What does your future look like?
In 1996, the Project Management Institute (PMI) issued a new A Guide to the Project Management Body of Knowledge (PMBOK® Guide) that, for the first time, included an Integration Knowledge Area. Ten years ago, few people had heard of programs or project management offices (PMOs); today they are more and more the norm. In the last five years, the most progressive organizations have adopted project management methodologies and processes on a large scale and integrated portfolio, programs, and projects into the business. These facts demonstrate a trend toward a better integration of project processes and disciplines in organizations in general and project-based organizations in particular.
How will these trends and the increased turbulence of the business environment affect the future project management beyond the management of single projects?
Until recently, the scope of project management has been obvious for anybody that practiced in the domain: “Projects have a beginning and an end and deliver results in a controlled manner.” All the rest is operations! However, as the project approach is gaining more and more ground at the organizational level, boundaries are becoming blurred between the domain of projects and the rest of the business. PMI is promoting “making project management indispensable for business results©” as their new slogan. At PMI® Global Congress 2010—EMEA, when asked about the future of project management in organizations, Greg Balestrero, then CEO of PMI, stated: “Projects, programs, and portfolio need to be seen as a whole, not as discrete areas of the business and to be truly effective, portfolio management should cover all business activities, not just projects.”
How will this blurring between project management and the rest of the organization affect our work in the future? How will it change your role and responsibilities as a project, program, portfolio, or PMO manager?
In parallel to the trend to integrate projects in organizations, recent events have outlined the need to renew organizations. How can we integrate projects, programs, portfolios, and PMOs within organizations to make them more competitive and how will it affect your project space and your roles and responsibilities as practitioners?
This paper will discuss how the project management space needs to be redefined and how it will affect practitioners.
Evolution of the Project Business Environment
In the last 15 years, we have witnessed the emergence of new organizational forms; management authors have identified many reasons for this, but two major causes are often put forward:
1. Increased turbulence caused by rapid change, deregulation, and globalization has forced managers to be more responsive.
2. Increased complexity has created higher interdependence of tasks within organizations and required major structural changes, bringing new means of coordination and increasingly modular organizational forms.
However, the current organizational context is still heavily dominated by traditional 19th and 20th century mechanistic, control-based organizational models (Clarke, 2004). The problem is that a mechanistic style of management tends to keep companies close to the static state because it minimizes interactions among its components. Mechanistic management is appropriate when goals are clear and when little uncertainty exists in the prevailing environment (De Meyer, Loch, & Pich, 2002).
In parallel, project-based organizations (PBOs) have increasingly been reported as an emerging organizational form and many organizations in which project management was adopted on a wide scale in the 1990s have now matured.
Siggelkow and Rivkin (2005) defined three specific contexts for firms operating in turbulent and complex environments:
1. Turbulence: In this situation, firms need to improve performance quickly to achieve outputs before conditions change. They need to focus on execution to get quick results to specific problems.
2. Complexity: This is a case in which firms need to be able to explore a number of possible solutions before making a final choice. They need a number of sound alternatives to increase the quality of decisions on an ongoing basis.
3. Combined turbulence and complexity: This compounded condition requires balance between speed and exploration. Typically, it is an approach that combines regular feedback loops and a capability to react quickly.
Obviously, some areas of the organization will also operate in a low turbulence, low complexity zone. This is the area of ongoing execution and continuity.
Figure 1 represents these four areas as quadrants of a matrix.
Exhibit 1: Organizational context.
As shown in Exhibit 1, high turbulence is typically associated with change, which usually generates uncertainty, whereas low turbulence is associated with ongoing processes. High complexity requires a decision-making approach to resolve ambiguity before taking action, whereas low complexity means that action can be taken and people can focus on execution.
Traditionally, organizations have evolved in a low turbulence and relatively low complexity environment; managers could rely on rational decision making and a linear decision process. Planning was generally predictive, aiming to predict the future as accurately as possible, which was likely because of the stability of the context. “Modern” project management has been developed in the environment where efficiency and reliability are the main measures of value and use of resources (time and cost) and delivery of requirements (scope and quality) are the measures of success. Continuity and risk avoidance are typically the two main objectives of management in this context.
Recently, as the context of organizations has evolved, other management approaches have come to the forefront, bringing about an emphasis on benefits and functions rather than features and characteristics. Program management has been advocated to realize strategic objectives and deliver benefits, and agile management has been promoted to capture user requirements as they evolve, developing the product in parallel with its delivery. In these cases, planning is adaptive and delivery is based on an iterative decision process consisting of a series of small ongoing decisions in line with an evolving strategy.
Hambrick and Fredrickson (2006), two well-known management authors, recently wrote, “A strategy […] is an integrated, mutually reinforcing set of choices […] that form a coherent whole. [It] can evolve and be adjusted on an ongoing basis” (p. 57).
In the current economic climate and fast-moving context, generating value while remaining competitive has become a key issue for sustainability and survival in organizations. The “project approach,” which includes a number of project-based disciplines, enables organizations to stay focused on delivering results and to be responsive in a continually changing environment. And, in recent years, more and more organizations have been turning to project management to manage their change activities to become what is now referred to project-based organizations (PBOs). But, experience and research have shown that most organizations are not set up to reap maximum benefits from the project approach and that benefits are lost because the different project disciplines and methodologies are not in synergy and the project approach itself is not integrated within the overall organizational context.
From the Management of Projects to Project Management
On October 2, 2008, at a Forbes Leadership Series meeting in Palo Alto, CA, Rich Karlgaard, publisher of Forbes magazine said: “The practice of project management will be the activity that makes or breaks many global companies in this economic environment.” Like Karlgaard, more and more organizations are accepting the fact that project management can give them the means to deliver strategy effectively and efficiently. Many have realized that it needs to be better integrated with other organizational activities.
Project management is a standardized methodology that enables organizations to deliver tangible results in an organized way. Project management methodologies have been formalized in the second half of the 20th century and they typically concern the delivery of single projects. Most writers and practitioners recognize that the first “modern” project was the late 1950s Polaris missile, a nuclear-armed submarine-launched ballistic missile built during the Cold War by Lockheed Corporation for the United States Navy. For many years, project management methods have been used to deliver products like buildings, manufacturing processes, defense equipment, and others.
In the last two decades, as the information technology (IT) industry adopted project management, and IT managers have become more prominent in the organizational hierarchy, project management has been applied to the delivery of more and more complex “solutions.” This situation, combined with the adoption of project management methods for a range of endeavors by governments, the financial industry, pharmaceutical research, telecommunications, large consultancies, and others, has led to the advent of complementary disciplines like complex project management, program and portfolio management and the creation of PMOs (project or program management office and their derivatives) as a structure to organize the practice of project management across the organization.
Traditional project management methodologies are embedded in a performance-based approach, and they promote an “uncertainty-reduction” process (Winch, Usmani, & Edkins, 1998). For example, the PMBOK® Guide (PMI, 2008a) emphasizes the development of a baseline and its control as project management’s key concepts (Winch, 2004; Jafaari, 2004; Cooke-Davies, 2004). Contrarily to other authors who claim that project management should change to adapt to this changing context, I believe that traditional project management is ideally suited to deal with turbulent environments where uncertainty is high and ambiguity is low. To be successful, projects require a well-defined scope and defined parameters (low ambiguity), which are typically expressed through the project charter. On the other hand, project management delivers measurable results relatively fast and can deal with high uncertainty through planning and control, using tools like the work breakdown structure (WBS), cost and time estimating, risk management, and earned value.
As practitioners started applying project management concepts to more complex projects, to the management of strategic objectives or to the management of multiple interrelated projects to produce strategic benefits, they recognised the limitations of traditional project management techniques. Well publicised large scale studies [have] exposed the failure of traditional project management methods to respond to emergent situations and to ambiguity, as well as the lack of integration between strategic intent and the results generated by projects. (Thiry, 2010, p. 13)
One of the key aspects of a project’s success is its focus on short-term results and its capability to deliver those results within preset parameters. This, potentially, gives project-based organizations enormous flexibility to adjust quickly to emergent inputs. However, organizations typically manage projects individually and often have no overarching strategy to select projects and harmonize their outputs. If the environment becomes more complex, a demand for additional information, which, in a simple environment would lead to a better understanding of the problem, can lead to added complexity by confusing the issue and making it more ambiguous. Traditional project management cannot be applied anymore and different methods are required to deal with the situation.
In the last 10 years, the discipline of program management has evolved to offer a possible resolution to this issue, filling a missing link between project results and strategic objectives. Program management has been defined as “The governance and harmonized management of a number of projects and other actions to achieve stated business benefits and create value for the stakeholders” (Thiry, 2008a, p. 73).
In parallel, project portfolio management has evolved to link projects and programs with the corporate strategy of the organization. As it evolves, it becomes more and more embedded in the organization’s governance processes. Project portfolio management has been defined as “The process of analysing and allocating organisational resources to programmes and projects across the organization on an ongoing basis to achieve corporate objectives and maximise value for the stakeholders” (Thiry, 2008b, p. 50).
Finally, the PMO has evolved from a simple project support function to a well-disseminated organizational structure that can vary from a single person offering specialist support to a complex web of functions distributed at different levels of the organization. Large-scale studies on the nature of PMOs (Business Improvement Architects, 2005; Hobbs & Aubry, 2005) have demonstrated that PMOs are often restructured or closed, on average every two years. In addition, there is no single model for the PMO, but rather a myriad of structures that represent the culture and context of their respective organizations. A recent study conducted by Brian Hobbs (2007) for PMI identified 27 functions for the PMO. However, Hobbs has managed to group them into five major “groups”:
Group 1: Monitoring and Controlling Project Performance
Group 2: Development of Project Management Competencies and Methodologies
Group 3: Multi-Project Management
Group 4: Strategic Management
Group 5: Organizational Learning
As shown earlier, in the last 50 years, project management has evolved from a single project delivery methodology into a range of disciplines aimed at implementing an organization’s strategies. This has required practitioners of project management to evolve in different directions and develop new skills. Traditional managers of projects have sought new tools and techniques to help them manage single projects; PMI has responded to this demand by creating a number of new guides and standards and developing certification in specialized areas like scheduling, risk, earned value, and others.
On the other hand, some traditional project managers have been attracted by new opportunities like program management and portfolio management or even by more senior positions like head of projects or head of PMO. These practitioners have had to develop new skills, and project associations, for example, PMI and Office of Government Commerce (OGC) have led the offensive by issuing new guides and standards in these areas. In the program area, the Standard for Program Management (PMI, 2008c) and OGC’s Managing Successful Programmes are two resources. For portfolio management, practitioners can consult the Standard for Portfolio Management (PMI, 2008d) and OGC’s Management of Portfolios. New certifications have also appeared for program practitioners and portfolio managers.
Although in most cases project management knowledge is deemed important to practice in these new areas, it is not necessarily an essential condition. Some of the skills required include making decisions that advance strategic and business objectives and having a broad view of organizational culture and processes. Specific skill areas include organizational knowledge, strategic vision, environmental awareness, leadership, people skills, and political acumen.
In summary, the main skill differences between the management of projects and program and portfolio management are:
• Responsiveness and tolerance to ambiguity;
• Understanding of strategic and business issues;
• Capability to adopt a systemic approach; and
• Intuitive decision making and lack of verifiable data.
Because projects deliver tangible results within a limited timeframe and a contained budget, they are the ideal method to manage organizational flexibility, because results can be quickly assessed and each project investment can be limited, enabling the organization to readjust its strategy quickly. In order to be effective, this concept should be set in the context of a coordinated project management approach that includes program and portfolio management. A coordinated project management approach that helps define and maintain a “coherent vision,” offers a systemic approach to the management of strategic decisions and organizational value. In this context, programs and projects are intended to cope with turbulent and combined turbulent-complex situations while portfolio and strategy ensure adherence to the vision.
Integrating the Project Approach and the Business
Studies in strategy implementation have demonstrated that strategies are seldom implemented as planned. Strategy analysis, formulation, and implementation are not a linear process, but the three activities are going on concurrently all the time and strategies are therefore formed incrementally. A strategy is formulated and then reformulated on a regular basis, based on results. A recent survey of more than 1,000 CEOs (PricewaterhouseCoopers [PwC], 2009) outlined agility and responsiveness as an important competitive advantage; 95% of respondents identified the ability to adapt to change as critical (65%) or important (30%). Hambrick and Fredrickson (2005) said, “The best strategies for today’s turbulent environment keep multiple options open and build in desired flexibility” (p. 61). Couto, Ribeiro, and Tipping (2010) stated, “To navigate such a rocky landscape, companies must be ready to repeatedly transform themselves—indeed, to institutionalize the capacity to alter strategies again and again—as business conditions require. But few companies are competent at doing this, although not for lack of trying.”
The danger for project management is to try to expand the traditional project vision to the greater context and to “reuse project-centric contents and approaches” (Hanford, 2009, p.1) for programs and portfolios. This is often the case and can be worrisome when an in-depth study subsidized by the PMI (Thomas, Delisle, Jugdev, & Buckle, 2000) identified the gap between project managers’ “product-centric” and executives’ “promise-centric” views as one of the key aspects preventing executives from adopting a project approach at organizational level.
Large-scale studies have demonstrated that 30% of projects are cancelled before the end (The Standish Group, 1996; KPMG, 2005). And large, long-term projects—more than three years—are “significantly less predictable” in terms of time and scope (Cooke-Davies, 2002). These studies demonstrate that when the project-centric approach is applied to complex ambiguous ventures success is jeopardized. The two main competitiveness aspects of a project-based approach are the capability to adjust quickly through short-term well-defined projects and the capacity to maintain a strong strategic vision through programs and portfolios. This is why a coordinated integrated project management approach is the only real solution to consistently generate value in organizations. The project approach can also foster innovativeness through the social interaction context it creates in organizations (Thiry & Deguire, 2007), even more so if it includes different levels of the organization.
Whereas, before the end of the 19th century, a project team’s work was fully integrated with the project’s ultimate goal, today’s project teams have become detached from the value creation aspect or the project. In line with the Taylorist stance adopted by corporations since the beginning of the 20th century, “modern” organizations from the 40s, 50s, and 60s have created specialist units and methods dedicated to managing projects (Morris, 1997). These units typically focus on the deliverable of the project, relying on the sponsor organization to link the project outputs with the expected outcomes.
In 2008, the Project Management Institute (PMI) launched the second edition of the Organizational Project Management Maturity Model (OPM3®). In it, organizational project management is defined as “The application of knowledge, skills, tools, and techniques to organizational activities and project, program, and portfolio activities to achieve the aims of an organization through projects” (PMI, 2008b, p. 185). Exhibit 2 displays PMI’s vision of integrated PBOs, which is in line with the current organizational vision of projects.
Exhibit 2: Traditional PBO structure (adapted from Standard for Portfolio Management [PMI, 2008]).
Literature and practice point to the fact that project management integration currently focuses on the product delivery area of the organizational process (Thomas et al., 2000). In a traditional PBO, the focus is on single project management, and multiproject management focuses on resource allocation and piecemeal emergent strategies, which cover the high complexity area, but with a short-term risk avoidance view (Exhibit 3). Project managers are expected to play only product delivery roles. There is a clear separation between each area of business and contacts, including requirements, reporting, and handover. These are made through established hierarchical channels.
Exhibit 3: Difficulty of integrating projects and business functions in traditional view.
As early as 1959, Gaddis’ article in Harvard Business Review made organizations aware of the importance of projects for linking strategy and results. But projects were and are still today viewed as isolated from the overall organizational purpose. Most of the project management literature too, when considering project organization, refers to the organization of the project itself (Söderlund, 2004) rather than the integration of the project within the organization. When considering the whole organization, most prominent project management publications refer to three types of organizations: functional, matrix, or projectized (PMI, 2008a; Meredith & Mantel, 2008; Kerzner, 2009). This narrow view fails to consider many of the developments that have occurred in business over the last 30 years.
In the last 30 years, the essence of the firm has changed with important consequences. Human capital (industry or firm-specific skills and knowledge— the “know-how”) and the information technology that supports it, have become more and more important compared to physical assets (the “know-what”), which is transferable and mobile. This has initiated a break-up of many traditional vertically integrated firms and means that the organization’s boundaries are becoming more fluid and that they are more and more defined by a complementarity of functions rather than by imposed structures.
As organizations that have adopted the project management approach are maturing and new forms of organization are developing in line with developments in the organizational field, the following statements best summarize the issues facing this development. Lindkvist (2004) stated: “We have to move beyond such bureaucratic and cultural ruling in governing a highly individualized, project-based firm” (p. 19). KPMG’s survey report on IT project management (2005) stated that “While the discipline of project management is maturing in professionalism and profile, only a minority of organizations invest in project management capability development. … Ultimately, integrated governance is the key to significant and sustainable success and delivering your commitments” (p. 2).
In summary, a well-integrated PBO would be expected to display strong interrelationships between its projects and both its business and corporate strategies; in such an organization, project managers would be expected to be appointed in senior management roles, or senior managers would be expected to view project management as an integrative process to deliver value to the business.
What Does It Mean for YOU?
Few, if any, papers in the project community of research and practice challenge the current dominant organizational paradigms. Instead of looking for ways to adapt the organization to the project-based approach, they look for ways to “force-fit” the project approach to existing organizational paradigms of which the “matrix organization” is a good example. Most matrix organizations experience communication and resource allocation problems, especially between line managers and project managers. This generates issues at the executive level, when conflicts are escalated and disturb the “political harmony” of the organization to a point that, even when the value of a “projectized” approach to deliver strategy is demonstrated, it can still be challenged by the organization’s establishment because of power issues (Dovey & Fenech, 2006).
It is obvious that mature project organizations need to adopt approaches to integrate projects and other organizational activities. When set in traditional structures, project-based organizations (PBO) display a number of weaknesses like:
- the linking of projects to organizational business strategy and processes;
- the perceived threat of the project approach to traditional management systems; and
- the difficult grouping of stakeholders coming from different perspectives.
The great majority of organizations that have adopted project management as their main standpoint still structure themselves in a top-down hierarchical approach, missing the opportunity to integrate projects with the business. For a number of years now, our group has advocated a more flexible and integrated view of the PBO. This view is supported by research in innovation and new product development theory and practice, which provides convincing insight into the means to both increase short-term advantage and maintain an organization’s competitive edge over time.
Given that successful innovation requires flexible organizational structures, in which cross-functional teams or disciplines organize around solutions, well integrated PBOs could be a possible answer when their structures provide horizontal integration from business strategy to operational benefits and vertical integration between corporate objectives and the prioritised portfolio of projects. It is also very likely that the adoption of an integrated wide-scale project approach could enhance an organization’s capacity for innovation. (Thiry & Deguire, 2007, p. 18)
The solution lies in the concept of an end-to-end (E2E) process from the inception of a need, to its fulfillment where all the elements of the organization collaborate toward the satisfaction of the customer or sponsor. This is a cyclic process where each department has a role, and project management is central to the value realization process. Exhibit 4 shows a simplified version of that type of process.
Exhibit 4: E2E process in integrated PBO (© Michel Thiry, 2010).
This approach, which is shared by more and more organizations and advocated by some of the most influential business thought leaders, opens up new horizons for project managers who are willing to work in a more integrated way and let go of the single project approach. The integration of the project management approach in organizations requires a rethinking of the whole project approach from single project management and isolated program, portfolio, PMO, and OPM concepts to a fully integrated organization-project concept.
In regards to the complexity/turbulence view, the integrated E2E process starts with operations where needs are acknowledged based on issues and opportunities, and change actions are identified and aligned with the corporate and business strategies through portfolio management. Programs are developed based on value criteria and specific strategic objectives and projects are initiated within these programs to deliver new capabilities for the organization. Program management also insures the transition and integration of these capabilities within the business. Exhibit 5 represents this process.
Exhibit 5: Moving project management outside the box.
Project practitioners can move from the traditional low ambiguity/high uncertainty area into the more complex area of required managing value and ultimately programs, but they will have to accept a greater degree of ambiguity, which means a greater focus on decision-making; this requires a greater reliance on conceptual and business knowledge rather than technical problem-solving knowledge. They will also need to focus on stakeholders’ benefits rather than simply the product; this requires good understanding of the operations side of the business.
Portfolio management is an ongoing process and as such, is not directly in the sphere of knowledge of project practitioners, but more and more project practitioners are moving into this area through the PMO. Portfolio management is efficient only if it encompasses the whole investment portfolio of the organization that is traditionally associated with finance. Again, it requires a good grasp of the corporate and business strategies and a sound knowledge of operations and project management.
Finally, some project practitioners will want to move into the executive level of the organization. I would suggest that this does not involve the creation of a C(3)PO (chief project, program portfolio officer) role, but rather to seek existing “C” level roles. Our experience, which is substantiated by research, shows that the creation of a strong project structure or role often clashes with existing organizational structures and roles and triggers a negative image for project management as a whole.
There are currently two perspectives on the future of project management. The first is that of project management as a distinct structure in the organization with all projects grouped or directed under a CPO (chief project officer) or EPMO (enterprise program management office). The second view is that of integrated project practices within the whole organization and collaboration between operations, management, and projects .
In support of the first approach, Crawford, rightly argued for a better link between strategy and projects and promoted the centralization of project management under a CPO and an EPMO and stated that “The PMO serves as the critical link between strategic vision and the work of the enterprise” (Crawford, 2010, p. 2). He argued that the measures of project value are: reducing costs and improving timing, quality and productivity, which are clearly linked to the product-centric perspective of projects. Wideman (2005) defined the CPO as the person “Responsible for a group within an organization providing prioritizing, resource supply, support, and internal consulting to ensure that nominated projects are carried out consistently and successfully in accordance with corporate strategies. [That] may or may not have responsibility for overall direction and management of projects and customer satisfaction with the products.” (slide 4 of 8). This role includes accountabilities like establishing project management policies and guidelines; prioritizing projects; recruiting skilled staff; assigning project managers; ensuring satisfactory liaison with customers, etc. Although I have quoted these Crawford and Wideman, they are not the only ones to promote this view; in fact, most project management practitioners see the future of project management as a takeover, rather than a merger.
In this paper, I have already warned about the pitfalls of the first approach that is proven to create backlash in organizations and keeps project management in the product-centric area. Although one has to recognize that the second approach is more difficult to implement and definitely requires a longer-term view, the first approach typically reinforces the existing organizational structures and focus that has led us in the economic turmoil that we have experienced in the last few years. Our group firmly believes that organizations will have to change; we have observed that the most progressive have already restructured themselves in regards of increased turbulence and complexity, and project management is an ideal tool to support responsiveness and innovation, if implemented as an integrative concept. Our view is that, as organizations evolve towards a more responsive and flexible perspective, the project management approach should take into consideration a number of issues:
– PMOs could be seen as structures to support the implementation of an integrated project management approach in the PBO; as such they could be temporary.
– Projects and programs are about the execution of change decisions and the promotion of innovation. In this context, program and project managers should be empowered and encouraged to be creative.
– Portfolio management should not isolate projects from the rest of the organization, but investigate and prioritize the whole range of organizational activities.
– Project managers have traditionally been rewarded on efficiency and performance; the focus should change to rewards on results at organizational level, thus encouraging collaboration between operations and projects.
According to a recent CEO survey (PwC, 2009), scarcity of experienced resources and understanding of customer needs are two of the current concerns of CEOs, thus:
– Experienced project practitioners should be ready to play more of an internal consultancy role and move from one project to the next as required by criticality.
– Project practitioners need to focus more on customer satisfaction and less on product performance.
Many opportunities are opening for project and program managers who are interested in broadening their career. In summary, project practitioners who are interested in widening their horizons should:
Generally move from a product-centric perspective towards a benefit-centric perspective
– Develop decision-making skills over simple problem-solving skills
– Move from a baseline focus towards a results focus
– Understand financial requirements of programs and projects
– Develop integration skills over technical skills
Improve tolerance to ambiguity and complexity
– Acquire a strategic perspective of project and program impact
– Cultivate an aptitude to work with mixed teams from different areas of the business
– Develop their capability to rely on concepts rather than tools and techniques
– Depend on simple guidance over detailed rules
Cultivate transformational leadership and engagement skills
– Lead teams with no clear authority to engage stakeholders
– Foster negotiation, facilitation and collaboration over authority
– Promote opportunity seeking over threat avoidance
– Accept challenge as a way forward
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© 2011, Michel Thiry
Originally published as a part of 2011 PMI Global Congress Proceedings – Dublin, Ireland