Introduction
In developing the capability to effectively manage projects, organizations are faced with numerous decisions concerning issues such as the allocation of appropriate people to projects, project management systems, tools and techniques, organizational support to be provided to projects and the most effective governance structures for project-based organizations. Intentionally generic project management bodies of knowledge and standards provide basic guidelines concerning the practice of project management, but for practical use must be supplemented by an understanding and matching of the competence levels of people, the nature of projects, and the organizational and business environments in which projects are delivered.
Such concerns have resulted in the development, by organizations, of:
• Project management role profiles and job families
• Internal accreditation programs that relate competency levels of individuals to project types
• To roles in projects and in some cases to remuneration levels
• Fixed or flexible project management processes
• Different management and team structures for projects—such as strong and weak matrices, dispersed, virtual and collocated teams, and outsourcing.
Each of these initiatives requires decisions to be made as to how to classify projects, project roles, and aspects of the environments in which projects are undertaken.
Although considerable effort has been applied to the development of project management bodies of knowledge and practice standards there are no such standards available to guide decisions concerning classification of projects, project roles, project management processes and project environments. Therefore, many organizations have pragmatically developed and applied their own classification systems as a basis for decision making concerning resourcing and governance of projects. The ad hoc nature of such classification systems means duplication of effort as each organization (or division or business unit) invents their own system. There is also a significant reduction in opportunities for transferability within and between organizations due to differences in classifications. This is particularly relevant in the case of project management research where lack of accepted classification systems reduces the opportunities for progressive knowledge creation through meaningful comparison between studies.
This paper presents examples of approaches taken by a number of organizations to the classification of projects as a basis for matching of people, projects, processes and governance structures.
The material presented forms part of a research project commissioned by the Project Management Institute into potential classification systems for projects. The commissioning of this research represents a practical response by the Project Management Institute to needs of members and will be conducted in conjunction with corporate partners in North America, Europe, and Australia. This research involves identification of needs for project classification, of different classification systems used in practice as well as those reported in the literature, and an assessment of the suitability of different classification systems for use by corporations, practitioners and researchers for a range of classification needs.
Project Classification Systems
To date, classification systems for projects have been developed on an ad hoc basis for various uses.
Exhibit 1 shows a range of classification systems based on the size, complexity, or groupings of projects. These systems have been developed to provide guidance on the adoption of appropriate management systems, or the selection of project personnel, or the choice of project organization. What we see is that in different circumstances the size and complexity of projects is determined by:
• The scope and span of the project
• The number of functions or skills involved
• The location and source of risk
• The level of technical complexity
• Whether the project is stand alone or part of a larger system or program.
Another approach has been to classify projects by industry, sector, geographic region, by stage in the product or project life cycle, or by the strategic importance to the parent organization, Exhibit 2. This is usually for the selection of appropriate project management procedures. However, it is also useful for choosing the type of project organization appropriate to the project, or for ensuring the proper level of senior management support. Youker (1999) has pointed out that often what is important is not so much the sector that the project takes place in as the resource types that it draws on. An information systems project undertaken by a construction company will have the features of an information systems project rather than a construction project. However, all projects taking place in the public sector will take place against the background of the culture of the public sector, and so will be different from projects in the private sector—similarly with projects from different geographical regions. We can identify a project as occurring in a given country, but Turner (1999) points out that it will be different depending on whether the client or contractor or both is in an alien country.
Exhibit 1. Classifications of Projects by Size, Complexity and Familiarity
Exhibit 2. Classifications of Projects by Life Cycle or Sector
Exhibit 3. Classifications of Projects for Contract Type and Payment Terms
A classification approach used for centuries is in the selection of appropriate forms of contract and contract payment terms, usually dependent on the risk associated with a project, or its complexity, Exhibit 3. This set of classifications draws on much of the above.
These classifications are used for several purposes, including:
• Selection of an appropriate project management methodology
• Selection of an appropriate project organization
• Selection of appropriate project personnel
• Definition management, and assignment of risk
• Certification of project personnel
• Definition of project data requirements
• Selection of appropriate key performance indicators
• Focus on appropriate success criteria and success factors
• Choice of appropriate legal, cultural and philosophical systems
• Choice of appropriate contract and payment terms
• Transfer of knowledge.
Project Classification Systems in Practice
In order to find out what project classification systems are used in practice, the real needs for classification and the benefits and possible problems of classification, focus groups were conducted with four organizations, two in North America and two in Australia. All four of these organizations have a strong engineering basis and could be described as project based. Two are public sector organizations, one responsible for infrastructure and the other for utilities. Both of these organizations focus on internal clients. The other two organizations are private sector consulting firms, focusing on external clients. One of these offers engineering consulting services and the other is emerging from construction focused project management consulting to offering of project management consulting services for projects ranging from construction to organizational change.
Two-hour focus group sessions were conducted with each organization and participants were asked to address the following issues:
• Project context
• Attributes of projects
• Project classification systems in use
• Needs for project classification
• Perceived benefits and problems of project classification.
Project Classification Systems in Use
Organizations were found to have multiple project classification systems in use, some formally recognized and others informally applied. Three of the participating organizations had a clear understanding and recognition of and acceptance of project classification and have systems in place that are both multidimensional in that they can be classified on several dimensions simultaneously and hierarchical in the sense that within a classification, subcategories exist that are specific to a class of projects.
Participants representing the fourth, and smallest of the organizations, the project management consulting firm, were resistant to the concept of project classification. Language used throughout the focus group reinforced a shared concern that classification of projects would undermine their autonomy, create barriers that would impede coordination and would reduce their ability to market their services to the widest possible spectrum of clients. It became apparent, however, that a number of implied and tacit classification systems exist and that some, although not initially recognized as classifications, are extremely important in both market focus and management to conduct their work. In fact, the primary project classification used by the firm is by client, which may be seen as a form of classification by sector. They also classify projects by strategic importance to the firm itself, including market positioning, profit potential, and risk exposure.
The other, and larger of the two consulting firms, although far more comfortable with the concept of classification of projects, also addressed sector, in the form of national or international focus, as their primary project classification level. One of the two public sector organizations identified source of (government) funding as a primary formal classification factor which can be considered as strategic, and the other classified first according to scope, which also includes budget and therefore funding issues.
Other project classifications in use by the four organizations, either formally, informally or by implication covered factors identified in Exhibits 1 to 3, including size (cost, value, duration); complexity and familiarity (simple, repetitive, technology, risk, number of disciplines, recurring assignments/similarity/“repeaters”); Sector (specialization, market, national/international, public/private sector, client); life cycle; strategic positioning, and contract type. Product of the project was also an important classification in use.
It is notable but perhaps not surprising that the primary level of project classification of the three largest of these four project-based firms also formed the primary basis for their corporate structure.
The Need for Classification Systems for Projects
Needs for classification of projects were evident both as primary needs or key drivers of classification systems in use, and as secondary needs. Primary drivers included:
• Allocation of project to responsible department
• Strategic positioning including profit and funding issues
• Matching of project manager to project
• Specialization/discipline
• Resource allocation
• Management needs of different contract types
• Marketing including credibility with clients.
Secondary needs identified and generally addressed at lower levels of hierarchical classification, informally or tacitly included:
• Reporting—including dissections for multiple purposes
• Benchmarking, performance evaluation and improvement
• Knowledge capture, transfer, retrieval (including a common set of keywords to facilitate benefit from past experiences)
• Common/shared language
• Definition and management of interfaces
• Aligning to and tracking of contribution to achievement of business goals (including prioritization)
• Budget allocation
• Basis for adaptation of processes and tools to projects.
Issues, Implications and Problems Associated with Classification Systems for Projects
Loss of Autonomy
A problem identified by this study is the potential for resistance to classification due to concerns of loss of autonomy. Such concerns were express by focus group participants from the smallest firm in the study (under 200 people) who are all professionals, operating in a fairly autonomous manner, with considerable independence. Strong personal relationships and credibility with clients, external to the firm, are seen as a major factor in corporate profitability. Reporting requirements and systems are relatively “loose” and flexible. This group was resistant to the concept of classification of projects, seeing it as potentially undermining their autonomy. They were reluctant to accept any formal approach to classification, preferring to operate on the basis of “tacit understanding,” where decisions (concerning classification) are “debated and understood, not rule bound.” They believe strongly that project managers should be matched to clients rather than projects.
Creation of Barriers or Silos
Concern was expressed focus group participants that classification would create “barriers or silos,” and impede “coordination across boundaries.” Related concerns expressed by participants from several organizations included potential for classification and specialization to impede mobility and integration.
Visibility
Projects can be made visible by inclusion in a classification system or rendered invisible by exclusion (Bowker & Star, 2000). Without prompting, a number of the participants pointed out that classification had the positive effect of making a project visible and therefore enhancing ability to gain access to resources. This was seen as particularly valuable for “niche and support” areas. The reverse of this coin is that projects that are not classified, such as those conducted for internal improvement or infrastructure, administrative and change projects do not receive the attention and resources necessary to assist in effective and timely delivery. An interesting variation on this theme is that “some projects such as systems development get hidden in the main project” and are similarly neglected to their detriment.
Summary and Conclusions
This paper introduces the PMI-funded research project into classification systems for projects and has presented some (but by no means all) of the common ways of categorizing projects. We showed that these led to three broad groupings:
• Projects by size, risk or complexity
• Projects by strategic importance, stage of the life cycle or sector
• Projects by contract form, payment terms or risk ownership.
We then presented the results of focus groups, demonstrating that organizations do categorize projects for management convenience and business need and for matching of people, projects, processes and organizations. We found that the organizations interviewed used some of the categorizations suggested in the literature, as well as others, including:
• Marketing and the interface with customers
• Categorization by product of the project
• Assignment of project finance.
We found that the categorization was often hierarchical and lower levels of categorization were contingent on the higher levels.
The categorization of projects is beneficial and useful to organizations, but it needs to be practically and not theoretically oriented. Focus groups confirmed that there are intended and unintended consequences of that need to be considered in development of classification systems, such as loss of autonomy, creation of barriers and silos and effects of visibility or invisibility due to inclusion or exclusion from a classification system.
