IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

Impact of Critical Factors on The Performance of

Virtual Project Teams
Khurram Tariq Kayani , Muhammad Adeel Khan
Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology
(SZABIST), Islamabad

Submitted on
8 Aug 2011

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

Abstract
Unlike, traditional projects very less work have been done on this important and relatively
new segment of project management domain i.e. virtual projects. Although some studies on
similar side related to virtual team have been conducted previously, but the mechanics of
virtual teams and virtual project differ predominantly. The paper describes the relationship of
important factors which influence the virtual project and have impact of its performance
results. Although work on these critical factors was already done individually, but measuring
their comparative significance was ignored previously. The paper identifies the importance
level of major variables and highlights the most critical factors like teamwork, collaboration
and communication. For business rivals it is important to attain competitive advantage
through identification and responding with special concern on these factors. The results of this
study are gathered through a comprehensive questionnaire floated among the virtual project
team members. The valuable input given by these practicing virtual teams have given a
significant weight to this study.

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

Impact of Critical Factors on The Performance of

Virtual Project Teams
The advancement in information and communication technologies helped the project
management domain go beyond its traditional limits. The concept was in embryonic stages
during 90s when few of the biggest business giants realized the importance of "Working with
Global Resources", which later on took the shape of "Working Though Global Resources"
(Kirkman et. al., 2001). Currently, a number of projects prevailed in the market are having
collaboration and input from all across the globe, and these are termed as virtual projects
(Ebrahim et. al., 2009). A lot of emphasis has been given to time honored project
management practices. However, very less importance is given to significant areas of virtual
project management domain. Some work has been done to identify the impact of critical
variables on "Virtual Teams", however, dynamics of "Virtual Teams slightly differs from the
virtual project.
Due to easy availability of specialized off-shore human capital and shrinking cheap raw
material markets, most of the organizations are now moving towards virtual projects. While
realizing the gains the can reap from virtual models, experts have realized various grey areas,
which if not addressed properly will lead to project disaster. These gray areas can be
converted into comparative advantage if these (i.e. communication, trust, collaboration,
teamwork etc) are addressed as per their due share of importance. Although these factors are
equally important and influential in traditional projects, but impact and significance of these
areas become critical in virtual projects success. The paper aims at identifying critical factors
which influence virtual projects, and show their level of significance on the project
performance. The world economy is facing a situation similar to recession, resultantly offers
very few projects for third world countries like Pakistan, India, Afghanistan etc. However,
majority of the human and other resources are pooled up from these countries to act as virtual

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

teams in a virtual project environment, for European markets. Due to time and resource
constraints, the focal point of this research will only be South Asian countries.
Literature Review
Virtual Project brought a revolution in the management domain, prior the same work was
performed with more efforts and less skilled resources (Chang, Chuang and Chao, 2011).
However, the challenges it offer are nevertheless remains the key to successful performance.
The concept of virtual projects is relatively new and very less has been said on the subject,
therefore its best practices are yet to be explored.
However, some of the previous researches have focused on various dimensions of
virtuality (Pattern of Effective Management of Virtual Project Teams, PMI). The most
supported concept considers "Time and Geographic" displacement as the key factor for
virtuality. However, other affiliated factors, i.e. culture, loyalty, technology etc, become
subsidiary to above mentioned factors. Some scholars' think that virtuality is not due to
various factor as enumerated by other schools, but due to processes it uses. They believe in
the rapid processes for functioning and mustering of its resources for achieving the desired
goals. A similar school of thought believes that information technology and communication,
coupled with similar tools and techniques enables virtuality in a project (Dub & Par, 2004).
The study will discuss five major aspects, affecting virtual project performance: team
work, communication, trust, collaboration and leadership.
Team work
One of the most crucial aspects in a virtual environment is to develop understanding
between various teams which are different in their working style, inter-communication,
behavior, habits, norms, ethics etc. (Gurung & Prater, 2006). To bring them on single
platform to work in harmony and synergy good project managers plan cultural trainings,
seminars, setup team building activities and other type of such activities where all teams

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

interact with each other in a more friendly way. This will help them understand each other
better and in return team synergy will be generated (Chang, Chuang and Chao, 2011).
A similar experience can be observed through team cohesiveness, which normally
appears through long team work . Cohesiveness is defined as a small group of people having
complementary skills and they are committed to a common purposes, goal and approaches
for which they hold themselves mutually accountable and remain stitched (Khalid A Rawi,
2008).
Communication
In a virtual project environment simply the communication media is not enough to meet
the successful collaboration requirement; communication style, norms, respondents and
interpretation of veiled messages and gestures also plays a vital role (Chudoba, and Wynn,
2006). Majority of off-shore communication takes place for discussing strategic issues and
other specific decision related to process improvements (Chang, Chuang and Chao, 2011).
Previous researches endorses that communication plays a vital role in enhancing the level of
efficiency through broader discussions platform, more number of participant to their
convenience and giving chance to people to participate even with less confidence (Ying.
2007). However, a lot of other researchers believe that if that is the case then why failure rate
of virtual projects is more as compare to face to face project. Tools for virtual teams as
identified by Thissen et al. (2007) and many others are largely used to lessen the failure rate
of the project (Appendix A).
During late nineties when virtual project concept was in its inception, Bordia gave it
theory and 10 points on Computer Mediated Communication currently known as virtual
projects. The concept revolves around the time factor given to face to face and virtual projects
and results of same are associated with it. If time is more both projects can bring similar
results. At the same time it support the concept that virtual teams perform better in generating

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

ideas as compare to face to face projects. Ying (2007) states in a previous research that,
"Communication in Virtual Teams always takes place over an extended period of time. The
delay between response and feedback might provide members with the opportunity to
think about the problems and reflect more efficiently."
Trust
Due to the importance of this factor a lot of deliberation is done on the subject by
various authors (Nakayama, Binotto, Bianca, 2006). Although the mechanics of trust is
similar as that of a traditional project, but in virtual project the importance of this factor
increases manifolds. Since most of the stakeholder in an virtual project environment are
geographically well dispersed and most of the time work in isolation, so the element of trust
between the various tier is difficult to manage. "Another necessary condition on trust is the
incapacity to monitor and control a team member's behavior due to inaccessibility authors"
(Nakayama et al., 2006) . This definition seems more appropriate in virtual projects, where
trusting your employees is bondage due to inaccessibility to the geographic location. This
limitation can be overcome by using the best communication media / tools to establish a trust
level between these stakeholders. And basing on their level of trust one can easily ascertain
the probability of success in the project.
Leadership
Similar to traditional projects, leadership always have a significant role for enhancing
efficiency and productivity of the project. But unlike situation is seen in virtual environment
where team members are found from multiple flavors of culture, geography and behavior.
This warrants a special handling, and only a leader with charismatic personality can only
influence the overall results and move his team more effectively (Wang, E., Chou, H. &
Jiang, J.2005). Employees in a virtual environment mostly working on contract basis with not
develop much of affiliation with their project. This sense of insecurity presents a challenge to

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

the leadership, to get the right amount of work done in a given timeframe (Maggie and Alan,
2008).
Collaboration
The word collaboration is considered in a broader spectrum of team work. The
response by the teams and organizations doing collaboration is somewhat more formal then
typical relation due to team spirit. Many researchers consider of collaboration technologies as
one of the significant part which is being used to support co-located or virtual projects. In a
project there are mainly three types of interaction which are to communicate, coordinate and
adopt the desired action, and virtual collaboration simply revolves around these basic actions
through use of technology (Qureshi. et.al., 2006).

All the variables described earlier are already discussed under the ambit of project
performance in various researches. However, these major variables were discussed in
isolation or in combination with few variables. Resultantly, the previous researches have
given a scanty picture for project managers to distinguish the most important factor among all
of the variables.
THEORETICAL FRAMEWORK
The research is based on the model showing the impact of selected variables on the
performance of the virtual project. Communication being the backbone for all the virtual
projects plays a significant role on the performance. The efforts of leadership explore the
linkage of teams though their collaboration and team work performance. Another important
segment in the virtual environment is the amount of trust among the various team members
and their leadership. In the figure- 1 below, linkages of critical factors on the performance of
virtual project teams can be observed.

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

Figure 1
Theoretical Framework

Besides these identified variables, employees and executives satisfaction from their
employees and from the work environment also plays helps in improving the performance of
the project.

Table 1
Virtual Project Performance Hypothesis
H1

Good communication between the virtual team lead to better project performance

H2

Increased collaboration among the virtual team lead to project success

H3

Increased trust level between leaders and employees lead to project success

H4

Effective Team work lead to better project performance

H5

Good leadership effectively contribute to project success

H6

Cohesiveness among the team results in project success

IMPACT OF CRITICAL FACTORS IN VIRTUAL PROJECT

Research Methodology
The methodology used for this study is based on a literature review, research
framework, face-to-face interview and a questionnaire survey.
Basing on the available literature, and variables identified in the theoretical framework, a
comprehensive questionnaire was designed. The questionnaire covered input from the legacy
studies are as as shown in the Table 2 below.
Table 2
Sources of Questionnaire
Serial
1

Variables
Leadership , Satisfaction and Team

Study
Nora and Robert , 2005

Work
2

Communication, cohesion,

Ying. C, 2007

collaboration, trust and performance

A number of virtual projects and virtual teams were identified from government, NGOs
and private sector. The questionnaire was given in hardcopy as well as email to 165 people,
designed to measure the constructs mentioned earlier using a likert type scale of 1-7;
however, the reply was only received from 80 individuals, five out of which have not
answered the questions properly (Appendix-B).
Validity of questionnaire was evaluated through reliability analysis using a statistical tool
i.e. SPSS. Table 3 Indicated the reliability coefficients of constructs

IMPACT OF CRITICAL

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FACTORS IN VIRTUAL
PROJECT

Table 3
Reliability Coefficients (Cronbach Alpha) of Constructs
Serial

Variables (No of Items)

Cronbach Alpha

1.

Communication (5)

0.832

2.

Collaboration (5)

0.933

3.

Team work (9)

0.925

4.

Leadership (5)

0.867

5.

Trust (6)

0.811

6.

Performance (3)

0.880

7.

Cohesion (3)

0.840

8.

Satisfaction (4)

0.923

Cronbach alpha internal reliabilities were assessed for all the scale. Each scale had
acceptable reliabilities, with their alphas above 0.70 criterions (Nunnally, 1978). Reliabilities
shown in the table 3 thereby indicate high internal construct consistency and reliability.
The gathered results in SPSS show that there is a significant correlation between
performance and other three main contributors of project performance i.e. collaboration,
communication and team work.

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PROJECT

Table 4
Pearson Correlation

Leader
ship
Leadership
Performance
Satisfaction
Teamwork
Collaboration
Communication
Trust
Cohesion
Note

1
**

.334
.847**
.635**
.307**
.441**
.076
.018

Perfor
m ance

Satisfa
ction

Team
work

Collab
oration

.334**
1
.403**
.684**
.713**
.616**
.049
-.024

.847**
.403**
1
.786**
.289*
.388**
.033
.017

.635**
.684**
.786**
1
.443**
.417**
.019
-.053

.307**
.713**
.289*
.443**
1
.719**
.171
.048

Com
muni
cation
.441**
.616**
.388**
.417**
.719**
1
.241*
.128

Trus
t

Cohesi
on

.076
.049
.033
.019
.171
.241*
1
.539**

.018
-.024
.017
-.053
.048
.128
.539**
1

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Team collaboration in a virtual project is the most significant among all the measured
variables and shows its High correlation with performance. Whereas communication and
team work are having moderating correlation with the project performance. We have
observed from previous researchers that, better collaboration (Qureshi. et.al, 2006),
communication and team work (Ying. 2007 &) results into improved performance of the
project.
In addition to above mentioned test, the results were also checked against the regression
statistics. Table 5 shows that co-efficient of determination i.e. R Square is 0.72, which is
significant.

IMPACT OF CRITICAL

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FACTORS IN VIRTUAL
PROJECT

Table 5
Summary Output Regression
Mode
l
1

R
.851a

R
Square
.725

Adjusted R
Square
.705

Std. Error of the Estimate

.46880

a.

Predictors: (Constant), Communication, Satisfaction, Collaboration, Teamwork,

Leadership
b. Dependent Variable: Performance

Table 6
Regression Analysis
Model

(Constant)
Leadership
Satisfaction
Teamwork
Collaboration
Communication

Un standardized
Coefficients
B
Std. Error
.099
.180
-.122
.135
-.261
.174
.753
.122
.325
.088
.203
.092

Standardized
Coefficients
Beta
-.112
-.228
.688
.356
.212

Sig.

.552
-.905
-1.500
6.188
3.703
2.193

.582
.368
.138
.000
.000
.032

a. Dependent Variable: Performance

The t-value in Table 6 shows values of teamwork (6.19), collaboration (3.7) and
communication (2.19) are significantly higher than the desired (2.0), so impact of independent
variables over the performance of the virtual projects is confirmed. Similarly our hypothesis
H1, H2 and H4 are also established.
After application of various tests, it can be generally concluded that most of the findings
support the framework of the study. Teamwork, collaboration and communication remain the
main drivers among rest of the evaluated factors for project performance.

IMPACT OF CRITICAL

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PROJECT

Future Research Directions

Since the domain of virtual project is relatively new and very less work has been done so
far, but realizing its importance for future one can clearly say that a lot of areas are still
unexplored. Basic constraints of projects are yet to be explored in detail for its correlation
with virtual projects. The element of quality, resources, time and cost must be studied in
relation to virtual projects performance. And results must be interpreted to yield maximum
benefits for future projects.
Conclusion
The world has shrunken to a small village due to advancement in technology. Those who
want to remain competitive and gain maximum from this opportunity must remain focused on
the critical success factors of the projects, specially teamwork, communication and
collaboration etc. More efforts should be put into the core areas instead of giving equal share
to all sides. Smart entrepreneurs and executives have broadened their horizon and started
thinking on different trends to remain competitive (Sridhar, et al., 2007).

IMPACT OF CRITICAL

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Appendix A

Table 1
Tools for virtual teams (Adopted from Thissen et al. 2007)
Tool

Examples

Uses and

Immediacy

Sensory

Advantages

Instant
Messaging

Modes

Yahoo Messenger

Instant interaction

Synchronous or

MSN Messenger

Less intrusive

asynchronous

Text and

AOL Instant
Messenger

Visual

than a phone

limited

call

graphics

View who is
available

and Chat
Skype

Low cost
Low setup effort

Groupware /

Lotus Notes

Shared

Microsoft

Contact Lists

Services

Calendars

Asynchronous

Visual

Exchange
Novell

Arrange meetings

GroupWise
Cost and setup
effort vary

NetMeeting

User controls a

Synchronous

Visual

PC without

Remote
Access and

WebEx

being onsite

Audio

Control

Remote Desktop

Cost varies

Tactile

IMPACT OF CRITICAL

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FACTORS IN VIRTUAL
PROJECT

Web
Conferencing

pcAnywhere

Setup varies

NetMeeting

Live audio

WebEx

Dynamic video

Synchronous

Visual
Unlimited
graphics

Meeting Space

Whiteboard

Optional
audio

GoToMeeting

Application
sharing
Moderate cost
and setup effort

File Transfer

File Transfer

Share files of any

Asynchronous

type
Protocol (FTP)
Collaborative

Varies
with file

Cost varies

content

Moderate setup
effort

Websites
Intranets

Email

Numerous vendors

Send messages or

Asynchronous

Visual

files
and

Cost and setup

Audio in

effort vary

attached
files

Free applications

Telephone

Plain Old
Telephone

Direct calls

Synchronous

Conference calls

Asynchronous

Audio

IMPACT OF CRITICAL

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FACTORS IN VIRTUAL
PROJECT
Service
(POTS)
Voice Over
Internet
Protocol (VOIP)

Cost varies
Low setup effort

for voice mail

IMPACT OF CRITICAL

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FACTORS IN VIRTUAL
PROJECT

Appendix B
Table 2
Sources of Data Collection
Serial

Organization

Type

No of Respondents

CRS International

Virtual Project

13

World Food Program

Virtual Project

World Food Program

Virtual Team

Frontier Works Organization

Virtual Team

17

Virtual Team

(FWO)
5

Pakistan Tobacco Control

Program

Aids Control Program

Virtual Team

National Logistics

Virtual Project

12

Corporation (NLC)
8

Nation Rural Support

14

Program (NRSP)
9

eVision Software Islamabad

Virtual Team

19

10

Fouji Fertilizer

Virtual Team

11

OVM Pakistan

Virtual Project

22

12

Anonymous (Names are

Project / Teams

43

requested to be kept
confidential)

IMPACT OF CRITICAL

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FACTORS IN VIRTUAL
PROJECT

Total

165

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Leader
ship
Leadership

Perform
ance
**

Pearson Correlation
1
.334
Sig. (2-tailed)
.003
N
75
75
**
Performanc Pearson Correlation
.334
1
e
Sig. (2-tailed)
.003
N
75
75
**
**
Satisfaction Pearson Correlation
.847
.403
Sig. (2-tailed)
.000
.000
N
75
75
**
**
Teamwork
Pearson Correlation
.635
.684
Sig. (2-tailed)
.000
.000
N
75
75
**
**
Collaborati
Pearson Correlation
.307
.713
on
Sig. (2-tailed)
.007
.000
N
75
75
**
**
Communica Pearson Correlation
.441
.616
tion
Sig. (2-tailed)
.000
.000
N
75
75
Trust
Pearson Correlation
.076
.049
Sig. (2-tailed)
.516
.675
N
75
75
Cohesion
Pearson Correlation
.018
-.024
Sig. (2-tailed)
.880
.838
N
75
75
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).

Satisf
action
**

.847
.000
75
**
.403
.000
75
1
75
**
.786
.000
75
*
.289
.012
75
**
.388
.001
75
.033
.779
75
.017
.887
75

Team
work
**

.635
.000
75
**
.684
.000
75
**
.786
.000
75
1
75
**
.443
.000
75
**
.417
.000
75
.019
.871
75
-.053
.650
75

Collab
oratio
n
**
.307
.007
75
**
.713
.000
75
*
.289
.012
75
**
.443
.000
75
1
75
**
.719
.000
75
.171
.142
75
.048
.683
75

Comm
unicat
ion
**
.441
.000
75
**
.616
.000
75
**
.388
.001
75
**
.417
.000
75
**
.719
.000
75
1
75
*
.241
.038
75
.128
.273
75

Trust

.076
.516
75
.049
.675
75
.033
.779
75
.019
.871
75
.171
.142
75
*
.241
.038
75
1
75
**
.539
.000
75

Cohesion

.018
.880
75
-.024
.838
75
.017
.887
75
-.053
.650
75
.048
.683
75
.128
.273
75
**
.539
.000
75
1
75