Best Industry Outcomes

Terry Cooke-Davies, Lynn Crawford

• Publisher: Project Management Institute
• Year: 2012
• Print ISBN:
  9781935589471
• eBook ISBN:
  9781628250206
• Topic: Business
• Subtopic: Management
• Index: Business

This is a text for both thinkers and doers—those who study and those who practice project management. Project management does not exist in a one-size-fits-all world. This research examines practices in nine industries: aerospace and defense, automotive, engineering and construction, financial services, government, IT and telecommunications, petrochemical, pharmaceutical, and utilities. This report is academically rigorous and immensely readable, due mainly to the practical and engaging writing style employed by the authors. The literature review is a comprehensive review of concepts that form the underpinnings of the research. To academics, it is essential background. To practitioners, it is a highly informative tour of past and current thinking, which in itself, is worth the read.

Chapter 1

Introduction

Projects are a means to an end. They are undertaken by organizations for many reasons. For some organizations, projects are their business. They carry out projects on behalf of customers or to deliver products to them. For others, projects are the ways in which they change and improve the organization. Undertaking projects may be the organizational strategy or it may be the way in which organizational strategy is implemented. In either case, organizational capability to manage projects is either a core or enabling competence.

It is therefore not surprising that there is considerable interest in what good project management looks like, giving rise to a plethora of generic models of “best practices.” This is in itself a problematic concept: best practices for whom and under what circumstances? The concept that “one-size-fits-all” is contradicted by recent research into the value of project management (Thomas & Mullaly, 2008), which highlights the importance of “fit”—whereby the internal and external context of an organization would determine the configuration of project management that would add value. 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.

Generic standards for management of individual projects, and maturity or excellence models to assess and guide development of organizational project management, can both provide a useful starting point. However, it makes little sense for an organization to invest in project management systems that are not directly suited to the nature of its business. Maturity models, in particular, have been criticized for lacking an appreciation of context, and it has been recommended that “introducing principles of fit and contingency theory into the exploration of maturity” (Mullaly & Thomas, 2010, p. 7) could make them more effective and relevant.

One aspect of fit, proposed by Cooke-Davies, Crawford, and Lechler (2009) is that if an organization's project management capability fits with its strategy, then it will contribute strategic value to the organization. In other words, for each organization there will be specific strategic drivers, which will influence the configuration of its structure and systems (Donaldson, 1987) and the outcomes it will value. These strategic drivers will also influence and be influenced by the market or industry sector in which the firm operates.

A number of studies (Besner & Hobbs, 2008b; Cooke-Davies & Arzymanow, 2003; Crawford & Pollack, 2007; Pinto & Covin, 1989) have demonstrated variations in use of practices in management of different types of projects and in different markets or industries, such as engineering and construction, information technology, pharmaceutical R&D, defense, and financial services. While differences in practices have been identified, this information is dispersed over a number of studies undertaken over several decades. There has also been no empirical research that links strategic drivers with patterns of project management capability and valued outcomes in these different industry sectors. Such research would have the potential to assist organizations in making more informed decisions about contextually applicable investments in project management capability.

Project Management Institute (PMI), through its research program, called for proposals to explore and find the best practices common not to specific companies but to a particular industry or project type. Most importantly, the research was required to delineate the best outcomes that are expected for organizational success in different industries.

In response to this request, and with the aim of providing a basis for informed and contextually sensitive development of organizational project management capability in alignment with business strategy, research was designed and undertaken to answer the following questions:

1. What strategic drivers are characteristic of specific industries and project types?
2. Are there project outcomes that are typically most valued relative to specific strategic drivers, industries, and project types?
3. Are there characteristics or patterns of project management systems and practices that are associated with particular strategic drivers and goals, industries, and project types?

The research adopted a mixed method approach and was conducted in two phases. The first phase was a qualitative study, involving interviews with 39 senior managers across nine industry sectors: aerospace and defense, automotive, engineering and construction, financial and business services, government, IT and telecommunications, petrochemicals, pharmaceuticals, and utilities. The aim was to gain insight into the nature of context in each of these industry sectors and to identify strategic drivers. Results provided input to the second phase of the research, which adopted a quantitative approach, utilizing a web-based questionnaire, resulting in 437 responses of which over 50% were from persons in the general and program management roles. This phase aimed to verify the findings of Phase One concerning strategic drivers, success criteria and outcomes, and to gather data on patterns of project management capability in each sector.

Organization of this Report

In Chapter 2, a literature review briefly addresses the key themes underpinning this research: the importance of context, the nature of strategic drivers, different types of projects and their characteristics, organizational project management systems and capability and project outcomes. This provides the background to the research design, which is outlined in Chapter 3. It also assists in understanding the results of the research, which are presented in Chapters 4 and 5. Chapter 4 provides analysis and results from Phase One and Chapter 5 covers the analysis and results from Phase Two of the research. The final chapter, Chapter 6, presents a summary of the research and the conclusions.

Chapter 2

Literature Review

This research continues a stream of inquiry initiated by PMI through funding of research into the “Value of Project Management.” Much of the background to the research reported here can be found in Researching the Value of Project Management (Thomas & Mullaly, 2008) and various papers, which resulted from that earlier study, to which the authors of this monograph contributed. In particular, as part of the “Value of Project Management” research, the authors, with Thomas Lechler, wrote a paper exploring the concept of “fit” between an organization's implementation of project management and its organizational context by looking at how the underlying drivers of an organization's strategy might influence not only the nature of projects that it undertakes, but also the appropriateness of the arrangements that it makes to manage those projects (Cooke-Davies et al., 2009).

The guiding assumptions for the current research are:

1. That organizations adopt different strategies for achieving successful corporate outcomes;
2. That different strategies translate into specific strategic drivers and criteria for judging success;
3. That projects and programs are vehicles for the implementation of corporate strategy;
4. That projects and programs in different industry sectors are subject to different strategic drivers and success criteria;
5. That the nature of strategic drivers will cause emphasis and value to be placed on different project outcomes; and
6. That value placed on specific project outcomes will lead to refinement and application of certain project management practices potentially at the expense of others, resulting in different patterns of project management capability.

Underlying these assumptions is the concept of context and fit as mentioned in the introduction, whereby the internal and external context of an organization would determine the configuration of project management that would add value.

The literature review will therefore begin with a discussion of the importance of context and how this can often be forgotten in industry attempts at simplification and standardization. The concept of fit will be explored only briefly within this section, as it is covered in depth elsewhere (see Mullaly & Thomas, 2010; Thomas & Mullaly, 2008, pp. 33–34). Discussion of context will be followed by a brief review of strategy in the project management and strategic management literature as a basis for research design and interpretation. The nature and characteristics of different types of projects will then be reviewed, followed by a discussion of the components of project management implementations within organizations and what may be considered to constitute organizational project management capability. The final contribution will be a review of expected organizational project outcomes.

Context

“Scientific disciplines categorize. They divide their universe of interest into groupings or ‘kinds,’ name them, then set about the business of understanding those kinds in a scientifically valid way. This categorization process functions like a sculptor's chisel, dividing up the world into figure and ground, leading scientists to attend to certain features and to ignore others. One consequence of scientific categorization is that we sometimes essentialize our subject matter, then search for evidence of those essences, without considering how context might influence or contribute to its very nature.”

(Barrett, Mesquita, & Smith, 2010)

This quote from the field of psychology effectively describes the way in which projects have been named, reified, treated in isolation from context and described, by Engwall (2003, p. 790), as “the lonely project.” 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, largely isolated from its history and organizational and environmental context, 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 toward 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 (Cooke-Davies et al., 2009; Milosevic & Srivannaboon, 2006; Morris & Jamieson, 2005; Shenhar, 2004; Srivannaboon & Milosevic, 2006) 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 project management and engineering journals.

A further important development has been the extension of interest beyond the limits of the stand-alone project, enriching the understanding of project management to include program management (Artto, Martinsuo, Gemünden, & Murtoaro, 2009; Dietrich & Lehtonen, 2005; Lycett, Rassau, & Danson, 2004; Maylor, Brady, Cooke-Davies, & Hodgson, 2006; Partington, Young, & Pellegrinelli, 2003; Pellegrinelli, 1997) and portfolio management (Blichfeldt & Eskerod, 2008; Blomquist & Müller, 2006; Martinsuo & Lehtonen, 2007) and the recognition of project management as an organizational capability (Aubry & Hobbs, 2011; Aubry, Hobbs, & Thuillier, 2007, 2008; Crawford, 2006; Hobbs, Aubry, & Thuillier, 2008). Associated with these developments is an increased interest in the relevance of context to the management of projects (Engwall, 2003; Pellegrinelli, 2002; Pellegrinelli, Partington, Hemingway, Mohdzain, & Shah, 2007; Thomas & Mullaly, 2008). In many ways the extension of the sphere of interest of project management to encompass program and portfolio management can be seen as an attempt to reconnect the “lonely project” with its context.

The Relationship Between Projects, Programs, and Operations

Another way of reconnecting projects to their organizational context is to conceptualize them as vehicles for implementation of corporate strategy. For those organizations that manage or deliver projects on behalf of clients, projects are the core of their strategy and constitute business as usual.

Even for these organizations, 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 make other necessary improvements to increase capacity.

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 day-to-day operations 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, 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, day-to-day operations are already known and experienced, and thus form 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 adaptions, 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. Hence, projects undertaken in the context of the temporary organization are more subject to isolation from their organizational context than day-to-day activities or even projects, which are the business as usual of project-based firms.

Core Competence or Dynamic Capability

The role of projects and programs in the business-as-usual operations of many project-based organizations is both interesting and relevant from the perspective of context. 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 that is an extension of the resource-based view of the firm, linked to the field of strategic management.

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. Projects undertaken for external customers are subject to different drivers and contextual features than those conducted on behalf of internal customers.

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, project management as a field of practice ini...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Table of Contents
• List of Figures
• Executive Summary
• Acknowledgments
• Chapter 1. Introduction
• Chapter 2. Literature Review
• Chapter 3. Methodology
• Chapter 4. Analysis: Phase One
• Chapter 5. Analysis: Phase Two
• Chapter 6. Conclusions
• References
• Appendices