THE MANAGEMENT OF PROJECTS
The Wiley Guide to Managing Projects. Edited by Peter W. G. Morris and Jeffrey K. PintoCopyright 2004 John Wiley & Sons, Inc.
STRATEGY, PORTFOLIO ANDPROGRAM MANAGEMENT
Morris and Houghs (1987) work signaled the beginning of our recognition that animportant sea change was occurring in the manner with which we might begin tomake sense of the project management discipline. Their broadening out of the contextof project-based work, as articulated in the introduction, forced researchers and practitionersalike to reorient the traditional views of project management into a more inclusive andcomprehensive body of knowledge regarding the management of projects. Because projectsare typically initiated with the goal of achieving corporate strategic objectives, it becamenecessary to better understand the positioning of projects to align with strategic portfoliosand programs. Likewise, until and unless we can come to a rmer recognition of the goalsa project is intended to support, it will be difcult and frustrating to ascribe notions ofsuccess or failure to any particular project venture. Is it true, to put it into Shakespeareswords, that ripeness is all, or must we not have a rmer basis for understanding the causesand results of what we attempt?
A good place to start, as weve already seen, is the whole debate about project success.In Chapter 5 Terry Cooke-Davies reviews the studies that have been carried out in thisarea since the landmark work by Baker, Murphy, and Fisher in 1974. He concludes thatthere are essentially three levels of success measure: project management success (was theproject done right?), project success (was the right project done?), and consistent projectsuccess (were the right projects done right time after time?). While warning that there areno silver bullets, Terry nevertheless identies the half dozen or so key factors that he believes,from his research and that of his colleagues, are critical at each level.
Roland Gareis, in Chapter 6, offers a completely different approach. Refreshing, am-bitious, and comprehensive, Roland discusses the characteristics of organizations that areproject- (and program-) oriented. Again building on years of original research as well as
The Wiley Guide to Managing Projects. Edited by Peter W. G. Morris and Jeffrey K. PintoCopyright 2004 John Wiley & Sons, Inc.
90 The Wiley Guide to Managing Projects
practical consulting, Roland encapsulates most of the ideas this resource book addresses,although using his own distinctive management by projects framework (which is justslightly different, as the wording would suggest, from our management of projects).
In Chapter 7, Karlos Artto and Perttu Dietrich offer another comprehensive and verythorough overview, but this time on strategic business management through multiple proj-ects. Covering a wealth of academic work in the area, Karlos and Perttu examine the waythat companies manage the relationships between portfolios, programs, and projects in dif-ferent situations. They then generalize this into an overall theoretical model, which theyillustrate from a series of research projects they have undertaken with industry.
Ashley Jamieson and Peter Morris, in Chapter 8, similarly survey the literature onmoving from corporate strategy to project strategy, again emphasizing the sequence of mov-ing via portfolios and programs into projects (and subprojects/tasks). Like Artto and Die-trich, their chapter introduces fresh research evidence to substantiate their ndings, this timefrom a project funded largely by PMI. The project uses case study data as well as evidencefrom a questionnaire survey of PMI members and shows that most of those who repliedroutinely work in programs and projects, and use techniques to value-optimize the strategy(as is later discussed in Chapter 36).
David Cleland builds on this argument in Chapter 9, drawing on a wealth of experienceto extend the arguments regarding corporate planning and programs with more detail atthe project planning endfor example, explaining how project strategic planning feeds intowork packages via the work breakdown structure.
Joe Lampel and Pushkar Jha, in their chapter on project orientation, Chapter 10, con-tend that many projects fail as a result of poor strategic orientationof not achieving aproper t between the enterprise and the project. They hypothesize three types of project/enterprise orientationproject based, project led, and core operations ledand proposethat project scoping, programming, and autonomy shape the interaction between the projectand its corporate parent. They conclude by presenting research ndings that explore theseinteractions.
Having reviewed aspects of the linkages between strategy at the corporate, portfolio,program, and project levels, the next two chapters focus more purposefully on, rst, portfoliomanagement, and second, program management.
Norm Archer and Fereidoun Ghasemzadeh are two of the worlds leading authoritieson portfolio management (in the project, as opposed to the nancial, sense). Their Chapter11 brings out the importance particularly of managing risk and outsourcing options at theportfolio level, and the need for a framework for classifying project type. They then proceedto look at the different characteristics that affect portfolio choice and develop a genericprocess model for portfolio selection.
Michel Thiry, in Chapter 12, develops a number of interesting perspectives to betterunderstand the characteristics of program management. Building on the ideas already pre-sented in the previous chapters on strategy and portfolio management, Michel emphasizesthe importance of learning in developing a strategic response to evolving conditions; in hisprocess model of program management, learning needs understanding as clearly as per-formance delivery. (This leads him to dene project management in the more specic senseof being primarily about uncertainty reduction.) He then elaborates this into a two-dimensional phase model linking strategy, programs, projects, and operations cyclicallyaround the activities of formulation, organization, deployment, appraisal, and dissolution.
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Ali Jaafari, in Chapter 13, focuses on the characteristics of large (engineering) projects,emphasizing in particular how they are subject to environmental uncertainty and may needmuch more front-end, strategic management than the smaller project. Ali then walks thereader through a high-level process model of the major things that need doing in the man-agement of large projects.
Graham Winch, in Chapter 14, provides an enormously useful practical account of theimportance of stakeholder management in achieving successful project outcomes. Taking asystems development project as an example (the computerization of share dealing on theLondon Stock Exchange), Graham shows how the failure to identify and manage differentparties expectations can not only lead to academic discussions of whether and for whomthe project was or was not a success, but can in a very real sense lead to loss of control andultimately project disaster. Graham concludes by drawing out nine key lessons for managingstakeholders effectively.
Finance is an important dimension to the strategic development of projects. The avail-ability of money will affect what can be done, and when. In the public area particularly,changes in the way projects are funded have had a huge effect on the whole way projectsare set up and carried out. The next two chapters, by Rodney Turner and Graham Ive,illustrate this.
In Chapter 15 Rodney Turner gives a masterful overview of the characteristics andmeans of nancing projects as well as the process of nancial management on projects. Oneof the newer forms of project nance to have developed over the last 20 or so years (comingout of the oil sector in the 1970s) has been that of basing the projects funding solely onthe revenues generated specically by the project itself, with no other security from otherparties. This form, strictly termed project nancing, has become very important in manyparts of the world in bringing ways of using private funds to nance public infrastructureprojects. It is no exaggeration to say that this has had a revolutionary impact on the man-agement of public sector projects where it has been applied.
Graham Ive, in Chapter 16, discusses this form of project nancing in detail, withparticular reference to its application in the British public sector, which is widely regardedas leading the eld in this area. He outlines the origin of this form of nancing, known inthe United Kingdom as PFI (for Private Finance Initiative), and shows how it impacts onthe management of projects, for example by requiring increased clarity on project objectives,risk management, value management, securing stakeholder consent, capturing users re-quirements, and on procurement and bidding practices. (All issues either already addressedat this point or to be covered later in the book.) Interestingly, with regard to the procurementchallenges, Graham uses an economic tool (agency theory) to analyze the problems of de-vising the reward structure, selection of resources, and moral hazard. Throughout, he illus-trates his points with reference to a real PFI project, a new hospital.
About the Authors
Terry has been a practitioner of both general and project management continuously sincethe end of the 1960s. He is the Managing Director of Human Systems Limited, which he
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founded in 1985 to provide services to organizations in support of their innovation projectsand ventures. Through the family of project management knowledge networks created andsupported by Human Systems, he is in close touch with the best project management prac-tices of more than 70 leading organizations globally. The methods developed in support ofthe networks are soundly based in theory, as well as having practical application to members,and this was recognized by the award of a PhD to Terry by Leeds Metropolitan Universityin 2000 for a thesis entitled, Towards Improved Project Management Practice: Uncoveringthe Evidence for Effective Practices through Empirical Research. He is now an AdjunctProfessor of Project Management at the University of Technology, Sydney and an HonoraryResearch Fellow at University College, London. Terry is a regular speaker at internationalproject management conferences in Europe, North America, Australia, and Asia and haspublished more than 30 book chapters, journal and magazine articles, and research papers.He has a bachelors degree in Theology, and qualications in electrical engineering, man-agement accounting, and counseling, in addition to his doctors degree in Project Manage-ment.
Dr. Roland Gareis graduated from the University of Economics and Business Administra-tion, Vienna; had habilitation at the University of Technology, Vienna, Department ofConstruction Industry; was Professor at the Georgia Institute of Technology in Atlanta; andwas Visiting Professor at the ETH, Zurich, at the Georgia State University, Atlanta and atthe University of Quebec, Montreal. He is currently Professor of Project Management atthe University of Economics and Business Administration, Vienna and Director of the post-graduate program International Project Management. He owns the rm ROLANDGAREIS CONSULTING.
Karlos A. Artto
Dr. Karlos Artto is professor at the Department of Industrial Engineering and Managementat the Helsinki University of Technology (HUT), Finland, where he is responsible for de-veloping research and education in the eld of project-oriented activities in business. Hiscurrent research interests cover the management of project-based organizations (includingthe area of project portfolio management and strategic management of multiple projects inorganizations); the management of innovation, technology, R&D, new product development,and operational development projects in different organizational contexts; project networksand project delivery chains; and risk management (with the emphasis on management ofbusiness opportunities and considerations of project success and related criteria).
Perttu H. Dietrich
Perttu Dietrich works as a project manager and researcher at the BIT Research Centre atthe Helsinki University of Technology (HUT), Finland. He has pursued research and de-velopment in several companies in the area of project portfolio management. His research
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interests include strategic management, multiproject management, and organizational de-velopment in different organizational contexts.
Ashley Jamieson worked for many years as a business manager, senior program manager,and project manager with global aerospace and defense companies on British, European,North American, Middle East, Southeast Asia, and Australasian aircraft programs and proj-ects. He then took up a career in research and academia. He has worked at the Centre forResearch in the Management of Projects (CRMP) at UMIST, where he carried out researchinto design management in major construction projects and was a visiting lecturer in projectmanagement. More recently, he has worked at University College, London, where througha PMI-funded research project, he investigated how strategy is moved from corporate plan-ning to projects and is currently conducting research for APM on its Bok revision with PeterMorris. He holds an MSc in Business Management and UMIST and is the coauthor (withPeter Morris) of Translating Corporate Strategy into Project Strategy (2004), published by PMI.
Peter W. G. Morris
Peter Morris is Professor of Construction and Project Management at University College,London, Visiting Professor of Engineering Project Management at UMIST, and Directorof the UCL/UMIST-based Centre for Research in the Management of Projects. He is alsoExecutive Director of INDECO Ltd, an international projects-oriented management con-sultancy. He is a past Chairman and Vice President of the UK Association for ProjectManagement and Deputy Chairman of the International Project Management Association.His research has focused signicantly around knowledge management and organizationallearning in projects, and in design management. Dr. Morris consults with many majorcompanies on developing enterprise-wide project management competency. Prior to joiningINDECO, he was a Main Board Director of Bovis Limited, the holding company of theBovis Construction Group. Between 1984 and 1989 he was a Research Fellow at the Uni-versity of Oxford and Executive Director of the Major Projects Association. Prior to hiswork at Oxford, he was with Arthur D. Little in Cambridge, Massachusetts, and previouslywith Booz Allen Hamilton in New York and with Sir Robert McAlpine in London. He haswritten approximately 100 papers on project management, as wel...