Project management systems

moving project management from an operational to a strategic discipline

DR. LYNN H. CRAWFORD
Professor of Project Management
The Mirvac School of Sustainable Development, Bond University, Australia
Lille Graduate School of Management, France
Director, Human Systems International Ltd.

DR. THOMAS G. LECHLER
Associate Professor, Stevens Institute of Technology
Wesley J. Howe School of Technology Management, New Jersey

Introduction: Does the Project Management System Fit the Business Strategy?

Although project management standards have, of necessity, focused on a generic approach to the management of projects, guided by what is applicable to most projects most of the time, there is a growing interest in the differences between projects and their contexts (Crawford, Hobbs, & Turner, 2006; Dvir, Lipovetsky, Shenhar,& Tishler 1998) and how this might influence their management. In line with this, several authors claim that the management of a project should be adapted to its specific characteristics (Wheelwright & Clark, 1992; Shenhar & Dvir, 1996; Balachandra & Friar, 1997). The unconditional use of project management standards is criticized, and a misfit between specific project characteristics and the chosen management approach is seen as a major source for project failure. The underlying hypothesis of this perspective proposes that project success is related to choice of the “right” management approach related to specific project characteristics.

Another group of authors suggests that the management of projects could be related to the strategy of the firm. This research stream analyzes the link between a single project and the strategy of an organization and has identified the existence of project strategies that are directly connected to a project's dynamic environment (e.g., Loch, 2000; Gunther McGrath & MacMillan, 2000; Pitsis, Clegg, Marosszeky, & Rura-Polley, 2003). According to these studies, a project is not always subordinate to the strategy of a parent organization but could, in fact, influence the organizational strategy. From this perspective, project success depends on the choice of the “right” strategy under specific contextual conditions.

Associated with differing perspectives on factors contributing to the success and failure of projects has been the development of three relatively independent research streams:

  • New Product Development: The strategic role of new product development and innovation (Takeuchi & Nonaka, 1986; Wheelwright & Clark, 1992; Hamel & Prahalad, 1994 Brown & Eisenhardt, 1997)
  • Entrepreneurship and Innovation: The strategic role of entrepreneurial efforts and innovation (Burgelman, 1983; Dess, Lumpkin, & McGee, 1999; Kanter, 1985; Abernathy & Clark, 1985; Gann & Salter, 2000; van de Ven, 1986)
  • Project management: As an implementation concept for time-constrained unique and complex tasks (Midler, 1995; Hobday, 2000; De Meyer, Loch, & Pich, 2002; Muller & Turner, 2007)

These three research streams co-exist, and each is addressing the implementation of unique, time-constrained and complex tasks from a different perspective. The common underlying hypothesis is that project success of such tasks or projects is related to a fit between either the characteristics of the single project and the management processes or the choice of project strategy and the project's context.

Even though these two types of “misfit” could cause project failure, the research streams only rarely (Payne & Turner, 1999) consider the influence of a corporate project management system on projects implemented within an organization. Projects are often embedded in the context of a system of management structures, standards and procedures or, as we call it, the project management system (PMS). However, the existing research streams tend not to address the possibility that project managers of failed projects might just have followed the specific rules set by the organization and that these rules may not “fit” the specific context.

Within the project management field, there has been recognition that factors contributing to the success or failure of projects extend beyond the direct control of the project manager and team leading to the development of interest in organizational project management capability (PMI, 2004; Crawford, 2006). This interest has been characterized by formulation of “best practices” and maturity models (Cooke-Davies, 2004a; Cooke-Davies, 2004b). These models and associated best practices, like standards for single projects, take a generic approach, effectively recommending that there is an ultimate goal for implementation of project management within organizations and an ultimate perfection to which all should aspire. So, while there is a growing interest in differential management of projects, there are pressures driving organizations aspiring to “best practice” to adopt similar project management systems regardless of the differences between the types of projects they manage and their corporate strategies.

This paper proposes that fresh light can be shed on challenges associated with the management of projects if the unit of analysis is changed not simply from the individual project (Level A in Figure 1) to the business unit, or the entire enterprise that provides the management systems and resources for the project (Levels C or D in Figure 1), but also to the “fit” or “congruence” of the systems of management used in the project at Level A with the underpinning needs of the enterprise at Level D if it is to accomplish its chosen strategy.

Units of analysis for research into the management of projects

Figure 1: Units of analysis for research into the management of projects.

In this study we propose that the causes for identified “misfits” between the specific project objectives and the management approach are beyond the level of a single project. This proposition allows connection of the three independent research streams mentioned earlier on a different level of abstraction. We argue that not only should the main strategic focus of an organization dictate the types of project that it undertakes but that it should also determine the configuration of project management systems used to plan and deliver its portfolio of projects. Viewed in this light, the perspective of main strategic drivers provides a platform for connecting the three seemingly unrelated research fields that discuss issues of project implementation. From this perspective, organizational project management systems, or the project management model or models chosen for implementation, can be considered more a strategic than an operational concern.

The ideas presented in this paper and the data used to illuminate them have been generated in the context of a globally conducted research project exploring the value of project management (Thomas and Mullaly, 2007). We have drawn upon the literature on project management and the related areas of innovation management and entrepreneurship from a strategic perspective as a basis for comparing chosen project management systems with the strategic drivers of organizational value. From this we have developed and will describe a conceptual framework that we refer to as the Strategic PMS—Value Driver Portfolio model. This model is then used as a background to analysis of four case studies that demonstrate how project management systems contribute to the success or otherwise of the entire population of projects undertaken within an organization. We then conclude with a specific set of recommendations to design and implement a PMS that could better meet the specific strategic requirements and that maximizes the value to the organization of projects implemented.

Our basic question is how the configuration of a PMS should fit the strategic requirements of an organization.

Strategic Drivers of Project Management Systems

Organizations undertake a multitude of projects to pursue their specific goals. They define general structures, standards and regulations in the attempt to ensure satisfactory governance and accomplish these projects successfully, and in so doing establish cultural norms. Taken collectively we refer to the whole of these structures, standards, regulations, processes, policies, methods, supporting tools and their surrounding culture as the “project management system.” This recognizes that the organization's strategy has not only consequences for the choice and funding of a specific project and the definition of its goals, but it also has consequences in terms of what is valued and how outcomes are achieved and reported. Following this line of thought it is the organization's strategy that drives the configuration of its project management system.

There are many ways of classifying strategies and deriving the underlying factors that drive success in achieving them. Michael Porter, for example, has developed a method of analyzing competitors in any given industry by first identifying, and then mapping, strategic factors that distinguish clusters of firms competing in the same market, such as increased product differentiation or vertical integration to control the value chain (e.g. Porter, 1985). Other authors have suggested different ways of classifying strategies (Mintzberg & McHugh, 1985; Mintzberg, 2007).

In a sense, the precise classification of strategies is immaterial to the hypothesis being proposed in this paper, that fresh light can be shed on the management of projects by considering the fit between the “project management system” in use at Level A and the underpinning drivers of the enterprise's chosen strategy at level C or D. However, for the purposes of this study, we adapt two of Porter's basic dimensions to analyze the potential impact of the basic value drivers behind a chosen strategy on the configuration of project management systems. With this focus we exclude obviously non profit or public organizations or autarkic project organizations that are created only for the purpose of a single project/program.

The two drivers of strategic value that we have chosen are degree of product differentiation, and degree of process economic improvement. The rationale for this choice is that certain organizations seeking to compete in their markets through product differentiation are likely to derive strategic value predominately through successful innovation of new products and services, whereas organizations seeking to compete through offering lower cost solutions will derive value predominately through improvement of the economics of process. This is not to suggest that any organization can compete if it ignores one or the other of these axes – clearly every competitive organization has to offer desirable products for a price that consumers are willing to pay. The point being made is that organizations competing through a product differentiation strategy have to develop systems for maximizing the value that they derive from investment in product or service innovation, whereas organizations competing on the basis of cost must derive maximum value from the efficiency of their manufacturing value chain.

By connecting these two general strategic positions in a matrix it is possible to differentiate four strategic scenarios for project management systems and to derive corresponding basic drivers of value that we might expect to see reflected in the configuration of project management systems.

  • Vertical axis (degree of product differentiation)
  • Novelty of product/market mix
  • Urgency of opportunity
  • Brevity of product life cycle
  • Intensity of innovation-led competition
  • Horizontal axis (degree of process economic improvement)
  • Reduction in/pressure on cycle-time
  • Reduction of waste
  • Minimization of cost

Each of the four resulting strategic positions defines a quite unique set of requirements leading to different perceptions of the value of project management and to different implementations of project management systems. The requirements are derived from the organization's need to manage its projects in a manner that is in harmony with its overall strategic drivers. This model, which we have named the Strategic PMS—Value Driver Portfolio Model, can be used to identify different variables that will place the drivers of business strategy on the vertical and horizontal axes. (See Figure 1.)

Strategic PMS—Value Driver Portfolio Model

Figure 1. Strategic PMS—Value Driver Portfolio Model

The Strategic PMS-Value Driver Portfolio enables differentiation of the following four strategic scenarios.

Scenario 1—Low Economic Driver, Low Differentiator Driver

This quadrant could be unkindly described as “stuck in the middle.” A clear strategic focus for change is missing. Projects that are implemented under these conditions are not so much designed to change the status quo as to make incremental improvements to both product or service and to cost. The ROI of organizations positioned in this quadrant are dependent on the contributions of projects and/or the lack of a strategy change imperative means that there is no focus on the implementation of projects.

Organizations operating in this quadrant are likely to be predominantly operations based in relatively stable market sectors. Focus is very much on continuity and business as usual. Techniques, such as six sigma, are likely to yield high returns by making operational improvements to major business processes, or to repetitive projects such as annual shut-downs (Hammer, 2002).

Scenario 2—High Economic Driver, Low Differentiator Driver

Large engineering organizations have led the way in managing large-scale complicated projects (Cooke-Davies & Arzymanow, 2002). These unique and challenging processes require radical process learning to improve particular process efficiencies. This is the field of the “classic” project management represented by the PMBOK® Guide. The cost strategy is to constantly reduce the costs along the value chain to deliver specific products or services to customers for the lowest price possible consistent with satisfying the customers’ requirements for quality.

Competitive advantage is only possible if these organizations are able to offer their outputs faster or for lower costs than their competitors. Projects within these organizations contribute best by being implemented with high efficiency. The Cost Containment strategy focuses at the project level on the following:

  • Operational excellence
  • High degree of efficiency

This strategic driver requires from the implemented PMS highly efficient project implementation processes. Projects in this environment are often implemented under fixed-price contracts for external project owners. Learning objectives appear in this environment as related to increased process efficiencies. Thus, radical process solutions will create a competitive advantage.

Of the four different quadrants, this is perhaps the best understood by the global project management community, with excellent summaries of different elements of the necessary project management model contained in such excellent handbooks as Cleland and King (1988) and Morris and Pinto (2004).

While the process is well understood for individual projects, the implications for the project-based enterprise built around its ability to deliver such projects consistently and well are less well understood. Turner and Keegan (2001) have demonstrated, for example, the need for governance structures that reflect the project-based paradigm

Scenario 3—Low Economic Driver, High Differentiator Driver

Large innovation-driven organizations (such as those involved in pharmaceutical drug development) need a project management system that is designed to manage highly uncertain processes. The differentiator strategy is related to the need to constantly innovate new products or services. Projects within these organizations contribute to achieve a competitive advantage best by creating products or services that are novel or at least more innovative than their competitors. These projects are mainly focused on generating new revenue streams by creating new markets and satisfying new market (customer) needs or increasing revenues in existing markets. The differentiator strategy focuses at the project level on the following:

  • Innovation excellence
  • High degree of creativity

This is precisely the area, however, where the different strands of literature reveal a paradox—the conflicting requirements to support innovation and to manage projects efficiently. On the one hand, studies have shown that strong project management is an essential precondition to the successful management of innovation projects (e.g., Loch, 2000), as is the involvement of customers throughout the project (Loch, 2000; Jouini & Churue-Duboc, 2007).

On the other hand, Turner, Keegan, and Crawford (2002) have demonstrated that in project-based organizations the very practices of project management that are meant to facilitate innovation tend to stifle it. This is particularly true during the formative stages of the innovative concept, what has been referred to as the “fuzzy front end” of the innovative project (Reid & de Brentani, 2004).

A PMS that encourages and supports such discontinuous innovation is likely to look very different from the traditional models that have been developed to deal effectively with Case 2. For example, such a PMS is likely to allow considerably greater flexibility to individuals in the early stages of the project when creativity is at a premium (Jouini & Charue-Duboc, 2007). It is also likely to be focused on identifying and then eliminating barriers to innovation (Sapsed, Bessant, Partington, Tranfield and Young., 2007).

Projects within this environment are mainly internally funded and based on internal contracts or cost reimbursement contracts. These projects are successful if learning processes allow for loops in the implementation process. The innovation management literature discusses many topics about the conditions supporting the success of innovation processes (e.g., Brown & Eisenhardt, 1995; Hall & Andriani, 2002; Kanter, 1985). Learning is focused on identifying new markets and/or new technical solutions. To be successful these s need to allow for radical learning processes to create innovative outcomes.

Scenario 4—High Economic Driver, High Differentiator Driver

Of interest are in particular those organizations that face both strategic drivers with the same importance. The intrapreneurial/entrepreneurial strategy focuses at the project level on the following:

  • Leadership excellence
  • High degree of entrepreneurial autonomy

Which PMS should such organizations choose? Many organizations just manage projects in separate entities, or they manage all projects utilizing a PMS that is optimized for one of the two strategic drivers. It seems to be a paradox to be efficient and innovative at the same time. Organizations that are not aware of this paradox fall into a PMS value trap of failing to achieve satisfying results from their projects. Intrapreneurship and entrepreneurship behaviors have to be fostered simultaneously so as to provide both operational and innovation excellence (Kanter, 1985). Project managers have to be empowered to act like entrepreneurs by being able to identify and exploit market opportunities. In this case, project managers are more in a role of business leaders and need to have these skills to be successful.

This is not simple, as is attested by the literature on intrapreneurship and entrepreneurship. One of the dominant themes during the 1980s and 1990s was the extent to which outsiders enjoyed the “attackers advantage” (Foster, 1986; Christensen & Rosenbloom, 1995). More recently, this has given way to a more nuanced discussion about the challenges faced by organizations when confronted by discontinuous innovation (e.g., Brown & Eisenhardt, 1997) and the need to develop what could be referred to as “semi-structures.” As Burgelman (1983) has pointed out, firms need both diversity and structure so that there is an inevitable tension between individual initiative and corporate attempts to impose uniformity.

In this quadrant, the imperative to deliver results economically combines with the need for creativity and innovation in both the ends (what) and the means (how) in a way that does not submit readily to the classic paradigm of rational deconstruction on which the structures, methods and tools of traditional project management are based. It is in this arena that the management of projects with a high degree of complexity is found—an area that is crying out for further research (Kim & Wilemon, 2003; Cooke-Davies, Cicmil, Crawford, & Richardson, 2007).

Methodology

As illustrated by the four quadrants of the Strategic PMS—Value Driver Portfolio model, we suggested that differing strategic drivers will lead to differing perceptions of the value of project management and to very different emphases in terms of project management implementation. When following Child and Mansfield's (1972) structure follows strategy hypothesis, it will only be possible to maximize the value of projects that are implemented if the PMS “fits” the strategic requirements of the organization. Applied to the relationship between the strategy and the configuration of a PMS, this leads to our fit hypothesis: Only a PMS that “fits” with its strategic drivers is able to maximize the value contribution of projects.

To explore this hypothesis, we analyze four case studies of project management systems in organizations. Specific aspects of the PMS configuration that have been analyzed here have been grouped under four elements—Policy, People, Structure and Process—which correspond broadly to the 7-S model used to describe the configuration of management systems (Pascale and Athos, 1982; Peters and Waterman, 1982):

Policy—This component describes senior management's perception of the strategic role of project management for the organization.

  • Strategic importance of project management
  • Organizational commitment to project management
  • CMMI maturity level

People—This component describes project management personnel-related issues. It is of particular interest if project managers are generally qualified to achieve project success.

  • Project management industry experience
  • Project manager's project management experience
  • Project management training
  • Project management career path
  • Project management certification

Structure—This component describes the organizational structures. A project management office (PMO) is supporting the introduction and the maintenance of project standards.

  • Project organization
  • Steering committee use
  • PMO
  • Resource allocation

Processes-This component describes the processes established for the management of projects and programs and the extent to which they are applied in the organization.

  • Project management methodology
  • Percentage of projects following formal methodology

Data Collection

The data for the case studies used for this analysis was collected as part of an ongoing study to analyze the value contribution of project management. A variety of methods was used in data collection according to the protocols established for the overall research into the value of project management (Thomas and Mullaly, 2007). Data collection methods included document analysis, interviews and questionnaires. In general, for each of the four case study organizations, three senior managers, five project managers and three customers were interviewed. In each organization, surveys were used to collect data from another group of five project managers and from at least three customers.

Attributes of Project Management Systems in a Cross-Case Analysis

Here we summarize the basic attributes of the installed project management systems of the analyzed organizations. The organizations analyzed face quite different strategic challenges in managing their projects. The summary in Table 1 is followed by discussion of each organization and an evaluation of the strategic fit of its PMS.

Table 1. Analysis of the PMS of Four Case Study Organizations

Attributes Organization No. 1 Organization No. 2 Organization No. 3 Organization No. 4
Project Context Attributes
Project Categories Software development Defense system development New product development Pharmaceutical drug development
Average Number of Projects per Year 50 700 200 150
Average Project Size $90K-$4M $3M-$75M $3M-$35M $5M-$500+M
Average Project Duration 6-60 months 18-48 months 18-36 months 3-12 years
PM Policy Attributes
Strategic Importance of PM Low to Medium Medium to High Low Medium to high
Organizational Commitment to Project Management Very high Very high Moderate Variable
CMMI Maturity Level Level 2 Level 5 Level 1 Level 1
People Related Attributes
Project Management Industry Experience Average 5 years Average 20 years Average 20 years Average 20 years
PM Project Management Experience Average 3 years Average 3 years Average 3 years Average 5 years (est.)
Project Management Training No standardized training Standardized training No standardized training Some standardized training
Project Management Career Path No Yes No Embryonic
Project Management Certification Less than 10 project manager's certified 40 project manager's certified 20 project manager's certified Ca 10% project manager's certified
Structural Attributes
Project Organization Functional Balanced Matrix Functional Matrix
Steering Committee Use Most projects Largest projects only Largest projects only All projects
PMO Yes Yes No Yes
Resource Allocation Centralized within business unit Centralized within business unit No Functional lines
Process Attributes
Project Management Methodology Moderately formal high adherence Moderately formal med. adherence Relatively informal documentation Moderately formal med. adherence
% Projects Following Formal Methodology 100% Top 5% Top 10% 100% follow some elements
First Organization

Organization 1 develops and offers databases, expert system software and risk assessment expertise to clients in the insurance industry. Most projects are internal and half of them are product development projects. Organization 1 has a very strong market position and does not have major competitors (see Table 2).

Table 2. Critical Project Management Events of Organization 1

Year Milestone Key Accomplishments
1998 New CIO
  • Focus on cost and performance of IT projects
  • Introduction of project management as a discipline
  • Improved strategic alignment of project portfolio
2002 Implementation of PMO
  • Standardization of project management methodology
  • Benchmarking with project management best practices
  • Creation of project management data repository
  • Post implementation reviews
2003 Introduction of Critical Chain
  • Achieving organizational efficiencies in resource utilization and project schedule performance
2004 CMMI Maturity Level 2 Achievement
  • 80% reuse of JAVA code
  • Rapid prototyping
  • Improved competitiveness for government contracts

Organization 1 was positioned in the lower left quadrant in 1997. The strategy was basically “stuck-in-the-middle” and project management was not seen as a core competency. That changed with the hire of a new CIO in 1998. One major strategic objective was to reduce significantly the number of employees within the IT department. From this perspective, the strategic focus was cost containment. After project management was formally implemented, it was the main purpose to cut project costs and increase the project budget. Further concepts to radically increase the efficiency were implemented with critical chain in 2003 and the CMMI maturity Level 2 achievement in 2004.

These steps resulted in a total reduction of the IT staff from 600 in 1998 to 380 in 2004 without reducing the number of projects implemented per year. The increased formalized project management procedures led to 90% of projects meeting the specifications today as compared to 50% before 1998. According to organizational records, 96% of the 50 projects started in the past year were completed on-time and on-budget.

Also the current process improvement efforts, including the move to CMMI Level 3 and the use of quality function deployment (QFD) for software development, are targeted to improve process efficiency.

In summary, the characteristics of the PMS match the strategic drivers for a cost containment strategy to implement projects. The case also demonstrates the learning effects and the continuous improvement of project efficiencies resulting in a move from the lower left quadrant to the lower right quadrant that is characterized by the efficiency focus.

Second Organization

Organization 2 is a governmental agency servicing the U. S. Department of Defense. This organization interfaces with the private sector defense industry in a variety of scenarios, ranging from project management of internal and external resources to professional services and facilities provider for externally managed projects. In some cases, they project manage work done by outside entities; in others, they provide resources to projects managed by outside firms. The organization both competes directly with and collaborates with private military contractors (see Table 3).

Table 3. Critical Project Management Events of Organization 2

Year Milestone Key Accomplishments
2004 Formalized Project Management
  • Creation of PMO (Project Integration Office)
  • Standardization of PM methodology
  • Benchmarking with PM best practices
  • Creation of PM data repository
  • Post implementation reviews
2006 Demonstrated software development excellence CMMI Software Level 5

Organization 2 was positioned in the lower left quadrant in 2004. The strategy was basically “stuck-in-the-middle” even though project management was an essential part of the strategic core competencies. The competitive pressure increased over the past five years, leading to a significant reorganization in 2003 (from 22 business units to five) to better service existing clients and to compete more effectively against private military contractors. In 2004 Organization 2 started to formally introduce project management by installing a PMO to provide guidance and project management documentation to project leaders throughout the organization, particularly those who manage the top 40 projects. Project management standards are followed rigorously for the large projects, but the organization still has many problems in implementing the magnitude of small and medium projects. A standardized training for project managers would be necessary to improve process-focused learning processes. One division of the technical organization has achieved Level 5 of the CMMI software maturity model. SAP Software and Microsoft Project are used for project management and financial control.

In value terms, the different steps undertaken to move into the lower right quadrant seem to have paid off. In the view of senior management, the following occurred:

  • Internal and external customers are happier with deliverables.
  • More development projects are transitioning to external customers.
  • The organization's reputation for on-time delivery has been enhanced compared to privately held competitors.

In summary, the gap between the strategic position and the implemented PMS is closing. Nevertheless, some of the key attributes still show significant potential for improving the efficiency of projects. In particular, the wider use of steering committees, the implementation of an organization-wide training program for project managers and the consequent use of project management standards for all projects will improve the efficiency of projects and position the organization clearly in the lower right quadrant.

Third Organization

Organization 3 develops petroleum additives for the fuels and lubricants industry. It develops, manufactures and markets lubricant additives used primarily in automotive, heavy-duty diesel and marine engines. The projects are in many cases internal product development projects that are focused to satisfy new market needs (see Table 4).

Table 4. Critical Project Management Events of Organization 3

Year Milestone Key Accomplishments
2004 Product development process Implementation of stage gate process model

This organization should be basically positioned in the upper left quadrant, but the implemented PMS does not “fit” the strategy. The PMS is more based on ad hoc approaches that do not clearly foster internal learning processes.

The organization introduced in 2004 a stage gate model to improve the controlling of the projects.

After the introduction of the stage gate model, 65% of projects are on budget/schedule compared to 50% that met budget/schedule goals before the introduction. The interviewed senior managers mentioned four reasons for the continuing cost/schedule overruns:

  1. A lack of project planning experience, including risk and contingency planning
  2. Research uncertainties
  3. Market vagaries
  4. Inadequate portfolio planning—too many projects in the pipeline

The last reason points out that a standardized portfolio management concept is missing. Projects are mainly initiated ad hoc on external demand. Steering committees are only used for the most complex projects, which achieve a higher budget/schedule ratio.

The first reason suggests that organizational learning is not institutionalized. Due to the high experience of the project managers, it is still possible to maintain a satisfying success rate, but many projects still do not meet the expectations.

This organization shows the highest misfit between its strategic position to innovate and the implemented PMS. The PMS is not clearly positioned to meet the needs of the organization.

Fourth Organization

Organization 4 is the research and development department of a large pharmaceutical company, operating widely across the globe. It takes output from the drug-discovery process, in the form of new molecular entities, and develops them into new medicines approved for sale in global markets. It also takes existing medicines and develops improved applications for them (see Table 5).

Table 5. Critical Project Management Events of Organization 4

Year Milestone Key Accomplishments
2005/2006 Created single department for portfolio and project management Creation of a single organizational unit responsible for project management of both early and late-stage development world-wide Aim is to create a professional family, supported by “state-of-the-art” planning processes and tools.

The drug development is an interesting one, in that the strategic drivers change at a key point in the development process. This point is known within the industry by terms such as “proof of concept.” Before this point, in early stage development, the task facing the project teams is to demonstrate that a new medicine is both effective in treating the target disease and safe to humans at the prescribed dose. Thereafter, in late stage development, the task becomes one of demonstrating this to the regulatory authorities as comprehensively and cheaply as possible.

In effect, this means that the strategic drivers of early development (increased product differentiation) become replaced by increased economics as drivers of late development, including, as it does, the process of obtaining regulatory approval, conducting clinical trials and so on.

Between 2003 and 2005 the organization enjoyed significant success through the effective management of early development projects using a combination of portfolio management and project management. As a consequence, it was decided to provide a greater coherence to the portfolio and project management function by creating a single unit to be responsible for these functions worldwide. The newly formed group sees as its task the creation of a professional job family for project managers, supported by state-of-the-art project and portfolio planning processes and tools.

This development is an interesting one that contains the potential to either improve the fit between the PMS and the strategic drivers or not, depending upon the details of the improved PMS that is eventually implemented.

Prior to 2006, there was a good fit between the PMS and the strategic drivers in early development, through the use of increasingly rigorous portfolio management and project management methods that were flexible enough to allow innovation and creativity from the researchers. It was this fit that enabled the organization to reap the benefits of a significant improvement in its development pipeline and led senior management to recognize the value that can be added through good project management.

On the other hand, there was a poor fit between the PMS and strategic drivers in late development, due to the lack of rigor in the planning process, the patchy nature of integration between line functions and project management, and the lack of integrated project planning and management systems, thus the inability for steering committees to exercise the right balance between support and governance. Few of the late-development project managers were trained in project management in the traditional industries that operate in Quadrant 2; thus, a PMS that fits this quadrant is likely to feel alien to many of the people working in this organization.

By encouraging external certification, and seeking to implement state-of-the-art planning processes and tools that are suited to late development, the organization is taking steps to improve the fit within late development. The danger is that if a single PMS becomes the norm for both early development and late development, the “early good, late poor” scenario will be replaced by an “early poor, late good” one.

Conclusions

The cases support the link between an organization's strategic drivers and the configuration of its PMS. Based on our analysis, it is possible to derive several hypothesis directing further research efforts:

  • The basic challenges facing a PM system are related to drivers of the chosen business strategy.
  • Only a PMS that “fits” with its strategic drivers is able to maximize the value of projects and investment in project management.

Using the Strategic PMS – Value Driver model suggests differences in components and application of PMS in each of the four quadrants. The attributes of the PMS are clearly related to the intended strategy and what is consequently valued in the organization. The historic analysis revealed the development over time and the re-positioning of the analyzed organizations (see Table 6).

Table 6. Historical Development of PMS Position

Process Economics
Incremental Radical
Differentiation Radical Organization 4 (pre-2006)
Organization 4 early
development (2007)
Incremental

Organization 3 (2007)

Organization 2 (2004)----→

Organization 1 (1997)----→

 

Organization 2 (2007)

Organization 1 (2007)

Organization 4 late development (2007)

The first three organizations clearly started in the lower left quadrant. One (Organization 1) was clearly moving into the lower right quadrant. Organization 2 could be positioned halfway while Organization 3 still remains in the lower left quadrant. More specific details of the PMS are necessary to move this organization into the upper left quadrant. We have not found an organization yet that could be positioned solely in the upper right quadrant. Entrepreneurial behavior and process excellence seem to be contradictory. This is also reflected in the innovation literature that discusses the barriers to innovation. However, analysis of Organization 4 suggests that such organizations may need different project management systems and implementations for different parts of the business and that this may be the most appropriate response for mature organizations with strategic drivers that place them in this quadrant.

We could conclude that the strategic cost containment position leads to a rigorous implementation of process standards and structures enforcing the use of these standards. The differentiator position is related to less rigorous process implementations but to structures that allow for initiative. Strategic drivers will influence the nature of value expected from project management, and the components and methods of application of a PMS should be adapted to the specific strategic positioning of each organization in order to deliver maximum value.

References

Abernathy, W.J., & Clark, K.B. (1985). Innovation: Mapping the winds of creative destruction. Research Policy, 14(1), 3-22.

Balachandra, R., & Friar, J.H. (1997). Factors for success in R&D projects and new product.... IEEE Transactions on Engineering Management, 44(3), 276-288.

Brown, S.L., & Eisenhardt, K.M. (1995). Product development: past research, present findings, and future directions. Academy of Management Review, 20(2), 343-378.

Brown, S.L., & Eisenhardt, K.M. (1997). The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations. Administrative Science Quarterly 42(1):1-34.

Burgelman, R.A. (1983). Corporate entrepreneurship and strategic management: Insights from a process study. Management Science, 29(12), 1349-1364.

Child, J., & Mansfield, R. (1972, 6 September). Technology size, and organization structure. Sociology, 369-373.

Christensen, C.M., & Rosenbloom, R.S. (1995). Explaining the attacker's advantage: Technological paradigms, organizational dynamics, and the value network. Research Policy, 24(2), 233-257.

Cleland, D.I., & King, W.R. (1988). Project management handbook (2nd ed.). New York: VanNostrand Reinhold.

Cooke-Davies, T.J. (2004a). Measurement of organizational maturity. In D.P. Slevin, David I. Cleland, & J.K. Pinto (Eds.), Innovations—Project management research 2004 (211-228). Newtown Square, PA: Project Management Institute.

Cooke-Davies, T.J. (2004b). Project management maturity models. In P.W.G. Morris, & J.K. Pinto(Eds.) The Wiley guide to managing projects. Hoboken, NJ: John Wiley and Sons.

Cooke-Davies, T.J., & Arzymanow, A. (2002). The maturity of project management in different industries. In J.R. Turner, (Ed.), Proceedings IRNOP V. Zeeland, Rotterdam: Erasmus University.

Cooke-Davies, T.J., Cicmil, S.J.K., Crawford, L.H., & Richardson, K. (2007). We're not in Kansas anymore, Toto: Mapping the strange landscape of complexity theory, and its relationship to project management. Project Management Journal, 38(2), 50-61.

Crawford, L.H. (2006). Developing organizational project management capability: Theory and practice. Project Management Journal, 37(3), 74-86.

Crawford, L.H., Hobbs, J.B., & Turner, J.R. (2006). Aligning capability with strategy: categorizing projects todo the right projects and to do them right. Project Management Journal, 37(2), 38-51.

De Meyer, A., Loch, C.H., & Pich, M.T. (2002). Managing project uncertainty: From variation to chaos. MIT Sloan Management Review, 43(2), 60-67.

Dess, G.G., Lumpkin, G.T., & McGee, J.E. (1999). Linking corporate entrepreneurship to strategy, structure, and process: Suggested research directions. Entrepreneurship: Theory & Practice, 23(3), 85-102.

Dvir, D., Lipovetsky, S., Shenhar, A., & Tishler, A. (1998). In search of project classification: A non-universal approach to project success factors. Research Policy, 27(9), 915-935.

Foster, R. (1986). Innovation: The attackers advantage. New York: McMillan.

Gann, D.M., & Salter, A.J. (2000). Innovation in project-based, service-enhanced firms: The construction of complex products and systems. Research Policy 29(7-8), 955-972.

Gunther McGrath, R., & MacMillan, I.C. (2000). Entrepreneurial mindset: Strategies for continuously creating opportunity in an age of uncertainty. In Harvard Business School Press Books (1).

Hall, R., & Andriani, P. (2002). Managing knowledge for innovation. Long Range Planning, 35(1), 29-48.

Hamel, G. and Prahalad, C.K. (1994) Competing for the Future. Harvard Business Review 72(4), 122.

Hammer, M. (2002). Process management and the future of Six Sigma. MIT Sloan Management Review, 43(2), 26-32.

Hobday, M. (2000). The project-based organisation: An ideal form for managing complex products and systems. Research Policy, 29(7-8), 871-893.

Jouini, S.B.H., & Churue-Duboc, F. (2007). Managing concepts generation for discontinuous innovations: An organizational creativity perspective. In Proceedings of IRNOP VIII. Brighton, UK.

Kanter, R. (1985). Supporting innovation and venture development in established companies. Journal of Business Venturing, 1(1), 47-60.

Kim, J., & Wilemon, D. (2003) Sources and assessment of complexity in NPD projects. R&D Management, 33 (1), 16-30.

Loch, C. (2000). Tailoring product development to strategy: Case of a European technology manufacturer. European Management Journal, 18(3), 246-258.

Midler, C. (1995). “Projectification” of the firm: The Renault case: Project management and temporary Organizations. Scandinavian Journal of Management, 11(4), 363-375.

Mintzberg, H. (2007). Tracking strategies: Toward a general theory. New York: Oxford University Press.

Mintzberg, H., & McHugh, A. (1985) Strategy formation in an adhocracy. Administrative Science Quarterly, 30(2), 160.

Morris, P.W.G., & Pinto, J.K. (2004). The Wiley guide to managing projects. Hoboken, NJ: John Wiley and Sons.

Muller, R., & Turner, R. (2007). The influence of project managers on project success criteria and project success by type of project. European Management Journal, 25(4), 298-309.

Pascale, R.T., & Athos, A.G. (1982). The art of Japanese management. Harmondsworth, Mddx: Penguin Books.

Payne, J.H., & Turner, J.R. (1999) Company-wide project management: The planning and control of programmes of projects of different type. International Journal of Project Management, 17(1), 55-59.

Peters, T., & Waterman, R.H. (1982). In search of excellence: Lessons from America's best-run companies. New York: Harper and Row.

Pitsis, T.S., Clegg, S.R., Marosszeky, M., & Rura-Polley, T. (2003). Constructing the Olympic dream: A future perfect strategy of project management. Organization Science, 14(5), 574-590. 10477039.

PMI. (2004). Organizational project management maturity model. Newtown Square, PA: Project Management Institute.

Porter, M.E. (1985). Competitive advantage: Creating and sustaining superior performance. New York: The Free Press.

Reid, S.E., & de Brentani, U. (2004). The fuzzy front end of new product development for discontinuous innovations: A theoretical model. Journal of Product Innovation Management, 21(3), 170-184. 07376782.

Sapsed, J., Bessant, J., Partington, D., Tranfield, D. & Young, M. (2007). Persistent innovation barriers, and how to breach them with projects. In Proceedings of IRNOP VIII. Brighton, UK: International Research Network on Organizing by Projects.

Shenhar, A.J., & Dvir, D. (1996). Toward a typological theory of project management. Research Policy, 25, 607-632.

Takeuchi, H. and Nonaka, I. (1986) The new product development game. Harvard Business Review 64(1), 137-146.

Thomas, J. and Mullaly, M.E. (2007) Understanding the value of project management: First steps on an international investigation in search of value. Project Management Journal 38(3), 74-89.

Turner, J.R., & Keegan, A. (2001). Mechanisms of governance in the project-based organization: Roles of the broker and steward. European Management Journal, 19(3), 254-267.

Turner, J.R., Keegan, A., & Crawford, L.H. (2002) Delivering improved project management maturity through experiential learning. International Project Management Journal, 8(1), 72-81.

van de Ven, A.H. (1986). Central problems in the management of innovation. Management Science, 32(5), 590-607.

Wheelwright, S.C., & Clark, K.B. (1992). Creating project plans to focus product development. Harvard Business Review, 70(2), 67-83.

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.

©2008 Project Management Institute

Advertisement

Advertisement

Related Content

  • pulse-of-the-profession-2019-thumbnail.jpg

    Pulse of the Profession 2019

    What’s your PMTQ? Our Pulse of the Profession® research shows that organizations that combine technical skills with project management approaches drive more successful outcomes.

  • PM Network

    Bracing for a Storm member content locked

    By Gustafson, Katie The global economy has been called "buoyant" and "bullish." But what if it goes bust? Developing markets hit 4.5 percent combined growth in 2018 and seem on track to hit 4.7 percent this year,…

  • PM Network

    Familiar Faces member content locked

    By Bishel, Ashley Widespread use of facial recognition technology isn't just for phones anymore. Retail companies are launching projects to drive revenue, cut costs, eliminate theft and improve the customer…

  • PM Network

    Remade to Order member content locked

    By Fister Gale, Sarah McDonald's CEO Steve Easterbrook ordered change—and he wanted it fast. The leader of the world's second-largest restaurant chain last year gave his team less than a year to complete a massive…

  • PM Network

    R&D Race member content locked

    R&D can be the lifeblood of innovative initiatives, and an October PwC study shows that—across almost all regions and industries—the blood is pumping.

Advertisement

Publishing or acceptance of an advertisement is neither a guarantee nor endorsement of the advertiser's product or service. View advertising policy.