International Journal of Project Management 22 (2004) 213–223

www.elsevier.com/locate/ijproman

Managing a public sector project: the case of the

Italian Treasury Ministry
Michela Arnaboldi*, Giovanni Azzone, Alberto Savoldelli
Dipartimento di Ingegneria Gestionale, Politecnico di Milano, Piazza Leonardo Da Vinci, 32, 20133 Milan, Italy

Received 15 November 2002; received in revised form 24 January 2003; accepted 5 June 2003

Abstract
Project management strategy in the public sector has attracted the interest of many scholars since the late 1980s, following the
growing pressure on governments to abandon bureaucratic organisations in favour of leaner structures. Though Italy is considered
a late developer in this movement, its scope, speed and consistency of reforms is considered remarkable [OECD, (2001), Reviews of
Regulatory Reform in Italy]. Within this context many projects have been undertaken trying to implement the ideas of New Public
Management (NPM) [Public Administration (1991) 69:3; Accounting, Organizations and Society (1995) 20:93]. This paper reports
on a reengineering project carried out at the Italian Ministry of Treasury which tested a methodology drawn from the literature of
process engineering. Multiple dimensions and actions proved to be crucial in managing the project: the paper discusses them and
their relative importance over the life of the reengineering project.
# 2003 Elsevier Ltd and IPMA. All rights reserved.
Keywords: Reengineering; Project management; New Public Management; Public sector

1. Introduction general concern has been shown for the difficulties of

Since the beginning of the 1980s many countries have
been trying to change public organisations, responding
to the mounting pressure to reduce budgets and increase
the quality of services provided. This widespread move-
ment is often labelled as new public management
(NPM) [2,3] and many scholars (see for example [4–6])
attribute its origin to the British initiatives of Thatcher’s
reforming conservative government in the UK from
1979 on. The movement has been a driving force for
governments for downsizing and elimination of waste,
and it has led many public organisations to revise their
procedures and structures for complying with the prin-
ciples of economy, efficiency and effectiveness. The
application of business techniques is one of the more
significant elements which has led many public institu-
tions to undertake major, modernising projects.
This trend has attracted the attention of many scho-
lars who are interested in different issues. First of all, a
* Corresponding author. Tel.: +39-02-23992796; fax +39-02-
23992720.
E-mail address: michela.arnaboldi@polimi.it (M. Arnaboldi).
0263-7863/$30.00 # 2003 Elsevier Ltd and IPMA. All rights reserved.
doi:10.1016/S0263-7863(03)00067-X
managing a project in the public sector: are business
methodologies appropriate to these organisations?
Which are the critical success factors? Second, a recent
trend in public sector research has focused the attention
on the ‘‘reality’’ of this change; some authors [7,8] sug-
gest that projects and more generally the use of business
techniques is a way for adapting to the external envir-
onment in an isomorphic way [9]. This means that
organisations use projects as a façade for legitimation
and for picturing themselves as modern to the external
environment. According to this perspective after the
completion of the project, public entities continue to use
old practices and present the new one in the façade
emerging, which is their formal structure. Third, after 2
decades since the first attempts, an emergent field of
research poses the question whether the rise of different
projects, at different levels, at different times is an
answer to the reforms or are they elements of a
failure to achieve the comprehensive change claimed by
governments.
The present paper addresses the overall problem of
implementing a project within the public sector, pre-
senting the analysis of a reengineering carried out in the
214 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
Italian state administration as an action research inter-
vention.
The idea of the research is to first draw on the existing
literature to identify the main issues of managing a
project, and in particular a reengineering intervention,
in the public sector. The theoretical framework used
refers to three streams of research: (1) NPM, business
process reengineering (BPR) and project management.
The NPM literature helped in pointing out and analys-
ing the most relevant issues implied in the change of
public sector institutions; (2) business process reengi-
neering offers both theoretical and empirical studies,
which have been the basis for developing a methodology
suitable for state administrations; and finally (3) the project
management literature which integrated the definition
of the ‘‘action’’ approach.
The combined approach to the analysis highlighted
the major problems and the main instruments in under-
taking such a project. This led to the definition of the
methodology which was subsequently applied in a pub-
lic organisation, the Ministry of Treasury. This organi-
sation represents the ideal field for such an application.
Its critical role as a change agent, the dynamic legisl-
ative context in which it is embedded, and the increasing
pressures from different stakeholders, reflect the typical
situations discussed by NPM researchers which all make
the Ministry of Treasury a relevant example for testing
the methodology. Furthermore, the intervention
addressed a process, the management of European
Structural Funds, which is under scrutiny itself and
contributes to the creation of the complex situation in
which many public institutions operates.
The paper starts with an introduction to the Italian
situation to provide an understanding of the context in
which the research was conducted. The second part is
an outline of business process reengineering that has
served as a background in the definition of the method-
ology and for preparing the empirical application. The
central part of the article is devoted to the findings.
Finally the last section sets out the conclusions of this
study.
2. The Italian context
Italian central government started its reforming pro-
cess at the beginning of the 90s, following the example
of many OECD countries. Though Italy is considered a
follower of the ‘higher reformers’, such as the UK, New
Zealand and US [4], its actions are remarkable both for
its speed and its scope. The initial struggles of central
government were directed towards state- citizen rela-
tionships. Following the NPM principles and policies of
other countries, an administrative procedure law of
1990 (Law 241/90) was approved for simplifying proce-
dures. It focussed on improving procedures, and
adopting mechanisms which reduced the administra-
tion’s capacity to delay and stop action. A second step
was made in 1993 (Law 537/93), where attention was
directed to reducing the duplication of functions among
ministries and governmental bodies and improving
customer relationships.
In 1997, the government launched a third phase under
the so-called ‘Bassanini laws’, which are considered a
real breakthrough within Italian management reform
[1,10,11]. These laws aim at re-balancing powers
between the centre and subnational governments, and
re-launching the administrative simplification policy
based on processes of continuing accountability and an
aggressive reorganisation of government to improve
coherency and efficiency. Decentralisation accelerated,
the legal system was reorganised, and horizontal central
units were created to promote and monitor reform.
This context has been a fertile field for the implemen-
tation of NPM techniques; particular attention has been
paid by government to business process reengineering
(BPR), as a change technology. An example of this,
which stems from technology, comes from the Author-
ity for the Informatization in the Italian Public
Administration (AIPA):
The AIPA interest in process reengineering issues
rises from the observation of the widespread diffi-
culty within the public administration in defining,
starting and realizing information technology pro-
jects able to obtain evident and tangible results in
terms of improvements in the services offered to
citizens and in expensiveness in the operations [12].
This indirect pressure and the promotion of ‘Rein-
venting Government’ experiences [13] have driven insti-
tutions to make several attempts to revise the processes.
The next paragraph gives an overview of BPR and its
evolution, which is the basis for the empirical applica-
tion at the Ministry of Treasury.
2.1. Business process reengineering
The original idea of BPR came from Hammer [14],
who defined reengineering as the ‘radical redesign of
business process to achieve dramatic improvements in
critical contemporary measures of performance perfor-
mances’. Since this first concept BPR has evolved and a
number of approaches have been developed during the
years. Though it is not possible to identify a completely
uniform methodology, reengineering can be divided into
six phases, which contain the essential elements for defini-
tion, design, implementation and consolidation. The pha-
ses are: (1) the reengineering strategic definition, (2) the ‘‘as
is’’ process analysis, (3) the ‘‘to be’’ process definition, (4)
improvement interventions design, (5) implementation,
and (6) monitoring and continuous improvement.
 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
The goal of BPR is redesigning cross-functional pro-
cesses that determine the competitive success of an
organisation. It appears evident that the first step is
necessarily the definition of the intervention at a strate-
gic level through the following steps: strategic objectives
identification, strategic context definition, top-down
mapping of organisational processes, and definition of
reengineering breadth.
Once the process to be revised has been defined, the
objective of the second phase is the representation of
the process workflow. The third phase, the ‘‘to be’’ process
definition, is theoretically examined separately from the
‘‘as is’’ process analysis. However, in the practical
development of the interventions, these two phases
become inseparable: often ideas and hints for the rede-
sign emerge when the project team makes its survey of
the existing process. The last step of this phase is the
choice of which alternative to implement. Contrary to
the other steps of this phase, the alternative choice is not
a task performed by the project team: the final decision
needs significant project commitment from the
organisation itself.
Once the project team has identified an alternative
process to implement, the succeeding steps are set in
motion to specify the interventions necessary to make
the new reengineered process operational. According to
this approach the implementation means carrying out
the plans previously specified. The last phase, monitor-
ing and continuous improvement, has proved to be a
fundamental prerequisite for controlling and improving
final performances in the future: it facilitates the antici-
pation of possible difficulties of the organisation in
adapting to the new ‘‘to be’’ process, and to tailor the
new process to subsequent strategic and context changes.
3. Results
The conceptualisation of the reengineering project at
the Ministry of Treasury began in 1997, when the
enthusiasm for this technique was high. A negotiation
process was carried out before starting the project to
achieve the necessary commitment among managers
and elected members. The particular process addressed
was the European Structural Funds (ESF). This is
under scrutiny itself from the European Commission.
The next section provides an analysis of ESF, its recent
changes and it describes the role of the Ministry of
Treasury within this process.
3.1. European structural funds and the ministry of treasury
The European Structural Funds (ESF) are the main
mechanism for the provision of regional aid to the
member states of the European Union: they work
towards the goal of achieving economic and social
215
cohesion. Resources are targeted at actions which help
bridge the gaps between the more and the less developed
regions and which promote equal employment oppor-
tunities between different social groups, according to
certain priority objectives.
The economic and social importance of the ESF has
attracted the attention of many scholars, who have
addressed both general problems and country specific
issues. McAleavey and Mitchell [15] describe the ESF as
a ‘‘blunt policy instrument’’ and analyse the problems
related to programming and implementation, in which
better-organised and advantaged groups within regions
seem to be favoured. The critical nature of this issue
and in particular of the programming capability is
reaffirmed by a number of studies in different settings
[16–19] including different countries, that might be
classified as early adopters or late adopters of NPM
[1,3].
This growing attention is explained by the increasing
financial importance of ESF. The ESF are now the sec-
ond largest item of expenditure in the EU’s budget. The
major impetus for this change goes back to 1988, when
five regulations introduced a new framework through
which the structural funds delivered financial aid aimed
at reducing economic disparities among the Union’s
regions [20–22]. After that two major reforms followed
in 1993 and 1999 [23]. They resulted in the entry of six
new states and more rigid management and monitoring
procedures.
The definition of stricter management rules, the
reduction of the total availability (from the proposed
218.4 billion Euros of 1998 to 195 billion Euros) and the
introduction of newer, less wealthy countries into con-
tention for ESF funds emphasised the need to use
resources better than before. This change put an addi-
tional pressure on the member states which are, more
than before, competing for the remaining resources.
This situation created a new regime of constraints in
which the proposal to revise the ESF management pro-
cess appeared as an important opportunity for Italian
Ministry managers, which is the Italian core organiza-
tion within the ESF management process. The Italian
Ministry of Treasury (MoT) is a political body, which
determines financial and economic guidelines and pro-
grams. It is structured in several staff offices and four
operative departments: Treasury Department, General
Accounts Department, Development Policies Depart-
ment, General Administration, Personnel and Periphery
Services Department. Each Department has more
Directorates (or Inspectorates or Services), within these
Offices.
The main competencies attributed to Treasury
Departments are: supporting economic and financial
decisions of the Government, managing public debt and
sharing public resources, dealing with international
economic, financial affairs and currency affairs and
216 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
supervising the banking system and financial markets
(together with Italian Central Bank).
Concerning the ESF the MoT has the responsibility
for budgeting and controlling European balances,
including the execution of payments, the monitoring of
financial flows and the execution of EC controls. The
role of MoT is therefore crucial in the overall process of
managing ESF both in funds planning and in grants
payment. Often the bureaucracy of its activities has
caused delays in action, preventing the possibility of
obtaining funds and reimbursement.
The financial importance of ESF, the clear urgency to
improve the efficiency of the whole process and the
legitimation of these needs in the major principles of
Italian reforms accelerated the negotiation process
which ended in 1998 with the official start-up of the
project.
3.2. Dimensions and actions
The project was carried out over a three year period in
close collaboration with the Ministry staff. Three levels
of groups, lead by the project manager, supported the
reengineering: the steering committee, the project team
and the project groups. The first was devoted to defining
the strategic purpose of the intervention and maintain-
ing the commitment on the project and was devised by
the project manager and the director of all the Ministry
divisions involved. The project team consisted of aca-
demic researchers.
The implementation followed the six phases described
in the BPR section: the strategic definition, which led to
the selecting process to be revised, the ESF payment
process mapping, the definition of the ‘‘to be’’ process
and the detailed interventions and finally the setting of a
monitoring and control system. Fig. 1 shows the phases
of the project, people directly involved.
This empirical application at the Ministry of Treasury
(MoT) offers the possibility of identifying the variables
and the factors which affect project and project man-
agement success in public institutions.
The empirical study at the MoT stressed in particular
the importance of seven dimensions (D) of the public
sector, that can be faced with seven actions (A). Table 1
reports a summary of these characteristics and actions.
This paragraph discusses these dimensions following the
sequence of reengineering phases. However as sug-
gested, where characteristics and actions related to a
particular phase can influence all the following ones.
The reengineering process has been depicted in a
number of discrete stages. The first is the strategic
definition in which the project team identifies the pro-
cesses to be revised. Since the beginning it was clear
that the political nature of commitment (D1), as
reported also by many authors [24–26], is a first
important difference.
The need to select the proper process to review, the
difficulties of gaining and guaranteeing leadership on
the project, and the necessity of securing and focusing
human resource efforts required a high commitment
from the organisation. This factor is recognised as cru-
cial in the project management literature [27,28] and
more specifically amongst reengineering supporters
and detractors [30,31]. Top management commitment
helps anticipating problems in driving the project to its
completion. The definition of a steering committee was
considered an appropriate instrument for directing
internal attention to the project and formalising nego-
tiation and interactions among involved parties.
However, in public sector institutions, top manage-
ment support is not enough. Politicians have an influ-
ence on organisational life and their exclusion has often
driven the project to failure [17]. The consequent action
is defining a steering committee composed by three
spheres: public managers, politicians and project team
leaders (A1). The appropriate definition of the steering
committee and its involvement in the project has an
influence on all the phases: the active participation of
the steering committee put pressure on the human
resources involved, helping to achieve the completion of
the project and the incorporation of new routines.
It is also important to carefully evaluate the coherence
between the influence of the steering committee and the
scope of the project: the wider the scope of reengineer-
ing, the higher the commitment needed. At the MoT the
steering committee was defined from the beginning, but
before starting the implementation some actors, not
previously involved, interfered with the project imple-
mentation: the project manager needed almost three
months to involve them and restart the implementation.
The creation of such a steering committee should not
be seen essentially as an additional problem but also as
an opportunity. The involvement of political parties
guarantees the possibility of promoting and starting a
policy change, which could not be achieved without
political support. Obviously one consequence is the time
spent on reaching decisions is longer, especially because
the actors involved often have contrasting interests.
Another important dimension of the public sector is
that objectives are not linked with profit (D2). It is evi-
dent that this factor influences reengineering from the
strategic definition at the outset. Also private organis-
ations pursue different objectives, nevertheless they are
shaped by the final goal of creating economic value:
instead in public institutions it is often difficult to find a
unitary vision. The lack of convergence on explicit,
measurable goals allows different interpretations and
creates problems in negotiating with contrasting actors.
This is further complicated by the difficulties in marking out
the process users (D3). Who are the users of a public insti-
tution’s process? As Thompson and Jones [32] suggest a
user in the public sector is someone who immediately
 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
Fig. 1. Project phases.
presents themselves for the service, those who may be
waiting for the service, those who may need the service
even though they are not actively seeking it, future gen-
erations of service recipients, relatives and friends of the
immediate recipients, state and local governments or
entities that assist in service provision, legislators, citi-
zens who oversee the agency’s performance, and citizen
as taxpayers.
These two characteristics were matched during the
strategic definition at the MoT generating a possible
solution. Each steering committee member was asked to
make goals clear and link them to possible advantages
for different users, defining a formal relation between
them. This user/goal map (A2) was then discussed in
several meetings and finally the agreement on the scope
of the reengineering was achieved.
The formal instrument enhanced and accelerated the
negotiation process, but also allowed a narrowing
the breadth of reengineering project, which is a prerequisite
for project success [33]. Realistic and definite goals, and
217
client satisfaction played a fundamental role in all the
following phases, and the formalisation of procedure
can be seen as an insurance against future opposition.
The definition of the map was particularly useful in
defining the scope of the project at MoT. The analysis
of ESF management highlighted two critical processes:
programming and payment. The discussions with the
steering committee and the definition of the goal/user
map stressed the difficulties in revising the first one. The
negotiation drove the team to narrow the scope of the
project and focus the reengineering on the payment
process.
This situation mirrors, partially, the complexity that
characterises public institutions. They are not the result
of rational planning, they usually emerge from a weak
balance of political relations where any change in one
part of the organisation is likely to have an effect on the
other [25].
The political origin of public organisations is further
reflected in their usually decoupled structure (D4); this
 218
Table 1
Dimensions and actions

Dimension Action Implications on reengineering phases

M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223

Strategic Definition ‘As Is’ process analysis ‘To Be’ process definition Intervention Design Implementation Monitoring

D1 Political Commitment A1 Steering Committee Involvement of political Major helpfulness of Negotiation on new Motivation Motivation Motivation
Enlargement actors; Goal negotiation internal staff process possibility and supervision and and
supervision supervision
D2 Not profit objectives A2 Definition of a Map Formalising negotiation Facilitating in defining Possibility to control Facilitating in
of goals and users on goals process performance alignment between defining control
indicators strategic goals and system
‘To be’ process
performances
D3 Multiple and Formalising user Possibility to verify
various users requirements user satisfaction
D4 Decoupled structure A3 Definition of Formal Involvement of all Identification of
and Informal structure stakeholders informal practices
D5 Legislative A4 Identification of Analysis of macro Analysis of
constraints legislative constraints legislative procedural laws
constraints
A5 Legislative plan Possible Project revision Definition of timescale
D6 Lack of expertise A6 Training Training on Negotiation Training on techniques Training on new process Training on
tool and use of results (here BPR) tools and functioning MCSs
(e.g.: IT)
D7 Scarce management A7 Parallel design of Definition of goals and Definition of
control systems MCSs architecture performance indicators/
responsibility
 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
means that institutions have a formal structure that
satisfies the external environment and a different inter-
nal routine that constitutes the real management prac-
tice. This characteristic has a strong influence on
reengineering. Decoupled organisations generally act
differently from what formal tasks suggest; this high-
lights the need for reengineering teams to analyse a dual
structure identifying the real and the formal routine (A3).
At the MoT this action was first performed during the
strategic definition. With the help of internal members
the project team drew the map of formal and informal
actors related to ESF payment process. Gathering this
information facilitated the recognition of possible
‘organisational’ constraints and enabled tailoring a
strategy for involving these ‘hidden’ stakeholders.
The double analysis of the decoupled process was
essential also during the ‘as is’ process analysis. Origin-
ally this second phase was proposed as marginal in the
reengineering process [34]. The essence of reengineering
was a problem solving, creative and iterative process,
starting from a so-called ‘‘blank sheet of paper’’. To
identify the explicit and the hidden needs of customers,
and define organisational potentialities, reengineering
(according to this radical approach) had to start from
an empty field. In such interventions the detailed analy-
sis of the existing process becomes superfluous, nothing
of what the ‘‘as is’’ process included is assumed as con-
straints for the redesign. For earlier BPR proponents
bottom-up analysis was conversely seen as counter-
productive, because it could determine a conservative
influence on the creative process, bringing little differ-
ence to the initial situation. Analysing the literature
(regarding both the most recent methodology and
implementation cases) a mitigation of this radical
approach emerges, together with a greater attention to
mapping existing processes [12,30,31,35–42].
The project at the MoT followed this recent
approach, identifying a detailed map of the activities,
responsibilities, and information technology.
The use of project management instruments was par-
ticularly useful. Two different teams were established to
carry out this task. The first group (composed of three
members) was devolved to mapping the management
issues and the second group (composed of two IT engi-
neers) was devoted to investigating information and
communication. The initial stage of the mapping
required the involvement of both teams in every inter-
view; then the two teams focused on different group of
actor.
Another important element of project management
was the definition of frequent and regular meetings for
continuously revising the map of the process. In this
way the coherence between the teams was guaranteed,
and at the same time a triangulation of data was
achieved. The geographical concentration of all the
internal people involved in one building facilitated
219
the organisations of meeting and the circulation of
information. This also activated a process of informal
conversation on the project issues which was particularly
useful for the project team in capturing problems and
opportunities without the barrier of formal interviews.
A further struggle was made in this phase in high-
lighting the overlapping of formal and informal rela-
tions and routines. This is a peculiarity of public
organisations that needed a careful approach from the
teams; this increased the time for carrying out the ‘‘as
is’’ process analysis.
A further important difference of projects carried out
in public sector is the presence of legislative constraints
(D5). Laws and procedures are central elements of pub-
lic organisations, which regulate routines and changes,
and consequently affect reengineering interventions.
During the intervention at the MoT the project team
decided to tackle this problem formally, making a par-
allel analysis of legislative issues (A4). Firstly the prob-
lem was addressed during the reengineering strategic
definition. Some interventions for example were exclu-
ded because they implied a significant change in legisl-
ation: this was considered by the steering committee to
be outside of the project. Then the legislative analysis
proceeded during the ‘as is’ process mapping where the
project team identified necessary changes in regulation.
The third phase carried out at the MoT is the defini-
tion of the ‘‘to be’’ process design. As suggested pre-
viously this phase was almost concurrent with the
process mapping and performed by the project team.
The interaction with the internal structure and specifi-
cally the involvement of the steering committee was
essential in choosing the alternative to implement. The
complex environment of a public organisation required
a long negotiation to convince people of the appro-
priateness of the suggested interventions and the use of
simulation software was particularly helpful because it
showed cost and time savings. The need to support
alternatives with software simulation required the
detailed definition of each intervention, which implied a
longer time for this phase but increased the desire to
proceed with the project.
It is finally important to say that the alternatives
involved some procedural and legislative changes. This
led to the definition of a legislative implementation plan
(A5) with a timetable agreed by the steering committee.
This step is a peculiarity of public sector organisations
and it can be critical for the success of the project. The
duration for implementing legislative change is not
always foreseeable and this could delay the implemen-
tation of new procedures.
Before starting the implementation the project man-
agers in accordance with the steering committee defined
four work groups within the MoT, supported by four
external team leaders. Each group was devoted to fol-
low a specific intervention and report the results on a
220 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
regular basis. The project management was supported
defining a precise path with a number of milestones and
frequent reviews in order to support the both the exter-
nal and internal implementers.
The creation of these mixed groups was particularly
helpful in facing another public sector issue that is the
general lack of expertise (D6). This is particularly true in
Italy where managers traditionally have a legal rather
than management background. Training (A6) is sug-
gested as an appropriate tool to address this issue in the
project management literature [43]. The experience at
the MoT suggests that training should be provided on:
(1) the background of techniques and tools used during
the project, (2) the use of information systems (if
defined), (3) the operationalisation of the new process.
In the last phase of the project—monitoring and con-
tinuous improvement—another difference highlighted is
the general absence or scarcity of management control
systems (D7). Nevertheless the consolidation of the
process and its improvement needs a system which is
able to report on performances. This implies often
designing a control system ‘ex novo’’ (A7) together with
the redefinition of the process and the identification of a
responsible for managing and reporting its results. This
is the case of the MoT, where the payment process has
never been evaluated through specific indicators. An
incremental approach was followed, designing an initial
control system with simple indicators (time and costs)
and reports.
Finally it is important to highlight two elements,
which are not considered peculiar to public institutions
but which were crucial in carrying out the project suc-
cessfully: leadership and software support. Leadership
has been a fundamental element during all the phases of
the reengineering. Indeed this element is not new for
private organisations; authors agree that leadership
strengths and enthusiasm will provide an example and
will aid the project success. In public organisations,
especially in recent years, maintaining a sharp focus is
sometimes very difficult. Human resources struggle
everyday with new tasks, initiatives and new services to
deliver: this could give a project affecting management
practice a lower priority. The solution suggested for
private organisations fit: that is the presence of a con-
tinuous open and frank communication.
Finally it is important to say that the use of software
was useful, in particular during the process mapping
and the definition of the ‘new’ reengineered process.
Many authors agree that the use of design and simu-
lation software has become an essential tool for the
modern reengineering approach. First these instruments
allow the identification of all the possible pitfalls of the
existing process, highlighting organisational, human
and technological constraints. Second simulation tools
offer the possibility of testing different solutions and
measuring process performances more easily. Further,
at the Ministry of Treasury, the use of simulation
software was revealed to be an important instrument
for convincing people. As stated above, the leap from
the design phase to the implementation was critical:
the missing engagement of some process stakeholders
created some difficulties and arose oppositions for
proceeding the project. Presenting simulation results,
and showing costs and time savings were fundamental
for getting stakeholders support and taking the project
forward.
4. Conclusions
Implementing a project in public organisations has
become an important issue in recent years. This interest
in this context too, has been stimulated by the reform-
ing movement that has spread across all the OECD
countries in the last two decades. Though governments
have started to change at a different pace, the principles
of the reforms are similar and they are commonly
addressed with the label of New Public Management
[2,3]. Italy is considered a late adopter of this move-
ment, starting the legislative change only at the begin-
ning of the 1990s. Nevertheless the breadth of policy
changes is remarkable and it makes the Italian context
an ideal field for researchers. The increased importance
of Italy is proved by the attention recently given by
international researchers [44–48].
One of the implications of the NPM movement is the
proliferation of business techniques applications by
undertaking a project. In such a context this paper has
analysed the problems of managing a reengineering
project in public sector organisations.
The findings of this paper are based on data from an
action research approach carried out in a 3-year period
at the Italian Ministry of Treasury. In this paper we
have drawn on NPM, reengineering and project man-
agement literature. NPM has informed the investigation
of the major issues involved in public institutions chan-
ges, informing the definition of a tailored approach to
reengineering in such organisations. The available lit-
erature on BPR was essential in defining the methodol-
ogy. However project management contributions to the
literature completed the framework, adding cross-fertil-
isation of elements which were fundamental in the
empirical phase.
The specific interest in Structural Funds was raised by
the recent changes in their legislation: (1) the increased
number of eligible countries, (2) the definition of stricter
monitoring procedures, (3) the reduced overall budget.
These changes stressed the need of achieving a more
efficient process management. The complexity of the
process and the huge number of stakeholders involved
have allowed an investigation of a complete range of
critical dimensions and identifying possible actions for
 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
facing these situations. The results presented in the
paper are not generalisable to all public organisations
elsewhere. However the process of change studied may
have a wider interest for other public sector organisa-
tions.
The major theoretical findings of the paper cover
three dimensions; first insights from, and the limitation
of BPR available methodologies in approaching a pub-
lic sector redesign; second, strictly related to the first,
the identification of possible actions on the implemen-
tation of reengineering in government settings; third the
importance of project management issues throughout
the project. Further the action research rationale has
given empirical evidence of the real applicability of the
above approach.
A major finding of this study relates to the insights
gained from and the limitations of business reengineer-
ing methodology. Though some authors suggested that
public sector projects can be managed following busi-
ness approaches, literature and the experience at the
Ministry of Treasury proved that a tailoring is needed.
The adaptation of the methodology has been discussed
using seven dimensions (D) and seven actions (A) which
are considered to be relevant. As shown in Table 1 a
single action can influence many phases of a reengin-
eering project.
The first issue is the enlargement of the social system
governing the project. The political nature of public
institutions generates the necessity to involve on one
hand elected members and on the other hand stake-
holders that apparently are not related to the process
under revision. The structure of these institutions is the
result of subtle negotiations, which can disappear in
the formal facade though remaining at the core of the
organisation. Revising a process in public sector means
revisiting this network of relations, creating possible
tensions; for this reason the involvement of all stake-
holders is essential.
Involving all the actors is necessary but it is not
enough: when actors with different interests are involved
the negotiation on goals can become never-ending. The
empirical experience at the MoT suggested that the use
of a formal instrument enhanced this process. The par-
ticular instrument adopted here is a map of goals and
users, which was defined by each member of the steering
committee and subsequently agreed with them.
Another important element for avoiding problems
during the reengineering project was the definition of
constraints. Recent approaches to BPR have stressed
the importance of anticipating problems from the
beginning, abandoning the radical Hammer and Cham-
py’s approach [34] which advocated forgetting all con-
straints and starting from a blank sheet. Our approach
is more relevant in public institutions where constraints
are more difficult to remove. In particular the analysis
should tackle the legislative sphere, underlining possibi-
221
lities or additional struggles for achieving the project
completion.
The last two actions introduce the third major find-
ings of this paper: the importance of project manage-
ment issues. The first element is training; human
resources in public administration, but particularly in
Italian institutions, did not have a management back-
ground. The introduction of business techniques causes
defensive resistance and negative behaviour which could
prevent the success of the project. Though the involve-
ment of internal staff is important, providing the proper
training is essential from the initial phases of the pro-
ject, because it allows a full immersion of people in the
project proceedings.
A second important element is the control of the
project and results. Defining achievable milestone and
emphasising the need to maintain a timescale helped to
address behavioural struggles in the reengineering,
minimising the risk of people being diverted and trap-
ped by their routine activities.
Two further instruments helped in avoiding project
failure: continuous communication and the definition of
a management control system. Both formal and infor-
mal communications, such as official reports and fre-
quent meetings, allowed the circulation of information
at all levels, informing constantly on the results of the
project. The defined measurable indicators was funda-
mental: particularly for convincing the steering com-
mittee and maintaining the needed commitment [28].
It is important to highlight that all these instruments
were more effective because they were supported by the
use of formal structured groups: the steering committee,
the project team, the work groups. This approach helped
in rationalising the change process: first the groups
represented a reference and discussion point for internal
staff, all along the project duration; second their presence
enhanced the process of legitimation within the organi-
sation diminishing the potential for conflicts.
The approach was successfully applied at the Ministry
of Treasury and the ESF payment process revisited. The
new procedures have been tested for a 3 month period
and different benefits have been so far shown both by
final user and internal staff.
First the new process and the rationalisation of activ-
ities prevent the duplication of documentation and
reducing the need of documentation cross-checking,
which had caused considerable delays in the past in the
payment process. Second the reduction of payment time
allowed more rapid reimbursements for the Italian
regions, which began to reduce their financial exposure.
The management control system implemented allowed a
reduction in cost around 35%, on average, and in time
of 48%. At present the full implementation of the pro-
cedure on a routine basis needs the final approval of an
already proposed law which is under discussion at the
Parliament.
222 M. Arnaboldi et al. / International Journal of Project Management 22 (2004) 213–223
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