Operational excellence won't do it--toward a new project management maturity model

 

 

Aaron J. Shenhar and Joca Stefanovic
Wesley J. Howe School of Technology Management
Stevens Institute of Technology

Traditional Project Management Drivers

The current body of knowledge in project management is rich and growing. Since its inception as a recognized discipline in the late 1950s, project management has received increased attention: books have been published, applications developed, accreditation and certification established, and maturity models widely used. Yet, despite this impressive growth, project failure is a much too common outcome to be ignored. And the rate of project success remains unsatisfactorily low. As the literature shows, most projects fail to realize time and budget goals, many achieve only moderate levels of business success (Klaschke, 2003; Standish Group, 1994, 2001).

Why is it that we know so much about projects yet lack the know-how to do them right? Perhaps the field is missing something fundamental in its current understanding and comprehension of projects and project management. We contend that over the last fifty years, the project management discipline was primarily focused on process, efficiency, and “getting the job done.” Perhaps the best way to describe it is through the well-established drivers of project management. Traditionally, a project is considered successful if it is completed on time, within budget, and to specifications. It is the challenge of meeting the triple constraint— this iron triangle that drives projects and project managers towards successful outcomes.

Why Operational Excellence Is Not Enough

Meeting the triple constraint requires a well-structured project process, one comprising a careful approach to planning, execution, and monitoring. The Project Management Institute (PMI), through its well developed PMBOK® Guide, has driven this focus by identifying nine knowledge areas and dozens of processes that project managers should follow to successfully realize their projects. To test how well organizations are implementing project activity, the discipline has adopted the concept of maturity models to assess levels of capability in project execution (Pennypacker & Grant, 2003). These models, however are based—to a large extent—on processes, testing the structural integrity of an organization’s project management processes. In short, the current project maturity models are all focused on accomplishing the same result: improving operational excellence.

There is nothing really wrong with the traditional approach. It is simply no longer enough. Operational excellence alone does not always produce the relevant organizations results that are needed to thrive in today’s dynamic and competitive world. Because projects are initiated for business results, only meeting time and budget goals is not enough. Those who manage projects should aspire to achieve business results rather simply satisfy the triple constraint. Accomplishing this requires a new mindset, one that is more strategic in nature and more concerned with the business aspects of project success and the long-term business impact of project outcomes. Several studies demonstrate that project success is a multidimensional strategic concept (Shenhar, Dvir, Levy, & Maltz, 2001), and that it is time to develop a more strategic approach to project management (Shenhar, 2004).

It is also important to understand that project management is not just about following a process and achieving milestones. Project managers who accept the responsibility of implementing project to achieve business results will deal with the business and strategic aspects of their projects, they will recognize the right business perspective and they will build a unique strategy for their projects, one that will generate competitive advantages and help the product win in the market place (Shenhar et al., 2005). These strategic aspects must become a standard approach that project managers use to lead their projects and implement organizational processes.

With this, project managers also need to see themselves as leaders who deal with the human element of realizing projects. They must help their team realize their full potential and maximize their performance. They can accomplish this by inspiring and motivating their people. In sum, rather than focusing on achieving the triple constraint, project managers should worry about three—perhaps bigger—issues: the strategic, the operational, and the human element of project leadership.

Currently, a new and more strategic approach is evolving in project management. A recent study outlined a framework called Strategic Project Leadership® (SPL): It is a model that helps focus the project manager’s attention towards the strategic, the operational, and the element of leading projects (Cleland & Ireland, 2002). This study details five components for planning projects—strategy, spirit, organization, processes, and tools—and seven principles for implementing projects. (See Table 1.)

  Traditional project management Strategic project leadership®
Basic paradigm Projects are a collection of activities that must be executed on-time, on-budget, and to-specification Projects are strategic organizational processes that are initiated to achieve business goals
Perspective Operational Strategic; operational; human
Manager’s role Getting the job done—on-time, on-budget, and to-specification Getting business results; winning in the market place
Project success Meeting the triple constraint Achieving multiple dimensions: efficiency; customer; business; team; future
Project definition Project scope (SOW) Product; competitive advantage; strategy; scope
Planning Activity; schedule; budget Strategy; spirit; organization; processes; tools
Project reviews Progress; status; budget Customer needs; strategy; success dimensions; status

Table 1. Traditional project management versus strategic project leadership (Cleland & Ireland, 2002)

Toward the New Strategic Maturity Model

The next step in building a strategic approach to managing projects is to develop an integrative maturity model, one which tests projects according to the three dimensions of project leadership: the strategic, the operational, and the human. (See Figure 1.)

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This model is built according to the common structure of five levels in other maturity models (e.g., Pennypacker & Grant, 2003). It includes the following levels: (1) initial process, (2) structured processes and standards, (3) organizational standards and institutionalized processes, (4) managed processes, and (5) optimized process. But instead of just assessing how well a project follows a structured operational process, this model also tests the two processes related to strategy and leadership. Table 2 describes the structure of this SPL maturity model and its three major components. The maturity levels of each dimension are determined via a collection questions that characterize each dimension’s project activity.

  Level 1: Initial processes Level 2: Structured processes and standards Level 3: Organizational standards and institutionalized processes Level 4: Managed processes Level 5: Optimized processes
Strategic focus (6 Questions) Projects are sometimes focused on business on an ad-hoc basis Strategic aspects are partially addressed in some standardized form Strategic aspects are followed according to organizational standards Strategic aspects are managed and reevaluated as projects progress Strategic processes are optimized and integrated within an organizational level
Operational excellence (4 Questions) Operational processes are carried out ad-hoc on projects Operational processes are partially standardized on projects Operational processes are following an organizational standard Operational processes are managed andevaluated in light of other projects Operational processes are optimized and improved at the organizational level
Leadership (6 Questions) No specific focus on leadership issues Leadership processes are partially standardized on projects Leadership processes are consistently carried out according to an organizational standard The leadership processes are managed, evaluated, and improved in light of all projects Leadership processes are optimized and integrated at the organizational level

Table 2: The SPL Maturity Model Structure

Initial Assessment Results

We obtained the initial data from a pilot comprised of 35 projects carried out between 1995 and 2002. These projects involved new product development, both with derivative/upgrade products and breakthrough/platform products. Although these were developed within various industries, about 60% involved the high-tech industry. Project durations ranged from several months to several years and cost from tens of thousands to several billion dollars.

We started by assessing the strategic and operational dimensions only. We then ranked the projects as high or low in regards to these two dimensions. Low corresponded to level 1; high to levels 2 and above. The distribution of projects between the two dimensions is described in Figure 2. The results show that in term of operational excellence, the projects were almost equally divided between low and high levels (17 and 18 respectfully). However, the strategic focus dimension showed that more than 80% of the projects (29) ranked low on the strategic aspects of their management. This confirms our initial hypothesis that most projects do not focus on the strategic and business aspects of project management.

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Conclusion

This three-dimensional maturity model shows how many companies manage their projects and to what extent they focus on achieving operational excellence instead of accomplishing business goals. In coming studies, we expect to test the relationship between the higher strategic and leadership focus and the business results. But the real value of this model is to help companies understand that they must not only improve their operations but also focus their project efforts towards accomplishing business and leadership goals and towards educating their project managers to take on the higher leadership role that today’s competitive global marketplace demands.

Cleland, D. I., & Ireland, L. (2002). Project management: Strategic design and implementation. New York: McGraw-Hill.

Klaschke, G. (2003). What the CHAOS chronicles 2003 reveal. Cost Xpert Group.

Pennypacker, J. S., & Grant, K. P. (March, 2003). Project management maturity: An industry benchmark. Project Management Journal, 34(1), 4 – 11.

Project Management Institute. (2003). Organizational project management maturity model (OPM3®) – Knowledge foundation. Newtown Square, PA: Author.

Shenhar, A. J. (2004). Strategic project leadership®: Toward a strategic approach to R&D management. R&D Management, 34(5), 569 – 578.

Shenhar, A. J., Dvir, D., Guth, W., Lechler, T., Panatakul, P., Poli, M., & Stefanovic, J. (2005). What is project strategy. Paper presented at the annual meeting of the Academy of Management, Honolulu, Hawaii.

Shenhar, A. J., Dvir, D., & Levy, O. (1997). Mapping the dimensions of project success. Project Management Journal, 28(2), 5 – 13.

Shenhar, A. J., Dvir, D., Levy, O., & Maltz, A. (2001). Project success – A multidimensional, strategic concept. Long Range Planning, 34, 699 – 725.

Spikes Cavell Research Company. (1998). The bull survey. London: Spikes Cavell Research Company.

Standish Group. (1994). CHAOS: Project failure and success. West Yarmouth, MA: The Standish Group International, Inc.

Standish Group. (2001). Extreme chaos. West Yarmouth, MA: The Standish Group International, Inc.

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.

©2006 Project Management Institute

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