisfaction and repurchase intent) have been perceived to be relatively more
important at the later stages of the project (Bronte-Stewart, 2015; Lim and Mohamed,
1999; Zolfaghari et al., 2017).
It has also been argued, however, that the satisfaction of the project stakeholders
is vitally important, and thus the cost, schedule, and performance are relatively
Customer centric success measures in project management
207
less important (Baker et al., 1983). In agreement with these results, Rom et al. (2002)
and Lipovetsky et al. (1997) investigated the project success factors and discovered
that the benefits to the customer are the most important success criteria. Some researchers
have also claimed that projects may fail with regards to the time, cost and
output specifications but are still perceived to be successful in the long run as far
as the customer is concerned (Bronte-Stewart, 2015). In addition, Rom et al. (2002)
discovered that the internal performance measures have in fact not been
used as frequently as the external success measures such as customer satisfaction.
Lipovetsky et al. (1997) also found that benefits for the customer were not only the most
important success measures, but that they were practically twice as important as success
measures such as ‘meeting design goals’, which was the second most important success
measure. On the basis of the previous discussion, the first research hypothesis reads as
follows:
H1
Customer satisfaction has a significant impact on repurchase intent in system
delivery projects.
2.3 Customer satisfaction and relationship quality in project management
In addition to customer satisfaction, the quality of the relationship is an important
perceptual customer consideration (Dwyer et al., 1987; Grönroos, 1997; Harker and
Egan, 2006; Williams et al., 2015). The objective in project management is to
establish, develop, and maintain successful relationships (Fruchter and Sigué, 2005;
Morgan and Hunt, 1994). In business-to-business relationships this can be achieved
either on a personal or company level (Holmlund, 1997), which means that companies
need to develop commitment and trust in continuing relationships to enhance satisfaction
(Rindell et al., 2014). The dimensions of the relationship at the company
level can include issues such as inter-firm cohesion, attraction, and trust
(Holmlund, 1997), as well as commitment, culture, communication, and conflict
resolution (Chakrabarty et al., 2007).
The nature of the customer-supplier relationship can be considered as highly relevant
also in the project management context (Ahola et al., 2008) although it has not
necessarily been considered as a project management success variable. Recent research
has discovered, for example, that the drivers of customer satisfaction and relationship
quality differ, in order and magnitude, during the course of a project depending on
whether projects were delivered on-time or late (Williams et al., 2015).
The concept of ‘perceived quality’ has been used to refer to the stakeholders’
perceptions of the project to judge project success in addition to reaching the project
goals (Pinto and Mantel, 1990). These perceptions may include assessment regarding if
the project found solutions to the problems it was created for; if it improved performance;
and if the project is a definite improvement. Relationship quality, however, may contain
more dynamic issues such as problem-solving and communication and more long-term
issues such as image and trust (Ahola et al., 2008). Therefore, the quality of relationship
is vital to the successful completion of the project (Cox et al., 2006; Fernie and Thorpe,
2007). Finally, Hellard (1995) identified nine elements of building collaborative
relationships and Meng (2012) discovered ten indicators of the supplier-customer
relationship. On the basis of this discussion, the second research hypothesis reads as
follows:
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H2
M.J. Haverila and K.C. Haverila
The relationship quality has a significant impact on customer satisfaction in system
delivery projects.
2.4 Customer satisfaction and value for money in the project management
context
Value for money is another important consideration in the customer satisfaction and
repurchases intent research. In service quality research, the role of value for money has
been discovered to be crucial (Caruana et al., 2000) and to have a direct impact on
customer satisfaction (Chiou, 2004; Fornell et al., 1996; Gera, 2011).
The relevant extant value research has taken a utilitarian view so that the
value construct has been measured as the net ratio of benefits to costs (Cravens et al.,
1988; Sinha and DeSarbo, 1988; Williams and Soutar, 2009). Consequently, a buyer
and seller gather values if the benefits (the output) received are greater than the
resources spent (the input). In other words, both parties receive something more
useful than what has been given up (Sinha and DeSarbo, 1988). It also has been
argued that this utilitarian angle to value is one of the most prominent determinants
of purchase intentions and repeat purchase behaviour (Chang and Wildt, 1994;
Williams and Soutar, 2009; Zeithaml, 1988). In some contexts, it has been argued
that repurchase intention is largely based on the satisfaction mediated by perceived
value (Hume and Mort, 2010). In addition, perceived value for money has also been
found to be a significant mediator of perceived quality, price, risk and willingness-to-buy
(Sweeney et al., 1999).
Value for money can also be an important construct in project management (Bing
et al., 2005; Green, 1994; Lock, 2017) from the S-D logic point of view (Vargo and
Lusch, 2008). This is due to the fact that project management is a business-to-business
related activity where economical (Cooper, 1994; Michell et al., 2001; Walter et al.,
2001) and functional value considerations (Heathcote, 2016; Sheth et al., 1991) are
typically important in spite of the fact that the research in this regard is lacking. Typical
functional value attributes include quality, reliability, durability and price (Williams and
Soutar, 2009), of which price has been discovered to have a mediating role in this context
(Chiua et al., 2007; Hair et al., 2006; Hume and Mort, 2010; Lina et al., 2012).
Consequently, it is important to investigate the role of the value for money construct in
the project management context as far as the customer satisfaction and repurchase intent
are concerned. On the basis of this discussion the third research hypothesis reads as
follows:
H3a
The value for money mediates the relationship between customer satisfaction and
repurchase intent.
H3b The value for money quality has a direct and significant impact on customer
satisfaction in system delivery projects.
For this research, we examine customers’ perceptions in the context of project
management performance. The research model is illustrated in Figure 1. The dotted line
indicates the possible direct impact of the value for money construct on customer
satisfaction. The rectangle boxes represent the indicator variables for the relevant
customer centric constructs.
Customer centric success measures in project management
Figure 1
3
209
Theoretical framework of the study
Research methods
3.1 The firm
The organisation that provided the data for our study is a Fortune 100 firm in the facilities
management industry. The projects studied were the installation of new or retro-fit
heating, ventilation, air conditioning, and security systems that it manufactured. Since the
firm had threshold levels for its projects, most of the projects were for large customer
facilities. The firm has operations in over 100 countries, and over 100,000 customers
worldwide. The firm delivers thousands of complete system delivery projects to its
customers annually. The firm had a variety of improvement initiatives in place, such as
customer relationship management and Six Sigma process improvement, and constant
aims in improving its performance. The choice of the industry can be justified by the
large number of projects that are done on an annual basis, which provides a good basis
for statistically reliable analysis.
3.2 The sample
Each system delivery project had a formal contract that specified the project parameters,
such as the scope of work, milestones, project completion, and cost. The contract also
specified the key contact person in the customer organisation. This was typically the
person in charge of over-seeing the project and was most commonly a facilities manager.
Approximately 80% of respondents held this title, with most of the remaining being an
engineer of some type.
When the contract was initiated, the respondent was informed, in person, that a
customer satisfaction survey would be conducted after the project was completed. The
customer’s participation was requested. As a result, cooperation rates for the survey
averaged approximately 60% to 65% each month. Within 30 days of signing off on the
project as completed, the person’s name went into a sample frame for research. The
sample frame was transferred to the market research firm on a monthly basis. The
research firm attempted to reach all customers, by calling them up to five times. The data
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in this research comes from respondents located in the USA. For the purposes
of this study, data was aggregated over 18 consecutive months. During this period,
3,129 surveys were completed.
3.3 Questionnaire development
The questionnaire was developed through a two-stage process by an experienced
marketing research firm. First, a sample of 20 customers was the subject of qualitative
depth interviews. The customers were asked to indicate issues related to the quality of
relationship, value for money, satisfaction and repurchase intent with system delivery
suppliers. There were a variety of drill down questions asked to get detailed responses.
The results of these qualitative interviews were then converted into questions. This was
then circulated to an executive steering committee in the supplier organisation for review
and modification. The research firm then reviewed existing approaches in both
commercial and academic research. For the purposes of this study, the questionnaire
consisted of a total of eight questions.
The customer satisfaction construct consisted of two questions in the model: overall
satisfaction and overall performance in terms of meeting expectations. The relationship
quality construct was composed of three items: relationship quality, follow-up and
communication. The repurchase intent construct consisted of two items as follows:
willingness to recommend and the overall level of repurchase intent. Finally, as typical in
the relevant research, value for money was a single item construct representing the
overall level of agreement with the value for money statement (Chiou, 2004; Fornell
et al., 1996; Gera, 2011) (see Appendix 1).
Since the survey was administered by phone, a five-point response scale was used.
Questions used the scale ‘excellent-very good-good-fair-poor’ or an equivalent to
measure the customer’s perceptions of the supplier’s performance. A ‘do not know’
option was available for all questions.
3.4 Analytical techniques
To test hypotheses 1 and 2, partial least squares (PLS) structural equation modelling
(SEM) was used to test the theoretical model using the SmartPLS software (version
3.2.7). Similar to the outlier analysis in Sattler et al. (2010) no outliers were discovered in
the sample with standard residuals greater than +3 or lower than –3 (Hocking, 2003).
3.4.1 Assessment of the measurement model
Following a recent approach for the testing of the reflective model (Ringle et al., 2018),
the analysis was done in two stages where the analysis of the measurement model was
done first and this was followed by the analysis of the structural model. When analysing
the measurement model, the indicator loadings should be first examined and the
standardised loadings should exceed the value of 0.70. This was the case in the dataset in
this research. Second, the internal consistency reliability should be checked and the goal
here is that composite reliability should be higher than 0.70 and below 0.95 (Ringle et al.,
2018). The composite reliability values were 0.879 and 0.908, and the Cronbach alpha
values were 0.727 and 0.798 respectively indicating high internal consistency (Nunnally,
1978; Ringle et al., 2018).
Customer centric success measures in project management
211
Third, the convergent validity should be assessed and this is usually done with the
average variance extracted (AVE) criterion and they should exceed the value of 0.50. The
AVE in the case of customer satisfaction was 0.785 and in the case of repurchase intent
was 0.831, and thus the criteria for the convergent validity was met in the dataset here.
Fourth, discriminant validity should be assessed for the measurement model. The
usual way to check discriminant validity of the latent variables when using PLS
modelling is to use the Fornell and Larcker (1981) criterion. Here the requirement is that
the square root of each latent variable’s AVE is greater than the latent variable’s
correlation with any other construct in the model, which also was the case in the dataset
under investigation here. The AVE in the case of customer satisfaction was 0.785 and in
the case of repurchase intent was 0.831. These values are clearly greater than the highest
squared correlations with other latent variables indicating good discriminant validity.
Recent research recommends, however, that a new HTMT criterion should be used to
evaluate discriminant validity. HTMT defined as the mean value of the indicator
correlations across constructs (i.e., the heterotrait-monotrait of correlations) relative to
the (geometric) mean of the average correlations of the indicators measuring the same
construct. High HTMT values indicate a problem with discriminant validity (Ringle
et al., 2018). The recommendation is that the HTMT values should not exceed 0.95. Also,
this criterion for the convergent validity was met in this data set as the HTMT values
were statistically significantly by being lower than one. This concludes the assessment of
the measurement model.
3.4.2 Assessment of the structural model
The first step when analysing the structural model is the analysis of the path coefficients.
With the bootstrapping method in PLS, the significance of the path coefficient can be
done (see Table 2).
Second, in PLS model a R2 is provided to determine the explanatory power of the
model. The indicator relevance in terms of R2 ranged between 0.48 and 0.54 indicating a
moderate explanatory power of the model (Hair et al., 2006; Ringle et al., 2018).
Third, the predictive power of the model should be done by means of the Q2 value
using the blindfolding procedure present in SmartPLS. Resulting Q2 values of larger than
zero indicate that the exogenous constructs have predictive relevance for the endogenous
construct under consideration (Ringle et al., 2018), which was also the case here
indicating good predictive power when using the Q2.
Recently, new goodness-of-fit measures have also been introduced to PLS modelling.
In this case, the standardised root mean square residual was used (SRMR) (Ringle et al.,
2018), and here the criterion is that the values should not exceed 1.0. This was also the
case in the current dataset.
In addition, the latent constructs were checked for multicollinearity with the variance
inflation factor (VIF), which should be below the critical threshold level of 10 (Belsley
et al., 1980; Kleinbaum et al., 1988). It is noteworthy to mention that reasonable
multicollinearity may not cause any problems in statistical analysis. If, however, severe
multicollinearity is present, it can increase the variance of the coefficient estimates and
make the estimates sensitive to changes in the model, and consequently the coefficient
estimates can become unstable and difficult to interpret.
In addition to the aforementioned tests in PLS, the common method variance should
be checked if the responses to the model variables come from single respondents in a
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M.J. Haverila and K.C. Haverila
one-time survey. This data collection was not, however, done as a one-time survey. As
indicated in the sample section of this research, the survey data was aggregated over 18
consecutive months through a multitude of data collections. None of the responses came
from the same respondents. Furthermore, the application of this test is not feasible in this
research due to the fact that there is only one independent variable in the model (quality
of relationship). For these reasons, the test for the common method variance was not
performed. Seeing as all the criteria in the structural model assessment were met, this
then concludes the assessment of the structural model.
3.4.3 Analysis of the impact of the value for money variable
The ‘value for money’ question was introduced either as a mediator variable influencing
the linkage between customer satisfaction and repurchase intent (Hypothesis 3a) or
having a direct impact on customer satisfaction (Hypothesis 3b). Regarding the mediation
effect, the required tests would be considered as follows (Shaver, 2005). First, there is a
need to establish whether the relationship between customer satisfaction and repurchase
intent is significant. Second, there is a need to discover if the indirect effects (customer
satisfaction, value for money * value for money, repurchase intent) are significant. If
these relationships are not significant, there is no mediator impact. The final test assesses
whether the direct effect (customer satisfaction → repurchase intent) becomes
insignificant if the mediator variable (value for money) is included in the model. The
mediating role can either be partial or full. If the mediating role is partial, it means that
the relationship between customer satisfaction and repurchase intent is reduced, but still
remains significant. If the mediating role is full, then the relationship between customer
satisfaction and repurchase intent becomes non-significant.
4
Results
4.1 Descriptive statistics
The means and standard deviations for the relationship quality, customer satisfaction, and
repurchase intent and value for money variables were calculated to assess the properties
of the data. Due to the large number of observations (N = 3,129), all correlations were
significant in Table 1 (Hair et al., 2006). The greatest correlation can be found between
customer satisfaction and willingness to recommend, repurchase intent and willingness to
recommend, and quality of relationship and communication (The shaded areas in
Table 1).
In addition, there is a need to assess multicollinearity, which can be done with the
VIF assessment (Belsley et al., 1980; Kleinbaum et al., 1988). The threshold value not to
be exceeded is 10, and as can be seen in Table 3, this threshold value is not exceeded,
which therefore indicates a lack of multicollinearity.
4.2 PLS modelling analysis
The results for the base model for relationship quality, customer satisfaction, and
repurchase intent are in Table 2.
Customer centric success measures in project management
213
Customer
satisfaction
4.17
0.79
1.68
1.00
Value for
money
3.34
0.91
1.51
0.53
1.00
Willingness to
recommend
4.20
0.82
-
0.66
0.57
1.00
Repurchase
intent
4.14
0.82
-
0.53
0.48
0.66
1.00
Met
expectations
3.33
0.82
1.62
0.57
0.50
0.54
0.46
1.00
Quality of
relationship
3.93
0.97
1.91
0.62
0.53
0.64
0.53
0.55
1.00
Follow-up
4.24
0.86
1.67
0.53
0.42
0.52
0.42
0.45
0.56
1.00
Communication
3.63
1.05
2.03
0.59
0.53
0.57
0.47
0.56
0.66
0.59
Variable
Communication
Follow-up
VIF
Quality of the
relationship
Met expectations
Repurchase intent
S.d.
Willingness to
recommend
Mean
Customer
satisfaction
Value for money
Descriptive statistics, correlation coefficients and VIF
Table 1
1.00
Results of the path model estimations.
Table 2
Customer satisfaction
Repurchase intent
Path
coefficient
Standard
error
t-value
Customer
satisfaction
-
-
-
Quality of
relationship
0.732*
0.052
14.000
Path
coefficient
Standard
error
t-value
0.064
10.645
-
-
0.690*
-
Note: *p < 0.01.
Summary of results for the hypothesis testing
Table 3
Hypothesis
Result
H1
There is a significant relationship between customer satisfaction and
repurchase intent in system delivery projects.
Supported
H2
There is a significant relationship between relationship quality and
customer satisfaction in system delivery projects.
Supported
H3a
The value for money mediates the relationship between customer
satisfaction and repurchase intent in system delivery projects.
Supported
H3b
The value for money quality has a direct and significant impact on
customer satisfaction in system delivery projects.
Not supported
When calculating the standard error and the T-value, a non-parametric bootstrapping
routine to test the significance of the PLS path modelling results was used. As we can see
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from the results in Table 2, both relationships in the base model are significant.
Therefore, both Hypothesis 1 and 2 are supported.
4.3 The estimation of the mediating impact of value for money
When testing whether the respondents’ value for money perceptions had a direct and
significant impact on customer satisfaction, the PLS modelling procedure revealed that
the relationship was insignificant (0.186, 2.241). Therefore, Hypothesis 3b is rejected.
To test whether the respondents’ value for money perceptions mediate the customer
satisfaction and repurchase intent relationship, a mediation analysis was conducted. The
method was explained in the analytical techniques section. The results are illustrated in
Figure 2. As can be seen, the relationship between customer satisfaction and repurchase
intent is significant without the impact of the value for money construct (the values not in
parentheses). The numbers in the parentheses indicate the path coefficients and the
respective T-values when the value for money is brought into the model. All relationships
remain significant, which is the requirement for mediation (Shaver, 2005). The
significance between customer satisfaction and repurchase intent deteriorates when the
value for money construct is introduced indicating partial mediation. Therefore,
Hypothesis 3a is supported.
Figure 2
Mediating impact of value for money between customer satisfaction and repurchase
intent
In conclusion, the results of the PLS modelling revealed that the quality of relationship
construct is significantly related to customer satisfaction, the customer satisfaction and
repurchase intent are significantly related and finally that the value for money construct
does not have a significant direct impact on customer satisfaction, but it does partially
mediate the customer satisfaction and repurchase intent relationship.
5
Discussion
In the first research question, we asked about the relationship between the perceived
quality of relationship and customer satisfaction in the context of complex system
delivery projects. We found support for this hypothesis. In the second research question,
we inquired whether there was a significant relationship between the customer
satisfaction and repurchase intent in the same context, and we also found support for this
hypothesis. Finally, we investigated the possible mediating impact of the value for money
Customer centric success measures in project management
215
construct between customer satisfaction and repurchase intent. Support was also found
for this hypothesis.
The results point out two main contributions: the importance of customer perceptions
that related to the quality of relationship evaluations in project management in achieving
customer satisfaction, which of course has implications for customer-centred systems
delivery. We will discuss these findings below.
5.1 Relationship quality and customer satisfaction in the context of complex
system delivery projects
The results showed that the impact of the customer’s perceptions regarding the quality of
relationship is strong on customer satisfaction. Where earlier studies have discovered the
importance of customer satisfaction as an important success criterion (Atkinson, 1999;
Lim and Mohamed, 1999; Lipovetsky et al., 1997; Shenhar et al., 1997, 2001), we have
complemented these findings by investigating the quality of the relationship in the project
management context (Ahola et al., 2008; Holmlund, 2008). Ahola et al. (2008) link
relationship quality with long-term benefits in buyer-supplier collaboration, whereas the
shorter-term benefits are more related to the product of project management and the
efficiency impacts that are achieved.
Our results indicate that customer perceptions in terms of the longer-term oriented
measure of relationship quality are relevant to the more immediate measure of customer
satisfaction. This finding offers important input to the existing project success research
where the project team’s perspective is typically geared towards the efficiency goals of
scope, time, and costs. From the customer’s perspective, project management
performance deals with establishing and maintaining a trustworthy relationship with the
supplier. Previous research has discovered that relationship benefits typically play a
greater role in short-term projects than in long-term projects (Olaru et al., 2008). This
further emphasises the importance of the customer satisfaction and repurchase intent
relationship discovered in this research. This is due to the fact that the delivery of
complex system delivery projects in the facilities management industry tends to be
relatively short-term (less than year) rather than long-term (lasting for longer period of
time).
5.2 Customer satisfaction and repurchase intent relationship
This study was built on the premise that relationship quality is an important foundation
for customer satisfaction in complex delivery projects. The empirical study was
conducted within the facilities management industry that has a need to deliver complete
systems repeatedly and successfully. In such an industry, in general, the value creation of
integrated solutions is important (Brady et al., 2005). We purposely deviated from
project-team centric studies on project success and focused on the customer perceptions.
In particular, we first paid attention on the impact of relationship quality on customer
satisfaction and then on the impact of customer satisfaction on repurchase intent. As
mentioned, there is a need in this industry to ‘deliver complete systems repeatedly and
successfully’. Therefore, achieving high repurchase intent is critical for success in the
facilities management industry.
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M.J. Haverila and K.C. Haverila
5.3 The mediating impact of value for money in customer satisfaction and
repurchase intent relationship
Value for money is an important consideration in the business-to-business context.
Therefore, it is likely that value for money can play an important role in customer
satisfaction and repurchase considerations. Research done by Olaru et al. (2008) in the
R&D industry discovered that customers are clearly more willing to repurchase (and
recommend) if the offering is perceived as good ‘value for money’. They continue by
logically claiming that high monetary sacrifice can significantly detract from value. They
also somewhat illogically claimed that a high level of benefits does not necessarily
guarantee a high repurchase intent. Therefore, the value or benefits received in relation to
cost (i.e., value for money) is a more reliable measure in this regard. This seems to be the
case also in complex system projects such as in the facilities management industry and in
the R&D industry. Many prior studies have discovered a direct impact of the value for
money construct on customer satisfaction. This study did not support this but rather
discovered a partially mediating impact on the customer satisfaction and repurchase
intent relationship. It is possible due to the fact that customers are not able to detect and
assess their true satisfaction immediately after the completion of the project. It was not
possible to detect a direct impact of the value for money construct on customer
satisfaction, but a mediation impact between customer satisfaction and repurchase intent
was detected.
6
Conclusions
This paper dealt with the project management experience of the customer in terms of
relationship quality, customer satisfaction and repurchase intent as well as the role of the
value for money construct in this context. The results indicate that the perceived project
management performance in terms of relationship quality is significantly related to
customer satisfaction, which on the other hand is also significantly related to the
repurchase intentions of the customers in the facilities management industry. In addition,
the value for money construct partially mediates the customer satisfaction and repurchase
intent relationship.
The impact of customer experiences in terms of the longer-term oriented measure of
relationship quality was significant on the more immediate measure of customer
satisfaction. This implies that the project supplier should maintain an excellent quality of
relationship with the customer by using ordinary project management methodologies, by
following up with the customer to ensure resolution on issues brought to the attention of
the supplier, and by establishing fast, accurate two-way communication to carry out
successful projects. It is clear, however, that more research is needed on the
contingencies influencing the relationship between a customer’s perceived project
management performance and customer attitudes.
6.1 Theoretical and practical implications of the study
This paper has discussed the role of customer centric measures, i.e., relationship quality,
value for money, customer satisfaction and repurchase intent in the context of project
management. Previous research has indicated that, in addition to the iron-clad success
Customer centric success measures in project management
217
measures (time, scope and money), other measures are needed to assess the success of the
projects due to their multi-dimensional nature.
The results of this paper indicate that relationship quality indeed is an important
customer centric success measure in project management which is an important finding
both from the theoretical and practical point of view. As discussed in the literature review
section, a project can even be deemed to be a failure in terms of the traditional success
measures of time, scope and money. The results of this study may mean that, in this kind
of situation, the role of the relationship quality may be critical from a long-term
relationship perspective.
Not surprisingly, the customer satisfaction and repurchase intent relationship was also
significant in this study which is consistent with previous research. An interesting
discovery in this research was the significant mediating role of the value for money
construct in the satisfaction-repurchase intent relationship. In other words, the higher the
perceived value for money of the project, the stronger the satisfaction-repurchase intent
relationship. So, when customers perceive that the value for money of the project will be
high, the more important it is for the repurchase intent, and thus for the ongoing
relationship between the customer and the supplier.
6.2 Limitations and ideas for further research
As in other related studies, this research also has its limitations. As indicated earlier, the
sample and the data collection occurred in the USA. While the company had extensive
amount of experience in the delivery of complex system projects, it would be important
to expand the research approach taken in this study to other countries, as well as to other
cultural contexts. For example, Lipovetsky et al. (1997) have discovered that different
projects display different success factors, and therefore extending the research approach
taken here to find out how different types of projects with different technological
uncertainty and system scope behave, might be an interesting research direction to
pursue. The systems that were installed by the facilities management industry supplier in
this study have, for example, a reasonably long expected life. Therefore, it is feasible that
the performance of the installed system over a long time period might vary and this could
have an influence on the customer perceptions.
In addition, the approach taken here was from a single project management supplier
point of view where there is a strong interest in relationship quality, customer
satisfaction, repurchase intent and value for money. The engagement of multiple
suppliers into the same research project might add interesting viewpoints into the
contemporary research in the context of project management research. The sample of this
research was derived from large customers in the facilities management industry. Again,
including smaller customers as respondents might also contribute into the research setting
and offer new perspectives and discoveries to take place.
Finally, in the PLS model, R2 (variance explained) was provided to determine the
explanatory power of the model. The R2 value for the customer satisfaction endogenous
variable was 0.536 and for the repurchase intent endogenous variable was 0.476. While
the explanatory power of the model is moderate and significant, bringing other
independent variables (other than quality of relationship) into play might possibly add
value to the base model used in this study. An additional interesting viewpoint that could
be taken would be to compare and contrast the perceptions of customers and project
218
M.J. Haverila and K.C. Haverila
managers regarding the constructs used in this study. The sample provided data for five
consecutive quarters, however, in spite of that, looking at the stability of the relationships
over a longer period of time would add additional validity to the results achieved in this
study.
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Appendix 1
The questionnaire
1
Thinking about your overall experience with the company during the past 12 months,
how satisfied are you in doing business with the company? (Customer satisfaction)
2
Considering the quality of business solutions relative to the price paid, how would
you rate the company on value for the money? (Value for money)
3
How likely would you be to recommend the company to others? (Willingness to
recommend)
4
What is the likelihood that you will choose the company again when your next
installation project (new construction or retrofit) occurs? (Repurchase intent)
5
Considering the company’s overall performance, the company has met your
expectations as follows. (Met expectations)
6
Overall how do you rate the quality of the business relationship you have with the
company? (Quality of relationship)
7
How would you rate the company for following up with you to ensure resolution of
issues you have brought to their attention? (Follow-up)
8
How would you rate the company performance in establishing fast, accurate
two-way communication with its customers? (Communication)