Project Management Institute

Project management tomorrow

preparing for the emerging environment

Introduction

The business environment in which project management is practiced is changing at an ever-accelerating pace. Technology, along with dramatic shifts in the geo-political and demographic landscapes, has produced a workplace that already differs markedly from the typical corporate environment of the early 1990's. In fact, few who left the workforce in 1993 would recognize today's work processes, much less be comfortable operating within them.

Within this fast-changing business environment, there is significant risk that project management will be perceived as an outdated concept, a dinosaur in a world focused on agility and the next quarterly profit statement. Businesses are awash with concepts that promised never-ending profits, but are now discarded in favour of glitzy new ideas. Consider the fate of Frederick Taylor's “Scientific Management” (1911) and more recently, the quality movement.

Project management is particularly vulnerable to obsolescence because of our inability to articulate the value in statistically valid financial terms. While there have been numerous attempts to measure and demonstrate the “value” of project management, convincing evidence is sparse, and corporate management continues to demand additional proof.

How then can we ensure that project management and its practitioners remain valued assets in the corporate strategic toolset? One approach is to identify the predominant business needs of the foreseeable future and position project management to meet it. To do so, we must analyse the major environmental trends within the business community, and successfully predict the emerging needs of business enterprises. Such an approach is not without risk, of course. The business graveyard is littered with concepts that were thought to be promising, but were eventually discarded. Nevertheless, to ignore the change around us, and merely strive to be successful today, is foolhardy. Eventually, we will find ourselves ideally equipped to meet the business needs of yesteryear.

The Changing Business Environment

A moment's reflection on today's workplace exemplifies the incredible changes of the past 20 years. Consider that in the early 1980s, the tools of business were memos and the telephone. Stenographers painstakingly recorded dictation in shorthand, and transferred the information to memos on IBM “golf ball” typewriters. Errors were corrected by applying “liquid paper” and retyping. Until the advent of the copier, the distribution of memos was limited to the number of carbon copies that could be accommodated in the typewriter.

Long-distance telephone communication was expensive. Businesses generally restricted personal telephone calls, and often tracked the use of business lines to ensure they were used only when necessary. The introduction of videoconferencing was seen as a step forward, but the generally poor quality of freeze-frame technology was a doubtful advantage over teleconferencing.

Meetings were almost always held face-to-face, even if substantial travel was involved. And since meetings were the primary means of communication and information dissemination, they tended to be frequent and long.

Information was stored in hard copy, in huge volumes. Every manager had shelves full of three-ring binders, and often stacks of papers awaiting filing. Bookshelves and file cabinets consumed considerable space in most offices, while common information was stored in libraries. Every organization maintained libraries, often several, and some were quite massive. Even so, a thorough literature search usually required research beyond the physical boundaries of a company's facilities, and required the researcher to travel to public or specialized libraries.

In such an environment, decision-making always flowed from the top. Upper management was the only group that had the necessary information to make decisions ranging from corporate strategy to personnel policies, and these decisions were disseminated down through the organization by communicating to each successive layer in turn. Middle management formed the critical communication link between the corporate decision-makers and the workers.

Modern communication tools have changed all this, of course. The stenographer has disappeared, and so has the personal secretary, for the most part. They have been replaced by personal computers, word processors, and e-mail. Voice and data can now be transmitted around the world inexpensively, and almost instantly. Collaboration technologies allow co-workers to meet remotely and quite effectively. In some organizations, a meeting is assumed to be remote unless specified otherwise.

But perhaps the most significant change in the past decade has been the way information flows within the corporation. Suddenly, the CEO can communicate simultaneously with every employee, even in global corporations with over 100,000 employees. The information that was once housed in three-ring binders, and available only to a select few, is now available to anybody with access to the corporate intranet. The communication links once provided by middle management are simply no longer required, along with much of middle management itself.

Of course, these are just the visible changes affecting the way we work. The work itself has changed too, and just as dramatically. The evolving market has nurtured huge new corporations dealing in products that were unknown 30 or 40 years ago: companies like Microsoft, Ebay and LensCrafters, while others have survived only by reinventing themselves, and many have simply disappeared.

Project Management Today

How is project management faring in this turbulent business environment? For the moment, it appears to be doing very well. PMI (2001) continues to report exponential growth in membership and its certification program, as do other project management associations (APM, 2002). Once used sporadically on large engineering and construction projects, project management is now practiced in dozens of industries in virtually every corner of the globe.

Beneath the surface, however, project management is not necessarily assured a healthy future. Statistical data confirming the financial “value” of project management is scarce, leaving it vulnerable to new management theories and concepts. Two studies illustrate different approaches to this question, and to the difficulty of establishing convincing databased evidence.

Ibbs and Reginato (2002) studied 52 organizations and attempted to correlate qualitative data with project management maturity. They report the following findings:

  1. Companies with more mature project management practices have better project performance.
  2. Project management maturity is strongly correlated with more predictable project management schedule and cost performance.
  3. Good project management companies have lower direct costs than poor project management companies.

These findings are significant, of course, and represent an important step forward in quantifying the value of project management. But they leave some unanswered questions:

  • Findings 1 and 2 relate to Cost Performance Index and Schedule Performance Index, which in turn are based on baseline cost and schedule estimates. How much of the improvement reflects better performance, and how much simply reflects better estimates?
  • How much project management is enough? Assuming an organization has many internal improvement opportunities, all-competing for scarce resources, what level of project management maturity is optimum?

Crawford and Pennypacker (2001) used a balanced scorecard approach to survey 103 senior practitioners with knowledge of their organizations' project management practices and their organizations' business results. Again, the results seem very encouraging. The respondents reported positive improvement in every category, including financial measures, after implementing project management initiatives. Significantly, they report an 88% improvement in Return on Investment. But the study raises similar questions. While it is clear that implementing more discipline in the management of projects can yield significant improvement, how much is enough? Are there specific practices that are more important than others, and are these same for every organization?

Clearly, these studies are important and represent a big step forward in quantifying the value of project management. But in considering the long-term future of project management, it is important to view the results from the perspective of senior managers and the shareholders they represent. And at that level, the data is still unconvincing. This does not mean project management will soon be replaced by some other management methodology. But there is a risk that project management may not retain the status it is enjoying today. And the only way to mitigate this risk is to prepare to address the business needs of the future.

The Emerging Environment

Fundamental Trends

Predicting the future is tricky business, as weather forecasters have known for centuries. Superficially, it is easy. Since any prediction is merely an opinion about events yet to occur, nobody can argue it is wrong. But serious forecasters are interested in being right, at least part of the time, and therefore usually try to base their forecasts on observed trends. This is particularly true when the forecaster has a financial stake in the outcome, as is the case in most business situations. In our case, having invested to some degree in acquiring project management skills, it is important to know if we can expect a reasonable return on our investment.

From a business standpoint, it is important not to confuse short-term trends with fundamental shifts driven by underlying irreversible conditions. Economic conditions tend to cycle, and the resulting trends in business practices are typically short-lived. It may be tempting to project weak spending on IT for the foreseeable future, but we know the global economy will eventually rebound and demand will soar.

Sometimes, however, there are underlying factors that affect cyclical conditions by dampening either the ups or the downs. For example, the travel industry is currently experiencing a severe slump. Major airlines are declaring bankruptcy, and tourism is down throughout the world. Is this a cyclical condition, or should we assume the travel industry will never rebound to its performance of the late 1990s? From an historical perspective, it appears to be just a cyclical trend. The travel industry is notoriously cyclical and is sure to rebound when fears of terrorism, war and SARS recede. But there is another factor likely to have a significant impact on the extent of the rebound. In recent years, and especially since the September 11 terrorist attacks in the United States, business has been diligently implementing alternatives to travel, investing in voice and data networks and collaboration technologies. And so, while travel may rebound, it is unlikely business travel will reach the levels of the 1990s any time soon.

Even long-term trends, that seem to be based on fundamental geo-political shifts, are often interrupted by discontinuities. The 18th-century British economist, Thomas Robert Malthus, affords a great example. In 1798, Malthus predicted widespread famine due to two observed and intersecting trends: population tends to grow exponentially while food supply grows only arithmetically. Of course, his prediction was soon proven wrong, interrupted by two factors he failed to recognize: the industrial revolution and the impact of technology on agricultural yields.

And so, how can we make sense of the current trends in business practice and determine what they mean to the future of project management? Is everything a guess, or are there some underlying shifts that allow us to make informed choices?

There are at least two fundamental trends that are largely independent of any management control and yet influence everything else: population growth and technology. From a purist's perspective, these are not absolutely independent. It is well known that population growth tends to be lower in countries with access to advanced technology, and conversely, lower population growth in developed countries creates labour shortages that spur technology-based automation. But for our purposes, it is useful to consider these as independent and fundamental trends.

The current population data is surprising, given the 20th Century predictions of an explosively overpopulated world gripped by Malthusian famine (Naik, et al., 2003). The world's population is still growing, but the rate of growth is slowing. Birth rates are down, not just in Western Europe, but also throughout the rest of the world. United Nations Population Division is now predicting that the world's population will level off at about 9 billion by mid-century.

(Naik, et al., 2003). Of course, relative population growth between countries is more important to business strategy, but it is beyond the scope of this paper to analyse these trends in any depth. Suffice it to say that business trends driven by global and regional population shifts are more likely to be enduring than those driven by the latest management theories.

Similarly, the development of technology is a topic too broad to analyse here. The course of technology is notoriously complex and always unpredictable. Nevertheless, we should recognize that technological innovation is irreversible. And we can confidently predict that developers will continue to work to satisfy any potentially profitable markets, and that we will continue to see products that improve and extend our lives.

Dependent Trends

While population and technology are clearly fundamental trends, they are not useful as predictors of the market for project management. Thus, we must identify higher-level trends, those that trigger real business decisions to pursue specific objectives and hire specific skills. Long lists of such predictions have been published by numerous authors including Naisbett (1984), Naisbett and Aburdene (1990), Haldane (1998), Hartmann (2001), and even PMI (1999). It serves no purpose to repeat any of those lists here, or the long list of predictions that appear regularly in business publications, but the following appear to meet the test of being driven by the fundamental trends of population and technology, and are therefore most likely to be enduring.

Emphasis on Health Care. There is nothing uncertain about this prediction. The confluence of an aging population in Western Europe and North America, and soon in Eastern Europe, Asia and Latin America, a declining labour supply, and the availability of new bio-technologies, will inevitably spur a burgeoning market for products that prolong productive life.

Sourcing Globalisation. Sourcing globalisation will continue, not because it is a popular trend, but because it is made necessary by the fundamental trends of population and technology. Given the declining labour force in western countries, companies will increasingly be forced to turn offshore for labour. And coincidentally, collaboration technologies make this possible. There is no reason, for example, why a North American corporation cannot immediately outsource its call centres to Costa Rica and its application development to India.

Market Globalisation. Market globalisation is less certain. Undoubtedly, corporations will continue to look to expand beyond the borders of their host countries, especially if they are facing declining population at home. However, cultures have a tendency to resist the encroachment of competing cultures, as evidenced by recent geopolitical events, and this is likely to cause a rejection of globalisation by companies based in Western Europe and North America. We are already seeing demands by global NGOs to balance “fair trade” with “free trade”, incorporating environmental responsibility and social justice. The most likely outcome will be a blend of global and local marketing, in which global corporations seek to have their products perceived as part of the local culture, with local packaging and brand identity.

Corporate Restructure. The pace of corporate restructure will undoubtedly increase for the foreseeable future. While some of this activity will surely be sparked by popular management theories, there are more fundamental reasons as to why it is inevitable. Technology has vastly increased both the ability to communicate and the dissemination of information. As indicated above, this is revolutionizing traditional communication flows and obsolescing the conventional role of middle management. Externally, it levels the competitive playing field, in that the same resources and information are available to both a company and its competitors. It is not yet clear how corporations will respond to these threats, but we will undoubtedly see a prolonged period of upheaval as management searches for solutions. Acquisitions and divestitures, along with new management structures, will be common as experimentation continues.

Privacy and Security. Clearly, the emerging information technologies create an unprecedented ability to conduct surveillance and glean personal information, and just as clearly, individuals will resist this intrusion, demanding guarantees of privacy and security. And as the labour market inevitably tightens in the face of declining birth rates, employees will find themselves in a strong position to demand these rights of their employers. Again, it is not clear how businesses will respond, but it will continue to be an issue of importance.

The Implications for Project Management

And so what does this mean for project management? Are these trends likely to increase the demand for project managers, or render them obsolete?

Generally, project managers are well equipped to survive and prosper in the emerging environment. Managers who can adapt to and lead change will be indispensable in an environment characterized by turbulence and experimentation. But the traditional model of a project manager having sole responsibility for a discrete project may not survive. Just as middle managers have become superfluous with the advent of pervasive technology for communication and information dissemination, so will traditional project managers. But many of the skills project managers typically apply to their work will not only be useful, but necessary, in the coming years.

Business will continue to need the tools provided by project management, of course. Project scope management, project time management, and the other seven knowledge areas defined by PMI (2000) are not going away. But the most critical need may be for the five general management skills that form the foundation for building project management skills, and that PMI asserts are “essential for the project manager”. Consider the following examples.

Leading. In an environment characterized by turbulence and experimentation, leaders who can effectively establish direction, and motivate and inspire, will be in high demand. Since the organization structure of the future has not been established, corporations are likely to try a variety of options, often involving conflicting directions simultaneously.

Communicating. The ability to facilitate effective communication is not necessarily getting easier with today's electronic tools. Rather, ensuring the right information gets to the right person at the right time is significantly more complex amid the plethora of extraneous information also being transmitted. At the same time, communication is increasingly occurring across geographic boundaries, time zones and cultures.

Negotiating. Globalisation is increasingly creating new cross-cultural interfaces, and these interfaces are becoming ever more complex. The demands for “fair trade”, along with the rising concerns for privacy and security, will greatly increase the need for people adept at negotiating across these interfaces, whether or not it is considered a formal part of their role.

Problem Solving. As noted above, the emerging environment involves a complex mosaic of conflicting directions and demands, further complicated by frequently changing relationships, many of which are cross-cultural. Problem solvers will be critical to the success of any organization.

Influencing the Organization. In a turbulent environment, only the successful companies will survive. And without the rigid command and control structures of the past, success will require people who can “get things done” in the absence of formal processes and procedures.

Conclusions

The emerging environment for project managers is likely to be characterized by turbulence and experimentation, as corporations strive to adapt to a world of slowing population growth and exponential, but unpredictable, technological development.

While their role is likely to change in unpredictable ways, project managers are well equipped to survive and succeed in the emerging business environment. In fact, their inherent general management skills are so critical, they are well advised to seek and expect leadership roles in the transformation.

Assuming the trends identified above continue, project managers will enhance their value by adopting the following tactics:

  • Consider a career in health care/bio-technology, or at least, develop skills that will facilitate a transition to a health-care related assignment at the right opportunity.
  • Take every opportunity to develop and practice the general management skills essential for the project manager: leading, communicating, negotiating, problem solving, and influencing the organization.

Above all, in a world of turbulent change, successful project managers must continually scan the environment, seek to predict the business trends of the future, and aggressively prepare to leverage their skills to address the emerging needs.

References

Association for Project Management. (2002). Association for Project Management yearbook 2002 – 2003 edition. High Wycombe: Association for Project Management.

Crawford, J. Kent, & Pennypacker, James S. (2001). The value of project management: proof at last. Proceedings of the Project Management Institute Annual Seminars & Symposium. Newtown Square: Project Management Institute.

Haldane, Dawn. (1998). Megatrends in project management. Proceedings of the Project Management Institute Annual Seminars & Symposium. Newtown Square: Project Management Institute.

Hartmann, Francis. (2001). The key to enterprise evolution—future pm. Proceedings of the Project Management Institute Annual Seminars & Symposium. Newtown Square: Project Management Institute.

Ibbs, William, & Reginato, Justin. (2002). Quantifying the value of project management. Newtown Square: Project Management Institute.

Naik, Guatam, Fuhrmans, Vanessa, Karp, Jonathan, Millman, Joel, Fassihi, Farnaz, & Slater, Joanna. (2003, January 24). Global baby bust. The Wall Street Journal, pp. B1, B4.

Naisbett, John. (1984). Megatrends. New York: Warner Books.

Naisbett, John, & Aburdene, Patricia. (1990). Megatrends 2000. New York: Avon Books.

Project Management Institute. (2000). A guide to the project management body of knowledge 2000 edition. Newtown Square: Project Management Institute.

Project Management Institute. (2001). The PMI project management fact book. Newtown Square: Project Management Institute.

Taylor, Frederick W. (1911) The Principles of Scientific Management. New York: Harper Bros.

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.

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