Evaluating project management maturity models
an analysis of business needs
Principal Consultant, Panthalassa Pty Ltd
Associate Professor: Faculty of Information Technology
University of Technology, Sydney
Project management maturity models have been developed because it has been recognized for some time that the adoption of project management by business corporations over the last 15 years has brought with it a new set of management challenges. For example, Pellegrinelli (1997, 141) states that “[t]he widespread use of projects…has brought with it the need to marshal project-based activity in some coherent and beneficial way”. However, it has taken time for a mature understanding of these challenges to emerge and, while there are various studies of particular management challenges, to date there has not been a synthesis of these analyses into a single coherent picture. This paper presents such a picture and also an analysis of how certain inherent features of the environment created by the “management by projects” approach give rise to the management challenges experienced. As a result of this analysis, a more thorough understanding of the challenges, and therefore the business needs that project management maturity models attempt to address, is reached. Thus, this paper provides a critical framework for evaluating specific models and guiding businesses in their selection and implementation.
This paper characterizes project management maturity models as a response to the management challenges experienced by organizations that have adopted what is often termed the “management by projects” strategy. It follows that an analysis of the origins and nature of these management challenges can provide a framework for evaluating project management maturity models, enabling one to posit the question: How effectively do the available project management maturity models address the management challenges presented by the management by projects approach? This, of course, is another way of testing the extent to which project management maturity models address the business needs that they are intended to. We begin by contextualizing project management as a tool for executing business strategy in a time of extreme competitive pressures brought on by globalism and the ICT revolution. We then describe how the success of project management in this respect has given rise to the “management by projects” approach, where businesses organize much of their work as projects, and how this has created a new management environment – the “multi-project environment”. We then outline 7 features of the multi-project environment that are problematic in the sense that they give rise to a new set of management challenges, and these management challenges are analyzed in detail. Finally, we use this analysis to propose a rudimentary checklist that can be used to assess particular project management maturity models, such as OPM3™, CMMI and others.
Management by Projects – Executing Strategy in a Dynamic Business Context
Today project management is generally recognized as an important, if not the predominant, model employed by organizations to execute their business strategies. Projects are seen as the building blocks of strategy. For example, the Guide to the Project Management Body of Knowledge (PMBOK® Guide) (2000, 10) asserts that “there is often a hierarchy of strategic plan, program, project and sub-project, in which the program consisting of several associated projects will contribute to the achievement of a strategic plan”. However, this recognition is of only recent origin. Van Der Merwe (2002,410) makes the observation that “[f]or years project management was ridiculed in business development as a low-tech, low-value and questionable activity. Only recently has it been recognized as a central management discipline”.
Indeed, the widespread adoption of project management as a tool for executing strategy has been one of the most significant phenomena in business management practices over the last 15 years. In 1992 in his book Liberation Management, Tom Peters suggested that project management is the key to survival for organizations in the 21st century and beyond. Half a decade later, Pellegrinelli (1997, 141) stated that “[f]rom its roots in the construction and aerospace industries, [project management] has become the chosen vehicle for change in the IT arena”. A decade later, Van Der Merwe (2002, 402) described how project management had moved beyond IT and become ubiquitous across multiple industries:
Until 1980, project management had been seen as the sole domain of engineers, finding a niche specifically in the civil engineering industry. At first project management found acceptance in the rapidly developing IT industry that was heavily relied upon when mapping and analyzing business processes. Early success revealed a close tie with project management and soon everyone was following suit.
It has been observed that the driver of this process is the belief that project management provides mechanisms to cope with the competitive pressures unleashed by globalism and the ICT revolution. For example, Pellegrinelli (1997) describes how organizations, particularly organizations that are highly dependent on IT, have adopted project management techniques to cope with “uncertainty, multiple goals and speed of change”. In this respect, Eskerod (1996, 41) states:
In the 1990s the “management by projects” strategy has become an important tool due to the general belief that this kind of organizational design provides the company with the necessary flexibility and responsiveness to survive in an extremely turbulent context, where the ability to change and be innovative is imperative.
Project management provides proven disciplines for managing change and, as organizations have found themselves needing to change more frequently due to a more dynamic business context, they have turned to project management to help them manage this change as effectively as possible.
Inevitably, this process has given rise to a new and complex management environment – the multi-project environment. In a multi-project environment most of the work of businesses is organized as projects, formalised project management is the predominant business process for managing change, and multiple projects are executed simultaneously. As Platje, Seidel and Wadman (1994, 100) put it, “[a]s the project orientation of organizations increases, multiple projects are carried out simultaneously”.
Problematic Features of the Management by Projects Approach
It is now generally recognized that the emergence of the multi-project environment has brought with it a new set of management issues – that in adopting project management to cope with the competitive pressures of a dynamic business context, business organizations have created an entirely new set of management challenges. For example, Pellegrinelli (1997, 141) states that “[t]he widespread use of projects…has brought with it the need to marshal project-based activity in some coherent and beneficial way”. However, it has taken time for a mature understanding of these challenges to emerge and, while there are various studies of particular management challenges, to date there has not been a synthesis of these analyses into a single coherent picture.
We believe that we have achieved such a synthesis. Our approach has been to start from an analysis of the multi-project environment itself, determining which features of that environment are problematic in the sense that they give rise to the management challenges experienced by businesses that have adopted the “management by projects” approach. In this sense, we characterize the multi-project environment as an environment where:
- Demand for projects exceeds organizational capacity;
- Projects are highly interdependent;
- Critical strategic decision making, learning and knowledge are decentralized;
- Projects compete against each other;
- Innovation behaviours and practices may be stifled;
- Classical functional organizational forms are rendered obsolete; and
- Traditional power relations and cultural assumptions are undermined.
Demand for Projects Exceeds Organizational Capacity
Archer and Ghasemzadeh (1999, 207) eloquently describe the problem: “project management approaches are so commonly used in many industries…But there are usually more projects available for selection than can be undertaken within the physical and financial constraints of a firm”. Kendall and Rollins (2003, 70) describe an all too common scenario:
The president of a $250M communications distributor complained for two years that the strategies in his “Focus Book” were not being implemented. When we completed strategic planning with his top teams…several hundred projects were identified, of which only about 50 were sanctioned by the senior management team. The company had the capacity to handle about 25 active projects. No wonder the president's ideas were never implemented.
When organizational capacity is exceeded in these circumstances, “each active project blocks the progress of other projects…[i]t is like having the organization's arteries clogged” (Kendall & Rollins, 2003, 98).
In this context, organizational capacity includes money, people (including skills and knowledge), and time.
Projects are Highly Interdependent
Turner and Speiser (1992) present a thorough analysis of the complex interdependency between projects in a multi-project environment, and of the interfaces that exist between projects and between projects and day-today operations. Projects deliver related objectives which together contribute to the overall development objectives of the parent organization, have common outputs, and share resources (people, materials, equipment or sub-contractors), information or data, and technology (engineering, hardware or software). Additionally, there are often direct dependencies between projects – i.e., where one project requires a facility to be delivered by another project in order to proceed.
Critical Strategic Decision Making, Learning and Knowledge are Decentralized
Project management implies independence, decentralization and delegation of authority, with the result that critical strategic decision making and learning occurs, and knowledge is held, in autonomous, only loosely coordinated and integrated project teams. This raises the issue of how one goes about maintaining a coherent focus and keeping activity coordinated and integrated in a multi-project environment. For example, Van Der Merwe (1997, 224) states that “if an organization manages many individual projects, each with its own dedicated Project Manager, there will inevitably be little or no control of projects”. Similarly, Turner, Keegan and Crawford (2000), in a study of learning by experience in the project-based organization, discuss how various studies show that many organizations repeatedly make the same mistakes on their projects.
Projects Compete Against Each Other
In a study of poor communications in project based organizations, Eskerod (1996, 64) identifies how in the multi-project environment there is often a tendency for competition to develop between projects:
Survival of the fittest is a concept that belongs to this mind-set and competition and battles were exactly what I found in my empirical studies. Battles on getting the highest priority among the projects, battles to get specific employees on projects, struggles to get attention from top management and so on. The concept of battle gives us a better understanding of the mechanisms in a multi-project environment.
Innovation Behaviours and Practices May Be Stifled
Midler (2000) argues that innovation in a multi-project environment is problematic because it requires risks to be undertaken and investment in exploratory activity to generate new solutions, whereas project management is concerned mainly with the triple constraints of time, cost and requirements. Because of the overwhelming need to reduce lead times and costs, the project management approach tends to be risk averse, and is therefore not of itself well suited as a business process to the realization of highly innovative strategies.
Midler (2000, 82) also argues:
The classical project paradigm is a demand-pull design model. It organizes the mobilization of professionals to answer explicit demands from project owners. But…[i]nnovations like the Walkman by Sony, Post-it by 3M, or Navigator by Netscape were not designed as an answer to an explicit question or existing customers.
Extending Midler's argument, project management could be classified as an example of what Leonard-Barton (1992) described as “core rigidities” – i.e., routines that inhibit an organization from innovating to accommodate new circumstances.
Classical Functional Organizational Forms are Rendered Obsolete
Van Der Merwe (2002) describes how the dominant paradigm of organizational structure, since the industrial revolution and the work of Adam Smith on the specialization of labour, is the functional hierarchy. This form of organizational design structures the enterprise around the tasks that are involved in producing and distributing primary products the organization creates (Van Der Merwe, 2002). The structure is composed of divisions and departments which reflect the specialization of the work (Alsène 1999).
Projects, however, tend to cut across the boundaries of the functional divisions and departments of the functional hierarchy (Payne, 1993; Bishop, 1999; Alsène, 1999; Van Der Merwe, 2002). Consequently, this organizational form has proven to be inadequate in a multi-project context. For example, Payne (1993, 239) states that the “traditional, functionally structured organization is well suited to a single process operation…[but] does not easily permit the cross-functional coordination that is essential to successful project performance”. Bishop (1999, 6) states that “…making decisions, resolving conflicts across functional areas, and coordinating the product development process of several different products simultaneously becomes almost impossible to achieve within a typical hierarchical structure”.
In our experience, in a classical functional organization the functional paradigm infuses all thinking, decision making and action, which ensures dysfunctional effects for project management systems and tends to send them “out of control”. Each senior functional manager (and their subordinates) is primarily driven by the objectives of their functional area, with little motivation to consider the relative value of their projects against the projects of other functional areas, and with little or no ability to assess whether the resources required to undertake their projects are available. Consequently, senior functional managers unilaterally approve and initiate projects without considering broader organizational objectives and resource constraints, much energy is wasted in battles between these managers to secure limited resources for their projects, priorities for projects change frequently, the number of projects “on the books” grows well beyond organizational capacity with the result that less and less is achieved, and the execution of the organization's strategy is slow and fragmented, if it is achieved at all.
Traditional Power Relations and Cultural Assumptions are Undermined
Alsène (1999, 374) explains how the cross-functional integration required by projects is usually unwelcome in organizations because it undermines existing power relations: “Clearly, none of [the] “permanent” forms of organization is truly inclined to make room for temporary structures of the project type. In other words, the implementation of a project structure represents, in nearly all enterprises, a deviation relative to the existing order”. All parties concerned, it is argued, fear the establishment of temporary autonomous structures due to loss of personal influence. Bishop (1999) describes how the political obstacles to cross-functional project teams and approaches are daunting: the senior decision makers who are required to sponsor such change are functional managers whose authority derives from the functional hierarchy and the status quo, and they therefore stand to lose the most.
This situation generally leads to power struggles. Payne (1993, 239) describes how vested functional interests attempt to reassert their influence by making inappropriate intrusions into the management of project teams: “The functional managers want to know what is going on, as they perceive a diminution of their status and influence, when a Project Manager is given control over “their” staff. They therefore want to attend all the meetings, to make sure they are not losing out in some way”. Bishop (1999, 9) observes that vested functional interests resist the authority of project managers and sabotage the efforts of project teams: “…it is the functional departments (that often control the resources and information vital to the success of the cross-functional team) that can and often do sabotage the efforts of the cross-functional team”.
Functional interests also seek to implement an “assembly line” approach to the management of projects. The PMBOK® Guide (2000, 20) describes how the functional hierarchical organisation may structure a project as a series of projects that correlate to the boundaries of the functional areas: “when a new product development is undertaken…the design phase is often called a design project and includes only engineering staff”. Similarly, project phases are often structured in accordance with the boundaries of the functional departments, where “each functional area works in isolation on their part of the process and then passes the activity to the next department in a serial decision making process” (Bishop, 1999, 6).
Management Challenges for Organizations that Adopt the Management by Projects Approach
We suggest, based upon our analysis of problematic features of the multi-project environment, that there are 5 critical management challenges for organizations that adopt the management by projects approach:
- Development of a comprehensive, integrated, balanced and holistic project selection capability;
- Development of integrated, holistic, and institutional risk and benefit management capabilities;
- Integration of project based learning and knowledge into the broader organization;
- Organizational transformation to remedy dysfunctional structures and practices; and
- Management of power.
Project Selection Capability
In the need for a project selection capability is converged each of the problematic features of the multi-project environment, which establishes it as the most evident and perspicuous of the critical management challenges facing organizations that adopt the management by projects approach. Platje, Seidel and Wadman (1994, 100) explain that “[i]n a multi-project organization, the simultaneous management of the throughput times, resource allocations and costs of the projects is a complex process of balancing the (often conflicting) interests of multiple participants”. However, herein lies the means to a rigorous understanding of what might be described as the mandatory requirements of an effective project selection capability – an effective project selection capability is comprehensive, integrated, balanced, and holistic.
A project selection capability is:
- Comprehensive, if it provides the means to assess the relative importance of heterogeneous collections of projects with diverse economic and non-economic value drivers;
- Integrated, if it provides the means to establish “strategic trajectories” comprised of several component projects, for example, innovation strategies;
- Balanced, if it provides the means to sequence projects according to their relative importance without violating organizational and environmental constraints. In this context, organizational constraints refers to organizational capacity – i.e., limitations on time, human and financial capital. Environmental constraints refers to mandatory imperatives and interdependencies between projects, for example, direct dependencies;
- Holistic, if it provides the means to consider both active and proposed projects simultaneously for a given resource pool.
Risk and Benefit Management Capabilities
The need for risk and benefit management capabilities is driven by the fact that projects are highly interdependent in a multi-project environment. As with project selection, herein lies the means to a rigorous understanding of what might be described as the mandatory requirements of effective risk and benefit management capabilities – effective risk and benefit management capabilities are holistic, integrated, and institutional.
Risk and benefit management capabilities are:
- Holistic, if they provide the means to elicit, analyze and respond, not only to the intra-project impacts, but also the inter-project impacts of events. Platje, Seidel and Wadman (1994, 102) state that “[s]ince the projects in the portfolio are mutually dependent…project leaders and department heads cannot only focus on their own project or department. Equally as important as individual project-team members jointly defining and executing mutually dependent activities in their project is teamwork at the portfolio level”. It would be unusual for an event that has a risk impact upon one project not to also have a flow on risk impact upon several other projects. For example, a delay against schedule in one project will cause other projects to be delayed because of resource sharing or direct dependency;
- Integrated, if they provide the means to manage the interrelationships between risks and benefits. Because benefits accrue from project deliverables the risk impact of an event also has a direct and measurable benefit impact – for example, an event that causes a delay to schedule will delay the start date planned for the accrual of benefits;
- Institutional, if they are proactive, regular, investigative and systematic, rather than occasional and responsive, in nature.
Learning and Knowledge
Turner, Keegan and Crawford (2000) state that project-based organizations generally fail to:
- Capture their learning from their successes and failures on past projects
- Expose apprentice project professionals to organizational learning gained through projects; and
- Encourage project teams and professionals to reflect on their own experiential learning.
In order to integrate into the broader organization the experiential learning that occurs, and knowledge that is created, at the project level, project-based organizations need to develop new repositories and new practices for the capture and access of such experiential learning and knowledge. This goes far beyond establishing project management competency standards and accrediting project management professionals within the organization.
It is essential that organizations that adopt the management by projects approach explicitly address organizational structures and practices that prove dysfunctional in a multi-project setting. In some cases this is a simple matter of efficiency, the achievement of economies of scope, but in other cases the change required is profound and paradigm shifting. Our experience is that efforts to establish project selection and risk and benefit management capabilities face failure if structural aspects are not addressed (Fenech & Dovey, 2004).
Firstly, project-based organizations using an assembly line model need to transition to an autonomous cross-functional teams model. Bishop (1999), surveying a number of published studies, identifies the following advantages of cross-functional project teams:
- Speeding up of overall cycle times by reducing coordination and knowledge transfer delays incurred where sequential activities are performed by different people or groups;
- Faster decision making because the decentralized decision making process abrogates the need to follow intra and inter departmental protocols;
- Improved flow of communication;
- Increased knowledge at lower levels of the organization; and
- Less likelihood of rework, redundancy and inappropriate activities.
Secondly, project-based organizations need to transition to a project structure in which resources are generally allocated to (temporary) project teams, and functional units and line management are far less significant than the project teams. Sauer, Liu and Johnston (2001), in a study of Australian construction companies with projectized structures, urge adoption by organisations in other industries. Alsène (1999, 368) argues that: “…the project structure appears to be the most appropriate structure to use for projects aimed at bringing about internal changes in enterprises (implementation of a new computer system, institution of new rules and procedures, establishment of a new organizational structure, etc), as soon as these changes become moderate to broad in scope”.
Many project-based organizations have recognized the need to restructure but have gone only part of the way, settling for a matrix structure. A matrix structure combines both functional specialization and cross-functional business product or project specialization; a product or project structure is superimposed upon the existing function based structures and resources from vertical units are assigned to horizontal units (Alsène, 1999; Van Der Merwe, 2002). Typically, individuals assigned to project teams “remain under the authority of their functional hierarchical superior, who keeps and eye on them, notably on the administrative level (workload, performance evaluation, continuing education, etc)” (Alsène, 1999, 367). It is argued that the matrix structure provides the “best of both worlds”, preserving “the benefits, such as information sharing and continuity, of the functional-department structure, while enabling cross-functional coordination on a project basis” (Payne, 1993, 240). However, in our view this reasoning is fatally flawed, firstly because the matrix structure exacerbates political intrigue – the “project-team member has 2 masters, his/her manager and the Project Manager…[t]here is a tendency for a power struggle to develop between the functional manager and the Project Manager for control of the staff member” (Payne 1993, 240) – and secondly because the materiality of functional information sharing and continuity must be questioned in a management by projects context, where cross-functional information sharing is paramount.
Thirdly, project-based organizations need to create new entities to fulfill the responsibilities that come with new project selection and risk management and benefit management capabilities. For example, the enterprise PMO has become increasingly popular in recent years.
Fourthly, project-based organizations need to integrate existing practices with new project selection and risk and benefit management capabilities. For example:
- Project management practices (which in the case of IT organizations includes system development practices) – alignment of project lifecycles and phase boundaries with macro level approval cycles, and definition of project activities to create the required inputs for macro level decision making;
- Reward systems – redefinition of incentives to motivate senior managers and their subordinates to support enterprise level project priorities and schedules, rather than narrow functional project priorities;
- Strategic planning – incorporation of project selection outputs in strategic planning, and moving from annual to more regular (bi-annual or quarterly) planning cycles.
Management of Power
Curiously, despite overwhelming evidence of dysfunction resulting in out of control project management systems, and of superior alternative ways of organizing the enterprise, “the functional structure remains the structure that is used most for projects of all kinds” (Alsène, 1999). In our experience, this is due to a failure to effectively manage power relations while implementing change resulting in the sabotaging of change initiatives (Fenech & Dovey, 2004). The political dimension cannot be ignored which demands courage from business leaders. Sauer, Liu and Johnston (2001) state that moving to a projectized environment “means being prepared to weaken the authority of technical staff in functional units so that Project Managers can secure the team members they want and be assured that they have their full commitment”. If a matrix structure is adopted as a compromise to maintain political harmony it may very well be the worst of all worlds.
Evaluating Project Management Maturity Models
Based upon our analysis, a rudimentary checklist for evaluation of project management maturity models should include the following questions:
- Is guidance provided for establishing a project selection that is comprehensive, integrated, balanced, and holistic?
- Is guidance provided for establishing capabilities in risk and benefit management that are holistic, integrated, and institutional?
- Is guidance provided for integrating project based learning and knowledge within the organization?
- Is the need for organizational transformation addressed? Does this include transitioning from assembly line to autonomous cross-functional team models, structural redesign, establishing new organizational entities, such as PMOs, and aligning and integrating existing practices with new project selection and risk and benefit management capabilities?
- Is the need to manage power during the implementation of the project management maturity model addressed? Does this include the types of cultural and political resistance that may be encountered and specific and practical advice about countering such resistance?
The management challenges that have been brought on by the adoption of the management by projects approach are profound. In addition to demanding new sophisticated organizational capabilities, they strike at the functional core – what Zuboff (2003) calls “the deep structure” – of the classical functional organizations in which most people work. Because of this, in our experience, many organizations and their senior managers are in denial about the challenges that they face. It may be also the case that we in the project management profession are guilty of treading too carefully around the material issues: in selling the benefits of project management within our organizations, it doesn't help if one rocks the apple cart too frequently. However, if project management maturity models are to be an effective tool, rather than just another management fad, they must not dance around the edges but openly and directly address the management challenges faced by organizations that have adopted the management by projects approach. We believe that our analysis and evaluation checklist makes a contribution towards achieving this.
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© 2005, Bryan Fenech
Originally published as part of 2005 PMI Global Congress Proceedings – Singapore