Summary
The model of the project-oriented organization (POO) is introduced. The advantages of “Management by Projects” as an organizational strategy are analyzed, the application of a new management paradigm in the POO is described, and specific organizational structures, such as expert pools, strategic center, project portfolio group and pm-office, are introduced. Emphasis is given to the processes, which are specific for the POO, such as:
• Assignments of projects and programs
• Project management
• Program management
• Project and program coaching and auditing
• Project portfolio coordination
• Networking between projects
• Infrastructure of the POO and the pm-office
• Personnel development in the POO
• Organizational development of the POO.
For the performance of these processes specific competences are required by individuals, teams, and the POO overall. Instruments for the assessment as well as for the further development of these competences are presented.
It is the objective to differentiate clearly between the project management process and other specific processes of the POO, to operationalize the model of the POO, and to differentiate between individual, team and organizational competences in the POO.
The Model of the Project-Oriented Organization
A POO can be defined as an organization that:
• Defines “Management by Projects” as an organizational strategy
• Applies temporary organizations for the performance of complex processes
• Manages a project portfolio of different project types
• Has specific permanent organization structures to provide integrative functions
• Applies the “New Management Paradigm”
• Has an explicit project management culture
• Perceives itself as being project-oriented.
The POO considers projects not only as tools to perform complex processes, but also as a strategic option for the organizational design of the company, the division or the profit-center. By applying “Management by Projects” the following organizational objectives are pursued:
• Organizational differentiation and decentralization of management responsibility
• Quality assurance by project teamwork and holistic project definitions
• Goal orientation
• Organizational learning by projects.
For processes of different complexities different organizations are adequate. The POO perceives projects and programs as temporary organizations for the performance of complex processes. For unique processes of medium to high complexity, of short to medium duration (three months to 24 months) projects are the appropriate organization form. Projects can be defined for contracts for external clients as well as for product developments, marketing campaigns or reengineering activities for internal clients.
A program is a temporary organization for the performance of a process of high complexity. The projects of a program are closely coupled by overall program objectives, overall strategies, and common processes and methods. A program has a time limit and is medium or long term (one to four years) in duration.
Typical programs are the development of a “product family” (and not of a single product), the implementation of a comprehensive IT-solution (such as SAP), the reorganization of a group of companies in a holding structure, and large investments, such as an oil platform.
Exhibit 1. Dynamic boundaries of the Project-Oriented Organization
The more different project types a POO holds in its project portfolio, the more differentiated it becomes and the higher becomes its management complexity. In order to support the successful performance of the single projects as well as to ensure the compliance of the project objectives with the overall strategies, specific integrative structures, such as a strategic center, expert pools, a pm-office, and a project portfolio group are required. Some of these permanent organizations might be virtual.
The POO is characterized by the existence of an explicit project management-culture, i.e., by a set of project management-related values and norms. In the POO, project management is considered as a business process for which there exist specific procedures and a common understanding of the project roles involved, and for which project management methods applied.
Further, in the POO the application of a “New Management Paradigm” is required. Traditional management approaches are emphasizing detailed planning methods, focusing on the assignment of clear defined work packages to individuals, relying on contractual agreements with clients and suppliers and using the hierarchy as central integration instrument.
Compared with this traditional management approach the central features of the “New Management Paradigm” are:
• Consideration of organization as competitive advantage
• Empowerment of employees
• Process-orientation
• Teamwork in flat organizations
• Continuous and discontinuous organizational change
• Customer-orientation
• Networking with clients and suppliers.
The POO has dynamic boundaries and contexts. On the one hand, the number and the sizes of the projects and programs are constantly changing, permanent and temporary resources are employed, and cooperations are organized in virtual teams. On the other hand, varying strategic alliances are established and relationships to the different social environments of the different projects and Programs are managed.
In order to manage the dynamics of the POO, besides identity activities such as strategic planning activities, reflections of the culture, and continuous organizational development, clusters of projects such as chains of projects, a project portfolio, and networks of projects, can be applied as new integrative structures.
Considering the sequence in which projects are performed the chain of projects results. By relating a set of projects to each other according to a specific criterion, such as the technology applied or a geographic region, a network of projects results, and by considering all projects performed by an organization, the project portfolio results. A project portfolio is defined as a set of all projects the POO holds at a given point in time and the relationships between these projects. In comparison to a program a project portfolio is not an organization.
Processes of the Project-Oriented Organization
The POO is characterized by specific business processes. The core processes project management, program management, and project portfolio coordination, are briefly described.
Project management is the core business process of the POO. It consists of the subprocesses project start, project coordination, project controlling, project discontinuity management, and project close down.
The project management process starts with the formal project assignment and ends with the project acceptance by the project owner. The project management process is performed in addition to the contents related processes to achieve the project results. Examples for contents related processes of an engineering project are engineering, procurement, logistics, and construction.
Objects of consideration in the project management process are the project objectives, the scope of work, the project schedule and the project costs, as well as the project organization, the project culture, and the project context (project environment relationships, relationships to the company strategies, relationships to other projects, etc.).
Exhibit 2. Specific Processes of the Project-Oriented Organization
Program management has to be performed in addition to the management of the single projects of a program. The program management methods are similar to the project management methods, i.e., there is a program work breakdown structure, a program bar chart, a program environment analysis, etc.
The advantages of designing program organizations instead of defining a “mega-project” with several subprojects are as follows:
• A less hierarchical organization
• Clear structures and a clear terminology (a program manager and several project managers instead of one project manager and “project managers” of the subprojects)
• Empowerment of the projects of the program by allowing for specific project cultures, specific relationships to environments, specific project organizations, etc.
• Differentiation between program ownership and different ownerships for the projects.
The objectives of the project portfolio coordination are:
• Optimizing the results of the project portfolio (and not of the single projects)
• Selection of projects to be started
• Definition of project priorities
• Coordination of internal and external resources
• Organization of learning of and between projects.
The basis for the coordination of the project portfolio is a database, which allows the development of project portfolio reports. Typical project portfolio reports are the bar chart of projects, the projects profit versus risk graph, the progress chart of projects, etc.
Exhibit 3. Description of the Role “Project Manager”
PM-Competences in the Project-Oriented Organization
Competence can be defined as knowledge and experience for the performance of a business process. The specific competences a POO requires, relate to the performance of the processes described previously. Further on the individual, team and organizational competences to perform the project management process will be analyzed.
Exhibit 4. The Organizational Project Management Competence
PM-Competences of Individuals
The project management competences required by individuals differ according to the project roles to be fulfilled. The following project roles can be performed by individuals: project owner, project manager, project management assistant, project team member, and project contributor. The specific project management functions to be performed, e.g., by a project manager can be described in a role description.
From the role description it is obvious that the project manager requires knowledge and experience not only to apply project management methods, but also to creatively design the project management process.
This ability relates to:
• The selection of the project management methods appropriate for a given project
• The selection of the appropriate communication structures
• The facilitation of the different workshops and meetings
• The selection of the participants for the different workshops and meetings
• The decision to involve a project coach
• The definition of the appropriate form for the project management documentations.
The project management competence of a project manager is the capability to fulfill all functions specified in the role description. Besides the project management knowledge and experience for a given project type, a project manager needs product, company, and industry knowledge. In international projects, cultural awareness and language knowledge are also prerequisites.
PM-Competences of Project Teams
In order to perform a project successfully, a project team requires competence. The competence of a project team can be defined as the project management competences of the project team members plus the social knowledge and experience of the team to commonly create the “Big Project Picture,” to produce synergies, to solve conflicts, and to ensure learning in the team.
A project team cooperates in workshops and meetings. The application of project plans, such as a work breakdown structure, a schedule, a project environment analysis, etc, have to be understood as tools, to support the communication in the project team.
PM-Competences of the Project-Oriented Organization
Not only individuals but also organizations have the capability to acquire knowledge and experience and to store it in a “collective mind” (Senge, 1994, Weik & Roberts, 1993). Willke (1998) describes organizational knowledge as hidden in organizational principles, which define the way organizations work. For example, such organizational principles, which define the way projects are managed, are project management procedures, project management templates and standard project plans.
The project management competence of the POO can be described and assessed with a “pm-competence” model (Gareis & Huemann, 1998). This model can be presented in a “spider web,” with the axis project start, project controlling, project coordination, management of project discontinuities, project close down and design of the project management process.
The assessment of the project management competence of an organization is based on an IT-supported questionnaire, with about 80 questions.
The overall project management competence of a POO is presented by the area, resulting of the connection of the project management competence points at the scale of the spider web axes.
Development of PM-Competences in the Project-Oriented Organization
Project management can be perceived as a core competence of the POO, as it creates a competitive advantage. To ensure this competitiveness permanent further development of the project management competence is necessary. Project management competences of organizations, teams and individuals have to be developed.
The relationships between individual, team, and organizational learning in the POO are shown in Exhibit 5.
Instruments to develop the project management competence of individuals are (self-) assessments, trainings (classroom, on the job) and coachings, combined with training. Instruments to develop the project management competences of teams are (self-) assessments, trainings and coachings, reflections, and supervisions. Instruments to develop the project management competences of the POO are project management benchmarking and organizational development projects.
Exhibit 5. Relationships between Individual, Team, and Organizational Learning
Conclusion
Even project management is an important process competence for the other specific processes of the POO, and have to be analyzed and further developed, too. Appropriate instruments for these assessments still need to be developed in research projects.
Further, the concept of organizational learning and competence development should not only be applied to the POO overall, but also to its temporary organizations, i.e., to projects and programs.