Successful project portfolio management beyond … project portfolio management beyond project selection techniques: Understanding the role of structural alignment Michael G. Kaiser

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International Journal of Project Management xx (2014) xxx–xxx

JPMA-01629; No of Pages 14

Successful project portfolio management beyond projectselection techniques: Understanding the role of

structural alignment

Michael G. Kaiser a, Fedi El Arbi b, Frederik Ahlemann c,⁎

a odacer finanzsoftware GmbH, Dotzheimer Str. 36, 65185 Wiesbaden, Germanyb KPMG AG Wirtschaftsprüfungsgesellschaft, Ganghoferstraße 29, 80339 Munich, Germany

c Chair of Information Systems and Strategic IT Management, University of Duisburg-Essen, Universitätsstraße 9, 45141 Essen, Germany

Received 26 October 2012; received in revised form 21 February 2014; accepted 4 March 2014

Abstract

Project portfolio management (PPM) is a commonly employed technique to align a project portfolio with strategic goals. Prior research hasmainly regarded PPM as a methodology to optimize the overall benefit of a project portfolio. While adequate project selection techniques arecertainly important, we argue that successful PPM – and consequently effective strategy implementation – depends on an organization's structuralalignment with the needs of PPM. Based on three cases in the German construction industry, we study the effects of fundamental strategic changeson the project selection and organizational structure. From our case analysis, we develop a substantive theory to explain how the criteria, used by acompany to choose and evaluate its projects, influence the company's structure through the information requirements created by such criteria. Toassess whether our theory is in line with accepted schools of thought on organizational design, we integrate it with existing organizational theories.Our contribution is twofold. First, we offer a substantive theory that integrates strategy implementation, organizational information processing, andstructural adaptation. Second, we introduce a new antecedent of successful PPM, namely structural alignment, thus introducing a new perspectiveon PPM beyond mere project selection techniques.© 2014 Published by Elsevier Ltd.

Keywords: Strategic project portfolio management; Contingency theory; Theory of organizational information processing

1. Introduction

When PhilippHolzmannAG,which had long beenGermany'slargest construction company, filed for insolvency in 1999, thepublic was shocked. While government intervention was able todelay its eventual demise to 2002, it became apparent that, owingto a lack of communication between headquarters and businessunits as well as insufficient risk management, Philipp HolzmannAG had accepted risky projects far beyond its means (Dahlkampand Reuter, 1999).

⁎ Corresponding author. Tel.: +49 201 183 6790; fax: +49 201 183 4021.E-mail addresses: [email protected] (M.G. Kaiser), [email protected]

(F. El Arbi), [email protected] (F. Ahlemann).

http://dx.doi.org/10.1016/j.ijproman.2014.03.0020263-7863/00/© 2014 Published by Elsevier Ltd.

Please cite this article as: M.G. Kaiser, et al., 2014. Successful project portfolioalignment, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2014.03.00

mana2

The case of Philipp Holzmann AG shows that selecting the rightprojects is crucial for the success of project-based business models(Müller et al., 2008). Available project alternatives usually farexceed the number of projects that can be executed with anorganization's limited resources at any given time, and choosingthe right projects in a particular context is seldom easy (Engwalland Jerbrant, 2003). Therefore, academics and practitioners alikehave sought to develop methods to address the project selectionproblem. One prominent approach is project portfolio manage-ment (PPM), which is used to keep the ratio between existing andnew projects as close to an optimal state as possible (Archer andGhasemzadeh, 1999). While financial criteria play a significantrole in defining the optimal state, strategic intentions are alsoimportant (Englund and Graham, 1999). The strategic aspect of

gement beyond project selection techniques: Understanding the role of structural

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http://dx.doi.org/10.1016/j.ijproman.2014.03.002





2 M.G. Kaiser et al. / International Journal of Project Management xx (2014) xxx–xxx

project portfolio management has seen increasing interest inresearch, and there is now ample literature on the connectionsbetween project portfolios and business strategies (Artto,2001; Morris and Jamieson, 2005).

However, most literature takes a somewhat methodologicalperspective on PPM, focusing on algorithms for optimizingportfolios and the general effectiveness of PPM approaches(e.g., Doerner et al., 2006; Henriksen and Traynor, 1999). PPMis seen as a planning and controlling approach looked aftermostly by project management offices or dedicated role-playersin the project organization (e.g., Archer and Ghasemzadeh, 1999;Müller et al., 2008). However, while this perspective has seenmuch attention, we are not aware of any research into the orga-nizational transformations necessary to implement a strategicproject portfolio management regime. This is unfortunate, becauseorganizational alignment and the ability to collect pertinentinformation from all organizational units is often more importantto PPM success than employing sophisticated project prioritizationmethods or information systems (Kerzner, 2004). Indeed, the lackof research into the organizational impact of strategy implemen-tation is not limited to project-based organizations but is a generalblind spot in strategy research (Noble, 1999), even though prac-titioners often see strategy implementation as more risky anddifficult than strategy formulation (Hrebiniak, 2006).

In our research, we study organizational alignment as anantecedent to successful PPM, using case studies in the Germanconstruction industry. Construction contractors are a typicalexample of project-based companies. Since their core businessis the execution of construction projects, strategies must beimplemented by changing how projects are selected and managed(Langford and Male, 2001). From the empirical data we gatheredat three large construction firms, we derive a substantive theory ofthe relationships between strategy, project portfolio management,and the organizational alignment prompted by strategic PPMimplementation. The resulting theory will be integrated withtheories of organizational information processing (Galbraith,1973) and contingency theory (Donaldson, 2006; Hofer, 1975) tointerpret the results in the context of a more general theoreticalframework.

The paper is structured as follows. After the Introduction, weexamine the state of strategic management with a focus on theconstruction industry and also provide an overview of the conceptof project portfolio management. We then present our researchmethod. We illustrate our findings in the context of a shortdescription of the current state of German construction. In the nextsection, we explain the substantive theory we have developed andembed it in broader theories of strategic alignment. In conclusion,we point out our study's limitations and outline future researchopportunities.

2. The rise of strategic management in construction

The topic of strategic management is rarely considered inliterature about project portfolio management. Strategy isoften considered the preserve of top management, while projectmanagement issues are the responsibility of the project manage-ment office. This view fails to acknowledge the close relationships

Please cite this article as: M.G. Kaiser, et al., 2014. Successful project portfolio manaalignment, Int. J. Proj. Manag. http://dx.doi.org/10.1016/j.ijproman.2014.03.002

between both fields, particularly in project-based businesses. Onthe one hand, a functioning strategic management process isa precondition for the alignment of a project portfolio withstrategy (Meskendahl, 2010). On the other hand, project portfoliomanagement is essential for the implementation of formulatedstrategies in these firms (Srivannaboon, 2006). As an antecedentof PPM, we will discuss the state of strategic management in theconstruction industry as it is documented in the literature in somedetail. This will also illustrate in what context the case companieswe studied operate.

While strategic management is generally studied in theabstract, and without reference to any one industry, somespecificities of construction warrant the consideration of strategyimplementation in this industry. More than most other manu-facturing industries, construction has traditionally been a laggardin adopting strategic management methods (Hillebrandt et al.,1995; Junnonen, 1998). Several reasons have been put forwardfor this slow adoption. First, construction contractors' project-based business model is certainly an important obstacle: nothaving one relatively static organization but a plethora oftemporary organizations (i.e. individual projects) inhibits theimplementation of complex strategies (Chinowsky andMeredith,2000). The dominance of small to medium-sized, owner-runfirms in construction might also contribute to the slow uptake ofstrategic management practices, as these firms have been shownto be less conscious of strategy and more concerned withshort-term management (Jennings and Beaver, 1997). Finally, ithas been suggested that the educational backgrounds of con-struction firms' top managers lead to low awareness of strategicmanagement. Since many construction managers have anengineering background, many lack formal training in strategyformulation and implementation methods (Pries and Janszen,1995).

Despite lagging acceptance in construction, there is nowa growing body of research on construction strategy (seeTable 1). Prior research primarily reveals a slow increase inawareness of strategic management methods over the past twodecades. While the strategy formulation aspect has receivedsome attention, strategy implementation in the constructionindustry is still poorly researched. This leaves a gap in currentresearch, because strategy implementation is far more industry-dependent than strategy formulation (Gupta and Govindarajan,1984).

3. The concept of project portfolio management

Project management is linked to strategy implementation intwo distinct ways. Firstly, there is the management of strategyimplementation projects, an aspect that has been studiedextensively (Grundy, 2000; McElroy, 1996; Pellegrinelli andBowman, 1994). The second link is the implementation of astrategy through the modification of project management (PM)practices (Srivannaboon, 2006). This applies to all facets ofsingle-project and multi-project management, specifically inproject-based industries where projects are of paramount strategicrelevance.



Table 1Overview of previous strategy research in the construction industry.

Article Overview Pertinent contribution

Lansley (1987) Lansley develops an explanatory framework linking the strategy, skills set,and structure of construction firms with the market environment.

Based on contingency theory, the paper introduces thenotion of adaptive responses of construction firms tochanging market conditions.

Betts and Ofori(1992)

After outlining Porter's five forces, value chain, and generic competitivestrategies as strategic management paradigms, the paper focuses onfactors inhibiting the application of such paradigms in construction.

Betts et al. identify the following hindrances to strategicmanagement in construction:

– Uniqueness of individual projects.– Industry fragmentation.– Management intensity (leaving less time for

strategic management).Warszawski

et al. (2007)Warszawski presents a process for strategy formulation in the constructionindustry.

It is necessary to focus on both the business environmentand the internal resources of a company to select successfulstrategies.

Junnonen (1998) Junnonen studies the strategy formation process in construction firms.The paper distinguishes between the formation of a long-term corporatestrategy and business strategy with a narrower focus on shorter-termchanges.

Junnonen underlines the challenges to strategicconstruction managers by the industry's cyclical nature.

Chinowsky andMeredith (2000)

The authors conducted a survey of executives at the 400 largestgeneral construction contractors with regard to the state of strategyplanning and competence development.

The survey shows that construction executives are awareof the importance of strategic market positioning in ahighly competitive environment. However, strategyplanning is still only partly implemented in mostcompanies.

De Haan et al. (2002) De Haan et al. assess the validity of the core competence theory ofstrategy in the construction theory.

Core competencies are found to be a valid approach tostrategies in construction. The authors hold that a fitbetween the market environment and a firm'scapabilities are critical for its success.

Price (2003) Price presents a comprehensive overview of the strategy process inconstruction. Frameworks found in practice are combined into aunified framework for the construction industry.

The studied organizations show the growing sophisticationof construction companies with regard to strategicmanagement. However, it becomes apparent that manycompanies are still unable to effectively implementstrategies.

Green et al. (2008) Green et al. investigate the applicability of the dynamic capabilities theoryto construction. Since dynamic capabilities – like core competencies – aregrounded in the resource-based view of the firm, the study is closely relatedto the one by De Haan et al. (2002).

The authors find dynamic capabilities to be a fittingtheoretical approach to strategy formation. Theyestablish that construction firms derive their strategylargely from their own expertise in transforming resourcesinto business value.

Kazaz and Ulubeyli(2009)

Exploring strategic management practices, Kazaz et al. surveyed firms tocreate a SWOT analysis for the Turkish construction industry.

The research showed an increasing use of strategicmanagement techniques. However, many companiesstill consider long-term planning and conscious marketpositioning to be tedious and unnecessary.

Isik et al. (2010) Isik et al. relate resources/capabilities, project management competence,and strategic decisions to company performance using a structural equationmodel.

The statistical model shows a strong impact of strategicdecisions as well as resources/capabilities onorganizational performance. Project managementcompetency exacts its influence mostly through its effecton these two factors.

3M.G. Kaiser et al. / International Journal of Project Management xx (2014) xxx–xxx

Project portfolio management has risen to prominence as amethod of selecting and managing an organization's projects(Thiry and Deguire, 2007). As the name suggests, PPM has itsorigins in the application of modern portfolio theory to theproject selection problem. First put forward in the seminalwork of Markowitz (1952, 1991), modern portfolio theory wasoriginally applied to financial asset selection into an optimalportfolio, but the general applicability of ideas from portfoliotheory to project selection has long been established (Gibson andNolan, 1974). PPM is now used for the composition of projectportfolios in such diverse fields as product development (Cooper


et al., 2001), IT (McFarlan, 1981), and construction (Vergara andBoyer, 1977). While in its inception, PPM primarily meantthe selection of projects using the original portfolio theory factorsof risk and return, it now refers to a broader set of activities(e.g., continuous risk management, controlling, and reporting),and considers a wider range of factors (Blichfeldt and Eskerod,2008). A portfolio is different from a program or large-scaleprojects with subprojects in that its projects need not have a sharedgoal, but simply compete for the same resources (Turner, 2009).

The typical activities in PPM's scope are the gathering ofpossible projects, their prioritization and selection according to




available resources, and the evaluation of running projectsconcerning their continuing fit with the portfolio. These activitiesusually involve particular optimization algorithms or manage-ment techniques that make use of specific project selection criteria(e.g., Doerner et al., 2006; Henriksen and Traynor, 1999; Kavadiasand Loch, 2003). Companies have considerable leeway in thedevelopment of their selection criteria, and different measures aswell as the wide variety of industries, project types, and strategychoices make interorganizational standardization impractical (Halland Nauda, 1990; Krumm and Rolle, 1992). However, it has beenwell established that project selection guidelines are the singlemost important mediator in the alignment of project portfolios tostrategies, and therefore deserve the attention of practitioners andscholars (Artto and Dietrich, 2004; Cooper et al., 2001; Crawfordet al., 2006; Dye and Pennypacker, 1999; Englund and Graham,1999).

Yet, a project does not leave the project portfoliomanagement's scope after it is selected for execution. Eventhough often neglected, the continuous evaluation of runningprojects, using the same criteria as for their selection, isparamount for stringent PPM (Jeffery and Leliveld, 2004).The unique nature of individual projects makes predictionsabout their progress very difficult and therefore imprecise. Ifan organization intends to keep a project portfolio in a certainstate, it is not sufficient to consider the proposal stageestimates; instead, one should rather work with measures thatreflect current project statuses. For instance, if a project's riskprofile (budget, resource demands, etc.) changes after itsinitiation, the portfolio profile and therefore the selection offuture project – accordingly – needs to reflect this change(Engwall and Jerbrant, 2003). The initial and continuousevaluation of the projects in a portfolio creates a high demandfor high-quality, up-to-date internal and external information,which can put considerable strain on an organization; this is putforward as the main reason for the inattentiveness to this aspect ofPPM in many organizations (Kendall and Rollins, 2003).

4. Research method

As noted, our goal was to create a substantive theory ofstructural alignment to the strategic project portfolio managementimplementation. To get a rich picture of this link, we employed a

Table 2Case company overview.

Alpha Be

Employees(in thousands)

67.4 66

Revenue(in billion Euros)

10.4 20

National revenue share 32% 11Main fields of activity Construction engineering, building

above and below ground, real estateand industrial related services,concession projects.

Reabanpr


qualitative researchmethod.We used a multi-case study approachfollowing general guidelines proposed by Yin (2008) andEisenhardt (1989). To aid our theory-building, we also reliedon the principles of grounded theory, as introduced by Glaser andStrauss (1967) and further specified by Strauss and Corbin (1990).

4.1. Site selection

Since we are still in the phase of building rather than testingour theory, we used a theoretical sampling approach, looking forsites that appeared well suited to reveal the relationships wesought to explore (Charmaz, 2006). Thus, even though theconstruction sector is dominated by smaller firms (DESTATIS,2010), we wanted to ensure the presence of a comprehensive setof institutionalized project portfolio management practices aswell as a sophisticated strategy process and therefore focused onlarge construction companies. As an additional criterion and inorder to get easier access to information about the companies'strategic positions and outlooks, we selected publicly tradedcompanies that regularly disclose their high-level strategies intheir annual reports and other investor relations documents.

4.2. Case companies

We collected data at three of Germany's largest constructioncompanies. While similar in size, they were sufficiently diverse intheir backgrounds, market positions, and strategic positions to geta broad view on construction industry practices. Table 2 providesan overview of the case companies and their main fields ofactivity. As is clear from the firms' activities, they are alreadyfairly diversified and derive a substantial part of their revenuesfrom real estate related activities other than building. Thedifference in revenue per employee shows the different degreesof vertical integration. Beta in particular exhibits a very lowdegree of vertical integration, generating approximately twicethe revenue per employee as Alpha. Gamma is more specializedthan the other two, focusing on the construction of traffic routes,i.e. mainly streets and canals. All three companies do morebusiness abroad than in their home market (Germany). For Beta,Germany is only the second-largest single market by revenue,because the U.S. and the Asia Pacific region generated almosthalf of its revenue.

ta Gamma

.1 10.1

.7 4.0

% 48%al estate development, buildingove and below ground, real estated industrial services, concessionojects.

Focus on traffic route engineering,but also building above ground andconstruction engineering, real estaterelated services, concessions.




4.3. Data collection

We used two main data sources to build our cases andanalyze the case companies' strategies, project portfolio man-agement, and organizational structures. The first source wasinterviews with informants in each company's project man-agement organizations and senior management (Kumar et al.,1993).

The interviews took place between November 2008 andNovember 2009. We used a semi-structured interview approach,using an interview guide that contained a broad set of questionsconcerning project management governance and processes. Thisinterview guide served two purposes: First, we sent it to pro-spective interviewees to provide them with an overview of thestudy as well as their role as participants. Besides the guide, theinterviewees were also briefed on issues of anonymity and the useof the data so as to obtain their informed consent (Kvale, 1996).Second, the guide supported the interviews, ensuring propercoverage of all relevant topics with all informants, and refocusingthe conversation if the interviewee digressed. In the guide, wesought a balance between overly narrow questions (which oftenintroduce preconceptions and lead to sparse data) and a guidethat is too general (to be of any help to the interviewer or theinterviewee) (Glaser, 1998, p. 94).

In accordance with Charmaz (2006, p. 18), we created aframework of questions to choose from in response to the topicsalready covered in the interviewees' answers and the state ofthe built theory. The interviewers were also free to exploreinteresting points brought up by the informants with follow-upquestions. The interviews were always led by two interviewersto reduce any bias, ensure comprehensiveness, and increase thefield notes' validity. All interviews were recorded and thentranscribed to a verbatim report for analysis (Bechhofer, 1984;Eisenhardt and Bourgeois, 1988). We collected 166 pages ofinterview transcripts from interviews with two to five key infor-mants in every organization. We also asked interviewees fordocuments describing their project management and PPMpractices and organization. Interviewees from Alpha and Gammagranted us access to such documents, which were added to thecase material for further triangulation (Eisenhardt, 1989).

The interviewees were selected for their in-depth knowledgeof their companies' project management processes and theirexperience in this context. All interviewees had been at theirfirms for at least five years, some for more than 40 years. Atcompany Alpha, we spoke to a senior project manager from theRussian subsidiary and the head of project management andscheduling. At Beta, we were able to speak to the departmentheads of competence management, development and buildingprocess management, and three senior project managers. AtGamma, we interviewed the head of scheduling and projectmanagement, the head of internal services, and a senior projectmanager. Due to their strong involvement in the conception andimplementation of project management practices and their longcareers in their organizations, the interviewees were not onlyable to elaborate on the status quo but also the longitudinaldimension of the development of project management in theirfirms.


The second primary data source was the annual reports thatthe case organizations are obliged to publish as publicly tradedcompanies. As part of the official investor information, theymust include sections detailing the current situation and risksfor the business, as seen by senior management. While notstrictly required by law, these reports also customarily containelaborate sections on a company's past, present, and futurestrategies. Further insights can often be gleaned from the sectionsdescribing the market situation as well as from the editorials bythe CEO and board chairman. We obtained the past decade's(2000 to 2009) annual reports for the case companies, focusingparticularly on the abovementioned sections. While the reasoningemployed by executive management in annual reports tends to beself-serving (Bettman and Barton, 1983), they have been shownto be a good source of information concerning an organization'sstrategies (Bettman and Barton, 1983; Bowman, 1984). Wecollected 3513 pages of annual reports from the case companies.

As far as they were applicable, we followed the guidelines ofEisenhardt (1989) and Gibbert et al. (2008) to ensure rigor indata collection and analysis. For instance, we collected all datain a structured database, in our case, a hermeneutical unit of theATLAS.ti qualitative data analysis software version 6.2.27.

4.4. Data analysis

The source material was coded bottom-up, as recommendedby Strauss and Corbin (1990), i.e. without an a priori codingscheme. In a first step, we analyzed the source documents line-by-line, marking every discernible concept with a code reflectingits content. The coding was performed by one researcher and thenindependently confirmed by a second; differences between thetwo coders were reconciled in a workshop. With the annualreports, we restricted the full analysis to the parts pertinent to acompany's past, present, and future strategy (the strategy section,forewords, editorials, and situation and market reports). Theremaining parts of the reports (e.g., financial reporting, auditcertificate, compensation statements) were skimmed to spotrelevant sections but were not coded line-by-line. We checkedthe quality of the source material (in particular, annual reports vs.interview transcripts) through data triangulation and found noobvious contradictions. We therefore conclude that the interviewtranscripts and annual reports are trustworthy concerning theinformation relevant for our study.

After the coding of the documents, we performed severalrounds of categorization, constantly comparing the sourcematerialwith the categories to ensure category validity (Strauss, 1987). Toease this process, we employed a visual mapping technique (Milesand Huberman, 1994) using the network view functions providedby ATLAS.ti and merging the resultant codes into supercodes.The categorization was performed conjointly by two researchersin a series of workshops.

4.5. Theory-building

To arrive at our substantive theory, we used two interrelatedprocesses: conceptualization and theoretical integration. Con-ceptualization is the ‘naming of an emergent social pattern




grounded in research data’ (Glaser, 2002). Through our workon the low-level concepts, we discovered and coded in the sourcedata and these concepts' categorization, arriving at higher-levelcore categories in which the gathered information could beorganized; this information had meaning and validity above andbeyond the various case incidents. We also contextualized theconcepts in a framework that emerged from our analysis; as wecondensed the data, it became clear that all events, with theirantecedents and consequences, could be located in three specificconceptual realms: strategic management, project portfolio man-agement, and organizational alignment.

For substantive theories with a focused scope, such as the onewe develop in this paper, it is fruitful to explore links to other, moregeneral or ‘grand’ theories to ensure our theory's plausibility,connect it to existing research streams, and more easily comparethe theory with findings from related fields of inquiry (Charmaz,2006; Eisenhardt, 1989). For the purpose of this theoreticalintegration, we screened influential theories of organizationalbehavior, learning, and strategy for insights into the overarchingcausalities behind the phenomena we observed. In the followingsections, we first describe the findings and propositions of oursubstantive theory and then highlight the links to existing theory.

5. Strategic challenges and structural alignment of PPM

While they disagree about the extent and causes of its influence,the proponents of both the resource-based view and the industrialorganization perspective acknowledge the environment as animportant determinant of successful strategies (Miller and Shamsie,1996; Porter, 1979). Since the adaptation of strategy to theenvironment is important, changes in the environment often triggeradjustments in strategies (Venkatraman and Prescott, 1990). TheGerman construction industry is thus well suited to our researchobjectives owing to the drastic changes that it underwent duringthe past decade.Wewere able to observe our case companies in orshortly after a strategic change process, which also led to theimplementation of project portfolio management practices. Bycomparing organizational structures before and after these changes,we were able to infer PPM implementation's impact on theorganization. To provide some context to the companies' strategicresponses, we will describe the new environmental conditionsthey faced and how these were assessed by the companies' topmanagement.

5.1. Setting the scene: The market environment

The German construction industry has been in distress foralmost 15 years. Like the construction sector in other matureeconomies (Ng et al., 2009), the gross value added share ofconstruction in Germany has declined since the end of post-warreconstruction (DESTATIS, 2010). However, the downwardtrend in this industry only developed into a dramatic constructioncrisis (Baukrise) after a short boom phase in German constructionspurred by government spending and tax subsidies incentivizingreal estate investment in East Germany in the years afterreunification (Bensemann and Kiesewetter, 2008).


For about five years (1991 to 1996), the artificial demandcreated by these subsidies not only led to a build-up of over-capacity in the industry, but also shielded German constructioncontractors from rationalization pressures felt in other Euro-pean markets owing to increasing internationalization andworkforce mobility (Keitel, 2007). Therefore, when thesubsidies ended, German contactors were forced to adapttheir capacities to the lower demand and also faced fiercecompetition for the remaining contracts from foreign competitorsentering the German market. The situation was further exacer-bated by demographic factors: with the German populationshrinking and aging, the real demand for new housing decreasedover time (Ottnad and Hefele, 2006). Unsurprisingly, the industrystructure also underwent notable changes. In particular, there wasmajor consolidation among major construction companies. In1996, there were still 575 of the roughly 80,000 constructioncompanies with more than 200 employees. By 2008, the totalnumber of construction contractors decreased to 74,000, andonly 190 companies with more than 200 employees were left(DESTATIS, 2001, 2009).

All three case companies, although different in many aspectsof their organizational goals and structures, show strikingsimilarities in their assessments of the market environment, itsstrategic implications, and the effect that their strategies have ontheir project management organization (structure) and projectmanagement processes.

The case companies' senior management unequivocally seesthe German market as secondary in their growth plans. Evenwhen the effects of the current financial crisis and the mostpressing liquidity problems subside, Germany remains a countrywith an infrastructure that is already highly developed, withsufficient or even abundant commercial and housing space,combined with adverse demographics: all factors have led tostagnation in or a decreasing demand for construction. Onenoteworthy exception is the further development of the trans-portation infrastructure (mainly roads and railways, but alsoairports) that, owing to Germany's central geographical positionin the EU and the country's increasing trade with Eastern Europe,will likely continue for the foreseeable future. Owing to its focuson transportation infrastructure, Gamma's assessment of theGerman market was less negative than those of Alpha and Beta.Nevertheless, all firms agree that the most dynamic constructionmarkets are abroad, mainly in developing countries in Asia andAfrica. Due to lower vertical integration in international markets,German companies are more reliant on subcontractors, which areconsidered a major source of risk. Furthermore, the procurementof raw materials with adequate quality is often difficult, and therecent volatility of commodity prices (e.g., steel) makes supplymanagement and price estimation challenging.

5.2. Strategic response

The lackluster growth or stagnation of construction demandin Germany and other developed countries increasingly shiftsthe case companies' strategic attention towards real estate-related service businesses that promise a steadier cash flow andlower risk exposure, and enable the offering of package deals




that include the design, construction, and subsequent manage-ment of real estate properties (cf. Bon, 1992). To counter theprice pressure in their home market and establish a stronginternational profile, the case companies have accentuated theimportance of developing unique differentiation through innova-tion and diversification. To this end, especially Alpha and Betasought to develop new technologies and know-how in technicallydemanding areas of construction. In terms of Porter's (1980)generic strategies, they try to move from a low-cost strategy to acombination of segmentation and diversification strategies. It hasbeen shown that, for this purpose, increased innovation is acommon response to competitive pressure (Boone, 2000; Vives,2008).

There are several aspects to this strategy. One aspect isspecialization in niche markets, such as particular buildingand infrastructure types, to convince clients on the basis ofstrong track records rather than low prices. Unlike before, topmanagement now relies on extensive market analyses beforeentering a market to ensure a good fit with the organization'scapabilities, and sufficient margins, to make a market entryprofitable. Furthermore, all three companies' senior manage-ment perceives strong engineering and project managementcapabilities as key to their differentiation. We may concludethat, for the first time, the construction companies worked ona sophisticated strategy for regaining competitiveness on acorporate level, covering all business units and group companies.This was new, compared to previous approaches where localautonomy was not questioned as long as (some) profits wereearned. The interviewees at Alpha and Beta reported that thestrategic change started in earnest in the early 2000s. This is alsosupported by the management assessments in the annual reports.The interviewees at Gamma pointed to a series of takeovers from2002 to 2008, which underlined the importance of the realestate-related services besides the traditional construction busi-ness. Thus, we conclude:

Proposition 1. Severe strategic threats induce a centralizationof strategy development and subsequent strategic adjustment.

5.3. Adjustment of project portfolio management

As an immediate result, the abovementioned strategy results in apick-and-choose approach to project selection, limiting the projectsto bid on to those that are (a) in a market worth entering from astrategic perspective, (b) a good fit for the company's (material andimmaterial) resources, and (c) sufficiently profitable, also when

Table 3Strategic goals.

Strategic goal Alpha Beta Gamma

Diversification Moderate High LowInnovation High High ModerateInternationalization High High ModerateLow prices Moderate Low HighRisk mitigation High High HighStrategic relationships High High ModerateVertical integration Low Low Moderate


taking all known risks in account. This contrasts starkly to theprevious approach of taking on projects simply to have allavailable resources operating at full capacity, with comparativelylittle regard for their strategic fit and risk-adjusted financialprospects. Table 3 provides an overview of strategic goals andtheir importance to the case companies. As we can see, while allcompanies moved in the same direction, Alpha and Beta weremore committed to the goals listed in the table. Gamma is stillmore oriented towards price competition, seeking to achieve acost advantage by higher vertical integration.

For instance, projects at Alpha are classified in four riskcategories, from low risk projects (Category 1), to projects withextremely high technical demands, a very short timeframe, and/or other risk factors (Category 4). With the public sector asan important customer, these risk factors are not limited toimmediate financial risks, but also include repercussions ofnegative publicity from accidents, environmental damage, orcollaboration with controversial partners. The top manage-ments of Alpha, Beta, and Gamma are clear about the im-portance of public perceptions of their business. An Alphaannual report states: “Increasingly, we see image competitionreplacing price competition.” Likewise, all other strategicgoals are represented by sets of selection criteria leadingto more complex selection schema for more differentiatedstrategic goals. Thus, we conclude:

Proposition 2a. The project selection criteria and measuresderive from an organization's strategic goals.

Proposition 2b. The complexity of the project selection criteriaand measures is contingent on an organization's strategic goals.

In our case companies, the foremost activity in institution-alizing project portfolio management was a push for organiza-tional centralization. Internal departments responsible forproject management functions were set up to perform theirtasks as service providers for internal and external customers.Besides PPM, they are responsible for the introduction of newPM methods into the organization, providing PM training andadvice, and assisting in project planning and controlling — atproject managers' request. To ease project portfolio manage-ment, all companies use a central information system for theirproject management (PMIS), which they use to performmulti-project management and project portfolio reporting. Tothis end, Beta introduced a new PMIS with portfolio managementcapabilities in 2001, Alpha followed suit in 2002 and Gamma in2005.

In the wake of the case companies' organizational centraliza-tion, the project selection process underwent profound changesduring the Baukrise. Alpha, for instance, had its first majorreorganization, which heralded the aforementioned changes, in1999 and 2000. Further changes included a centralized projectportfolio, and riskmanagement followed in 2002 and 2003. At thetime of the interviews, the already centralized staffing process wasimproved to better align project teams with strategic goals bycarrying over personnel from the estimate and risk assessmentphase. A recent Alpha annual report states: “In future, we arecommitted to only taking on projects of great strategic impact,




projects with high profitability and manageable risks.” Alpha (in2003) and Beta (in 2004) therefore each introduced a strictcentralized gating process to evaluate every project by means offinancial and strategic criteria. The informants at Alpha and Betaemphasize the importance of the centralization efforts in thegating process. Prior to rigorous gating, the case companies wereprone to take on projects of questionable profitability and withextremely high risks. One Beta manager described the situation asfollows: “[The new selection process] is a necessary result ofmany fundamental problems, not only in our company but in thewhole industry. What our industry went through over the past10 years led to the process as it is today, which is simplynecessary to protect the company. A lot of nonsense happenedbefore that, which cost the company a lot of money. This had tostop.” Triggered by the environmental factors and the companies'assessments of the market environment, they made similarorganizational choices in their centralization of project manage-ment. In an attempt to ensure an alignment of organizationalstrategies and the project portfolio, all three companies chose thehierarchical level of strategic decision-making as a locus for PPM.This allowed for an easy flow of information, the required levelof management attention and seamless strategy implementationthroughout projects.

Proposition 3. If project portfolio management is introduced,it is organizationally centralized at the same hierarchical levelas the locus of strategic decision-making.

5.4. Structural response

As decisions about projects are regularly made by the board ora committee with strong board participation, concise documen-tation is needed to facilitate swift decision-making. To informtheir selection decisions, top management uses a variety of datathat evaluates every possible and running project from severalrelevant perspectives. First, the project needs to fall within thescope of the company's strategy and expertise. For instance,because Gamma has decided to focus on building traffic routes, itmostly discards bid options outside this scope. At this point,management also considers its strategic goals, specificallybidding on certain projects (e.g., the building of airports) tobuild a reputation in this field or to leverage internal innovationsas competitive advantage in the bid process. Following theirdiversification and internationalization strategies, Alpha andBeta also try to select a project portfolio that is spread outgeographically and in terms of project type.

It is now necessary to create a preliminary project planfor every potential project. Similar to an actual project plan,schedule and resource consumption planning is customary.Such a plan forms the basis for cost estimates and for ensuringthe availability of necessary resources. The centralization ofproject management units that support the creation of thesepreliminary plans is a matter of efficiency as well as of con-centrating planning expertise. By collecting detailed time andmaterial records for tasks and comparing planned values toactual values, the project management units gain insights forfuture project and resource planning. A PMO member at Alpha


notes: “If necessary, I go to the construction site with astopwatch to measure the durations of certain tasks. […] This isalso crucial in our project controlling, to fend off constructionmanagers that often like to take their time.” These records arerelevant for the compilation of bidding documents and pricecalculations. Having comprehensive knowledge of the time andcapital demands, especially in the more exotic or specializedoperations, is seen as a strong competitive advantage andsignificantly reduces risk.

At both Alpha and Beta, the resource management departmentcoordinates closely with the PMO in developing project schedulesand thereby reduces the risk of conflicts with other bids orcontracts. To reliably plan and allocate resources, all companiesintroduced a central resource management system alongside thePMIS. The rationale provided by our informants is the efficientarbitration and allocation of existing resources as well as theadaptation of resources to future demands. Resource adaptationbecomes more important because project selection is now lessdependent on resource exhaustion and more dependent onstrategic project fit, leading to a need to size the availableresources accordingly.

In sum, we observed that the case companies' sophisticatedportfolio management that considers a multitude of perspec-tives (risk, strategic fit, resource fit, schedules, etc.) induces asignificant need for specific information. Thus, we conclude:

Proposition 4a. Every project selection criterion creates therequirement to gather specific internal or external informationabout every prospective and running project and its context.

Proposition 4b. An increase of project selection criteriacomplexity leads to an increase in information requirements.

To meet the advanced information requirements, financialmanagement and risk management are centralized and elevatedto a strategic level. Because high-risk projects – sometimestaken only for reasons of prestige and publicity – used toendanger profits or even a company's existence, the vetting ofprojects for risk factors was intensified. Risk management nowadvises on the project risks, makes bid recommendations, andproposes risk premiums — if necessary. A central riskmanagement department makes it possible to manage individ-ual project risks and to consider the project portfolio risk profileas a whole. All three companies have therefore installed acentral risk management unit to estimate project risks andmonitor running projects.

As an extension of intensified financial and risk manage-ment efforts, there is an increased focus on the management ofcontracts and resulting claims, the rationale being that manyrisks can be passed on to subcontractors and suppliers. Withdecreasing vertical integration, claims play an important role inconstruction, often providing a major source of income forgeneral contractors and reducing the financial exposure toclaims from customers. Informants also point to the consider-able legal expertise necessary to assess and assert claims,especially in an international context. The information providedby the legal units responsible for claims and contracts support thedecision committee in vetting bids and contracts for viability. As a



Table 4Structural changes and respective information contributions.

Evidence in casecompanies ⁎

Structural change Information contribution Alpha Beta Gamma

Centralization of project management office Schedules, resource plan, and cost estimates; projectprogress; planning compliance

I I I

Centralization resource management Resource availability, resource adaptation potential I IA ICentralization of procurement and supply chain management Resource availability, resource adaptation potential,

procurement risksI A IA

Centralization of human resource management(recruiting, reductions, project staffing)

Resource availability, resource adaptation potential AI AI A

Centralization of customer and supplier relationship management Resource availability, procurement risks AI AICentralization of risk management Risk mitigation A AI AICentralization of claims management Risk mitigation, strategic relationships AI AI I

⁎ A: annual reports, I: informants.


Beta executive notes: “We used to have contracts that were signedby some business unit, even if they should never have been,because there were deal-breakers in the fine print and [contractmanagement] was not as involved in the process then, as it isnow.” One senior manager comments as follows on claims:“Whether a project is profitable [… is often …] determined byclaims being managed properly.”⁎

A central human resource management organization isresponsible for applying the resource adaptation strategy topersonnel. Alpha and Beta informants point to the role of humanresource development in their innovation process in increaseddifferentiation over competitors. This includes a central knowl-edge management strategy to leverage experience in exceptionalprojects that could be used to compete for similar projects.Professionals with specialized skills can be requested and assignedinternationally, and skills deficits can be addressed by means oftraining. As a PM consultant at Beta notes: “We coordinatepersonnel adaptation measures in all branches. Nowadays, we fitthe resources to the project portfolio, and not the other wayaround.” To complement their resource management, Alpha andBeta centralized their procurement. Besides efficiency gains, thisstep is a prompt response to the demands of the resource planningprocess. Furthermore, in their internationalized structure, thesecompanies want to take advantage of arbitrage effects and procurematerials or machinery in the cheapest market.

Overall, several functions in the company were centralizedin order to enable the effective synthesis of information for theselection process. Table 4 indicates the main structural changes,as evidenced by the annual reports as well as our informants.One can see a strong coherence in these organizational measuresbetween all the case companies. We argue that organizationalcentralization was induced by the information requirementscreated by the introduction of central project portfolio manage-ment. The coordinative effort – to for instance, obtain up-to-date,standardized risk profiles or resource consumption reports fromdispersed organizational units – is too great and, thus, companiesconsolidate processes and thereby centralize information. Weconclude:

⁎ All quotes are translated from German.


Proposition 5a. To implement project portfolio management,the organization's structure must be aligned with the informationrequirements created by the project selection criteria.

Proposition 5b. The organizational alignment involves estab-lishing processes, systems, and organizational units to create,process, and deliver information required by project selectioncriteria.

5.5. Project portfolio management success

Successful structural change has a significant impact onPPM efficiency and effectiveness. From adapting and extend-ing their organizational structure to the needs of PPM, the casecompanies experienced several positive effects: First, a propercentralization of important information processes leads to morecomprehensive information of higher quality and timeliness, ashighlighted by a PMO member at Alpha: “[…] We haveexperience from former projects concerning cost estimation,risk evaluation, duration estimation, and so on. Project planningbecomes easy when you have such information.”

Second, the case companies were thus able to improve theirdecision-making quality: Informants reported on a significantlyimproved informational foundation for decision-making, asclaimed by a Beta manager: “[…] We have a central planningprocess for key resources. These resources comprise not onlyconstruction equipment but also project managers and engi-neers. When a key resource is not available, it does not makesense to make an offer for a project that needs this resource.”Furthermore, risks and consequences of decisions becameapparent; decision-makers were more confident that theirdecisions actually complied with strategic objectives, aspointed out by a project manager at Gamma: “[…] if the clientdecides to change the risk accountabilities or the paymentarrangements during the bidding phase, and if these changesare not compliant with our strategy, we cancel our projectoffer.”

Third, the institutionalization of information-gathering forPPM legitimized it and gradually established a consensus thatPPM is the right method to use. While in the early phasesof PPM adoption, there were insecurities and reservations




regarding its introduction, the newly established organizationalunits and processes with their proponents countered this doubt,and working PPM practices swiftly convinced laggards of thevalue of PPM.

Four, informants overall described the structural alignment asan important antecedent of effective strategy implementation,which avoids misled investments and overly risky initiatives,while at the same time assures that strategic objectives are met, aspointed out by a PMO member at Alpha: “[…] the chief riskofficer, who is a member of a board of directors, decides to whichrisk class a project belongs. Project risk monitoring becomesessential owing to the problems our industry faces and the manycompanies that have lost a lot of money as a result of senselessdecisions.”

Proposition 6a. Adequate structural alignment with the needsof PPM leads to greater PPM success.

Proposition 6b. A structural alignment is adequate when itwarrants the timely and efficient delivery of high-qualityinformation required by PPM.

From a holistic perspective, our case companies' strategieswithin the examined timeframe were successful. Considering themany other large construction companies that succumbed to thecompetitive pressure during the Baukrise, mere survival duringthese years can already be deemed a success for them. Due to thelong-running nature of projects that our companies typically takeon, a certain lag before the positive results are measurable inthe balance sheets is to be expected. However, comparing therevenues and profits of our case companies (averaging the periodsfrom 2001 to 2003 and from 2006 to 2009), we can see moderateto high revenue growth and, at the same time, a disproportionateincrease in profits. Alpha increased its revenue by 55%, whileincreasing profits by 514%. Beta's revenue rose by 150%, and itsprofits by 225%. Gamma grew its revenue by 17% and, at thesame time, increased its profits twentyfold. The success of ourcase companies exceeds the growth of the construction sector aswhole (DESTATIS, 2010) by a large margin.

From the evidence, we can now derive a generalized theoryof the structural effect of project portfolio management. Thepropositions stated above express the primary causalities thatwe elicited from the case material. In times of strategic threats,organizations tend to centralize their strategy development andimplementation. Given a strategic management process, an or-ganization develops and explicates an organizational strategy withspecific goals. These goals are then used to define the selectioncriteria for projects and goals for the overall project portfolio.Each project is assigned a number of attributes matching thesecriteria; the same is true for the overall portfolio of running andscheduled projects. These attributes of both the projects and theportfolio are solicited by organizational information providers.The individual project attributes on which a selection decision isbased, in combination with the current portfolio attributes, arethen evaluated using the strategy-derived decision criteria. Thestructural changes are triggered by the demand for informationproviders capable of assigning the required attributes to projectsas well as the project portfolio. Ultimately, an adequate structural


alignment will foster successful PPM in terms of acceptance,decision-making quality and strategy implementation.

6. Theoretical integration

We now proceed to interpreting our substantive theory of thestructural effects of strategy implementation via PPM throughthe lens of major theories in organization science. All our casecompanies underwent a clear organizational transformationtowards centralization of strategy development and projectportfolio management. Prior scholarly work on organizationalarchetypes can explain this process. Before the transfor-mation process, our case companies could be characterized asadhocracies with strategies that are more the result of individualbehavior than of a careful planning process (Mintzberg andMcHugh, 1985). The later organizational structure reflects a movefrom adhocracy to a form that can best be described as a machinebureaucracy (Mintzberg, 1980). However, while some of thecharacteristics of machine bureaucracies match (such as formal-ization of behavior), others do not (e.g., low level of training).This can be explained by Mintzberg's focus on operational workprocesses, which strategy development and portfolio managementare not. A similar yet more elaborated model by Staw et al. (1981)describes how organizations react to environmental changesthat lead to threats. They analyze such threats' effects at in-dividual, workgroup, and organizational levels and conclude thatorganizations react through a multitude of responses, includingcentralization of authority, increased formalization, and reducedcommunication complexity; these were present in our casecompanies.

In more general terms, the contingency theory of organiza-tions has been widely acknowledged for its ability to explainthe structure and performance of organizations (Donaldson, 2001).In its essence, contingency theory holds that an organization'sperformance is contingent on the fit between the organization andenvironmental as well as internal factors, which are surmisedunder the term contingencies (Child, 1973; Lawrence and Lorsch,1967). Since organizations generally seek to perform, they thusalso strive to attain a fit with their context, and therefore seek toreadapt if their context changes (Donaldson, 1987). As noted, theenvironment imposes one or many contingencies that influencebusiness strategy (Hofer, 1975) and, to some degree, limit thechoices that managers can make during strategy formulation so asto attain viable results (Hrebiniak and Joyce, 1985). Whenformulated, the strategy itself becomes a contingency that partlydetermines an organizational structure's success (Donaldson,1987), besides other factors such as organizational size (Child,1973). Apart from its impact being mediated through strategy, theenvironment may also directly influence organizational configu-rations (Venkatraman, 1989). Contingency theory has strongexplanatory power for the phenomena that we observed in the casecompanies. Not only does it clarify the effect of environmentalchanges on business strategy, but it also explains the generalorganizational transformation mechanisms due to the implemen-tation of such strategy. As we have seen, the main driver ofstructural change is the necessity to establish information flowsbetween different parts of the organization.




Galbraith (1973, 1974, 1977) sees the properties of organi-zational information processing (OIP) as highly influential inthe shaping of organizational structures. Galbraith's main tenetis that the demand for information and the capacity to process itincreases with the uncertainty of a task's environment. This isundoubtedly the case for the case companies, who must copewith a significant increase of uncertainty in their strategicenvironments. Along similar lines, project portfolio manage-ment, particularly the selection of the right projects in terms ofstrategy, financials, and risk, is a complex task involving a highlevel of uncertainty (Langford and Male, 2001).

Galbraith (1977) also proposes that, when faced with highuncertainty levels, organizations should rely on setting goals,rather than meticulously defining processes and routines. Heholds that it is impossible to define processes while anticipatingall eventualities of a volatile situation. One should rather set goalsand efficiently gather the information required to make sounddecisions.We have clearly seen such behavior in the constructionindustry. Selection committees do not follow a mechanistic set ofrules. Instead, while the criteria are usually well defined, thecommittee has considerable freedom to weight and interpretthe information provided for their selection decisions. This isnecessary to reach strategic goals in the light of constantlychanging environmental factors and portfolio attributes. In lightof Galbraith's theory, selection committees can be seen as lateralrelationships allowing for efficient decision-making in a group ofall relevant stakeholders (Galbraith, 1974).

The project portfolio management information requirementsare determined by the project selection criteria, while the infor-mation processing capacity is determined by the individual andcollective capacities of selection committee members. Since theselection criteria have been extended dramatically, so too has theinformation required to base selection decisions on. However, theinformation processing capacities of executive boards andselection committees are limited (O'Reilly, 1980). Galbraithproposes the creation of vertical information systems – that is,organizational units that collect information from all organiza-tional levels – as one way to address information requirements(Galbraith, 1974). These units are responsible for interpreting andcondensing the vast information gathered at all hierarchical levelsand enabling the various decision-makers to process it. Moregenerally, information processing theorists argue that goodorganizational structure is achieved when a task's informationrequirements are matched with the information processingcapacity of those charged with completing this task. The greaterthe uncertainty and therefore the information requirements, themore effort an organization must exert to collect and prepareinformation (Egelhoff, 1982). As noted, modern constructioncompanies go to great lengths to gather and pre-process infor-mation for the consumption of those responsible for projectselection. They do so by creating vertical information systems(to use Galbraith's term) in the form of centralized departments,for instance, for risk information (risk management), resourceinformation (resource management, HR management), andscheduling (PMO).

What we could not observe in our cases were forms ofself-contained tasks and slack resources (Galbraith, 1974). We


saw that the latter were simply not an option for the casecompanies in times of fierce competition, often based on prices.Self-contained tasks could indeed be observed, but only at theproject level, whereas at the strategic or portfolio level, otherdesign strategies dominated. Based on our case analysis, wecan conclude that the frequency of strategy development andportfolio management processes did not justify the definition ofself-contained tasks with organizational restructuring.

Fig. 1 shows the complete path from the strategy changesto the structural changes induced by the implementation of anew strategy. We also annotated the causal flows with ourpropositions, which closely match the predictions derived fromorganizational theories.

7. Conclusion

In this paper, we presented the results of an investigationinto the structural changes induced by strategy implementationusing project portfolio management. We believe that thedescribed findings generally apply to project-based businessmodels. However, since our study is limited to constructioncontractors, there is still a need for research in other industries(besides construction) to establish the findings' validity. Forthis purpose, it would be fruitful to conduct a quantitative study thatrelates the choice of strategic configurations with informationrequirements, and tests the co-occurrence of these requirementswith corresponding organizational structures. Because severalquantitative studies have successfully operationalized informa-tion requirements, we are confident that such a study would notonly validate our theory, but would also yield further insights intothe dynamics of OIP in a project management context (Egelhoff,1982; Leifer and Mills, 1996).

Our study's theoretical contribution is twofold. First, it liesin the integration of strategy implementation, organizationalinformation processing, and structural adaption. While infor-mation processing has been used as paradigm to study the fitbetween strategy content and organization (Egelhoff, 1982;Rogers et al., 1999), as well as to shed light on organizationalfit with environmental contingencies (Daft and Lengel, 1986;Kleinschmidt et al., 2010), our study is to our best knowledgethe first to explain the link between strategy implementationand organizational structure using an OIP perspective. Since theability to adequately procure and process information is notonly important for strategy formulation and strategy imple-mentation (Hrebiniak, 2006), it stands to reason that organiza-tions aligned with the information requirements of strategyimplementation are more efficient and/or more agile in imple-menting new strategies. Second, our study establishes a newperspective on PPM, broadening the narrow focus of method-ological approaches. We have shown that a major antecedent ofsuccessful PPM is structural alignment. PPM's implementationin project-based organizations is thus not merely a matter ofdefining project selection techniques, but – rather – it shapesthe organizational structure as a whole. This paper's primarycontribution is therefore a new perspective on the requirementsof PPM implementations and strategy implementation with PPM.Many organizations still struggle to set up an effective and efficient



Fig. 1. The PPM information processing model.


multi-project environment (Elonen and Artto, 2003; Engwalland Jerbrant, 2003). Using an information requirement approachenables practitioners to analyze the organizational impact ofcomprehensively introducing PPM. While some literature onPPM acknowledges the importance of accompanying organi-zational measures, such as the centralization of resource man-agement or a central PMO, it provides no guidance on theirrelative importance and how much effort should be invested inthese measures in the particular context of any organization. Usingstrategic information requirements as the point of departure forPPMdesign, organizations ought to be able to establish a close linkbetween the strategy and project portfolio management processes,and ought to be able to successfully implement strategies.

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Successful project portfolio management beyond … project portfolio management beyond project selection techniques: Understanding the role of structural alignment Michael G. Kaiser