Managing projects in context
responding to strategic drivers
Human Systems International Limited
Cranfield School of Management, UK
Project management as a field of practice initially focused on the standalone project and on development of generic standards, largely ignoring context. This has been challenged by attempts to provide useful categorizations of projects according to their different attributes, including aspects of context, and there is increasing interest in application of different project management approaches according to project type. Recognition of project management as an organizational capability has been a more recent development, but models and standards for organizational project management have been subject to a similar one size fits all approach.
Recent research into the value of project management highlighted the importance of “fit” whereby the internal and external context of an organization would determine the configuration of project management that would add value. This paper reports on research that aims to contribute to reducing the isolation of projects from context and raises the strategic positioning of project management by enhancing understanding of the strategic drivers of corporations in different industry sectors and the implications this may have for organizational project management capability.
Managers of projects, in search of professional identity, have created a vibrant field of practice alive with consultants, trainers, professional associations, and a burgeoning array of standards and certifications. In the search to define a distinct body of knowledge and set of practices that could be claimed as “project management,” the focus has been on the project. It is largely isolated from its context and stripped to its bare essentials to enable the development of generic standards. While it may be argued that this process was a necessary step on the path towards professional formation, it has had a number of interesting and perhaps unexpected consequences. Arguably, the most serious of these consequences has been the isolation of project management, as a career, from the mainstream of general management, and as a field of inquiry, from the mainstream of the management sciences. In a practical sense, project management is now widely considered among members of senior management as a tactical activity. The discourse of project management (Crawford, 2006), developed and promulgated through standards, is good for professional formation but reinforces the insularity of practitioners and separation from the rest of the management community. Academically, it has presented difficulties for researchers in anchoring their work to a wider body of knowledge and theory development.
The last decade has seen significant attempts to raise the strategic relevance of project management (Shenhar, 2004; Morris & Jamieson, 2005; Milosevic & Srivannaboon, 2006; Srivannaboon & Milosevic, 2006; Cooke-Davies, Crawford, & Lechler, 2009) and to reconnect project management to the broader management field. The latter has been evidenced by efforts to have project management streams and representation at European and American Academy of Management events, and publication by project management researchers outside the project management and engineering journals.
A further important development has been the extension of interest beyond the limits of the standalone project, enriching the understanding of project management to include program (Pellegrinelli, 1997; Partington, Young, & Pellegrinelli, 2003; Lycett, Rassau, & Danson, 2004; Maylor, Brady, Cooke-Davies, & Hodgson, 2006; Artto, Martinsuo, Gemünden, & Murtoaro, 2009; Dietrich & Lehtonen, 2005) and portfolio management (Blomquist & Müller, 2006; Martinsuo & Lehtonen, 2007; Blichfeldt & Eskerod, 2008) and the recognition of project management as an organizational capability (Crawford, 2006; Aubry, Hobbs, & Thuillier, 2007, 2008). Associated with these developments has been increasing interest in the relevance of context to the management of projects (Pellegrinelli, 2002; Engwall, 2003; Pellegrinelli, Partington, Hemingway, Mohdzain, & Shah, 2007; Thomas & Mullaly, 2008).
This paper reports on research that aims to contribute to reducing the isolation of projects from context and raises the strategic positioning of project management by enhancing understanding of the strategic drivers of corporations in different industry sectors and the implications this may have for organizational project management capability.
The Role of Projects and Programs in Strategy Implementation
Considerable attention is given in the literature and in practice to the formulation of strategy and the importance of effective strategies to corporate performance. Strategy implementation has received less research attention than formulation (Li, Guihui, & Eppler, 2008) but it is “making strategy work–executing or implementing it throughout the organization” (Hrebiniak, 2008, p.12) that presents a major challenge. No matter how good strategies may be, they are of little value if they are not effectively implemented. Often, corporate strategies of competing firms are very similar and the key differentiator is their relative ability to deliver the strategy. Inability to deliver on strategy erodes stakeholder faith and support. For public companies, the result of this erosion can be seen in the disintegration of share prices and for others the loss of stakeholder support can inhibit ability to raise capital or garner the political support needed to meet the growth demands of tomorrow.
While much of the discussion of strategy in the project management literature is concerned with the strategy for individual projects or with “strategic” projects (Grundy, 2000) or the need for individual projects to be aligned with corporate or business strategy, Jamieson and Morris (2004) among others, suggested that projects and programs are vehicles for the implementation of strategy and position the management of projects as a key business process. Artto and Dietrich (2004) provided an excellent review of strategy and strategic management in support of an argument for linking the management of multiple projects in organizations to the ultimate business purpose. Shenhar (2004) also suggested that projects are initiated for business reasons and proposed that elements of organizational project management capability, including project strategy, spirit, organization, process and tools, should be aligned with business strategy.
Chaffee (1985) pointed out that there is no consensus on definition of strategy, but associates Chandler's definition with what she describes as a linear strategy model which includes strategy implementation:
Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals. (Chandler, 2003, p. 13)
In line with this definition, Chandler (2003) suggested that a structure is required to take action, allocate resources, and implement strategy. A role for projects and programs is to provide structures for allocating resources and taking action to implement strategy.
Most organizations are involved in competitive activity either directly (as in the case of commercial enterprises) or indirectly (as in the case of government departments) and so a further aspect of strategy to consider is concerned with the competitive environment within which the organization operates. A firm achieves competitive advantage in a given market whenever it outperforms its competitors, (Cool, Costa, & Dierickx, 2002) and both the selection of projects to be undertaken and the arrangements it makes for managing those projects will influence its ability to obtain the competitive advantage it is seeking. There is considerable literature on the relationship between strategy, context, and competitive advantage (e.g., Porter 1985; Prahalad & Hamel, 1990; Barney, 2002), but project management per se is not a prominent topic anywhere within it. The literature on strategy seems to be much more visible to the world of project management than vice versa.
One exception is Jugdev and Thomas (2002) who examined the claims of project management maturity models (MMs) to provide sustainable competitive advantage in the light of Barney's (2002) framework for a strategic asset. Their conclusion, based on the claims of MMs and assumptions about the transferability of knowledge about project management embedded in MMs, is that MMs can result in competitive parity for most firms and a temporary competitive advantage for some.
The Relationship Between Project, Programs and Operations
Realistically, not all aspects of strategy are implemented through projects and programs. Strategy implementation encompasses either operations or business as usual (BAU), by which an organization accomplishes its purposes on a day-by-day basis, as well as activities undertaken to change or improve an organization's ability to accomplish its purposes. Such activities include efforts that are designed to:
- Improve the performance of business-as-usual activities,
- Develop new businesses, new products, new services or new markets,
- Introduce new technology, new processes or new ways of working, and
- Build new physical infrastructure, acquire new assets and so on.
The totality of these efforts comprises the practices and disciplines associated with managing projects, programs, and project portfolios. What distinguishes this class of activity (projects and programs) from the first (operations/business as usual) is that they all involve planning and then creating some product or service that at the point of inception exists only in the imagination of the person or people who are promoting it. The process of planning these activities, therefore, involves imagining a series of steps that may or may not work out as planned, and each of which may have unforeseen consequences. It could be described as a process of enfolding an envisaged future into a known present, and can conveniently be labeled as “innovation.” In contrast, business as usual is already known and experienced, and thus forms a predictable basis from which to plan variations that can be relied upon generally, to deliver the required improvement. This can conveniently be labeled “adaption.”
A second distinction between the two classes of activity lies in the nature of the organization that undertakes these activities. For all but the most short-lived or routine of adaptations, it is normal practice for an organization to create a project team or program organization, if the innovation is sufficiently important that it requires its own dedicated resources and structure for management, either as a project or as a program. Such a team, existing as it does solely for the purpose of accomplishing the particular activity, is by its nature temporary regardless of whether the people who make up the team are employees of the permanent organization, employees of a supplier organization, or self-employed contractors hired specifically for the duration of the project or program (Turner & Müller, 2003). Business-as-usual activities, on the other hand, are by their very nature at the heart of the permanent organization that is seeking to accomplish its specific purpose through the strategy that it has adopted.
Figure 1. Two Classes of Activity Necessary to Implement Strategy
Core Competence or Dynamic Capability
It is both interesting and relevant from the perspective of context, to note that for many project-based organizations, projects and programs are business as usual. For such organizations, the management of projects and programs either on behalf of clients or to deliver products to clients, often under contract, are its primary business and can be considered a core competence (Prahalad & Hamel, 1990). Where projects and programs are used to adapt, integrate, or reconfigure “internal and external organizational skills and functional capabilities in response to changing external conditions”(Teece, Pisano, & Shuen, 1997, p. 516), the enabling organizational infrastructure or project management systems (Cooke-Davies et al., 2009) can be described as dynamic capabilities (Teece & Pisano, 1994), a concept which is an extension of the resource-based view of the firm. In different contexts, an organization's ability to manage projects and programs can be seen as either a core competence or a dynamic capability. Strategically driven improvements to or reconfiguration of the project management systems of a project-based organization can therefore be seen as requiring dynamic capabilities. An organization can excel at managing projects on behalf of clients (its primary business purpose) but be deficient in its ability to effectively change or improve its own capabilities to respond to changing market conditions.
What this begins to highlight is that management of projects is likely to be perceived and valued differently in different contexts not only between but also within organizations. Depending upon the context, use, and purpose of projects and programs, they will be subject to different strategic drivers and the “specific and identifiable processes” (Eisenhardt & Martin, 2000, p.1105) used to manage them may be expected to vary accordingly.
Responding to Context
As mentioned earlier in this paper, project management as a field of practice initially focused on the stand-alone project and on development of generic standards, largely ignoring context. This has been challenged by attempts to provide useful categorizations of projects according to their different attributes, including aspects of context (Shenhar & Dvir, 1996, 2004; Crawford, Hobbs, & Turner, 2005), and there is increasing interest in application of different project management approaches according to project type.
Recognition of project management as an organizational capability has been a more recent development, but models and standards for organizational project management have been subject to a similar one size fits all approach. A plethora of maturity models, of which the Project Management Institute's (2008) Organizational Project Management Maturity Model (OPM3®)—Second Edition is a prominent example, provide a generic model of what is considered to be “best practice.” This is in itself a problematic term: Best practice for whom and under what circumstances? If we look at an organization's project management systems, once again, as a dynamic capability, although they may “have similarities across firms (popularly termed ‘best practice’)” they are still “idiosyncratic in their details and path dependent in their emergence” (Eisenhardt & Martin, 2000, p. 1105). The specific set of processes and routines used in the management of projects can be expected to vary not only from firm to firm but according to the nature of the market and the positioning or strategy of the firm in that market.
Variation in the configuration of elements in the project management system according to business strategy is directly addressed by Srivannaboon and Milosevic (2006) who demonstrated that a company or business unit will select advantageous competitive attributes which will then “drive the different ways that projects are managed in terms of their foci and contents” (p. 500). This is demonstrated in the case studies presented by Srivannaboon and Milosevic and in those described by Cooke-Davies, Crawford, and Lechler (2009). The effect of different context and business strategies on focus and configuration of project management systems was also very clearly identified by Cooke-Davies and Arzymanow (2003). In a study conducted on behalf of a number of the world's leading pharmaceutical research and development companies, they found differences between the way project management was practiced in pharmaceutical R&D, construction, telecommunications, financial services, petrochemical, defense sectors.
This leads to the question: What are the advantageous competitive attributes or strategic drivers that are characteristic of specific contexts such as industry sector, application area, or project type? Answering this question is a prerequisite for gaining a better understanding of what configuration of organizational project management capability offers the best fit with specific markets and their strategic drivers and begins to provide a basis for developing maturity and excellence models that are sensitive to context.
The aim of the research reported here is to enhance understanding of how the strategic drivers of corporations in different industry sectors may have implications for variations in configurations of organizational project management capability. As pointed out earlier in this paper, project management as a practice and a field of inquiry has tended to be inward looking. Project managers and project management academics have their own language, captured and disseminated through project management standards. We are in many cases, either “smoking our own dope” or “preaching to the choir.” In designing this research, we have therefore endeavored as far as possible to seek input from members of the permanent rather than the temporary organization.
A qualitative approach was taken to the research design. The research was aimed at identifying key strategic drivers in each of six industry sectors: engineering and construction, pharmaceutical, finance, energy, IT and telecommunications, and petrochemical. A small sample of a minimum of two interviewees in each sector was chosen based on the industry knowledge of the researchers. In addition, three interviews were conducted with market analysts. Semi-structured interviews, using open-ended questions, were in two parts. The first part of the interview protocol did not refer to projects. The questions that were asked all related to the following: what—in a competitive and relative performance sense—needed to be done superbly in the industry sector; the criteria and measures used to assess success in the sector both internally and by analysts; factors that drive share price or similar indications of performance; and the key things they need to do or achieve in order to satisfy shareholders and other key stakeholders. Market analysts were only asked this set of questions.
The second part of the research protocol dealt with projects. The primary intent here was to identify specific characteristics of projects conducted in the sector, key competencies, challenges, and key criteria that need to be met in delivery of projects in order to satisfy corporate strategy.
All interviews were transcribed and the data analyzed using grounded theory techniques (Strauss, 1998) with the aid of AtlasTi 5.6.3 qualitative data analysis software.
Figure 2 presents an overview of the key strategic drivers identified across all interviews. It is not particularly surprising that financial performance and execution performance were most frequently cited as key strategic drivers across all sectors. Notably, however, financial performance was mentioned almost exclusively in the first part of the interview protocol, which included criteria and measures for performance in financial markets. References to execution performance were primarily as drivers across the sector, with less than half the references appearing in the second part of the interview protocol, which referred more directly to projects. As both financial performance and execution performance are both the most important and complex themes further explanation is warranted and is provided below. Note that numbers appearing in all figures represent frequency of occurrence of each code in the dataset and are provided only as a graphic illustrator to support interpretation of qualitative data.
Figure 2. Key Strategic Drivers
The code financial performance was used wherever an interviewee referred to financial performance generally, or covering a number of aspects of financial performance together, as an important signifier of successful corporate or project performance. Examples of quotations citing financial performance include:
“We have to deliver to our financial plan.” [6:23]
“I guess financially they look at our financial results. We're a public listed company, so they look at that.” [18:14]
“They look at cost of income, profit, and the like. Market share is obviously fairly critical. When you look at market share, you look at direct revenue, you look at cost, profitability, it really comes down to the concept of earnings per share.” [9:19]
The last quotation above provides an indication of the range of topics incorporated in financial performance. In order to facilitate a more intimate level of analysis, a number of aspects of financial performance were separately coded. These were revenue, profitability, share performance, and ROI, which appear in Figure 2 as well as cash flow and market share, which were mentioned but at a lower frequency. References to ROI included terms such as return on equity, assets, and capital. A number of these subsidiary concepts emerged as significant in certain sectors. Cost efficiency is a related term but is significant it its own right as will be seen in the analysis by industry sector.
Execution performance includes reference to performance in a general sense as well as achievement of specific performance outcomes such as time, cost, quality, safety, and environmental results. Also captured under this term is the infrastructure required to maintain acceptable levels of performance. Examples of quotations that illustrate what is meant by execution performance include:
“Metrics for success include high availability, a low number of issues, and delivery of projects on time and under budget. These figures used are within our performance management process.” [11:14]
“Just the usual, I suspect - adhere to time, cost, quality, risk management, and communication management - but they do it better than their competitors.” [11:17]
A number of the aspects covered by separate codes can be considered associated with or part of execution performance as shown in the network view presented in Figure 3. Notable is schedule performance, which is one of the most frequently mentioned drivers, as shown in Figure 2. It was identified as a separate code because it was highlighted as significant particularly in certain sectors. Cost efficiency is not shown as associated with execution performance because it more closely linked to financial performance and is a strong theme in its own right. Where a quotation was coded as cost efficiency, it was generally not concerned with meeting budget or cost control in a traditional project management sense, which would be coded as execution performance. Predictability and meeting commitments is a strong theme throughout the dataset and is clearly associated with execution performance. Other themes relevant to execution performance are consistency of process, which is a contributor to both execution performance and predictability. Consistency of performance is a part of execution performance but warranted separate treatment because it highlights the value placed on consistency. Both consistency of process and consistency of performance are strongly linked to predictability.
Figure 3. Execution Performance and Related Themes
Key Strategic Drivers by Sector
In the following section, each of the six industry sectors under examination is introduced with a description of the distinguishing characteristics of projects in the sector, drawn from analysis of the interviews. A summary bar chart of the most frequently mentioned themes for the sector is then presented. Only those themes that appear at least twice in the transcripts of interviews for the sector are included in the bar charts. Further explanation, illustrated with relevant quotations of the key themes or strategic drivers identified is then given. It should be noted that at time of writing this paper, saturation (Strauss, 1998) had not been reached for all codes in all sectors. Theoretical sampling will continue until this is achieved. Each quotation is identified with the quotation identification number allocated in AtlasTi.
Projects in the petrochemical industry were described as highly “capital intensive” [4:2, 5:1]. Associated with this is the sheer size of the projects, which are also transnational and complex. It is essentially a project-based industry where projects are a core competence, but the projects are so large that each one could be considered a business. Customers of projects are internal.
Figure 4. Strategic Drivers—Petrochemical Sector
Financial and execution performance are important but the primary driver in the sector is predictability and meeting commitments. These three drivers are intertwined as the following demonstrates:
“The bottom line is we have to execute our projects flawlessly. To be successful, we have to essentially honor our commitments to the business managers, to the executive team; we have to be very predictable. When we state the forecast, when we state a cost and what the schedule of these projects is going to be, we have to deliver on that, so that they can manage their portfolio and manage expectations with Wall Street, etc. Our job is to manage the capital of the company. We execute the plan of the company; we are the ones that take their vision and execute it, hopefully flawlessly.” [4:1]
While financial performance is clearly a significant driver, safety is crucial in this sector.
“To be successful, we have to operate our assets without incident (safely, extremely well). We are capital intensive, so we have to invest our shareholders' money in a very competitive way so as to generate a good return on the investment.” [5:1]
Safety was mentioned by both interviewees from the petrochemical industry as a key driver, and in this quotation, it is strongly linked to predictability.
“The one thing that does keep anyone awake at night is safety, and whether or not we are hurting people on our jobs. Beyond the moral implications of not wanting to hurt people, we believe that a safe job is one that has more of a chance of being predictable, it is better run, and those are indications of how long-running a project is, the leading safety metrics, overspending, a good portion of my time is spent thinking about safety.” [4:10]
Cost efficiency in this sector is closely tied to productivity as it is very much concerned with production. Benchmarking is used extensively.
“We need to see that the plant is running at the required reliability, that you have got the production streams, and that all the capital costs have been precisely determined, and you need to see what the operating costs are…” [4:2]
Transparent communications, as a basis for good and ethical decision making, and consistency of process, are closely linked to predictability, execution performance and safety. Innovation is linked to the size and long-term nature of projects, requiring long-term thinking, adaptability, and innovative thinking.
Engineering and Construction
Projects in this sector are largely executed under contract for external to the performing organization with emphasis on schedule performance and scope control. Environmental performance is highlighted along with a need for innovation and keeping pace with technology.
Figure 5. Strategic Drivers—Engineering & Construction
Again, financial performance is important, but the leading driver in the engineering and construction sector is execution performance, with emphasis on the traditional metrics of time and cost. Risk management is closely linked to this and appears as an important driver. Execution performance is not just about time and cost, however. In an industry where much of the work is carried out under contract, winning the contracts is important and demonstrating the ability to do the work contributes to this.
“We need to deliver a project on time and in budget and once we win a project … that is what it takes on your résumé is to show that you have done what your customer has asked you to do, and convince them that we have the ability to do it. We tell them we know how to get these things done.” [7:14]
Stable and quality management is a driver cited by the analysts [2:12], and can be seen as an important factor in winning contracts. Stability and the ability to deliver are also seen to have a favorable impact on share price [19:21].
There are clearly links between meeting customer expectations, customer satisfaction, and innovative contract management.
“We have the people and the ingenuity to structure a contract generally that is both beneficial to us and to our customers that matches what is important to them…. Innovative and creative solutions, sometimes they are managerial innovations and sometimes they are technical, but those are the things we need to do to be successful.” [5:5]
Growth is associated with a pipeline of new contracts as well as with growth in earnings:
“The other thing is are we winning the projects we go for, are you winning the projects you need and want to and when you do, you know you are being successful. You don't grow and be successful if you are not winning those projects.” [7:18]
“Earnings growth and satisfying shareholders that we are giving them a good return on their investment is important.” [7:19]
Energy providers are operating in an area of volatility, which is highly regulated, competitive, and cost sensitive. Operating costs and capital cost efficiency are important [3:9]. They need to be efficient in purchasing energy, managing energy trading risk, and they need to gain market share in order to reduce operating costs [3:11]. The supply chain is important in this sector. Due to the nature of the industry, environmental issues are significant. Interestingly, both innovation and standardization are considered characteristic of the sector. Innovation is necessary for growth and for utilization of new technologies. Standardization is required to achieve cost efficiencies. This is a classic case of strategy being implemented through both innovation and adaption as mentioned earlier in this paper.
Figure 6. Strategic Drivers—Energy
Provision of energy involves many stakeholders including government, consumers, and a wide range of businesses. It touches many lives so it is not surprising that stakeholder engagement is considered a key driver:
“Stakeholder management and people management and communications is the absolute key we've found here.” [14:14]
“It appears that good PR is a key issue; communications. People who appear to be successful are very good at the PR side of things. It's just a particular characteristic of this industry as opposed to other industries, where other factors are more dominant.” [15:13]
Predictability, supported by execution performance clearly supports customer satisfaction and adding value for customers that are in turn linked to stakeholder engagement.
“In terms of what we do, we deliver what we promise basically. So we set out what we say we will do, and what keeps stakeholders happy is when we deliver on time what we said we would seek to achieve.” [15:20]
Technology is another important driver. Not only does new technology have to be implemented (innovation) there is apparently a lack of understanding not only in the community but in the industry itself which introduces a requirement for education:
That relates to the general lack of understanding, in this case, not within the community, which is not so much of a problem, but actually within the industry…. There is a general lack of understanding of the technology and the consequences involved - economically, operationally. So it's a process of having to educate. [15:11]
A significant characteristic of projects in the finance sector is the intangibility of the end products:
“I think what's unique about our projects is that they deal with the intangible. So when you're developing a service or a product or an end to end experience, it's not like building a building, you're actually building intangibles. And that makes it particularly challenging through the whole life cycle, from the whole concept of articulating what is the outcome, what is the value of the project, what is it that his finite piece of work that's engaged with cost time and scope, what is it going to deliver.” [9:7]
Sensitivity to the media is another characteristic of the sector that also reflects the focus on customers and customer satisfaction:
“In banking, media do like to bash the banks, so it's critical to have a heightened awareness of customer satisfaction. A poorly implemented change project, or anything that could potentially impact negatively on customers, could quickly leak to the press and blow up. That's something that's very important in this industry.” [10:7]
Change projects are referred to in this last quotation and this is indicative of the importance of such projects in the sector. Transformation was a term used by all interviewees from the Finance sector. This is also a regulated sector where a considerable number of projects are undertaken as a matter of compliance.
Figure 7. Strategic Drivers—Finance
It is not surprising that “it's very much finance driven in the world of…banking” [12:16] and “it all comes back to the profit the bank makes, and each individual group is driven to meet certain targets. If they fail to meet their targets we have to explain why” [12:16]. Profitability, share performance, market share, revenue, and growth were all mentioned often in these interviews:
“…from an organizational point of view, profit and customer satisfaction. Consistency and excellence.” [10:18]
Execution performance and cost efficiency can be seen as directly connected to the drive for financial performance and predictability, consistency in performance and risk management support this. Predictability is seen as having a direct impact on share price:
“Analysts would judge success against performance; if the organization makes a prediction, how close they are to that prediction.” [12:15]
Schedule is a key driver, as an aspect of predictability, for both customers (market share) and share price, but as part of the culture of the industry:
There is no one specific thing, but probably schedule. Timeframes are always tight in this industry; it's part of the culture. Everyone wants everything done now….. So getting things done quickly, in a timely fashion, is very important. That can be related to our strong customer focus. [10:24]
Focus on performance and customers (adding value for customers, meeting customer expectations, customer satisfaction) ties back to the sensitivity of the sector to the media, which in turns impacts share price:
Obviously if bad press gets out, it can affect the share price. So if we screw up something that impacts on customer satisfaction that can affect the share price. If we blow expenses or budget and this is reported in the media, potentially if it's a big project, that can affect the share price. [10:17]
IT and Telecommunications
In this sector, the focus is around customers. Therefore, “the majority of project work in the telco industry is market based, unless they are dealing with core infrastructure” [17.7]. So that there are “two major areas in technology, there are the operations, and there's applications” [18:7]. This results in a wide range of project types and sizes:
“So the uniqueness of the industry, of this particular company, is we have every style of projects that we can get, and we have processes in hand, here, to manage all of those”.[16.7]
Figure 8. Strategic Drivers—IT & Telecommunications
Customer satisfaction, market share, market awareness, adding value for customers, repeat business, meeting customer expectations, and customer focus all relate to customers. When asked what organizations in the sector need to do superbly, answers were short and to the point:
“We have to serve our customer base.” [16.1]
“Basically, the organization needs to get more high value customers, and focus on offering quality customer service.” [17.1]
“We have to essentially deliver to the customer systems which are reliable and which meet their expectations.” [18.1]
Financial measures including market share, share performance, ROI, revenue, and profitability are all important but reliability of the end product emerges as the key driver for achieving customer satisfaction and market growth.
“It's all about the performance of the infrastructure, whether it's going up or down, how well does the network perform, are there outages, can customers answer their phone.” [17:15]
“We have to essentially deliver to the customer systems which are reliable and which meet their expectations.” [18:1]
This is a sector in which quality is important because reliability of the end product means you need to be “producing products with very little defects which we can measure” [18:21]. Execution performance and competence of personnel are required to achieve this. Challenges in the sector are trying to do too much at once and finding sufficient competent resources to deliver the desired quality of reliable product to customers.
Those in pharmaceutical industry are quite clear about the characteristics that distinguish their projects from those in other sectors. They are characterized complexity and uncertainty and they evolve presenting all the challenges of innovation, enfolding an envisaged future into a known present described earlier in this paper.
“What is unique and different about what we do, in project management and targets, other than any other industry, is that instead of starting with the blueprint; you build the blueprint as you go.” [20:7]
“They are special in what distinguishes them from generic projects and makes pharmaceutical projects different from other industries is the degree of uncertainty and complexity which has to be managed through the course of the project. Pharmaceutical projects tend to be projects that are hypothesis testing projects.” [21:7]
Figure 9: Strategic Drivers—Pharmaceutical
Innovation is clearly the key driver in this sector. What they need to do superbly is:
“Go with the products. Product specification; it's all about innovating products to market as fast as you can.” [20:1]
“Innovate. The company needs to be able to develop new knowledge, and use that knowledge to innovate in pharmaceuticals.” [21:1]
Pipeline is a characteristic feature of the pharmaceutical sector. Productivity is judged on the number and nature of projects “in the pipeline,” which has a direct impact on earning potential [20:18]. Productivity measures include:
“…numbers of projects that are in the pipeline; numbers of projects that are successful; cycle times for those projects; and costs.” [21:1]
Associated with pipeline is the ability to terminate. While there need to be a critical mass of projects in the pipeline, the organization also needs to be able to make decisions to terminate projects. It is an industry where early termination is as good a result as completion. This concept is associated with the portfolio perspective, which requires good governance.
“I think there is a fundamental recognition in the pharmaceutical industry that the complexity and ambiguity requires that projects be constantly vigilant for the need to change or adapt their plans….. In our industry we need to balance the execution of projects the drive forward at all costs mentality against the stop for a minute and think about it mentality which is required to adapt your program plans.” [21:8]
“It is critical that senior management is part of that dialogue on the issues; you need them to make trade-offs; to make the decisions as to which program to advance and what program to stop, and as you make those decisions you need senior management to be clearly aware of those issues.” [20:20]
Ability to delivery strategy is highly competitive and drives both decision making and performance:
“Can you deliver, and does that check out well against the competition? If you come to the market with a treatment for [x], but you cannot beat or differentiate from [product name] then you have zero value.” [20:19]
Given the high level of uncertainty and the evolving nature of projects in the sector, the prominence of schedule performance may appear unexpected. Investigation, however, reveals that the approach to time is around milestones and cycle times.
“Two things: First of all, from a project management standpoint, is metrics by time: cycle time in the development of a discovery or pipeline, we set target dates for major milestones in our ability to achieve that.” [20:15]
A distinctive feature here is the relationship of timelines to resources. Time, in this sector, is in itself a precious resource. The projects may be long and complex but time to market is crucial. Therefore, it is important to ensure that a lack of resources does not impede progress: “One thing you cannot buy back is time” [20:25]. Time, in this sector, is clearly more important than cost:
“The most obvious metric is timelines: can your stats folks achieve the resources to deliver on the timeline, or are they impeded by the resources? It goes back to the critical path: can you keep these other areas off of your critical path? Typically, if a toxicology program hits on the critical path because they were not able to complete on the normal time, is it due to a lock up in resources? Trying to keep clinical on the critical path all the time.” [20:24]
Time is more important than cost in an execution performance sense, but cost efficiency is also a strategic driver:
“We share data with other companies in the industry to benchmark our own productivity against our peers.” [21:2]
Srivanaboon and Milosevic (2006) identified competitive attributes as time-to-market, quality, cost reduction, and feature. Hrebiniak (2008) identified market share, profitability, and shareholder's value. All of these are reflected in one way or another in the key strategic drivers that have emerged as significant in the six industry sectors studied here. The results, however, provide interesting insights into the importance of context. There are clearly similarities. Financial performance and execution performance appear as key drivers in all but two sectors—and they are certainly important for all. Significantly, innovation is important in both energy and pharmaceutical sectors where financial and execution performance were less significant.
Each sector clearly has its own flavor, and there is one key driver in each case that gives a hint of that flavor. It is interesting that both engineering and construction and the finance sector have execution performance as a lead driver. The key drivers for each sector are summarized below in Table 1.
|Petrochemical||Engineering & Construction||Energy||Finance||IT & Telecoms||Pharmaceutical|
|Predictability||Execution Performance||Stakeholder Engagement||Execution Performance||Reliability of End Product||Innovation|
|Financial Performance||Financial Performance||Cost Efficiency||Cost Efficiency||Customer Satisfaction||Pipeline|
|Execution||Stable & Quality||Innovation||Financial||Financial||Ability to Deliver|
|Safety||Meet Customer||Revenue||Profitability||Market Share||Schedule|
|Cost Efficiency||Innovation||Profitability||Ability to Deliver Strategy||Market Awareness||Portfolio Perspective|
|Growth||Customer Satisfaction||Adding Value for Customers||Adding Value for Customers||Cost Efficiency|
|Customer Satisfaction||Meet Customer Expectations||Repeat Business|
Table 1. Summary of Key Strategic Drivers by Industry Sector
The question driving this research was the following: What are the advantageous competitive attributes or strategic drivers that are characteristic of specific contexts, such as industry sector, application area, or project type? Answering this question is a prerequisite for gaining a better understanding of what configuration of organizational project management capability offers the best fit with specific markets and their strategic drivers and begins to provide a basis for developing maturity and excellence models that are sensitive to context. The results to date are promising.
A limitation of the research is that the sample is small and from a grounded theory perspective, we are not yet confident that we have reached saturation. Some further interviews using a theoretical sampling approach are required. The next step in the research will be to look at both the strategic drivers and the configurations of organizational project management systems in various sectors, in search of patterns that will inform a more context sensitive approach to assessment and development of organizational project management capability.
Artto, K., Martinsuo, M., Gemünden, H. G., & Murtoaro, J. (2009). Foundations of program management: A bibliometric view. International Journal of Project Management, 27(1),1–18.
Artto, K. A., & Dietrich, P. (2004). Strategic business management through multiple projects. In P.W.G. Morris & J. K. Pinto (Eds.), The Wiley guide to managing projects (pp. 144–176). Hoboken, NJ: John Wiley & Sons, Inc.
Aubry, M., Hobbs, B., & Thuillier, D. (2007). A new framework for understanding organisational project management through the PMO. International Journal of Project Management, 25(4), 328–336.
Aubry, M., Hobbs, B., & Thuillier, D. (2008). Organisational project management: An historical approach to the study of PMOs. International Journal of Project Management, 26(1), 38–43.
Barney, J. B. (2002). Gaining and sustaining competitive advantage (2nd Ed.). Upper Saddle River, NJ: Prentice-Hall Inc.
Blichfeldt, B. S., & Eskerod, P. (2008). Project portfolio management - There's more to it than what management enacts. International Journal of Project Management, 26(4), 357–365.
Blomquist, T., & Müller, R. (2006). Practices, roles, and responsibilities of middle managers in program and portfolio management. Project Management Journal, 37(1), 52–66.
Chaffee, E. E. (1985). Three models of strategy. Academy of Management Review, 10(1), 89–98.
Chandler, A. D. (2003). Strategy and structure: Chapters in the history of the American industrial enterprise. Washington, DC: Beard Books.
Cooke-Davies, T. J., & Arzymanow, A. (2003). The maturity of project management in different industries: An investigation into variations between project management models: Selected papers from the Fifth Biennial Conference of the International Research Network for Organizing by Projects. Held in Renesse, Seeland, The Netherlands, 28–31 May 2002. International Journal of Project Management, 21(6), 471–478.
Cooke-Davies, T. J., Crawford, L. H., & Lechler, T. (2009). Project management systems: moving project management from an operational to a strategic discipline. Project Management Journal, 40(1), 99–109.
Cool, K., Costa, L. A., & Dierickx, I. (2002). Constructing competitive advantage. In A. Pettigrew, H. Thomas, & R. Whittington (Eds.), Handbook of strategy and management (pp. 55–71). Los Angeles, CA: Sage Publications.
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. (2005). Project categorization systems: Aligning capability with strategy for better results. Newtown Square, PA: Project Management Institute.
Dietrich, P., & Lehtonen, P. (2005). Successful management of strategic intentions through multiple projects - Reflections from empirical study. International Journal of Project Management, 23(5), 386–391.
Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic Capabilities: What Are They? Strategic Management Journal, 21(10–11), 1105–1121.
Engwall, M. (2003). No project is an island: linking projects to history and context. Research Policy, 32(5), 789–808.
Grundy, T. (2000). Strategic project management and strategic behaviour. International Journal of Project Management, 18(2), 93–103.
Hrebiniak, L. (2008, March–April). Making strategy work: overcoming the obstacles to effective execution. Ivey Business Journal.
Jugdev, K., & Thomas, J. (2002). Project Management Maturity Models: The Silver Bullets of Competitive Advantage? Journal of Project Management, 33(4), 4–14
Jamieson, A., & Morris, P. W. G. (2004). Moving from corporate strategy to project strategy. In P. W. G. Morris & J. K. Pinto (Eds.), The Wiley guide to managing projects (pp. 177–205). Hoboken, NJ: John Wiley & Sons, Inc.
Li, H., Guihui, S., & Eppler, M. J. (2008). Making strategy work: A literature review on the factors influencing strategy implementation (Rep. No. ICA Working Paper 2/2008:). Lugano, Switzerland: Institute of Corporate Communication.
Lycett, M., Rassau, A., & Danson, J. (2004). Programme management: A critical review. International Journal of Project Management, 22(4), 289–299.
Martinsuo, M., & Lehtonen, P. (2007). Role of single-project management in achieving portfolio management efficiency. International Journal of Project Management, 25(1), 56–65.
Maylor, H., Brady, T., Cooke-Davies, T., & Hodgson, D. (2006). From projectification to programmification: Rethinking project management. International Journal of Project Management, 24(8), 663–674.
Milosevic, D. Z., & Srivannaboon, S. (2006). A theoretical framework for aligning project management with business strategy. Project Management Journal, 37(3),98–110.
Morris, P. W. G., & Jamieson, A. (2005). Moving from corporate strategy to project strategy. Project Management Journal, 36(4), 5–18.
Partington, D., Young, M., & Pellegrinelli, S. (2003, August). Understanding program management competence: A phenomenographic study. Academy of Management, B1–B6.
Pellegrinelli, S. (1997). Programme management: Organising project-based change. International Journal of Project Management, 15(3), 141–149.
Pellegrinelli, S. (2002). Shaping context: the role and challenge for programmes. International Journal of Project Management, 20(3), 229–233.
Pellegrinelli, S., Partington, D., Hemingway, C., Mohdzain, Z., & Shah, M. (2007). The importance of context in programme management: An empirical review of programme practices. International Journal of Project Management, 25(4),41–55.
Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York. The Free Press.
Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68, 79–91.
Project Management Institute. (2008). Organizational project management maturity model (OPM3®)— Second Edition. Newtown Square, PA: Project Management Institute, Inc.
Shenhar, A. J. (2004). Strategic project leadership: Toward a strategic approach to project management. R&D Management, 34(5), 569–578.
Shenhar, A. J., & Dvir, D. (1996). Toward a typological theory of project management. Research Policy, 25(4), 607–632.
Shenhar, A. J., & Dvir, D. (2004). How projects differ and what to do about it. In P.W.G. Morris & J. K. Pinto (Eds.), The Wiley Guide to Managing Projects (pp. 1265–1314). Hoboken, NJ: John Wiley & Sons, Inc.
Srivannaboon, S., & Milosevic, D. Z. (2006). A two-way influence between business strategy and project management. International Journal of Project Management, 24(6), 493–505.
Strauss, A. L. C. J. (1998). Basics of qualitative research: Techniques and procedures for developing grounded theory. (2nd ed.). Thousand Oaks, CA: Sage Publications.
Teece, D. J., & Pisano, G. (1994). The dynamic capabilities of firms: An introduction. Industrial and Corporate Change, 3(3), 537–556.
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.
Thomas, J., & Mullaly, M. E. (2008). Researching the value of project management. Newtown Square, PA: Project Management Institute, Inc.
Turner, J. R., & Müller, R. (2003). On the nature of the project as a temporary organization. International Journal of Project Management, 21(1), 1–8.
© 2010 Project Management Institute