The Future of Project Management

Jonas Söderlund

• Professor, BI Norwegian Business School• Professor, KITE, Linköping University• Educated: Harvard Business School, MIT, and LiU• Visiting professor/scholar: Cranfield School of Management, Ecole Polytechnique, MIT

• Core faculty/director: Advanced Project Management, PMEX Executive MBA, Master of Management

• Research on:I: P-form organizations and capabilitiesII: Human Resource Management in Project-based OrganizationsIII: Project management, knowledge integration and time

• Research with: Astra Zeneca, Saab, Volvo Cars, Volvo Aero, Tetra Pak, ABB, Skanska, Scania, and Ericsson.

Jonas Söderlund

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Trends and tendencies

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Disintegrating forces– necessary integration

GlobalizationEmerging economies

Market influences

Market transformation

DeregulationComplex solutions

Science and technologySpeed

SpecializationLocation

Rethinking Project

Management?

• Cross-national. How is project management affected by the increasing number of international projects? How is project management affected by the increasing requirements on cross-national cooperation and coordination?

• Cross-company. How is project management affected by the increasing need for cooperation and coordination across firms?

• Cross-disciplinary. How is project management affected by the increasing requirements on knowledge integration, coordination across disciplinary boundaries and knowledge bases?

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Three challenges

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Challenges

• The international challenge: International mergers, international R&D,

international projects

• The organizational challenge: Outsourcing, offshoring, networks, cooperation

across organizational boundaries

• The technological challenge: Complex systems and technologies, coordination

across disciplinary boundaries, knowledge integration requirements

The international challenge

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The international challenge

• International mergers

• International R&D

• International projects

• International mega projects

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Case: Scandinavia • The export of Scandinavian countries has continued to

increase. Today export accounts for more than 50 percent of GDP.

• The share of foreign owned R&D is more than 40 percent, equally the share of foreign R&D by Scandinavian firms is steadily increasing.

• The number of people employed by foreign companies is on the rise. In some sectors the rate of change has been 300 percent during the last two decades.

• Number and importance of international mega projects are increasing. More local large-scale projects are carried out by international companies.

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The organizational challenge

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The organizational challenge

• Outsourcing and offshoring

• Open innovation and open projects

• Network-based organizations

Organizational fragmentation• R&D carried out by Indian companies for Western

companies have increased by 300 percent in the last 10 years.

• Co-developed projects in the pharmaceutical industry are more than 25 percent faster than in-house projects.

• Infrastructure projects in 2010 involved five times as many sub-contractors as in 1990.

• Project alliances and innovative contracting are used to reduce cost and lead-times.

The technological challenge

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The technological challenge

• Technological complexification

• Knowledge specialization

• Clockspeed competition

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Historical requirements Contemporary requirements

Low technical complexity of vessels

High technical complexity of vessels

Low interdependence (subcontractors only supplying components)

High interdependence (subcontractors installing components on board)

Few partners involved in a project Many partners involved in a project

Low time pressure, long product development lead-times

High time pressure, short product development lead-times

High profit margin Low profit margin

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Supporting observations• The increasing clockspeeds in our economy are forcing firms to launch products more

frequently.

• As a result, a larger fraction of the total work in the firm is project work. In effect, then, the business manager becomes a project manager or an overseer of project managers. The premium paid for project management skills and tools is thus likely to increase.

• Those faster clockspeeds are also forcing companies to compress their product development cycles.

• A research study at Stanford University found that industry sectors where the product clockspeed was higher tend also to have faster organizational clockspeeds.

(Fine, 1998, Clockspeed: Winning Industry Control in the Age of Temporary Advantage, MIT Press)

The nature and design of project structures

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Approach Traditional project management Adaptive project management

Project goal Getting the job done on time, on budget, and within requirements

Getting business results, meeting multiple criteria

Project plan A collection of activities that are executed as planned to meet the triple constraint

An organization and a process to achieve the expected goals and business results

Planning Plan once at project initiation Plan at outset and re-plan when needed

Managerial approach

Rigid, focused on initial plan Flexible, changing, adaptive

Project work Predictable, certain, linear, simple Unpredictable, uncertain, nonlinear, complex

Environment effect

Minimal, detached after the project is launched

Affects the project throughout its execution

Project control Identify deviations from plan, and put things back on track

Identify changes in the environment, and adjust the plans accordingly

Distinction All projects are the same Projects differ

Management style

One size fits all Adaptive approach: one size does not fit all

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Two key variables

Interdependence

Knowledge Development

Line Structure

Project Structure

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Sub-systems

Development process

Integrated

Separated/Partitioned

Separated/Sequential

Iterative/Overlapping

1. Complete modules, Phased, Hand-over, PM aspartitioning and planning, “Separated project organization”

2. In phases, acrosssub-systems, Integratedsub-system teams, IT Electrical/Mechanical, PM as hand-over control and WBS,”Phased project organization”

3. Across phases, Complete modules, Overlapping/iterativeManufacturing-Product designPM as partitioning, managingIntegrated teams, “Modularized project organization”

4. Across phases, across systemsManufacturing-product design/Electrical-mechanical engineeringPM as integration, “Coupled project organization”

(cf. Söderlund, 2005)

The nature and dynamics of project processes

ProjectStart Stop

Client organization

Use of project outcomes

Deliveries

The Logic of Value Creation in Projects

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A process model

Time

Magnitude

Operational uncertainty

Contextual uncertainty

Pacing – out-of-phase

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A real process model

Time

Magnitude

The nature and range of project success

EfficiencyImpact oncustomer

Impact onteam

Business anddirect success

Preparationfor future

Project Success

•Meeting schedule

•Meeting budget

•Meeting requirements and specifications

•Other efficiencies

•Customer satisfaction and loyalty

•Benefit to customer

•Extent of use

•Brand name recognition

•Team satisfaction

•Skill development

•Team member growth

•Team member retention

•No burnout

•ROI, ROE

•Sales

•Profits

•Market share

•Cash flow

•Service quality

•New technology

•New market

•New product line

•New core competency

•New organizational capability

Time frame

Successdimensions

Short Medium Long

Efficiency

Impact onteam

Business anddirect success

Impact oncustomer

Preparationfor future

Project Success

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PSO

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Objectives Control Evaluation

People

System

Organization

Readings and references

• Berggren, C., L. Bengtsson, A. Bergek, M. Hobday & J. Söderlund (2011) (Eds.): Knowledge integration and innovation: critical challenges facing technology-based firms, Oxford: Oxford University Press.

• Berggren, C., J. Söderlund & C. Anderson (2001): Clients, contractors, and consultants: the consequences of organizational fragmentation in contemporary project environments, Project Management Journal. Vol. 32, No. 3:39-48.

• Bredin, K. & J. Söderlund (2011): Human Resource Management in Project-based Organizations: The HR Quadriad Framework, Basingstoke: Palgrave.

• Dahlgren, J. & J. Söderlund (2001): Managing inter-firm projects: on pacing and matching hierarchies, International Business Review, Vol. 10: 305-322.

• Morris, P., J. Pinto & J. Söderlund (2011) (Eds.): Oxford Handbook of Project Management, Oxford: Oxford University Press.

• Söderlund, J. & N. Andersson (1998): A framework for analyzing project dyads: the case of discontinuity, uncertainty and trust, in R. A. Lundin & C. Midler (Eds.), Projects as arenas for renewal and learning processes, Boston: Kluwer Academic Publishers.

• Söderlund, J. & F. Tell (2009): The P-Form organization and the dynamics of project competence: Project epochs in Asea/ABB, 1950-2000, International Journal of Project Management, Vol. 27: 101-112.

• Söderlund, J., A. Vaagaasaar & E. S. Andersen (2008): Relating, reflecting and routinizing: developing project competence in cooperation with others, International Journal of Project Management. Vol. 26, No. 5: 517-526.

• Söderlund, J. (2010): Knowledge entrainment and project management: the case of large-scale transformation projects, International Journal of Project Management, Vol. 28, No. 2: 130-141.

• Söderlund, J. (2005): Projektledning och projektkompetens: perspektiv på konkurrenskraft, Malmö: Liber. (“Project management and project competence: Perspectives on competitiveness”). (351 p)