Project Sponsorship Management

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PROJECT SPONSORSHIP MANAGEMENT: The Case of Contracting in Egypt 2 nd Chapter

Transcript of Project Sponsorship Management

PROJECT SPONSORSHIP MANAGEMENT: The

Case of Contracting in Egypt

2nd Chapter

JULY 2015

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CHAPTER 2. LITERATURE REVIEW

2.1. INTRODUCTION

In ‘nowadays’ economy where companies are required

to meet increasingly higher profits, through as much as

possible rational use of resources, project management

prominently shaping their strategy. The project manager

must simultaneously perform many tasks. He/She should

also constantly take decisions at all levels of resource

use, adjustments of the timetable, budgetary matters,

management of human relations, communication and

technical problems. Thus, it is a fact that business is

threatened by many different kinds of risks (Spikin,

2013).

In other words the sponsor has the role of the

guarantor. The sponsoring is not just a sponsorship, such

as gratuitous. It is a form of financial transaction

(financial pact), which results in benefits for both

parties; on the one hand the administered, via financial

funding, achieves its objectives more easily, while the

other, the sponsor, through managing the offered

financial resources, ensures its promotion and it is a

powerful marketing tool. (Wilcox, 1992)

Moreover, sponsors seek by sponsoring to motivate

their own partners, suppliers and traders and to promote

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their products. Therefore, the sponsors are definitely

interested in carrying out the funded activities, because

through them they achieved and their communicative goals

as well. In most cases, however, project sponsoring has

been an idealistic parameter, which does not crowd out

the interest of the sponsor for his promotion (Sinanioti-

Mavroudi, 2002).

On the other hand, successful companies do not avoid

or pass on their necessary risks, instead they formulate

their strategy based on these risks (COSO ERM, 2004).

Most often, however, they undertake them in order to

generate significant returns for shareholders. The

company's management has the responsibility to identify

the major activities, processes and procedures,

associated with the risks identified and classified

according to impact and probability to happen, in order

to take appropriate measures for dealing with, rollover

and exploitation. (Spikin, 2013)

In the 2nd Chapter, there is an analytical

literature review, as far as the theory context of

project management, contracting and project sponsorship

are concerned.

2.1.1. Sponsoring: Historical Review and Definition

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The term «sponsoring» comes from the Latin «sponsio»

interpreted as a solemn promise and betrothal. It was a

contractual promise to ongoing question and answer that

was provided by the archaic legislation and it was

subjected to a simplified court procedure (Kunkel, 1973).

In other words the sponsor has the role of the

guarantor. The sponsoring is not just a sponsorship, such

as gratuitous. It is a form of financial transaction

(financial pact), which results in benefits for both

parties; on the one hand the administered, via financial

funding, achieves its objectives more easily, while the

other, the sponsor, through managing the offered

financial resources, ensures its promotion. (Wilcox,

1992)

The current concept of sponsoring is described in

the following definition: the sponsorship is a contract

by which a company (sponsor) is exchanging goods or money

to the participants themselves in order to a project be

made and they undertake to use the mark , the name or the

brand name of the sponsor in this project (Liakopoulos,

1998).

Although the motives of natural or legal persons,

that enhance any financial activities, are shown in terms

of principle gratuitous charity, a closer look approves

that the obligations undertaken under the sponsoring

contract are an instrument for more efficient

advertising. As the sponsor is characterized by the

organization or person who supports or promotes project

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activities, based on its promotional return, for example

in the USA it is considered as the business which

finances or contributes to expenses radio or television

program in return for ‘air time’(Brown, 1993).

2.1.2. Contemporary Project Sponsoring and its Features

Until the past decade, most companies regarded the

sponsorship as an obligation to society. (Catherwood &

Kirk, 1992). Nowadays, this perception has changed. The

interest has moved from charitable activities into

mutually beneficial agreements between donors and

administered (Abratt, 1987; Meenaghan, 1983). Most

businesses now expect remarkable results, as well as

measurable in sales, as a return for their investment in

a sponsorship (Catherwood & Kirk, 1992; Cornwell, 1995;

Hoek 1993 & 1997; Irwin & Sutton, 1994; Marshall & Cook,

1992; Wilson, 1997)

However studies have shown that the effectiveness of

sponsorship sales are directly related to the degree in

which the sponsor is willing to leverage his investment

with additional advertising and promotional activities

and expenses (Quester & Thompson, 2001). It has also been

seen in studies done, that a remarkable percentage

(ranging between 30% and 50%) of donor companies do not

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assess the effectiveness of their sponsorship. (Sandler &

Shani 1989; Witcher et al., 1991).

Beyond the theoretical analysis as far as the

confusion of sponsoring with other commercial concepts,

it is necessary to name and record the "signs" that

enable to discern if any funding is or not sponsorship.

These signs are mentioned below (Bowman, 1987):

The social service and credit of the sponsor to

social acts of charity should be the prime targets.

It must necessarily involve transferring financial

resources from the private to the public-social

sector.

Social sponsorship signed by the names of companies

and promotion focuses on them.

Also it is signed by companies rather than

individuals.

The promotion of the sponsor is discreet.

Social sponsorship activity is directed to the

‘social human’, in other words whoever is interested

in the joint, while the commercial sponsorship is

directed to the economic man, the one who sells and

buys.

The products are not described and extolled and,

normally, not even mentioned.

2.1.3. Sponsoring versus Advertising

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Like advertising, the sponsoring is a promotional

way used by companies / sponsors. However, in sponsoring

compared with advertising, the sponsor has significant

advantages that make it more attractive than advertising,

because advertising is considerably more expensive than

the sponsoring and its results in attracting consumers /

buyers are not always satisfactory; therefore, sponsoring

is considered as a more accessible - through

communication - productive enterprise policy since the

cost of the latter is much lower than the cost of

advertising expenses (Hermanns & Puettmann, 1989).

Additionally, in sponsoring, the sponsor’s brand name is

being known even in the part of consumers, which

systematically avoid ads or general remains indifferent,

but cares for those projects that are financed by donors.

2.2. PROJECT SPONSORSHIP

2.2.1. Defining project

The handbook issued by the Project Management

Institute (Project Management Institute, PMI), defines as

a project:

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“... the temporary venture that aims to create a unique product or

service. Temporary means that every project has a definite end. Unique

means that the product or service differs prominently from all other

similar products or services” (PMI, 1996, p.4)

According to Turner (2003), ‘project’ is a venture

in which human resources, equipment, financial resources

and raw materials are organized in a novel way, and with

a view of taking specific scope of work that have certain

standards and which are given costing and time

constraints to produce a beneficial change that is

defined by quantitative and qualitative targets.

The next list shows the main characteristics of a project

(Turner, 2003):

Consists of non-recurring activities which in the

general case can be described by the software life

cycle.

Require planning to achieve the final result.

The result is unique.

The execution requires a group.

Has a beginning and an end.

Is subjected to restrictions of various kinds

(time, cost quality, etc.)

The available resources are limited

They are large and complex.

2.2.2. Success Factors in Project Management

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The project manager must simultaneously perform many

tasks. He/She should also constantly take decisions at

all levels of resource use, adjustments of the timetable,

budgetary matters, management of human relations,

communication and technical problems. It is therefore

necessary to identify the main issues, strategic,

tactical or operational, in order to define priorities

and to enable the project manager to focus on critical

issues, which alternate depending on the phase in which

the project is located.

Additionally, Balachandra (1984) has defined the

following 10 factors of success, as far as the project

management is concerned:

1. Project Objective: The definition of clear

objectives is the key in planning and executing a

project. Understanding the performance and

evaluation measures is important to be well

coordinated. Therefore, all members should be aware

from the outset about the objectives of the project.

2. Support from the administration’s side: The

competition for resources in combination with the

large degree of uncertainty underlying a project

often lead to conflict and crisis. The constant

presence of management throughout the project life

cycle helps to understand the objective of the

project and its importance. This awareness leads to

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a support which may prove invaluable for solving

problems in cases of conflict or crisis or if

uncertainty arises. Therefore, clear and frequent

communication between the project manager and the

administration acts as a catalyst for the success of

a project.

3. Project planning. The conversion goal and the

performance measure on a feasible plan is the link

between the theoretical phase design (conceptual

design) and production phase. A detailed plan

covering technical, financial, and organizational

issues, communications, control and schedule is the

basis for implementation. Planning does not end when

implementation starts as the need for changes or

alterations are continuous. Planning is therefore

dynamic and durable and connects alternating targets

and performance with the final results.

4. Cooperation with the Customer. The final user of the

project is the final arbiter of its success. A

project which is finished on time, according to the

desired specifications and within budget, but never

or rarely used can certainly be regarded as failure.

On theoretical design phases it is very important to

have good communication with the customer (internal

or external) and that the objectives will be fully

aligned with the customer needs. Subsequent phases

require continuous collaboration with the client in

order to correct possible errors in the translation

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of objectives into performance measures. However,

due to alternating needs and conditions, although in

the early stages is useful to have non-declaration

of the customer's precise needs, these potential

lapses in the planning or implementation phase. The

configuration management system is a link between

existing plans and change requests of the client and

the project team.

5. Staff issues. Satisfactory achievement of technical

targets without violating the schedule or the budget

does not mean that the project is completely

successful, even if the customer is happy. If the

various parties involved in the project do not

maintain good relations, the success of the project

is questionable, as the good cooperation and

dedication to the project is necessary for success.

6. Technical issues. Technical staff training and

fulfillment of technical requirements must be one of

the first concepts of a project manager as without

them a project cannot be completed.

7. Acceptance by the customer. Continuous cooperation

(consultation) with the customer throughout the

lifecycle of a project increases the probability of

success in terms of user acceptance. In the final

stages of implementation, the customer must

determine the resulting project and decide whether

it is acceptable or not. In case the project is not

accepted at this stage, then it failed.

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8. Project control. The continuous flow of information

on the actual progress and the feedback mechanism

allows the project manager to face uncertainty.

Comparing the real progress with the current plans,

the project manager can distinguish derogations,

expect problems and initiate corrective actions. Any

deviations from the original plans can be corrected

if noticed in time.

9. Communication. Successful transition between the

phases of the life cycle of a project and good

coordination between the participants in each phase

requires a continuous exchange of information. In

general, communication is facilitated if the line of

authority is clear. The organizational structure of

the project must describe the communication channels

and the type of information that must pass through

them. Moreover, there must be a clear directive on

how often this information will be produced and

transmitted. The official communication lines and

the informal flow between team members advocate the

success of the project.

10. Troubleshooting. The control system is designed

to be able to find the problem areas and, if

possible, to find their source. Due to uncertainty,

which is frequent sore for the completion of

projects, the development of an alternative project

(contingency plan), is a good preventive measure.

The availability of prepared plans and procedures

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for managing problems can reduce the troubles that

may need to be resolved and the work to be completed

as in there absence.

Finally, it is mentioned that these factors are

generally, and each project is unique and its

specificities require to be treated as appropriate.

2.2.3. Key Performance Indicators - KPI (set by client)

Key Performance Indicators are the quantitative

measurements outright by stakeholders that show the

critical success factors of an organization. The KPIs are

(Parker, 2014):

Set from the customer before the start of the

project in order of priority.

Directly related and supporting the business

objectives

The basis for the decision making throughout the

project.

“The basis for the acceptance of the solution by the client at the end of

the project”.

Defining KPIs can be challenging. Good KPIs must

have a target value and a way to be accurately measured

and reported on.  Ideally, it would be best if the

project sponsor simply handed administrated a list of

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project objectives, success criteria, and KPIs when

administrated were brought on board as the project

manager. However this rarely happens, because

administrated will usually need to work with the customer

or project sponsor to define them.  Many sponsors are not

trained on how to define good KPIs. This is a skill that

administrated will want to have and to provide as a

project manager. (Parker, 2014)

Good KPIs are shown below (Parker, 2014):

Aligned—Agree with the specific organization’s

vision, strategy, and objectives.

Optimized—The KPIs should be focused on providing

organization-wide strategic value rather than on

non-critical local business outcomes.  Selection of

the wrong KPI can result in counterproductive

behavior and sub-optimized results.

Measurable—Can be quantified/measured.

Realistic—Must be cost effective and fit into the

organization’s culture and constraints and

achievable within the given timeframe.

Attainable—Requires targets to be set that are

observable, achievable, reasonable, and credible

under expected conditions as well as independently

validated.

Clear—Clear and focused to avoid misinterpretation

or ambiguity.

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Understood—Individuals and groups know how their

behaviors and activities contribute to achieving the

KPI.

Predictive—The KPI may be compared to historical

data over a reasonably long time so that trends can

be identified.

Agreed—All stakeholders should agree and share

responsibility for achieving the KPI target.

Reported—Regular reports are made available to all

stakeholders and contributors so they know the

current status and take corrective action if needed.

In addition, Bernard Marr, a well-known performance

management expert, has developed a list of 75 KPIs that

every manager needs to know. Every business and every

project will have different KPIs to measure performance,

but Bernard’s list gives a good starting point for

conducting discussion with the business.  The set of 75

KPIs that Bernard Marr developed is listed below.

(Parker, 2014)

Financial Performance:

1. Net Profit

2. Net Profit Margin

3. Gross Profit Margin

4. Operating Profit Margin

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5. EBITDA

6. Revenue Growth Rate

7. Total Shareholder Return (TSR)

8. Economic Value Added (EVA)

9. Return on Investment (ROI)

10. Return on Capital Employed (ROCE)

11. Return on Assets (ROA)

12. Return on Equity (ROE)

13. Debt-to-Equity (D/E) Ratio

14. Cash Conversion Cycle (CCC)

15. Working Capital Ratio

16. Operating Expense Ratio (OER)

17. CAPEX to Sales Ratio

18. Price Earnings Ratio (P/E Ratio)

Customers:

19. Net Promoter Score (NPS)

20. Customer Retention Rate

21. Customer Satisfaction Index

22. Customer Profitability Score

23. Customer Lifetime Value

24. Customer Turnover Rate

25. Customer Engagement

26. Customer Complaints

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Market and marketing efforts:

27. Market Growth Rate

28. Market Share

29. Brand Equity

30. Cost per Lead

31. Conversion Rate

32. Search Engine Rankings (by keyword) and click-through rate

33. Page Views and Bounce Rate

34. Customer Online Engagement Level

35. Online Share of Voice (OSOV)

36. Social Networking Footprint

37. Klout Score

Operational Performance:

38. Six Sigma Level

39. Capacity Utilisation Rate (CUR)

40. Process Waste Level

41. Order Fulfilment Cycle Time

42. Delivery In Full, On Time (DIFOT) Rate

43. Inventory Shrinkage Rate (ISR)

44. Project Schedule Variance (PSV)

45. Project Cost Variance (PCV)

46. Earned Value (EV) Metric

47. Innovation Pipeline Strength (IPS)

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48. Return on Innovation Investment (ROI2)

49. Time to Market

50. First Pass Yield (FPY)

51. Rework Level

52. Quality Index

53. Overall Equipment Effectiveness (OEE)

54. Process or Machine Downtime Level

55. First Contact Resolution (FCR)

Employees and Their Performance:

56. Human Capital Value Added (HCVA)

57. Revenue Per Employee

58. Employee Satisfaction Index

59. Employee Engagement Level

60. Staff Advocacy Score

61. Employee Churn Rate

62. Average Employee Tenure

63. Absenteeism Bradford Factor

64. 360-Degree Feedback Score

65. Salary Competitiveness Ratio (SCR)

66. Time to Hire

67. Training Return on Investment

Environmental and Social Sustainability Performance:

68. Carbon Footprint

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69. Water Footprint

70. Energy Consumption

71. Saving Levels Due to Conservation and Improvement Efforts

72. Supply Chain Miles

73. Waste Reduction Rate

74. Waste Recycling Rate

75. Product Recycling Rate

2.3. SPONSORSHIP AND CONTRACTING

2.3.1. Project Sponsoring Contracting

The content of the sponsorship contract, in other

words the provision and the consideration, depends on the

respective objectives of the Parties. In particular, on

the part of the aid recipient by the donor, usually, it

is very significant to indispensable source of income for

the purposes of his business. In case that the ‘aid’ may

not occur by the sponsor, the project is in danger,

because its activities will not accomplish. However, it

is recommended in these cases of dependence, the contract

to be formed in such way as to safeguard the legitimate

interests of the receiver, and the correspondence of the

respective liabilities (Sinanioti-Mavroudi, 2002).

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Respectively, the ‘balance’ is consisted in the

contract and otherwise, ie when the receiver has such a

reputation and market power to be able to choose the one

sponsor among more candidates. Only then, the carry out

of the funded activities is secured and the receiver

seeks the highest possible provision by the designated

sponsor. From the perspective of the sponsor, sponsorship

serves the market communication thanks to the advertising

brand image. Depending on the type of the sponsorship

pursued, the relative advertising goals are achieved.

Also, sponsors seek by sponsoring to motivate their own

partners, suppliers and traders and to promote their

products. Therefore, the sponsors are definitely

interested in carrying out the funded activities, because

through them they achieved and their communicative goals

as well. In most cases, however, project sponsoring has

been an idealistic parameter, which does not crowd out

the interest of the sponsor for his promotion (Sinanioti-

Mavroudi, 2002).

2.3.2. Contracting and Maintenance via Risk Management

The risk management of a project is defined as the

set of the recognition procedures, analysis, response and

risk monitoring during the life of a project in order to

achieve its original goals The Risk Management is

considered as a key factor for the successful completion

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of large and complex projects, as it affects issues such

as timing, budget and customer satisfaction. (PMI, 2004)

There are several Risk Management methodologies

suggested in the literature. Some of these are summarized

in the table below.

Table 2. Risk Management Methodologies

METHODOLOGY STEPS OF RISK MANAGEMENT

Project Management Institute

(PMI 2004), “A Guide to the

project Management Body of

Knowledge”

Planning

Risk identification

Qualitative risk analysis

Quantitative risk

analysis

Designing risk mitigation

Control and monitoring

Klein & Cork (1998), “An

approach to technical risk

assessment”

Recognition

Resolution

Check

Documentation - Report

Chapman & Ward (1997),

“Project Risk Management

Processes, Techniques and

Insights”

Determination

Strategic approach

Risk identification

Information Structuring

Responsibilities - areas

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of responsibility

Calculation of

uncertainty

Risk significance

Observation

Control

Carter et al. (2001),

“Introducing Riskman

Methodology”

Basic (analysis in

qualitative terms)

Intermediate (draft

quantification)

Details (complete

quantification)

Fairley (1994), “Risk

management Software projects”

Recognition

Analysis

Risk reduce

Monitoring

Planning of alternatives

Crisis management

Exit from the crisis

Boehm (1991), “Software Risk

Management”

Risk analysis

(identification,

analysis, prioritization)

Risk management (planning

risk management actions,

management decisions,

monitoring and corrective

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actions)

Software Engineering Institute

(1992), “The SEI Approach for

Technical Risks”

Recognition

Analysis

Management

Control

Monitoring

IRGC (2005), “White paper on

Risk Governance”

Prequalification

Evaluation

Tolerance Towards Risk

Assessment

Risk Management

Communication

Institute of Civil Engineers

and the Faculty and Institute

of Actuaries (1998), “Risk

Analysis and Management for

Projects (RAMP)”

Start

Review

Risk management

Closing

It is observed that, despite the differentiation of

the stages and their names, there are many commonalities

regarding the steps involved. The general methodology of

the project risk management, used by all integrated

methods applied internationally, consists of four basic

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stages: the identification, the analysis, the response

and finally the monitoring of each project risk.

Below are some basic concepts in reference to risk

management (Beasley et al., 2010;

http://www.mindtools.com/pages/article/newLDR_80.htm,

retrieved 2/6/2015):

A. Critical Success Factors - CSF

Critical Success Factors are the elements and

the key sectors necessary to ensure the success of

business or an organization.

B. Key Performance Indicators - KPI

Key performance indicators reflect the critical

success factors within an organization and they are

customized according to the business activities of

the organization and the needs of the members

concerned.

C. Key Risk Indicators - KRI

Key Risk Indicators provide information to

stakeholders about the external environment, the

stability and profitability of the business, and the

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administration creating a foundation as well, upon

which to base their decisions.

On the other hand, the literature on risk management

stages is extensive. The differences shown are often

substantial and sometimes are indistinguishable (see for

example: Chapman & Ward, 1997; Kerzner, 2003). In each

case, a standard, proposed risk management process is

likely to occur as follows, with the combination of

processes that appear in the literature. This process is

general and can be applied to any type of project

(Kirytopoulos & Diamandas, 2005).

The proposed standard risk management process is

divided into four stages, which are related to the

identification, analysis, fighting and finally the

monitoring of project risk. In some of the methods shown

in the literature, one or more can be found by a

different name, but the steps are substantially similar

(Leopoulos et al., 2002). For example, it is often

referred to as risk identification. Risk identification

and analysis stage several times are analyzed via

qualitative and quantitative analysis (Leopoulos &

Kirytopoulos, 2004). The risk management process is

repeated throughout the duration of the project, based on

specific rules.

The identification of risk is the first and one of

the most critical stages of risk management (Chapman,

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1998). It takes place in order to identify all the risks

that are likely to affect the objectives of a project

and, at the same time, in their recording. The recording

of each risk profile is separate for each one, usually

made in special forms called ‘risk sheets’ (Tatsiopoulos

et al., 2001).

The risk analysis is used both to determine the size

of the risk consistency related to the project goals and

the risk probability, and to rank risks based on their

total gravity weight. Gravity weight (report) of a risk

is obtained by multiplying the likelihood times and the

expected consequences in case the risk becomes true. The

process of risk analysis can be performed either

qualitatively or quantitatively (Leopoulos et al., 2003).

The qualitative analysis is the most common because

it requires a smaller number of data to be applied and it

does not need specialized software tools while it is

generally less time-consuming compared to the

quantitative analysis. At this point, it is noted that

the risk is characterized by a dual nature. Firstly, it

may be seen as a threat, if its impact to the project

goals is negative. Secondly, it may be seen as an

opportunity, if its impact to the project goals is

positive (Hillson, 2004). Then, emergency actions are

determined by specific strategies; such as keeping,

transportation, relief and acceptance. Any decisions are

posted on the page of each risk in the ‘risk sheet’.

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In response stage that follows, in order to be

phased out, the necessary actions are set and those who

will be responsible for carrying them, as well. The

selected actions should be proportional to the risk

exposure, and should resolve the problem in an

economically acceptable way. In order to phase out one

risk, it may be determined one or more actions. Then, the

risk management group (that is often the same team as the

project management team) has identified the risks, it

classifies them, based on the analysis made and response

actions prescribed, and it passes through the monitoring

stage. At this following stage, the implementations of

actions, as well as their effectiveness, are monitored.

Corrective actions are defined and the risk features

(probability and consequence) are reassessed. The entire

process is repeated at regular intervals in order to

identify new risks and to update existing risk sheets of

the previous risks. These risk management project stages

is used by all integrated methods applied internationally

(PMI, 2004; Norris et al., 2000).

2.4. MARKETING: REASONS FOR ACCEPTING CONTRACT

2.4.1. Marketing

Definition of Concepts

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The concept of sponsorship represents a form of

economic transaction that results in benefits for both

Parties. On one hand the administered, through financial

funding achieves its objectives more easily, the sponsor,

through management of financial resources, is promoted

(Cornwell & Maignan, 1998; Meenaghan, 1983; Meenaghan,

1991; Walliser, 2003). Depending on the object of the

sponsorship contract the following types are

distinguished (Rifon et al., 2004): sport, cultural,

social, environmental, broadcasting, etc.

According to the above definitions, sponsorship

generally includes two main activities:

1. the item of exchange, between the sponsor and the

administered, from which, he receives financial

grant, while the first acquires rights by

associating with the administered activity and

2. the sponsor irrelevant promoting marketing

activities through the bond developed with

sponsorship

That means that skill, professionalism, practical

strategy, clear objectives determination, and assess of

the effectiveness of a sponsorship investment are

required, mainly on the company’s interest that assume

the role of the sponsor. (Meenaghan, 1996; Mullin et al.,

2000). The process of management in the area of

sponsorship includes, determining objectives, their

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selection, organizing and carrying out the sponsorship

and ultimately control the outcome (Walliser, 2003).

Monitoring and Measurement of the Sponsorship

Results

Based on the objectives, set by the authority, the

sponsors (companies) and the administered (eg

manufacturers of goods) expect to benefit from their

cooperation. Proper valuation will determine the basis

for future relations between the two parties and they

should debate in order to achieve conclusions. In recent

years there have been many studies that measure the

impact of sponsorship programs. Behind all these research

studies are essentially some companies / sponsors, trying

to assess and ensure the effectiveness of their

sponsorship activities (Mullin et al., 2000).

First of all, sponsorship typically operates in

conjunction with other elements of the communication

mixture, thus it is very difficult to isolate its single

effect. Second, the measurement of results is

particularly difficult, because it is subject to the

influence of the uncertainties of the market environment.

For example changes in the level of sales could be due to

changes in the purchasing environment (eg an increase or

decrease in the intensity of competitive efforts, paid by

companies) (Meenaghan, 1991; Crompton, 2004).

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Scholars have not yet adopted any specific

theoretical framework to guide research, which involves

the reaction of consumers in sponsorships (Cormwell &

Maignan, 1998; Stotlar, 2004; Walliser, 2003). Instead,

most often using various measurement techniques and

methods for evaluating the effectiveness of sponsorship

(Cormwell & Maignan, 1998; Tropodi et al., 2003). The

methods used by today's companies in order to evaluate

the results of their investment in sports sponsorship,

are threefold (Cornwell & Maignan, 1998; Meenaghan, 1991;

Tropodi et al., 2003; Walliser, 2003):

a. results in sales

b. level of coverage and promotion of the media and

c. results in communication

Determination of Results in the field of Sales

Many companies are trying to judge the success of

their investment in a sponsorship activity by enhancing

performance, which involves sales (Tropodi et al., 2003).

However the rise in product sales of a company associated

with a property, cannot be attributed directly to

sponsorship (Copeland, Frisby & McCarville, 1996). This

is because of the presence of other elements of the

communication mix, which operate in conjunction with the

sponsorship in an effort by companies to promote the

sales of their products. So, as happens with other means

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of promotion include the mix of communication, it is

difficult to assess separately the effect of sponsorship

in returns on sales of a company, and therefore this

method is not considered particularly reliable (Tropodi

et al., 2003; Meenaghan, 1991).

Methods to determine covering and visibility of the

Media

The most basic technique, which is included in this

category, is to monitor the quantity and quality of

coverage by the media for a project (Tropodi et al.,

2003). Specifically, includes the comparing of the

coverage value of a project administered by the media,

with the cost of the comparable space and advertising

time.

It includes the following parameters (Crompton,

2004):

a. The duration of the TV coverage, including verbal

and visual references

b. the duration of radio reporting and

c. the extent of press coverage, measured by the length

of the single column

The retrospective study of Cronwell & Maignan,

(1998), says that previous research, argues that this

32

technique provides a reliable estimation of visibility,

acquiring sponsorship, both through the network and via

radio and television.

The application of advertising evaluation methods in

the sponsorship area is inappropriate because these two

instruments of communication mix are designed to achieve

different objectives (Cronwell & Maignan, 1998; Crompton,

2004). Sponsorship is not just advertising with an

additional value, but a qualitatively different

communications vehicle (Cornwell & Maignan, 1998). So,

researchers have been very critical on the monitoring of

the quantity and quality coverage by the media of an

event (Ensor, 1987; Pham, 1991)

Determination of Contact Results

Two of the main objectives of a communication

sponsorship activity is to improve the knowledge of the

company / product and the image of the sponsor (Cornwell

& Maignan, 1998; Walliser, 2003). Sponsor companies, are

arriving to the achievement of specific objectives by

following a certain communication process through which

they convey the message you wish to the consumers, who

are the target group. Recent research has shown that it

is possible for a sponsor company to penetrate a certain

target market and to affect their buying behavior and

ultimately increase sales of its products and services

33

(Tolka et al., 2004). This process begins with the public

being exposed to a stimulus, which creates sponsorship

activity (Pham, 1991).

The sponsor is trying to transfer encrypted messages

via suitable transmission formats such as (Crompton,

2004; Pham, 1991):

a. written captions that include the name, brand of

the company, or logo of the sponsor and

b. oral information.

The coded message is conveyed by the forms, means of

television and radio broadcasting and personal contacts.

This message is designed in such a way as to strengthen

the position in the marketplace of the brand of the

company, to differentiate it from the other companies and

brands and to create an indirect emotional relationship

of the sponsor with the public.

The transmission of the message is made, when

ingested, and then interpreted by the persons who are the

target group (Pham, 1991; Crompton, 2004). It should be

emphasized that the objectives of a sponsor / company are

related more to the creation of an appropriate climate

around the consumer in order for him to arrive at the

decision to purchase a product, than in the rapid

increase in sales.

Assuming that sales cannot be measured, then the

most reliable measurements, concerning the assessment of

the economic rewards of a sponsorship activity should be

34

performed at the point in this process, in which only one

step before purchasing action is required. Persons who

are the target market; before reaching the market of the

company sponsoring the product go through the following

stages (Crompton, 1996):

a. knowledge,

b. interest

c. desire and

d. purchase decision

These stages are the known process' product adoption

"which is part of the wider process of communication of

the sponsor with the public. Sponsorship of a project

will eventually have a positive effect on sales, when

managed to lead the people by strengthening the knowledge

and the image of the sponsor's intention and ultimately

in the purchasing decision (Crompton, 1996 & 2004).

In order for companies to assess the effectiveness

of sponsorship in terms of achieving the communication

goals, they measures (Crompton, 2004; Cornwell & Maignan,

1998; Meenaghan, 1991; Tropodi et al., 2003; Walliser,

2003):

a. knowledge,

b. image and

c. intention to buy, from the consumers

This approach, which was designed to assess the

cognitive effects of sponsorship, has the advantage of

35

taking account of accurate perceptions of consumers

(Quester & Farrely, 1998). It also attempts to uncover

the cognitive impact of sponsorship on consumers, not

simply to measure the rise in popularity of the sponsor

that occurs due to the coverage by the media.

2.4.2. Brand image

Improving the image or a positive change of the

public attitude to a product or a company is a stage,

which is closest to the increasement in sales. Despite

the interest of the companies for transferring the image,

only a small number of studies have focused solely on the

results of the image of the sponsorship (eg Walliser,

2003).

Most often the image transfer is examined in

conjunction with the knowledge of the public of the

sponsor and its products and market goals. Also, as in

the case of knowledge, the results of the image appear to

be only temporarily, and related to the integration of

sponsorship in the communication mix (Stipp & Schiavone,

1996).

Overall, it appears that the transfer of the image

is influenced positively by the number of identical

perceptions of the sponsor and the sponsored activity,

the attitude of the consumer towards the sponsor

relationship and activity, and the "active participation"

36

of the consumer in process of sponsorship (Walliser,

2003).

It should be emphasized that the value attributed to

building the image differs in dependence with the setting

that develops a sponsorship activity. Moreover, the image

transfer occurs only for donors with high ratings during

the project (Stipp & Schiavone, 1996; Walliser, 2003).

Finally, it is mentioned that McDaniel (1999)

evaluated the impact of the mark (brand) sponsorship to

consumer reactions. Lardinoit & Debraix (2001) focus on

the positive role of the permanent active participation

in memory, while Johar & Pham (1999) explore the

individual characteristics that are associated with the

withdrawal of the sponsor.

2.4.3. Important clients

There is a tendency for those involved in

investigations, for their attitudes towards sponsorship,

saying that they are more likely to buy the products of

the sponsor from that of competitors. Also, it seems that

the frequency of the presence of consumers in specific

sponsored events, and their training is important for

predicting the market intent. Not so for sex; this seems

not to affect the purchase intent (Daneshvary & Schwer,

2000; Walliser, 2003).

37

However, when it comes to actual behavior, it should

be noted that the use of sponsor - company's products are

not necessarily higher in relation to the use of products

of a competing company (Pope, 1998). Similarly, the

results relating to the purchase can easily be

overestimated because of "false consensus influences»

(«false consensus effects»). This means that there is a

possibility, people attending an event, to assume

incorrectly that other viewers assess positively the same

event and the sponsors (Bennett, 1999; Walliser, 2003).

On the other hand, the majority of studies measuring

the effects of sponsorship chose the concept of knowledge

as an independent variable. There are three general

approaches through which it is possible to evaluate the

impact of sponsorship on knowledge:

a. by measuring the degree to which the public

watches the sponsors,

b. by identification of factors influencing recall /

reference (sponsor by the public) and

c. by analysis of internal procedures related to

withdrawal, which takes place in the mind of the

viewer.

In particular, among the first studies examining the

effectiveness of sponsorship, some focused on the general

knowledge of the public for sponsors, while others in the

levels of public knowledge about the sponsors related to

38

specific events or activities (eg Easton & Mackie, 1998;

Walliser, 2003).

The methods to determine the effects on

communication have the advantage of taking into account

the accurate perceptions of consumers (Quester & Farrely,

1998). Also through the use of the opportunity given to

reveal the cognitive impact of sponsorship on important

clients / customers, and not simply to measure the rise

in popularity of the sponsor that occurs due to the

coverage of the media.

2.5. CONTRACTING IN EGYPT

As far as contracting is concerned, the main

contract types are the following below (Likosky, 2009, p.

1-2):

1) “modern concessions;

2) production-sharing agreements (PSAs);

3) joint ventures; and

4) service contracts, including risk service contracts, pure service

contracts and technical assistance contracts.”

According to Likosky, (2009, p. 1-2), “both the history of

traditional concessions and the enumerated present-day contract types are

common to oil and gas and also metal mineral extraction” (eg.

Barberis, 1999; Omorogbe, 1997; Smith et al., 2000).

39

2.5.1. Legal issues and contracting in Egypt

Egypt's economy has passed through many changes

between last decades. Relatively, Hendrix, (1991, p. 18)

stated that:

“In most cases, Egypt's imports are governmentally regulated and

often subject to customs duty. The procedures for importation are

numerous, and advance permission from the Egyptian authorities is

also often required.

Egypt's legal system is based on English common law, the French

Napoleonic codes and Islamic law. The currency, the Egyptian pound,

is tied to the U.S. dollar at the official rate of 0.70 pounds to the dollar.

This conversion rate is available only to the public sector, and the

government uses it to import essential foodstuffs, insecticides and

fertilizers. A "Ooating rate" is available to airlines, shipping companies,

and a few other entities. Most transactions, however, use the "free

market rate," which is applicable to imports by both the public and

private sectors.

As of January 1, 1989, both the United States and Egypt became

signatories to the United Nations Convention on Contracts for the

International Sale of Goods. This should greatly assist U.S. exporters in

their analysis of the many legal implications of doing business in

Egypt, as the U.N. Convention contains the terms exporters are already

accustomed to using for transactions in other parts of the world.”

(Hendrix, 1991, p. 18).

40

As far as the trade restrictions and regulations,

Hendrix, (1991, p. 18) stated that:

“In many ways, U.S. business executives should be comfortable dealing

with the Egyptian market. Since Egypt is a member of the General

Agreements on Tariffs and Trade (GATT), exporters experience few

problems in Egypt concerning anti-dumping duties, subsidies or

countervailing duties. Similarly, government intervention in

countertrade is non-existent.

Indeed, Egypt has adopted no specific legislation on the topic and

offers no incentives to encourage countertrade in the private sector.

With respect to preshipment inspections, no government regulation

requires an exporter to have its goods inspected, although the

Egyptian importer will likely request such a provision.

The government completely bans a list of over 200 goods from being

imported into Egypt. Generally, the list includes consumer, luxury and

other goods already produced in Egypt.

However, it is possible to obtain exceptions to this list for products

related to the production of certain goods. Goods financed with

bilateral or multilateral assistance, components imported by licensed

local manufacturers, assembly units and free zone imports all fit into

this latter category.

Interest payments require prior authorization from the exchange

control authorities. This applies to normal and penalty interest clauses

that may be found in exporters' sales contracts to Egyptian purchasers.

Only after authorization is obtained will government authorities permit

payments to be made abroad. The maximum rate of interest is also

subject to government approval.” (Hendrix, 1991, p. 18).

41

2.5.2. Labour costs in Egypt is low

There is an increasingly widespread practice in the

labor market of Egypt which proves the complete absence

of unions and other organizations for the protection of

the workforce rights. In the private section employers

require potential employees to sign undated resignation

letters as a condition for employment.

(http://www.globalsecurity.org/military/world/egypt/labo

r.htm, retrained 7/7/2015)

In current reality, the main need of the labor

market of Egypt is the substantial job creation. The

problem is demographic but not located on

overpopulation. It lies basically in the fact that the

larger part of the workforce consists of young people

who are just entering the labor market looking for a

dissent job. The second part of Egypt’s reality is that

jobs are not enough to meet demand, despite the

development efforts that had been made, and the fact

that there are serious absences regarding, education,

training and the skills that young people looking for a

job have in relation to the requirements of the labor

sector.

(http://www.globalsecurity.org/military/world/egypt/labo

r.htm, retrained 7/7/2015)

42

Data indicate that the workforce in Egypt is

growing steadily by about 2.8% annually. The group of

15-29 years was approximately 38% of the workforce in

2005; with the workforce consisting almost entirely of

men.

(http://www.globalsecurity.org/military/world/egypt/labo

r.htm, retrained 7/7/2015)

A research conducted by El-Laithy et al. (2003)

showed that the low income working class of Egypt lives

in large families, with low education levels, with their

main income coming from the black economy and from low-

paid activities. (El-Laithy et al., 2003)

The essential result of the study was that the most

important and decisive factor of poverty in Egypt is the

low level of education with only 28% of households to be

headed by an illiterate and only 8% of them being led by

a person with secondary education.(Hassan & Sassanpour,

2008; El Ehwany, 2004; Awad, 2003)

The direct effect of this reality was of course

that 20% of households headed by unemployed were poor,

ie shortly more than the 17% of households headed by a

salaried person. Most of the poor were among the self-

employed, mostly in the informal economy and 25% of

self-employed households in non-agricultural activities

were poor. (Hassan & Sassanpour, 2008; El Ehwany, 2004;

Awad, 2003)

43

2.5.3. Technology vs labour costs

For a labor market to be created there should be a

link between some factors. These factors are (Hall et

al., no date):

Population

Workforce

Technology and

Demand for goods and services.

The relationships generated between them are

interrelated. Ie the population defines the size of the

workforce; the workforce defines the exact quantity of

products and services that can be produced. Demand for

goods and services defines the business to be created and

technology sets the maximum incensement of products and

services and what processes will be used or not. (Hall et

al., no date)

Technology had a decisive influence in the way the

labor market exists, making the path easier for society,

both in the production of goods and in the area of

communications. Both the industrial revolution and the

mechanized production gave a huge increase in

productivity within the labor market and on the income of

the workforce. (Hall et al., no date)

Within the results that technology brought to the

labor market is the fact that today some industries seek

44

and recruit highly skilled and talented workers, although

there are still industries with simpler needs but their

rate is very small and as a result many unskilled workers

face placement problems.

According to Hall et al., (no date, pp.1-12):

“Globalization is fueled by technological advancement in information

and communication. A direct impact of globalization includes more

outsourcing and offshoring of work, especially in the form of

crowdsourcing for low-skilled employment needs and crowdcasting for

highly-skilled groups or individuals…

The Internet and its applications, including email, career websites,

instant messaging (IM), blogging, voice-over-IP (VOIP), search engines,

remote desktop connections, VPN, and others, have had a tremendous

impact in the way labor is sourced and structured…

As for structuring, VPNs (virtual private networks) allow employees to

connect to company servers from anywhere in the world, allowing

them to work at home, even if they permanently or temporarily reside

in another country. Aside from changing the labor models in various

industries, the Internet also created millions of jobs, from web analysts

to Internet businesses such as amazon.com. Last but not least, it

provides a valuable source of information, helping employees and

employers find the right match faster and at low costs.” (Hall et

al., no date, pp.1-12).

2.5.4. Political instability in Egypt

45

Egypt encounters serious problems of instability

since 2013 after the violent removal of President Mohamed

Morsi by military coup. From then and until today

President Abdel Fatah al-Sisi is fighting against

terrorists, the continuing instability and a severe

economic crisis. (CFR: Council on Foreign Relationships,

2015)

Sinai Peninsula lies at the heart of the problems.

Ansar Beit al-Maqdis, true to the self-declared Islamic

State, had been characterized as a terrorist organization

in November 2014 by the United States of America. Besides

them many independent Islamist militants who seek revenge

for the coup against the Muslim Brotherhood and former

president Morsi, are answering in violence. President

Sisi is trying to find solutions for these events hurting

Egypt’s hurt at the same time that the terrorism

increment in Egypt has sparked debates in the United

States about the chances of a civil war in the country.

(CFR, 2015)

The problems are getting bigger day by day. Some

days ago in retaliation for the brutal execution of 21

Egyptian Copts, the Egyptian air force bombed yesterday

camps, weapons depots and oil refineries controlled by

fighters of the Islamic State. The government in Cairo

announced that the air strikes against those targets in

Derna, Ben Jawad and Sirte were only against Jihad.

During these bombings at least 50 jihadists died,

46

belonging to bastions of forces loyal to the self-

proclaimed "government of Tripolis", which the government

official accuses as jihadists.

At the other side, the Islamic State gave publicity

to a video allegedly showing the beheading of 21 Egyptian

Copts, who were kidnapped in Libya. The Egyptian

Christian hostages were dressed in orange uniforms, and

were decapitated. After uploading the video, the

president of Egypt Abdel Fatah al-Sisi announced that he

urgently convenes the National Defense Council.

The presidents of France Francois Hollande and Egypt

Abdel Fatah al-Sisi sought the emergency session of the

Security Council of the UN and "new measures" against the

Islamic State. The fifteen member states of the Security

Council condemned "strongly" the mass execution,

stressing that demonstrates "once again the barbarity" of

the jihadists.

Washington has called the killings "shameful and

cowardly acts", while Pope Francis expressed deep regret,

noting that the 21 Egyptians were executed "simply

because they were Christians." For "Islamofascism" spoke

finally the French Prime Minister Manuel Vals.

Concerns that if the crisis response efforts in

Libya after Gaddafi era fail, then Libya could become a

"Mediterranean Somalia" were expressed by the special

envoy of the British government for the region. Jonathan

47

Powell warned that violence in Libya could be extended to

neighboring countries and in Europe.

Below we can see a timetable of the events that led

to the Political Instability in Egypt.

Table 1. Political Instability in Egypt: events’timetable

February 11,

2011

Egyptian President Hosni Mubarak stepped

down

Mubarak handed over power to the Supreme

Council of the Armed Forces (SCAF), headed

by the Minister of Defense Field Marshall

Hussein Tantawi.

SCAF stepped in to guide the country

through a transition to democracy, but

instead dismissed parliament and suspended

the constitution

March 19,

2011

SCAF with the help of mainly Islamist

constitutional experts, put a

“constitutional declaration” (temporary

constitution) to a referendum

Though the declaration would lift the

curfews and return security forces to

restore order and safety, it was opposed by

all secular forces.

Islamists roundly backed the Referendum,

which was approved by 77 percent of the

48

country

The referendum created a gap between

seculars and Islamists

September 10,

2011

A mob storms the Israeli embassy in Cairo,

forcing diplomats to flee.

October 9,

2011

Military police attacked peaceful Coptic

demonstrations, killing 25 people.

November 19,

2011

Clashes and major protests erupted in

Cairo’s central Tahrir Square to oppose the

early legislative elections

in November and December, legislative

elections took place

January 22,

2012

The results of the legislative elections

gave Islamists parties a majority in the

People’s Assembly

The Muslim Brotherhood’s Freedom and

Justice Party (FJP) won 47% of the seats,

followed by the more conservative Nour

Party with 25 percent of the seats, then

the liberal Wafd Party with 7% of the

seats. Islamists form a “constituent

assembly” to draft a new permanent

constitution.

April 12,

2012

Egypt’s Administrative Court dissolved the

100-member Islamist dominated “Constituent

Assembly”.

June 24, 2012 Mohamed Morsi of the Muslim Brotherhood won

49

the presidential election with a narrow

majorityJune 30, 2012 Mohamed Morsi sworn in as the first

civilian President of Egypt

A week later, Morsi issued a decree for the

return of the dissolved parliament.

July 9, 2012 The Supreme Constitutional Court ruled

reversed Morsi’s decreeAugust 12,

2012

President Morsi fired most of the top

military commanders, including Field

Marshal Tantawi.

Morsi issues a new constitutional

declaration granting him broad legislative

and constitutional powers never enjoyed by

any of Egypt’s presidentsOctober 11,

2012

Morsi attempts to remove Egypt’s general

prosecutor, provoking anger and triggering

mass protests. His second attempt is

successful in November.

November 28,

2012

President Morsi grants himself all

executive, legislative and some judicial

powers in order to speed up the process of

writing the constitution. Two weeks later,

the new constitution is approved by

referendum amid allegations of

irregularities by the opposition. Major

protests start nationwide

January 25, Second anniversary of the revolution

50

2013 intensifies the protests. More than 60

protestors killed near the prudential

palace. The street protests continue as the

economy continues to deteriorate. The

Egyptian Pound looses about 20 percent of

its value in the first two months of 2013.

March 1, 2003

- today

The political crisis affects tourism and

foreign investments, two of the main

sources of hard currency. Attempts at a

national dialogue and reconciliation

between the government and the secularist

opposition have failed, blocking any

prospect for stability and a better

economy. The secularist opposition insists

on constitutional reform and more

inclusiveness in government to solve the

political crisis. The continuation of the

political crisis puts Egypt at risk of

uprisings as the economy continues to

deteriorate

(Source: Foundation for Defense of Democracies, 2013)

51

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