Developing corporate project management practices through quality award framework

Introduction

Project management processes and knowledge areas, as defined by project management standards such as the PMBOK® Guide (1996) and ISO 10006 (1997), specify how a project could be defined, planned, executed, controlled and closed successfully in its environment. The origin and backbone of this traditional project management approach dates back a few decades, and forms a well-defined and mature framework for project management. Today, project management in an organization is no longer limited to on-time delivery, budget management and technical compliance independent of business and strategic context. Projects must be managed in the context of the whole organization with continuous consideration for short and long-term organizational needs.

This paper introduces a framework for managing the internal performance of the project and managing the project in the business context of the parent organization, taking into account the needs of key stakeholders. Emphasis is placed on the importance of selecting appropriate project and business management practices to support project objectives. This proposed management framework for a project-oriented organization is built on project management and total quality management disciplines.

In the past, the development of management in a project-oriented organization has focused on rather operative schemes, such as solving the problem of resource sharing among multiple projects. Under this alternative, project portfolio management and the use of project offices, project company financial and accounting systems, stakeholder management, and project maturity models, provide well-developed applications for managing project companies. However, our view is that contemporary project management applications lack focus on the strategic management of a project-based organization. We propose that projects and management of a single project must be linked to the strategic business management of the corporation. This option can be achieved by bringing the strategic objectives and issues of the company to the project level. Thus, project managers must be provided with both a vision of the company's goals and the authority to make decisions in a continuously changing business environment. The suggestion of bringing the authority and responsibility of strategic decision-making to the project level is supported by Wikström and Storholm (1995, 1999).

Extended Project Process

An extended project process is key for adopting a wide business view in projects. It is used to integrate project management with managing corporate business and to place project management in organizational context. The project company perspective requires an understanding of pre-project phases such as project sales and marketing, and post-project customer processes such as after-sales services. Such pre and post-project phases are typically related to management of a company rather than management of a single project.

The extended project process, referred to later in this paper as the project, broadens our view in two dimensions: internally and externally. Internal dimensions of the project include pre- and post-project phases and the external dimension brings forward the influence of the project stakeholders, such as suppliers and partners, supporting departments of the parent organization and the customer.

Internal Dimension of Extended Project Process

The internal dimension of the extended project process is well covered in project management literature. In practice, however, projects are still typically seen as an engineering and delivery process. Project phases (Turner, 1997) and typical organizational departments of the parent organization involved in the project are: proposal and initiation (marketing, sales and engineering departments), design and appraisal (sales and engineering department), execution and control (engineering department), and finalization and closeout (engineering and service department). The internal dimension of the project applies also to stakeholders from other organizations, which are involved in similar organizational structures. As an example, a customer cannot be considered as one stakeholder, but has numerous departments with different roles involved in the project (i.e., purchasing department, engineering department, operations).

External Dimension of Extended Project Process

The external dimension of project takes into account primary stakeholders and considers the project as an entity, which is a temporary organization that meets the main objectives of all stakeholders. Organizations are social arrangements for achieving controlled performance in pursuit of collective goals (Buchanan, 1997) and project organization dissolves when these objectives cannot be agreed upon. This view of the project recognizes that project stakeholders have different objectives and roles, but a successful project organization helps to create a common mission for the project and compromises between conflicting objectives.

Exhibit 1. Malcolm Baldrige Quality Award Criteria for a Project-Oriented Corporation

Malcolm Baldrige Quality Award Criteria for a Project-Oriented Corporation

The traditional definition of project primary stakeholders refers to a group having a legal contractual relationship to the project (Cleland, 1998). Using this definition, organizational arrangements and the definition of roles are used to define delivery limits and explicit responsibilities for project stakeholders. The customer has a special role for providing project financing and the parent organization generally provides the main share of the resources or has, at least, an integral role in the project. Our definition of the project organization goes beyond legal arrangements and strives to align values, culture, processes, short-, and longer-term objectives for primary stakeholders of the project.

Criteria for Project performance (CPP)

Quality award models, such as the Malcolm Baldrige National Quality Award (NIST, 1999) or European Quality Award (EQA, 1999), provide us with a perspective on business management in the organization. The award models are developed for general application in enterprises, but if we consider a project to be an independent, temporary organization operating under its own identity, it can be applied also to the project environment. The use of a quality award framework at the project level is also proposed by Lereim (1997). Exhibit 1 shows the principle of introducing quality award criteria in a project-oriented organization. The exhibit emphasizes the relation of those criteria to the multiple projects in the corporation.

Specific projects may not fully comply with these requirements and our approach develops the framework further, to be suitable for a project environment. In this way, changes to the basic quality award criteria are made to form Criteria for Project Performance (CPP). In the development of the CPP, the objective has been to use the structure and core values of the Quality Award Criteria as a foundation for integrating main business and project requirements into the overall framework. The following section describes how each Quality Award Criteria category is applied to the project environment. The content and core values of the original criteria (NIST, 1999) and interpretation of the criteria in an organizational context (Brown, 1998) are used as guidelines to create criteria for project performance. The following discussion of CPP is based on a more detailed analysis in Kujala and Artto (2000).

Leadership

The leadership category includes an internal focus, addressing project working leadership, and an external focus on a senior leaders’ role in setting values and high performance expectations for the project. The internal focus emphasizes management practices of a project working leadership, including project managers and other manager level personnel directly involved with the project. The external focus addresses both the parent organization's senior leaders’ roles as well as the roles of other stakeholders in the project. Projects provide opportunities for senior leaders to exercise leadership in practical and concrete situations. It is the role of the collective project leadership (i.e., senior leaders and project working leadership) to create a project mission. This mission refers to the conditions, where the goals of the project are clear and understood not only by the project team, but also by the other departments in the organization (Pinto, 1998) and other external stakeholders of the project. Project leadership, contrary to the phrase project management, refers to a wider perspective, where project parties are not managed and controlled, but guided to take their share of responsibility for meeting project objectives.

Strategy Creation and Implementation

Strategic management includes creating a long-term organizational strategy, taking into account internal and external opportunities and threats, and deployment of this strategy into the organization. Strategic management and project management occurs in different levels of the organization. They are easily seen as being separate, which is a limited view of strategic management in a project-oriented organization. A project-oriented organization achieves its goals through development of projects, thus project management must be an integral part of strategic management (Cleland, 1998). Projects provide information and insights into existing competencies and new opportunities. They also have a direct impact on creating an organizational strategy by taking advantage of emergent opportunities to change the direction of the organization. A strategy is a combination of intended strategies and emergent strategies (Mintzberg, 1998) and the latter is often the result of a successful new project.

Customer Orientation

Ideally, primary stakeholders work on a project with common objectives, sharing all information and capabilities so as to make a genuine contribution. In practice, the customer (as end-user and the entity that provides financing for the project) has the leading role in defining project objectives. Other project stakeholders, who are usually the main contributors to the project regarding knowledge and experience, are often excluded in the goal definition process. CPP does not deny the importance of customer-driven quality, one of the core values of total quality management, but suggests that in the long-term, it will benefit all project stakeholders to take a more balanced approach. This approach considers all primary stakeholders, and extends the scope of practices associated with customer management to include also suppliers and partners for the project.

Customer orientation depends on customer knowledge, and uses that information to develop appropriate customer relationship management practices. Material gained from customer wisdom is also used to provide products and services to meet customer requirements and expectations. The definition of customer knowledge goes beyond project specification and explicitly stated project requirements. It includes an understanding of customer values, culture, politics, and short- and longer-term business expectations and requirements. This information is used to improve performance by creating an understanding of customer preferences, expectations and the relative importance of project requirements.

Information and Analysis

Information and analysis are the main points within CPP for collecting and analyzing key information to effectively measure performance and manage organization. An effective performance measurement system provides a means by which to align project and organizational level objectives and to analyze cause-effect relationships using a balanced set of measures. This category has two major items: the measurement system and analysis of project performance. It provides the basis for fact-based management and an organizational learning process. A balanced set of measures, including customer and market, financial, human resource, supplier and partner, and process-related performance measures of all stakeholders, forms the project performance measurement system.

Human Resource Management

From a project viewpoint, the concept of human resource management is usually limited to the management of the project team, staffing it with qualified people and teambuilding to solve immediate problems on the projects. CPP adds to this idea a long-term view of human resource management, including employee education and development, career planning, and overall satisfaction of employees, with the ultimate goal of building an efficient and flexible organizationwide work system. The human resource management category has three items: Work Systems, Employee Education, Training and Development, and Employee Well-being and Satisfaction.

Process Management

Process management is the main area covered in the project management discipline, and this area is mature and well developed. CPP does not bring any new practices to this area, but extends current practices to cover extended project processes. Process management categories are divided into the management of design and delivery processes, and the supplier and partnering processes. Many of the design and delivery processes used in projects are based on those of the parent organization and other project stakeholders, but they need to be tailored to suit the specific needs of the project. Projects involve multiple parties with different processes and practices, which need to be selected, communicated to and aligned with all parties of the project. The partnership development concept diminishes the different ways of managing external and internal suppliers. The work is done together with all parties who take responsibility to contribute to the overall success of the project.

Exhibit 2. Criteria for Project Performance as System

Criteria for Project Performance as System

Project Business Results

The definition of a balanced set of project objectives is the starting point for aligning the project with business and strategic goals at the organizational level, and for selecting appropriate management practices to support those objectives. Project business results are made up of combined business objectives of primary stakeholders. Each project has a unique element, which leads to a project-specific balanced set of objectives.

The measurements for project business results include both leading and lagging indicators in the following categories:

• Customer-focused results

• Financial and market results

• Human resource results

• Supplier and partner results

• Process-related results.

Project performance levels are evaluated against targets and relevant comparisons or benchmarks. Other similar projects provide good benchmarking information, but each project is unique with project-specific criteria for success.

Criteria for Project Performance as a System

CPP takes systems approach for managing projects and project business. It is results-oriented and the success of the project is measured based on meeting project objectives. Result orientation does not imply that the processes and project management discipline is not considered important, rather that the value of those practices is only to support project objectives. The underlying assumption in systems approach is that the project is a system of interrelated parts, which cannot be effectively managed alone. CPP as a system (as shown in Exhibit 2) provides a model of project organization, which goes beyond a list of recommended practices. It does not recommend or propose any practice to be used, but rather provides a framework to select appropriate practices, and to analyze the relationships of selected practices.

CPP is designed as a management framework in order for the user to understand and develop project and business management practices from the “extended project process” point of view. It should be noted that CPP is not a competitive discipline for the project management body of knowledge or any other project management application. Rather, it is designed to provide a common framework to place project management practices in a business context and further develop them to better support business processes and objectives.

Integration of CPP With Management Practices

The application process and associated documentation is an integral part of quality award criteria, describing how the criteria are intended to be used for improving management practices. Although we don't cover the detailed use of CPP in project organization in this paper, it should be noted that, for effective impact, there should be integration with project and business management practices.

CPP provides a system model of project organization, which can be used to integrate different project management applications into the overall framework and create a common understanding of the role of those applications. This framework, utilizing organizational level business overviews and identifying the key aspects for the specific project, could be a useful tool for creating a common understanding of the project specific objectives and goals. We would like to emphasize that CPP itself is not a project management application, and it does not suggest any specific project management practices. This approach can be implemented as a part of project planning, reviews and meetings or project management training programs. Other uses of CPP include assessing and benchmarking projects, which will facilitate the organizational learning process.

This paper does not discuss in detail the use and focus of the project quality model in different phases of the project life cycle. Parts of the leadership category and strategic planning category focus primarily on the early phase of the life cycle and numerous strategic decisions that are implicitly made with the decision to pursue the project. Project goals and objectives have to be determined in early phases to focus all efforts on meeting these goals. Other categories—leadership, customer orientation, process control, and human resource management—apply equally to all phases of the project, although some items and areas may focus on specific phases of the project life cycle.

Based on the theory and general framework presented in this paper, we have used a practical application for project leadership in order to evaluate and improve the performance of the project and its parent organization. The management framework introduced in the paper has been developed using input from number of project managers working for Neles Automation and Valmet Paper Machinery. These managers have also reviewed the framework, and it has been tested in practice.

Conclusion and Further Research

The Criteria for Project Performance introduces a generic principle for integrating project management practices and business management into a project-oriented organization. A systems approach, core concepts and management areas from quality award criteria are applied to a project organization and projects to create a model for project and project company. Various project management applications and disciplines, such as project portfolio management, stakeholder management and the project management body of knowledge, are practices used for the actual implementation of the project and to integrate it into the overall business objectives. In addition, it should be noted that the framework presented provides input for organizational level management processes, and in order for the project to fully benefit from CPP, an organization needs an effective management system. We suggest that Quality Award Criteria, integrated with the Criteria for Project Performance could provide an effective management system for project organization.

Preliminary results indicate that CPP can provide a tool to improve project management practices and to bring additional insight to the project performance evaluation. Further studies are needed to better evaluate the applicability of the framework in various types of projects.

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This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

Proceedings of the Project Management Institute Annual Seminars & Symposium
September 7–16, 2000 • Houston, Texas, USA

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