Project Management Institute

Defining organizational project management

Abstract

Although organizational project management has been proposed as the logical extension of project management to the enterprise, it suffers from definitional issues, which creates a barrier to adoption by practitioners and researchers. The purpose of this paper is to create a research-based, holistic definition of OPM that can form the basis of future research and support practice. The existing paradigms of OPM as a structural, practice-based, and integrative competency are first reviewed. A definition is then proposed, which integrates these views, using the theoretical basis of the resource based view. Next, supporting knowledge areas for the revised definition are identified and explained; these concepts are then illustrated using two case studies of multinational firms from Trinidad and Tobago. The paper concludes with implications for research and practice.

Introduction

Although project management as a profession has a long history, research in the area is relatively new (Söderlund, 2004). The emergence of standard methodologies and bodies of knowledge has supported development of the field and has provided a structured collection of best practices on a particular issue; however, there is a gap between the organizational and professional perceptions of project management (Hodgson, Paton, & Cicmil 2010). Organizations may perceive project management as a vocation, rather than a profession, and project management–based initiatives may not receive the required support. With an explicit focus on integrating project management into enterprises (Crawford, 2006) at the project, program, and portfolio (PPP) levels, organizational project management (OPM) offers some promise for overcoming these limitations. Following are some definitions of OPM, which have been proposed in the past:

Project Management Institute (PMI)
OPM3 is the systematic management of projects, programs and portfolios in alignment with the organization’s strategic goals (PMI, 2008 p. 24)

Japanese Project Management Association (P2M)
P2M is “a framework that seeks to enhance capability of organizations to respond to external forces in order to achieve visions and missions” (Ohara, 2005 p. 16)

Aubry et al.
“Organisational project management is a new sphere of management where dynamic structures in the firm are articulated as means to implement corporate objectives through projects in order to maximize value”.(Aubry, Hobbs, & Thuillier, 2007 p. 4)

These existing definitions outline the three underlying paradigms of OPM:

1. OPM as Structure

2. OPM as Practice

3. OPM as Integrating Competency

OPM as Structure

Organizing by projects was seen as a response to dynamism in the external environment, creating new challenges for firms. Originally, hierarchical organizations were designed around long-term, repetitive processes. Firms were therefore configured into structures that supported these activities. As the environment became more competitive, firms began to initiate increasing numbers of projects. These projects began influencing the firms’ structures, because they were distinct social systems that spanned multiple departments, customers, and suppliers. Flexible, network-oriented structures began emerging and the concept of project management was applied to the organizational context in the form of “management by projects” (Gareis, 1989). In this paradigm, projects, not departments are the units of control, and the role of management is to manage the relationships between projects and their environments, both internal (within the company) and external (outside the company). Managing these project networks required two tasks: integration and differentiation. Integration is the responsibility of company administration and involves the incorporation of project inputs and outputs into a companywide framework. Differentiation is the responsibility of project teams and involves the creation of new projects to solve problems or access opportunities. In a related argument, OPM facilitates the development of organizational learning. Incremental change in a stable environment or a first-order change needs simple projects. More radical, second-order change or repositioning requires programs and portfolios. The characteristics of projects help enable change initiatives, because they can form a space for experimentation with new structures and processes.

Researchers have argued that this area remains underdeveloped as existing research looks at projects from the perspective of operations. As temporary organizations, they can manage uncertainty in ways that traditional departments cannot (Thiry & Deguire, 2007); however, limited theoretical or empirical work has explored these avenues.

OPM as Practice

In addition to the structural perspective, OPM has also been viewed as a collection of practices. Using a maturity model, organizations access their current practices and identify their relative positions on a scale. Although the use of maturity models has been established in the operations field, they are relatively new to project management, only having emerged in the last 20 years (Andersen & Jessen, 2003). Exhibit 1 below provides a summary of the major project maturity models currently in use.

Maturity Models Compared

Exhibit 1: Maturity Models Compared

As seen in Exhibit 1, these frameworks vary in goals, comprehensiveness, and classifications. Three models have strategic alignment as a specific objective, whereas others make no specific claims. OPM3 draws upon a database of 600, whereas PMMM and P3M3 base assessments on 40- and 27-item questionnaires. Finally, firms are classified in four, five, and continuous scales of maturity. Their effectiveness in improving organizational performance is still being debated with authors finding no effect (Ibbs, 2000), limited effects, and strong effects (Yazici, 2009).

OPM as Integrating Capability
Finally, OPM has been proposed as an integrating competency or capability (Thomas & Mullaly, 2008). This perspective has its roots in the resource based view, a theory that views individual firms as a collection of resources (Mahoney & Pandian, 1992). These resources can then be coordinated, forming the basis of a firm’s ability to compete against rivals (Penrose, 1959). Particular resource characteristics have been suggested by researchers in the resource based view (RBV) from which competitive advantage can be derived (Barney, 1991): Valuable, Rare, Inimitable (difficult to imitate), and Non substitutable (difficult to replace), summarized with the acronym VRIN. In this view, maturity models in isolation cannot be considered strategic because they are resources available to all firms. Knowledge-based resources that are based in the culture and history of a firm, however, can exhibit VRIN characteristics (Wernerfelt, 1995) and support competitive advantage. Identifying such competencies can be difficult, however, as few standard measures exist (Priem & Butler, 2001).

Revised Definition

While the paradigms have generally been examined separately, relationships exist among them. The structure and practice views can be linked, as practices may be discovered or trailed within flexible project teams (Tsoukas & Chia, 2002). These practices, if they are superior to those existing within the organization may then be transferred to other projects or operational functions (Lindkvist, 2004). Structure and capability are related in the organizational change aspect. Major change programs (e.g., Lean Production, Six Sigma) (Thiry & Deguire, 2007) can redefine organizations, creating new capabilities within organizations. Finally, practice and capabilities are also related, because generally practices are the visible evidence of some underlying capability. A revised definition of OPM will therefore need to incorporate these aspects. The following definition proposes the integration of the OPM paradigms of structure, practice, and capability and relates them to organizational outcomes:

Organizational Project Management is the systematic coordination of structures, capabilities, and practices to achieve continuous improvement in the performance of temporary processes (Projects, Programs and Portfolios).

Based on this definition, the following six components are the building blocks of OPM (Exhibit 2).

OPM Redefined

Exhibit 2: OPM Redefined

Positioning

To date, the role of project management in strategy has been mostly posited as entirely supportive, that is, project management follows strategy (Milosevic & Patanakul, 2005). However, as organizations vary widely in their configurations of activities, industry, market, and country, project management’s relationship with strategy can exhibit similar diversity (Cooke-Davies, Crawford, & Lechler, 2009). In project-based organizations, project management is a strategic competency and acts as the driver for organizational activities and forms the basis of strategy formulation and execution (Thiry & Deguire, 2007).

Through programs, project management can be an enabler or catalyst of strategy, facilitating the creation of competencies that organizations require to compete (Pellegrinelli & Garagna, 2009). This meso level position indicates two-way interaction between project management and strategy. Although the intent may have been formulated by top management, adjustments may be made in the realization process.

Architecture

Organizations range in their configurations, and individual PPPs within these settings may also vary on multiple dimensions. The architecture dimension examines the configuration of PPPs in an organization. Individual PPPs can vary on scale and complexity. PPPs can range from small, internal, local initiatives to activities that incorporate multiple firms and/or countries. PPPs also vary in complexity from relatively simple, routine projects to items that require the development of new technology or processes (van Marrewijk, Clegg, Pitsis, & Veenswijk, 2008). When firms are performing routine projects, the knowledge of delivery requirements is readily available, and successful realization requires the application of existing capabilities (Baumol, 1993) with predictable outcomes. However, when firms engage in projects with a high level of complexity, firms may be required to create capabilities to meet the delivery requirements.

Governance

Organizations need to create a structure that is appropriate to support delivery and internalize learning from projects. These structures may also be used indirectly to demonstrate effective management to external stakeholders (Rad, 2001). At the company-wide level, firms can be examined from the degree to which activities are controlled rather than owned. Organizations with more flexible structures, such as Performance Based Orgazniations tend to control rather than directly manage activities (Bresnen, Goussevskaia, & Swan, 2004). By contrast, firms that embrace ownership may have more fixed, permanent structures within which PPPs are realized. In small firms or those in which formal project management has been recently introduced, this may take the form of a single project manager or business owner/manager. As firms grow in both experience and size, more formal structures may be adopted. Larger, more experienced organizations may invest in PMOs or EPMOs, the role of which may vary with the organization’s architecture and positioning.

Interfaces

Organizations need to manage the connections between individual PPPs and between PPPs and their context. PPPs may share ownership and governance structures, requiring the management of information and resource interfaces (Windeler & Sydow, 2001). Depending on the organizational setting, PPPs may also interface with operations and other company activities (Waldron & Turner, 1995).

Practices

Based on the organization’s characteristics, it may engage in particular PPP practices. These practices may be derived from the adoption of a formal project methodology, such as Prince 2, P2M, Agile, or based on a body of knowledge such as A Guide to the Project Management Body of Knowledge (PMBOK® Guide) or APM (Bredillet, 2003). Practices may also be influenced by the industry setting. The government, military, and aerospace industries, for example have modified bodies of knowledge for their particular requirements (Crawford & Pollack, 2007). In addition to industry, individual firm adoption of frameworks, such as CMMI or Six Sigma can influence PPP practices (von Wangenheim, Silva, Buglione, Scheidt, & Prikladnicki, 2010).

Performance Measures

To evaluate PPP success, organizations adopt based evaluation approaches that measure particular aspects of performance. Outcome-based approaches tend to evaluate PPPs’ inputs versus outputs (Zqikael, Levin, & Rad, 2008). Organizations may take a financial approach, using metrics such as return on investment (ROI) to evaluate particular practices or PPPs as a whole. Firms may adopt measures that blend qualitative and quantitative metrics, such as a balanced scorecard approach. In benchmarking approaches, practices and competencies may also be compared within or across industries to determine the relative performance of the organization. The last two may be combined in organizations that adopt maturity models such as OPM3 or P3M3 (Pennypacker & Grant, 2003)

Illustrative Case Studies

This section presents two case studies about firms from Trinidad and Tobago to illustrate the concepts presented earlier. They were selected using a maximum variation approach (Patton, 2005). The first firm is a large, state-owned concern in the mining industry; the second is a small engineering organization in the energy logistics sector.

OPM in State Organization

Acquired by the state in 1978 from a foreign owner, the BinderCo (name changed) supplies a binder for use in road construction. It employs 200 people at the head office in Trinidad and owns a subsidiary in the United States. It also has an extensive distribution network in Asia, Europe, and South America, where employees are responsible for sales and service. The company operates an internal PMO, which provides standardized templates for project teams and monitors project metrics. The company operates two core processes at its manufacturing facility. In the first, ore is extracted and heated to a melting point using steam. The liquefied material is then poured into drums for export; however, material packaged in this manner is difficult to ship and requires specialized handling and storage equipment by distributors. This has reduced the potential market for its products and enabled the growth of competitors. In order to overcome these limitations, the company launched a research program to develop a version of its product that could easily be shipped. Academic research funded by the program identified a potential process, which was tested in the late 1990s in a pilot plant. The company then invested in a major facility, based on this process, which was completed in 2008.

OPM in International SME

CCUM (name changed) is a manufacturer and rental agency for Cargo Carrying Units (CCUs). It employs 30 people in its main office in Trinidad and operates subsidiaries in Brazil and Venezuela. CCUs are manufactured to the DNV 2.71, a highly regulated standard for offshore equipment, covering design, manufacturing, and testing. CCUM specializes in the production of customized units that are closely adapted to customer needs. Customer service and finance are structured as conventional departments; manufacturing, marketing, and maintenance activities are executed as a project portfolio. Project management is viewed as a core competency as the company operates a flexible manufacturing facility. The company does not have a PMO and most decisions are made by the owner/manager along with internal project managers.

Comparison using OPM Dimensions

Exhibit 3: Comparison using OPM Dimensions

The above summary provides an example of the OPM framework applied to an organizational scenario. Improved alignment between the knowledge areas may improve performance in these firms. The first company could consider improvement on the performance measures dimension through adoption of a maturity model to benchmark its performance against similar organizations. The second may consider formation of a PMO to provide enhanced governance of its project-based organization.

Conclusions and Future Directions

In this paper, the existing paradigms of OPM are reviewed and they create an integrated definition that synthesizes structure, capabilities, and practices. This definition is then supported by a framework that describes the knowledge areas of OPM. Although still a work in progress, the ideas presented in this paper have implications for researchers and practitioners in the area of OPM. OPM research has been criticized for lacking a theory informed approach (Thomas & Mullaly, 2008) and the measures used in some maturity models have not been independently validated. Based on these deficiencies, their accuracy and ultimate usefulness can been called into question. With incorporation of an established strategy paradigm, the Resource Based View provides the opportunity for theoretically supported empirical work. Findings from future research can then be more easily compared both within project management and across general management research to provide a sound evidence base.

For practitioners, research evidence can aid in the construction of tools and interventions that improve organizational performance. In addition, the potential of the new framework to describe a wide range of company settings enables the possibility of application to areas previously ignored in OPM. For example, other than maturity models, no current tools have been found to evaluate OPM in subject matter experts. The next phase of this research will apply this framework to a range of organizations. It will be conducted using multiple case studies as they provide a framework for building and evaluating theory in a given context (Voss, Tsikriktsis, & Frohlich, 2002). Results from a single case study can be tested against subsequent case studies, and confirmed or discarded as necessary. In this way, a stronger or more useful framework can be built (Eisenhardt, 1989). The outcome will be used to detail, confirm, and extend OPM knowledge areas.

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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.

© 2011, Nigel L. Williams
Originally published as a part of 2011 PMI Global Congress Proceedings – Dallas, TX

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