Political Factors on Internal Success Factors and Project: History
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Muhammad Haris
,
Qing Yang

With the growing importance of renewable energy projects, there is a growing body of literature that not only highlights the barriers to the development of renewable energy projects but also highlights critical success factors (CSFs). 

  • critical success factors
  • renewable energy projects
  • external environmental factors

1. Introduction

The Paris Agreement calls on countries to limit global warming to well below 2 degrees Celsius, and preferably to 1.5 degrees Celsius. According to the UNEP’s 2022 emissions gap report, the current actions by countries are off track to meet emission targets, which will push to a 2.6-degree Celsius increase by the end of this century [1]. Renewable energy projects are at the core of clean energy transitions and hope to account for more than one-third of CO2 emissions reductions from 2020 to 2030 under the net-zero-emissions case by 2050. Although renewables are expected to comprise a 90% share of global electricity expansion for the period from 2022 to 2027, their implementation is affected by policy, regulatory, political, and financial challenges [2]. Addressing such implementation issues will likely reduce the gaps in the growth of renewable power generation globally.
Pakistan is a growing and developing Asian country that has a 61% share of thermal power generation in its energy mix. Although the geography of Pakistan offers it the ability to leverage abundant solar and wind power to meet domestic demand [3], the current share of renewables stands at a meager 6.5% [4]. The history of Pakistan’s power sector is replete with power shortages due to a mismatch in the demand and supply, often resulting in hours-long country-wide load shedding. Conversely, the energy mix remains titled towards imported fossil fuels on account of uncoordinated policymaking and lack of long-term energy planning [5]. The excessive dependence on power generation from imported fossil fuels has repercussions in the form of an increase in the carbon footprint of the power sector, uncertain energy security, higher cost of power generation, and a rising import bill.
Pakistan’s quest for renewable energy projects gained momentum in 2015 when investments worth USD 33.8 billion were earmarked for energy projects under the China–Pakistan Economic Corridor project [6]. In 2015, the share of renewables was 1.8%, whereas completion of four projects under the China–Pakistan Economic Corridor added 600 MW of capacity by the end of 2017 [6]. Currently, there are a total of 39 wind-powered projects (1838 MW), 9 solar (609 MW)-, and 9 biomass (278 MW)-based projects already connected to the national grid. The most recent Indicative Generation Capacity Expansion Plan (IGCEP 2022-30) targets are intended to enhance the share of renewables to 30 percent by 2030 [7]. However, a major hurdle in the completion of projects is political instability, which instigates inconsistency in the support from the government. The most recent manifestation of political instability was the ouster of Prime Minister Imran Khan from the parliament in April 2022. Before leaving office, his government granted excessive subsidies which staved Pakistan off from the ongoing IMF bailout package. As a result, Pakistan’s foreign exchange reserves steadily declined and currently stand at USD 3.7 billion [8]. Due to political instability, a host of other political factors, such as inconsistencies in policies and the legal system, issues with the provision of land, and lack of sovereign guarantees and finances, has caused bottlenecks for project developers. For example, the Zhenfa Pakistan solar energy project was completed after a delay of seven months, whereas ongoing solar projects, such as Meridian, HND, and Helios energy, are still under construction, although they were expected to be completed by the end of 2022 [9].
With the growing importance of renewable energy projects, there is a growing body of literature that not only highlights the barriers to the development of renewable energy projects but also highlights critical success factors (CSFs). Numerous studies have highlighted the external environmental barriers affecting the development of renewable energy in the context of different countries. These include studies conducted on the cases of Nepal [10], China [11], Indonesia [12][13], Mozambique [14], Malawi [15], Nigeria [16], Sri Lanka [17], Greece [18], Chile [19] and the Dominican Republic [20]. In the context of Pakistan, Maqbool and Sudong (2018) categorized the CSFs and investigated their impact on project success [21]. However, subsequent studies only added limited value to the literature by assessing the role of project efficiency [22], organizational support [23], despotic leadership [24], and stakeholder satisfaction [25][26] as mediating variables between the success factors and project success. While the focus of this growing literature remains restricted to the CSFs, there is a huge gap in the literature regarding how external environmental factors affect the relationship between project-level CSFs and project success. As such, the literature does not answer the role of political factors specifically on the implementation of renewable energy projects in Pakistan.

2. Theoretical Foundation

The theoretical support for this study stems from both modern organizational theory and environmental contingency theory. The former is based on the premise that the only way to comprehend organizations is to treat them as a system [27]. An organization is a function of mutually dependent variables which collectively impact organizational rationality based on its established objectives [28]. The pursuit of organizations to attain the goals of growth and stability resides with two key pillars of the system: the structure and the processes which define organizations [27]. Both the formal and the informal dimensions of organizational structure are inseparable as their interaction results in the establishment of the norms of an organization [28]. Modern organizational theory also emphasizes the importance of harvesting, processing, and delivering information, which links the sections of the system together [29]. Thus, communication within organizations is not only viewed as the stimulus which serves as the control and coordination mechanism, but it also integrates the system’s decision centers into synchronized patterns [30].
Although modern organizational theory examines organizations by considering them as integrated wholes, it does not offer any explanation of the cause and effect emerging from the external environment. Secondly, the applicability of this theory is restricted to modern-day dynamic organizations which seek to adapt to external changes. Considering these limitations of modern organizational theory, environmental contingency theory was incorporated into this study. This theory posits that there is no optimal approach to effectively managing, planning, organizing, and leading an organization [30][31]. Rather internal and environmental contingencies and their ensuing uncertainty force organizations to tailor their processes according to particular circumstances [29][30]. In view of Burns and Stalker, organizations are more likely to make use of their resources, reduce costs, and maximize their profits in a stable environment [32]. However, organizations must bear the cost in terms of a decline in productivity and profit when it is inevitable for them to adapt to changes in the external environment. The uncertainty affects the implementation of rules, policies, and procedures, which provide the basis for organizations to make decisions for both routine and non-routine tasks [30]. Therefore, environmental contingency theory explains the interaction of an organization with the external environment and why this relationship determines the success of organizations.

3. Categorization of Critical Success Factors

The concept of CSFs received little attention of academics initially. It was introduced by [33] in the 1960s [33]. Earlier literature on CSFs evolved with time, and its focus was mainly concentrated on defining the concept of these factors and exploring their link with a project’s success [33][34][35][36]. In view of [35], CSFs are the key areas that drive the success of organizations [35]. One of the earliest empirical studies, by [37], demonstrated that ten CSFs are strongly linked to project success [34][37]. These factors were mainly composed of factors internal to the organizations and were found to be generalizable to a wide variety of projects. Another study, by [38] found 15 factors within organizations, such as the role of human resources, planning, client involvement, a skilled team, technical expertise, and project communication [38]. They also identified the external environmental factors that demonstrated external influence outside the control of the project teams [35][38][39]. In view of [35], CSFs are categorized into macro/environment, industry-level, and firm-level factors [35].
A growing body of literature covers the identification of CSFs specifically in the context of energy projects. In two different studies, ref. [39] investigated the CSFs of power projects in China [39] and compared factors impacting wind and thermal power plants [40]. According to [39], 14 factors contribute to the success of power projects spread across the micro (project level) and the macro level [39]. Project-level factors include the project’s financial attractiveness, the business and management capacity of the project developer, and success achieved in completing past projects. At the macro level, active factors impacting the project are related to political, economic, legal and regulatory, environmental, and social categories. According to [41], five factors contribute to the success of projects, such as monitoring, coordination (national), design, training, and institutional environment [41]. In another study, by [42], government policies are attributed as a significant factor impacting the implementation of renewable energy projects in Malaysia [42]. In the context of success factors and barriers of public–private partnerships for renewable energy projects across the globe, ref. [43] highlighted the role of skills and efficiency with respect to both parties, proper documentation, technical development, and proper risk allocation in project implementation [43]. In addition, barriers emanating from different categories, such as political, regulatory, financial, technical, technological, construction, operational, and force majeure, have wide and varied impacts on projects across different countries [10][11][12][13][14][15][16][18].
Pioneering work on categorizing and finding the impact of CSFs on project success was carried out by [21]. They found that the following factors directly contribute to a project’s success.
  • Communication factors;
  • Team factors;
  • Technical factors;
  • Organizational factors;
  • Environmental factors.
Based on the framework of this study, numerous other studies added scholarship to the literature by mediating the effect of numerous variables in the context of Pakistan. All these studies reported the direct relation of CSFs to project success [22][23][24][25]. After a careful review of the literature, this study deploys the framework of CSFs on a project’s success. The framework of this study treats communication, team, technical, and organizational factors as project-level factors, whereas environmental factors are referred to as external environmental factors [39]. In addition, this research deploys only two project-level factors, communication and organizational factors, because these factors significantly and positively affect construction-based renewable energy projects’ success. The definitions of deployed success factors are mentioned in Table 1.
Table 1. Success factors affecting project success.
Critical Success Factors References
Communication Factors
A key area of project management. Whole project [29][32][33]
aspects are reliant on the effectiveness of communication.  
Its effectiveness and brevity provide an environment  
that delivers project success.  
Organizational Factors
This refers to the best processes, methods, and techniques [35][38][39]
devised to achieve project success.  
External Environmental Factors
Environmental factors refer to the factors that [16][23][25][40][42]
are not under the control of the project team.  
Domains include political, economic, social,  
technological, and natural disasters.

4. Political Factors

The private sector’s capability to invest in and implement energy projects is restricted by its inability to meet high upfront costs and hostility due to operations in different areas of the world [44]. It looks upon host governments to provide a level playing field. However, the external environment, in its various manifestations, such as economic, social, political, physical, technological climate, and industry-specific factors, affects the outcome of projects [10][14]. External environmental factors consist of non-specific elements which influence an organization’s strategies, stakeholders, and inter-organizational networks [29].
Political factors are external factors associated with the nature of the political system within which the projects are implemented [29]. Numerous studies have highlighted political factors which impact the success of renewable energy projects. Although political and legal factors are so interlaced in the literature, to the extent that it is difficult to analyze them separately [19], Table 2 highlights the political factors extracted from specific country cases. Investors and project developers require a stable and conducive environment and seek guarantees from governments to safely operate. However, there is evidence that countries which are characterized by unpredictable events and political instability deter both national and international investors from investing in energy projects [10][12][14]. A study by [10], which investigated the barriers to renewable energy projects in Nepal, found that the frequent changes in government and ensuing instability restricted the commitment of political leaders towards renewable energy development [10]. The enabling environment for renewable energy is based on clear policies and a supportive regulatory framework. Developing countries lag in their support of energy projects, as they have neither a comprehensive energy policy nor policies that are developed meticulously. In addition, evidence supports the worsening impact of instability on political leadership and its capability to formulate policy, as demonstrated by the case of Indonesia [12]. Another major hurdle faced by project developers is the frequent changes in the regulatory regime of the host country. These issues range from changes in upfront subsidies and tax exemptions to changes in interest loans, approval processes, and land acquisition. Similarly, political barriers are also known to impact the success of renewable energy projects in Sri Lanka [17]. According to [17], equipment for renewable projects is imported, and project developers are reported to incur higher tax costs to import equipment due to an unsupportive regulatory regime. In addition, the implementation of energy projects is affected by delays on account of long and lengthy approval processes in Sri Lanka [17].
Table 2. Political factors affecting renewable energy projects in developing countries.
Country Source Political Environment RE Policy Fiscal Subsidies/Incentives Taxation Transparency in Decision-Making Corruption Approval Process Land Acquisition
China [11]   ✓ ✓          
Indonesia [13]       ✓ ✓      
Indonesia [12] ✓           ✓  
Nigeria [16]   ✓ ✓   ✓ ✓   ✓
Sri Lanka [17]   ✓ ✓ ✓     ✓  
Malawi [15]   ✓            
Chile [19] ✓   ✓       ✓ ✓
Nepal [10] ✓ ✓     ✓ ✓    
Mozambique [14] ✓ ✓ ✓          
Greece [18]   ✓ ✓       ✓  
Dominican Republic [20]     ✓ ✓ ✓   ✓  
Note: The categories of political factors mentioned above only represent the existence of these barriers in respective countries.

5. Project Success

Projects are initiated to pursue specific objectives. It is imperative to set the criteria for project success at the outset to avoid misperceptions which could label the project a failure. Project objectives serve as the best criteria to assess the success of projects and provide a benchmark to determine how well the goals are met [45]. The iron triangle is attributed to measuring project success based on the three dimensions of time, cost, and quality [46]. Through time, success can be measured in terms of meeting schedules [47]. In terms of cost, success can be assessed as schedule overruns or underruns of the initial budget [47]. The quality aspect of success can be determined by conformity to the originally agreed upon functional as well as technical specifications of the project. However, complexities surface when project success is viewed beyond the common objectives of cost, time, and quality [45]. The performance of the project is also determined by project characteristics, the satisfaction of stakeholders, and the communication process of the projects. Moreover, project success also depends on anticipating project requirements and arranging resources to accomplish the right task at the right time [48]. Most projects fail as a result of issues not being resolved in a timely manner while gaps persist in the effective coordination and relation between project stakeholders.

This entry is adapted from the peer-reviewed paper 10.3390/su15118910

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