1PROJECT MANAGEMENT JOURNAL

PR O J E C TMA N A G E M E N TJO U R N A L

Research Quarterly, Volume 37, Number 3 AU G U S T 2006

Special PMI Research Conference 2006 Edition

Making Project Management Indispensable for Business Results™

Published by

5From Nobel Prize

to Project

Management:

Getting

Risks Right

Bent Flyvbjerg

16An Empirical

Investigation of the

Sponsor’s Role in

Project Initiation

Timothy J. Kloppenborg,Deborah Tesch,Chris Manolis, andMark Heitkamp

26On the Novelty

Dimension

in Project

Management

Klaus Brockhoff

37The Perceived Value

and Potential

Contribution of

Project Management

Practices to Project

Success

Claude Besner andBrian Hobbs

49Mechanisms for

Inter-project

Integration–

Empirical Analysis

in Program Context

Perttu Dietrich

62Longitudinal

Analysis of

Project

Management

Maturity

Mark Mullaly

74Developing

Organizational

Project Management

Capability:

Theory and Practice

Lynn Crawford

98A Theoretical

Framework for

Aligning Project

Management

with Business

Strategy

Dragan Z. MilosevicandSabin Srivannaboon

87Project-BasedManagement as anOrganizationalInnovation: Drivers,Changes, andBenefits ofAdopting Project-Based Management

Miia Martinsuo,Nicole Hensman,Karlos Artto,Jaakko Kujala, and Ali Jaafari

111New Possibilities

for Project

Management Theory:

A Critical Engagement

Svetlana Cicmil andDamian Hodgson

PR O J E C TMA N A G E M E N TJO U R N A LThe Professional Research Journal of the Project Management Institute

Volume 37, Number 3

AUGUST 2006

3 From the Editor

Christophe N. Bredillet, PhD, MBA, Ingénieur EC Lille

PAPERS

5 FROM NOBEL PRIZE TO PROJECT MANAGEMENT: GETTING RISKS RIGHT

Bent Flyvbjerg

16 AN EMPIRICAL INVESTIGATION OF THE SPONSOR’S ROLE IN PROJECT INITIATION

Timothy J. Kloppenborg, Deborah Tesch, Chris Manolis, and Mark Heitkamp

26 ON THE NOVELTY DIMENSION IN PROJECT MANAGEMENT

Klaus Brockhoff

37 THE PERCEIVED VALUE AND POTENTIAL CONTRIBUTION OF PROJECT MANAGEMENT PRACTICES TO PROJECT SUCCESS

Claude Besner and Brian Hobbs

49 MECHANISMS FOR INTER-PROJECT INTEGRATION–EMPIRICAL ANALYSIS IN PROGRAM CONTEXT

Perttu Dietrich

62 LONGITUDINAL ANALYSIS OF PROJECT MANAGEMENT MATURITY

Mark Mullaly

74 DEVELOPING ORGANIZATIONAL PROJECT MANAGEMENT CAPABILITY: THEORY AND PRACTICE

Lynn Crawford

87 PROJECT-BASED MANAGEMENT AS AN ORGANIZATIONAL INNOVATION: DRIVERS, CHANGES, AND BENEFITS OF ADOPTING PROJECT-BASED MANAGEMENT

Miia Martinsuo, Nicole Hensman, Karlos Artto, Jaakko Kujala, and Ali Jaafari

98 A THEORETICAL FRAMEWORK FOR ALIGNING PROJECT MANAGEMENT WITH BUSINESS STRATEGY

Dragan Z. Milosevic and Sabin Srivannaboon

111 NEW POSSIBILITIES FOR PROJECT MANAGEMENT THEORY: A CRITICAL ENGAGEMENT

Svetlana Cicmil and Damian Hodgson

123 Notes for Authors

124 Index of Advertisers

EditorChristophe N. Bredillet, PhD, MBA,

Ingénieur EC Lille

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PR O J E C T MA N A G E M E N T JO U R N A L

EDITORIAL REVIEW BOARDRick Bilbro, The Innova Group, Inc.;Tomas Blomquist, Umeå University, Sweden;Pierre Bonnal, CERN Accelerator and Beams Dept.; David Bonyuet, PMP, Delta Search Labs; David Christensen, Cedar City, UT;Dan H. Cooprider, Creative People Management;Steven V. DelGrosso, IBM; J. Davidson Frame, University of Mgmt. & Technology ;Gary C. Humphreys, Humphreys & Associates;Peter Kapsales, Belcore; Young Hoon Kwak, The George Washington University; Alexander Laufer, Technion-Israel Inst. of Technology;William Leban, PMP, DeVry University; Rolf A. Lundin, Jonkoping University; Fred Manzer, PMP, Center for Systems Management;Peter Morris, University College, London; Ralf Müller, Umeå University, Sweden;Michael Okrent, Agilent Technologies Inc.;Blaize Horner Reich, University of British Columbia|Okanagan;Paul B. Robinson, The Eastern Management Group;Arnold M. Ruskin, PMP, Claremont Consulting Group;Richard L. Sinatra, PMP, Potomac, MD;James Snyder, Springfield, PA;Anders Soderholm, Umea University;Paul Solomon, PMP, B-2 Earned Value Management Systems;Charles J. Teplitz, University of San Diego;Janice Thomas, Athabasca University;Zeljko M. Torbica, PMP, Florida International University;Terry Williams, University of Strathclyde; Graham M. Winch, The University of Manchester.

EDITORIAL ADVISORY BOARDFrank T. Anbari, PMP, The George Washington University; Karlos Artto, Helsinki University of Technology(HUT), Finland; David Cleland, University of Pittsburgh;Lynn Crawford, University of Technology, Sydney; Brian Hobbs, Université du Québec à Montréal; Toshihiko Kinoshita, Waseda University; Mark E. Nissen, Naval Postgraduate School;Asbjørn Rolstadås, Norwegian University of Science and Technology; Dennis P. Slevin, University of Pittsburgh.

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3AU G U S T 2006 PR O J E C T MA N A G E M E N T JO U R N A L

F R O M T H E ED I T O R SChristophe Bredillet, PhD, DSc, MBA,

Ingénieur EC Lille, CPD IPMA Level A, PRINCE2 Practitioner, CCE, ESC Lille, France

Dragan Milosevic, PhD, MBA, BSCE, PMP,Portland State University, USA

Janice Thomas, PhD, MBA, BSc,Athabasca University, Canada

Terry Williams, PhD, MSc, MA, FORS CMath, PMP, University of Southampton, United Kingdom

W elcome to this special edition of the ProjectManagement Journal featuring some of themost interesting papers presented at PMI’s

Biannual Research Conference held in Montreal,Canada earlier this year.

Papers were selected for their unique contribu-tions to the project management research literatureby a panel of four respected project managementresearchers, who also served as co-editors for thisSpecial PMI Research Conference 2006 Edition.

These academics reviewed each of the papersprepared for the research conference, and their rat-ings by the conference reviewers, and selected thosefor publication in this special edition.

Papers included in this special edition reflectthe global growth in project management research:four papers are from North American scholars, fiveare from Europeans and one is from an Australian.Some of these papers come from established schol-ars; others are from relatively newcomers to theresearch world. Several provide empirically basedexplorations of the state of project management intoday’s organizations. Others provide theoreticaldiscussions designed to shape project managementthinking and research. Some are provocative. All arerigorously grounded. Together these papers presentunique insights into the state of project manage-ment research and practice to date.

The first papers in the special edition exploreimportant longstanding issues in single projectmanagement (Flyvbjerg; Kloppenborg et al.;Brockhoff; Besner and Hobbs). The next set ofpapers investigates multiproject management andthe organizational impact of project management(Dietrich; Mullaly; Crawford; Martinsuo et al.). Thefinal two papers develop new theoretical approach-es to our study, understanding, and practice of proj-ect management (Milosevic and Srivannaboon;Cicmil and Hodgson). We hope you enjoy them.Even more importantly we trust and expect that theywill make you think.

Practitioners continually request more researchon project estimating as “Forecasts of cost, demand,and other impacts of planned projects haveremained constantly and remarkably inaccurate for

decades” (Flyvbjerg, this edition). Building from thefindings of a major research project exploring megaprojects and risk in the civil engineering field,Flyvbjerg outlines the idea and use of reference classforecasting, making a solid argument for its applica-bility and in fact necessity to improve project out-comes in all industries. This research makes asignificant contribution to the project managementliterature by providing empirical support forimproving how we develop and use estimates.

Executive level support is widely recognized asplaying an important role in achieving project suc-cess and yet very little research explores exactly whatthese project executives do to facilitate project suc-cess. Kloppenborg, Tesch, Manolis, and Heitkamppresent “An Empirical Investigation of the Sponsor’sRole in Project Initiation,” which examines and clas-sifies behaviors associated with the role of the proj-ect sponsor; “the executive with the fiscal authority,political clout, and personal commitment to see aproject through.” This study goes beyond identifyingproject sponsor behaviors, empirically validatingand then testing the association of these behaviorswith project success outcomes in specific situations.

Project classification and differentiation isanother important aspect of improving project man-agement by ensuring that the right tools and tech-niques are applied to each and every project.Brockhoff contributes a paper “On the NoveltyDimension of Project Management,” introducingresults from German studies that model dimensionsthat differentiate projects that are not yet reflected inthe practice or literature on project management.These studies conclude that although more formalproject management methods are adequate for lessnovel projects, the characteristics of project man-agers may be more important than project manage-ment methods for achieving success in highlyinnovative projects.

Addressing the issue of the tools and practicesused in project management, Besner and Hobbsexplore the “The Perceived Value and PotentialContribution of Project Management Practices toProject Success.” Survey responses from 753 proj-ect management practitioners provide interesting

4 AU G U S T 2006 PR O J E C T MA N A G E M E N T JO U R N A L

conclusions as to which project management practicesare most valued for their impact on project success.Organizational learning is recognized as one of the mostvaluable tools for its perceived ability to improve projectperformance. In contrast to Brockhoff’s paper, this paperconcludes that practitioners perceive many project man-agement tools are available for large and more complexprojects, while tools and techniques for small, less noveland internal projects are lacking.

Moving from a focus on single project management,Dietrich tackles important issues surrounding multipro-ject programs in their paper entitled “Mechanisms forInter-Project Integration—Empirical Analysis in ProgramContext.” Extending the contingency models of projectsto look at their variations across programs, this paperdescribes an exploratory study of four independent casestudies. These cases were designed to explore how per-ceived uncertainty and structural complexity affect theperceived importance of different integration mecha-nisms that are used in multiproject programs.

Many models for assessing project managementmaturity have arisen over the last 5–10 years; however,there is very little longitudinal data in the public domainto provide an understanding of the evolving state of prac-tice. Mullaly’s paper, “Longitudinal Study of ProjectManagement Maturity,” explores the theory underlyingsuch assessments, the evolution of maturity testing in aproject management context, and results from one matu-rity assessment tool over a period of six years. This paperprovides a longitudinal analysis of the changes in projectmanagement capabilities over time that will allow practi-tioners, researchers, and organizations to understand theimpact of project management maturity initiatives.

In a similar vein, Crawford’s paper, “DevelopingOrganizational Project Management Capability Theoryand Practice,” explores the development of project man-agement capabilities over time in one organization as jux-taposed with the evolution organizational projectmanagement capability as represented in project man-agement literature and standards. Using a discourseanalysis approach and exploring both company reportson movement toward increasing capability and theresearch and standards literature on how to do this,Crawford compares and contrasts espoused theory withtheories in use over time. This paper raises interestingquestions about the role literature and standards play infollowing or leading project management practice.

Rather than focusing on the specific levels of changeto project management maturity or capability, Martinsuoand colleagues investigate “Project-Based Management asan Organizational Innovation: Drivers, Changes andBenefits of Adopting Project-Based Management.” Usinginstitutional theory as a theoretical framework, this studyemploys survey-based data collection to understand what

drives an organization to implement project manage-ment. The authors explore what changes are imple-mented in such an initiative and what the resultingbenefits are to the organization of embarking on such achange. Interesting conclusions as to the primary driversof project management initiatives within organizationsare presented.

Milosevic and Srivannaboon, in “A TheoreticalFramework for Aligning Project Management WithBusiness Strategy,” present an empirically based theoreti-cal framework that highlights the impact of businessstrategy on project management (and vice-versa) and themechanisms used to strengthen that alignment. In look-ing at the alignment issue as a two-way influence betweenproject management and strategy, they provide insightinto the complex processes needed to accomplish thisalignment in organizations and present a potentialframework for integrating and supporting future researchin this area.

Finally, Cicmil and Hodgson, in the paper “NewPossibilities for Project Management Theory: A CriticalEngagement,” introduce alternative theoretical approach-es to the study of projects to problematise what is accept-ed as known about projects and project management.They very nicely summarize the issues and concerns ofboth academics and practitioners with the research andliterature on project management to date, providinginsights into why projects merit serious research attentionand why practically they are rising in popularity andimportance in contemporary organizations. In so doing,they broaden the research agenda for developing aca-demically important and practically interesting research.

Together, these papers, first, provide a provocative,diverse yet solid exploration of the state of project man-agement in today’s organizations, second, reflect direc-tions of the project management research. In otherwords, the collected papers provide a comprehensivecross-section of the issues that practically face organiza-tions and that theoretically confront researchers. It isboth a summation of the work that has been conductedto date, and an exciting basis for future research andexploration into how organizations are implementing,adopting, and adapting project management. We offer itin the hope that it is received with the same excitementand enthusiasm with which it was assembled.

Christophe N. BredilletDragan MilosevicJanice Thomas Terry Williams


FROM NOBEL PRIZE TO PROJECTMANAGEMENT: GETTING RISKS RIGHT

A major source of risk in project manage-

ment is inaccurate forecasts of project

costs, demand, and other impacts. The

paper presents a promising new

approach to mitigating such risk based

on theories of decision-making under

uncertainty, which won the 2002 Nobel

Prize in economics. First, the paper docu-

ments inaccuracy and risk in project man-

agement. Second, it explains inaccuracy

in terms of optimism bias and strategic

misrepresentation. Third, the theoretical

basis is presented for a promising new

method called “reference class forecast-

ing,” which achieves accuracy by basing

forecasts on actual performance in a ref-

erence class of comparable projects and

thereby bypassing both optimism bias

and strategic misrepresentation. Fourth,

the paper presents the first instance of

practical reference class forecasting,

which concerns cost forecasts for large

transportation infrastructure projects.

Finally, potentials for and barriers to ref-

erence class forecasting are assessed.

Keywords: risk management; project

forecasting; forecast models

©2006 by the Project Management Institute Vol. 37, No. 3, 5-15, ISSN 8756-9728/03

The American Planning Association Endorses Reference Class Forecasting

In April 2005, based on a study of inaccuracy in demand forecasts for publicworks projects by Flyvbjerg, Holm, and Buhl (2005), the American PlanningAssociation (APA) officially endorsed a promising new forecasting method

called “reference class forecasting” and made the strong recommendation thatplanners should never rely solely on conventional forecasting techniques whenmaking forecasts:

APA encourages planners to use reference class forecasting in addition totraditional methods as a way to improve accuracy. The reference class fore-casting method is beneficial for non-routine projects... Planners should neverrely solely on civil engineering technology as a way to generate project fore-casts (American Planning Association, 2005).Reference class forecasting is based on theories of decision-making under

uncertainty that won Princeton psychologist Daniel Kahneman the Nobel prize ineconomics in 2002 (Kahneman, 1994; Kahneman & Tversky, 1979a; 1979b).Reference class forecasting promises more accuracy in forecasts by taking a so-called “outside view” on prospects being forecasted, while conventional forecast-ing takes an inside view. The outside view on a given project is based onknowledge about actual performance in a reference class of comparable projects.

Where Flyvbjerg, Holm, and Buhl (2005) briefly outlined the idea of referenceclass forecasting, this paper presents the first instance of reference class forecastingin practical project management. The emphasis will be on transportation projectmanagement, because this is where the first instance of reference class forecastingoccurred. It should be mentioned at the outset, however, that comparative researchshows that the problems, causes, and cures identified for transportation apply toa wide range of other project types, including concert halls, museums, sports are-nas, exhibit and convention centers, urban renewal, power plants, dams, waterprojects, IT systems, oil and gas extraction projects, aerospace projects, new pro-duction plants, and the development of new products and new markets (Altshuler& Luberoff, 2003; Flyvbjerg, 2005; Flyvbjerg, Bruzelius, & Rothengatter, 2003, pp.18–19; Flyvbjerg, Holm, & Buhl, 2002, p. 286).

BENT FLYVBJERG, Aalborg University, Denmark

ABSTRACT


Inaccuracy in Forecasts

Forecasts of cost, demand, and otherimpacts of planned projects haveremained constantly and remarkablyinaccurate for decades. No improve-ment in forecasting accuracy seems tohave taken place, despite all claims ofimproved forecasting models, betterdata, etc. (Flyvbjerg, Bruzelius, &Rothengatter, 2003; Flyvbjerg, Holm, &Buhl, 2002; 2005). For transportationinfrastructure projects, inaccuracy incost forecasts in constant prices is onaverage 44.7% for rail, 33.8% forbridges and tunnels, and 20.4% forroads (see Table 1).1 For the 70-yearperiod for which cost data are available,accuracy in cost forecasts has notimproved. Average inaccuracy for railpassenger forecasts is –51.4%, with 84%of all rail projects being wrong by morethan ±20%. For roads, average inaccura-cy in traffic forecasts is 9.5%, with halfof all road forecasts being wrong bymore than ±20% (see Table 2). For the30-year period for which demand dataare available, accuracy in rail and roadtraffic forecasts has not improved.

When cost and demand forecastsare combined, for instance in the cost-benefit analyses that are typically usedto justify large transportation infrastruc-

ture investments, the consequence isinaccuracy to the second degree.Benefit-cost ratios are often wrong, notonly by a few percent but by several fac-tors. This is especially the case for railprojects (Flyvbjerg, Bruzelius, &Rothengatter, 2003, pp. 37–41). As aconsequence, estimates of viability areoften misleading, as are socioeconomicand environmental appraisals, the accura-cy of which are all heavily dependent ondemand and cost forecasts. These resultspoint to a significant problem in trans-portation project management: Moreoften than not, the information that man-agers use to decide whether to invest innew projects is highly inaccurate andbiased, making projects highly risky.Comparative studies show that trans-portation projects are no worse than otherproject types in this respect (Flyvbjerg,Bruzelius, & Rothengatter, 2003).

Explaining Inaccuracy

Flyvbjerg, Holm, and Buhl (2002;2004; 2005) and Flyvbjerg and Cowi(2004) tested technical, psychological,and political-economic explanationsfor inaccuracy in forecasting. Technicalexplanations are common in the liter-ature, and they explain inaccuracy interms of unreliable or outdated data

and the use of inappropriate forecast-ing models (Vanston & Vanston, 2004,p. 33). However, when such explana-tions are put to empirical test, they donot account well for the available data.First, if technical explanations werevalid, one would expect the distribu-tion of inaccuracies to be normal ornear-normal with an average near zero.Actual distributions of inaccuracies areconsistently and significantly non-nor-mal with averages that are significantlydifferent from zero. Thus the problemis bias and not inaccuracy as such.Second, if imperfect data and modelswere main explanations of inaccura-cies, one would expect an improve-ment in accuracy over time, because ina professional setting errors and theirsources would be recognized andaddressed, for instance, through refer-ee processes with scholarly journalsand similar expert critical reviews.Undoubtedly, substantial resourceshave been spent over several decadeson improving data and forecastingmodels. Nevertheless, this has had noeffect on the accuracy of forecasts, asdemonstrated. This indicates thatsomething other than poor data andmodels is at play in generating inaccu-rate forecasts, a finding that has beencorroborated by interviews with fore-casters (Flyvbjerg & Cowi, 2004;Flyvbjerg & Lovallo, in progress;Wachs, 1990).

Psychological and political explana-tions better account for inaccurate fore-casts. Psychological explanationsaccount for inaccuracy in terms of opti-mism bias; that is, a cognitive predispo-sition found with most people to judgefuture events in a more positive lightthan is warranted by actual experience.Political explanations, on the otherhand, explain inaccuracy in terms ofstrategic misrepresentation. Here, whenforecasting the outcomes of projects,forecasters and managers deliberatelyand strategically overestimate benefitsand underestimate costs in order toincrease the likelihood that it is theirprojects, and not the competition’s, thatgain approval and funding. Strategicmisrepresentation can be traced to polit-ical and organizational pressures; forinstance, competition for scarce funds or

Rail 44.7 38.4 <0.001

Bridges and tunnels 33.8 62.4 0.004

Road 20.4 29.9 <0.001

Type of Average Standard Level of Project Inaccuracy Deviation Significance (%) p

Source: Flyvbjerg database on large-scale infrastructure projects.

Table 1: Inaccuracy in cost forecasts for rail, bridges, tunnels, and roads, respectively

(construction costs, constant prices)

Average inaccuracy (%) -51.4 (sd=28.1) 9.5 (sd=44.3)

Percentage of projects with inaccuracies 84 50 larger than ±20%

Percentage of projects with inaccuracies 72 25larger than ±40%

Percentage of projects with inaccuracies 40 13larger than ±60%

Rail Road


Table 2: Inaccuracy in forecasts of rail passenger and road vehicle traffic


ation. Human judgment, includingforecasts, is biased. Reference classforecasting is a method for unbiasingforecasts.

Kahneman and Tversky (1979a;1979b) found human judgment to begenerally optimistic due to overconfi-dence and insufficient regard to distri-butional information. Thus, peoplewill underestimate the costs, comple-tion times, and risks of plannedactions, whereas they will overestimatethe benefits of the same actions.Lovallo and Kahneman (2003, p. 58)call such common behavior the “plan-ning fallacy” and argue that it stemsfrom actors taking an “inside view,”focusing on the constituents of thespecific planned action rather than onthe outcomes of similar already-com-pleted actions. Kahneman and Tversky(1979b) argued that the prevalent ten-dency to underweigh or ignore distrib-utional information is perhaps themajor source of error in forecasting.“The analysts should therefore makeevery effort to frame the forecastingproblem so as to facilitate utilizing allthe distributional information that isavailable,” say Kahneman and Tversky(1979b, p. 316). This may be consid-ered the single most important piece ofadvice regarding how to increase accu-racy in forecasting through improvedmethods. Using such distributionalinformation from other ventures simi-lar to that being forecasted is called

jockeying for position. Optimism biasand strategic misrepresentation bothinvolve deception, but where the latter isintentional—i.e., lying—the first is not.Optimism bias is self-deception.Although the two types of explanationare different, the result is the same: inac-curate forecasts and inflated benefit-costratios. However, the cures for optimismbias are different from the cures forstrategic misrepresentation, as we willsee next.

Explanations of inaccuracy in termsof optimism bias have been developedby Kahneman and Tversky (1979a) andLovallo and Kahneman (2003).Explanations in terms of strategic mis-representation have been set forth byWachs (1989; 1990) and Flyvbjerg,Holm, and Buhl (2002; 2005). As illus-trated schematically in Figure 1, expla-nations in terms of optimism bias havetheir relative merit in situations wherepolitical and organizational pressuresare absent or low, whereas such explana-tions hold less power in situationswhere political pressures are high.Conversely, explanations in terms ofstrategic misrepresentation have theirrelative merit where political and orga-nizational pressures are high, while theybecome immaterial when such pres-sures are not present. Thus the two typesof explanation complement, rather thancompete with one another: one is strongwhere the other is weak, and both expla-nations are necessary to understand thephenomenon at hand—the pervasive-ness of inaccuracy in forecasting—andhow to curb it.

In what follows, we present a fore-casting method called “reference classforecasting,” which bypasses humanbias—including optimism bias andstrategic misrepresentation—by cuttingdirectly to outcomes. In experimentalresearch carried out by DanielKahneman and others, this method hasbeen demonstrated to be more accuratethan conventional forecasting methods(Kahneman, 1994; Kahneman &Tversky, 1979a; 1979b; Lovallo &Kahneman, 2003). First, we explain thetheoretical and methodological founda-tions for reference class forecasting, thenwe present the first instance of referenceclass forecasting in project management.

The Planning Fallacy and Reference

Class Forecasting

The theoretical and methodologicalfoundations of reference class forecast-ing were first described by Kahnemanand Tversky (1979b) and later byLovallo and Kahneman (2003).Reference class forecasting was origi-nally developed to compensate for thetype of cognitive bias that Kahnemanand Tversky found in their work ondecision-making under uncertainty,which won Kahneman the 2002 Nobelprize in economics (Kahneman, 1994;Kahneman & Tversky, 1979a). Thiswork showed that errors of judgmentare often systematic and predictablerather than random, manifesting biasrather than confusion, and that anycorrective prescription should reflectthis. They also found that many errorsof judgment are shared by experts andlaypeople alike. Finally, they foundthat errors remain compelling evenwhen one is fully aware of their nature.Thus, awareness of a perceptual or cog-nitive illusion does not by itself pro-duce a more accurate perception ofreality, according to Kahneman andTversky (1979b, p. 314). Awarenessmay, however, enable one to identifysituations in which the normal faith inone’s impressions must be suspendedand in which judgment should be con-trolled by a more critical evaluation ofthe evidence. Reference class forecast-ing is a method for such critical evalu-

Deception

Delusion

Political and Organizational Pressure

Expl

anat

ory

Pow

er

Figure 1: Explanatory power of optimism bias and strategic misrepresentation, respectively,

in accounting for forecasting inaccuracy as function of political and organizational pressure


taking an “outside view,” and it is thecure to the planning fallacy. Referenceclass forecasting is a method for sys-tematically taking an outside view onplanned actions.

More specifically, reference classforecasting for a particular projectrequires the following three steps:

1. Identification of a relevant refer-ence class of past, similar proj-ects. The class must be broadenough to be statistically mean-ingful, but narrow enough to betruly comparable with the spe-cific project.

2. Establishing a probability distri-bution for the selected referenceclass. This requires access tocredible, empirical data for asufficient number of projectswithin the reference class tomake statistically meaningfulconclusions.

3. Comparing the specific projectwith the reference class distribu-tion, in order to establish themost likely outcome for the spe-cific project.

Thus, reference class forecastingdoes not try to forecast the specificuncertain events that will affect theparticular project, but instead placesthe project in a statistical distributionof outcomes from the class of referenceprojects. In statisticians’ vernacular,reference class forecasting consists ofregressing forecasters’ best guessestoward the average of the referenceclass and expanding their estimate ofcredible interval toward the correspon-ding interval for the class (Kahneman& Tversky, 1979b, p. 326).

Daniel Kahneman relates the fol-lowing story about curriculum plan-ning to illustrate how reference classforecasting works (Lovallo &Kahneman, 2003, p. 61). Some yearsago, Kahneman was involved in a proj-ect to develop a curriculum for a newsubject area for high schools in Israel.The project was carried out by a teamof academics and teachers. In time, theteam began to discuss how long theproject would take to complete.Everyone on the team was asked towrite on a slip of paper the number of

months needed to finish and reportthe project. The estimates ranged from18 to 30 months. One of the teammembers—a distinguished expert incurriculum development—was thenposed a challenge by another teammember to recall as many projects sim-ilar to theirs as possible, and to thinkof these projects as they were in a stagecomparable to their project. “Howlong did it take them at that point toreach completion?,” the expert wasasked. After a while he answered, withsome discomfort, that not all the com-parable teams he could think of everdid complete their task. About 40% ofthem eventually gave up. Of thoseremaining, the expert could not thinkof any that completed their task in lessthan seven years, nor of any that tookmore than 10. The expert was thenasked if he had reason to believe thatthe present team was more skilled incurriculum development than the ear-lier ones had been. The expert said no,he did not see any relevant factor thatdistinguished this team favorably fromthe teams that he had been thinkingabout. His impression was that thepresent team was slightly below aver-age in terms of resources and potential.According to Kahneman, the wise deci-sion at this point would probably havebeen for the team to break up. Instead,the members ignored the pessimisticinformation and proceeded with theproject. They finally completed theproject eight years later, and theirefforts went largely wasted—the result-ing curriculum was rarely used.

In this example, the curriculumexpert made two forecasts for the sameproblem and arrived at very differentanswers. The first forecast was theinside view; the second was the outsideview, or the reference class forecast.The inside view is the one that theexpert and the other team membersadopted. They made forecasts by focus-ing tightly on the project at hand, andconsidering its objective, the resourcesthey brought to it, and the obstacles toits completion. They constructed intheir minds scenarios of their comingprogress and extrapolated currenttrends into the future. The resultingforecasts, even the most conservative

ones, were overly optimistic. The out-side view is the one provoked by thequestion to the curriculum expert. Itcompletely ignored the details of theproject at hand, and it involved noattempt at forecasting the events thatwould influence the project’s futurecourse. Instead, it examined the experi-ences of a class of similar projects, laidout a rough distribution of outcomesfor this reference class, and then posi-tioned the current project in that dis-tribution. The resulting forecast, as itturned out, was much more accurate.

The contrast between inside andoutside views has been confirmed bysystematic research (Gilovich, Griffin,& Kahneman, 2002). The researchshows that when people are asked sim-ple questions requiring them to takean outside view, their forecasts becomesignificantly more accurate. For exam-ple, a group of students enrolling at acollege were asked to rate their futureacademic performance relative to theirpeers in their major. On average, thesestudents expected to perform betterthan 84% of their peers, which is logi-cally impossible. The forecasts werebiased by overconfidence. Anothergroup of incoming students from thesame major were asked about theirentrance scores and their peers’ scoresbefore being asked about their expect-ed performance. This simple diversioninto relevant outside-view informa-tion, which both groups of subjectswere aware of, reduced the secondgroup’s average expected performanceratings by 20%. That is still overconfi-dent, but it is much more realistic thanthe forecast made by the first group(Lovallo & Kahneman, 2003, p. 61).

However, most individuals andorganizations are inclined to adopt theinside view in planning new projects.This is the conventional and intuitiveapproach. The traditional way to thinkabout a complex project is to focus onthe project itself and its details, tobring to bear what one knows about it,paying special attention to its uniqueor unusual features, trying to predictthe events that will influence its future.The thought of going out and gather-ing simple statistics about related proj-ects seldom enters a manager’s mind.


This is the case in general, according toLovallo and Kahneman (2003, pp.61–62). And it is certainly the case forcost and demand forecasting in trans-portation infrastructure projects. Ofthe several-hundred forecasts reviewedin Flyvbjerg, Bruzelius, andRothengatter (2003) and Flyvbjerg,Holm, and Buhl (2002; 2005), not onewas a reference class forecast.2

Although understandable, projectmanagers’ preference for the inside viewover the outside view is unfortunate.When both forecasting methods areapplied with equal skill, the outsideview is much more likely to produce arealistic estimate. That is because itbypasses cognitive and political biasessuch as optimism bias and strategicmisrepresentation, and cuts directly tooutcomes. In the outside view, projectmanagers and forecasters are notrequired to make scenarios, imagineevents, or gauge their own and others’levels of ability and control, so they can-not get all these things wrong. Humanbias is bypassed. Surely the outsideview, being based on historical prece-dent, may fail to predict extreme out-comes; that is, those that lie outside allhistorical precedents. But for most proj-ects, the outside view will produce moreaccurate results. In contrast, a focus oninside details is the road to inaccuracy.

The comparative advantage of theoutside view is most pronounced fornon-routine projects, understood asprojects that managers and decision-makers in a certain locale or organiza-tion have never attempted before—likebuilding new plants or infrastructure, orcatering to new types of demand. It is inthe planning of such new efforts thatthe biases toward optimism and strate-gic misrepresentation are likely to belargest. To be sure, choosing the rightreference class of comparative past proj-ects becomes more difficult when man-agers are forecasting initiatives forwhich precedents are not easily found;for instance, the introduction of newand unfamiliar technologies. However,most projects are both non-routinelocally and use well-known technolo-gies. Such projects are, therefore, partic-ularly likely to benefit from the outsideview and reference class forecasting.

First Instance of Reference Class

Forecasting in Practice

The first instance of reference class fore-casting in practice may be found inFlyvbjerg and Cowi (2004):“Procedures for Dealing with OptimismBias in Transport Planning.”3 Based onthis study in the summer of 2004, theU.K. Department for Transport and HMTreasury decided to employ the methodas part of project appraisal for largetransportation projects.

The immediate background tothis decision was the revision to TheGreen Book by HM Treasury in 2003that identified for large public pro-curement a demonstrated, systematictendency for project appraisers to beoverly optimistic:

“There is a demonstrated, system-atic tendency for project appraisers tobe overly optimistic. To redress thistendency, appraisers should makeexplicit, empirically based adjustmentsto the estimates of a project’s costs,benefits, and duration … [I]t is recom-mended that these adjustments bebased on data from past projects orsimilar projects elsewhere” (HMTreasury, 2003b, p. 1).

Such optimism was seen as animpediment to prudent fiscal plan-ning, for the government as a wholeand for individual departments withingovernment. To redress this tendency,HM Treasury recommended thatappraisers involved in large public pro-curement should make explicit, empir-ically based adjustments to theestimates of a project’s costs, benefits,and duration. HM Treasury recom-mended that these adjustments bebased on data from past projects orsimilar projects elsewhere, and adjust-ed for the unique characteristics of theproject at hand. In the absence of amore specific evidence base, HMTreasury encouraged governmentdepartments to collect valid and reli-able data to inform future estimates ofoptimism, and in the meantime to usethe best available data. The Treasury letit be understood that in the future theallocation of funds for large publicprocurement would be dependent onvalid adjustments of optimism inorder to secure valid estimates of costs,

benefits, and duration of large publicprocurement (HM Treasury, 2003a;2003b).

In response to the Treasury’sGreen Book and its recommendations,the U.K. Department for Transportdecided to collect the type of datawhich the Treasury recommended, andon that basis to develop a methodolo-gy for dealing with optimism bias inthe planning and management oftransportation projects. TheDepartment for Transport appointedBent Flyvbjerg in association withCowi to undertake this assignment asregards costing of large transportationprocurement. The main aims of theassignment were two; first, to provideempirically based optimism biasuplifts for selected reference classes oftransportation infrastructure projects,and, second, to provide guidance onusing the established uplifts to pro-duce more realistic forecasts of capitalexpenditures in individual projects(Flyvbjerg & Cowi, 2004). Upliftswould be established for capital expen-ditures based on the full business case(time of decision to build).

The types of transportationschemes under the direct and indirectresponsibility of the U.K. Departmentfor Transport were divided into a num-ber of distinct categories in which sta-tistical tests, benchmarkings, and otheranalyses showed that the risk of costoverruns within each category may betreated as statistically similar. For eachcategory, a reference class of projectswas then established as the basis forreference class forecasting, as requiredby step 1 in the three-step procedurefor reference class forecasting previous-ly described. The specific categoriesand the types of project allocated toeach category are shown in Table 3.

For each category of projects, a ref-erence class of completed, comparabletransportation infrastructure projectswas used to establish probability distri-butions for cost overruns for new proj-ects similar in scope and risks to theprojects in the reference class, asrequired by step 2 in reference classforecasting. For roads, for example, aclass of 172 completed and compara-ble projects was used to establish the


probability distribution of cost over-runs shown in Figure 2. The share ofprojects with a given maximum costoverrun is shown in the figure. Forinstance, 40% of projects have a maxi-mum cost overrun of 10%; 80% ofprojects a maximum overrun of 32%,etc. For rail, the probability distribu-tion is shown in Figure 3, and forbridges and tunnels in Figure 4. Thefigures show that the risk of cost over-

run is substantial for all three projecttypes, but highest for rail, followed bybridges and tunnels, and with the low-est risk for roads.

Based on the probability distribu-tions described, the required upliftsneeded to carry out step 3 in a refer-ence class forecast may be calculated asshown in Figures 5–7. The uplifts referto cost overrun calculated in constantprices. The lower the acceptable risk for

cost overrun, the higher the uplift. Forinstance, with a willingness to accept a50% risk for cost overrun in a roadproject, the required uplift for thisproject would be 15%. If theDepartment for Transport were willingto accept only a 10% risk for cost over-run, then the required uplift would be45%. In comparison, for rail, with awillingness to accept a 50% risk forcost overrun, the required uplift wouldbe 40%. If the Department forTransport were willing to accept only a10% risk for cost overrun, then therequired uplift would be 68% for rail.All three figures share the same basic S-shape, but at different levels, demon-strating that the required uplifts aresignificantly different for differentproject categories for a given level ofrisk of cost overrun. The figures alsoshow that the cost for additionalreductions in the risk of cost overrun isdifferent for the three types of projects,with risk reduction becoming increas-ingly expensive (rising marginal costs)for roads and fixed links below 20%risk, whereas for rail the cost ofincreased risk reduction rises moreslowly, albeit from a high level.

Table 4 presents an overview ofapplicable optimism bias uplifts forthe 50% and 80% percentiles for allthe project categories listed in Table 3.The 50% percentile is pertinent to theinvestor with a large project portfolio,where cost overruns on one projectmay be offset by cost savings on anoth-er. The 80% percentile—correspon-ding to a risk of cost overrun of20%—is the level of risk that the U.K.Department for Transport is typicallywilling to accept for large investmentsin local transportation infrastructure.

The established uplifts for opti-mism bias should be applied to esti-mated budgets at the time of decisionto build a project. In the U.K., theapproval stage for a large transporta-tion project is equivalent to the time ofpresenting the business case for theproject to the Department forTransport with a view to obtaining thego or no-go for that project.

If, for instance, a group of projectmanagers were preparing the businesscase for a new motorway, and if they or

Roads

Rail

Fixed links

Building projects

IT projects

Standard civil engineering

Non-standard civil engineering

MotorwayTrunk roadsLocal roads Bicycle facilitiesPedestrian facilities Park and rideBus lane schemesGuided buses on wheels

MetroLight railGuided buses on tracksConventional railHigh speed rail

BridgesTunnels

StationsTerminal buildings

IT system development

Included for reference purposes only


Category Types of Projects

Table 3: Categories and types of projects used as basis for reference class forecasting

-20% 0% 20% 40% 60% 80%

Cost Overrun VS Budget

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Distribution of Cost OverrunsRoads

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


Figure 2: Probability distribution of cost overrun for roads, constant prices (N=172)


their client had decided that the risk ofcost overrun must be less than 20%,then they would use an uplift of 32%on their estimated capital expenditurebudget. Thus, if the initially estimatedbudget were £100 million, then thefinal budget—taking into accountoptimism bias at the 80%-level—would be £132 million (£1 = $1.8). Ifthe project managers or their clientdecided instead that a 50% risk of costoverrun was acceptable, then the upliftwould be 15% and the final budget£115 million.

Similarly, if a group of projectmanagers were preparing the businesscase for a metro rail project, and if theyor their client had decided that with80% certainty they wanted to staywithin budget, then they would use anuplift on capital costs of 57%. An ini-tial capital expenditure budget of £300million would then become a finalbudget of £504 million. If the projectmanagers or their client required only50% certainty they would stay within

budget, then the final budget would be£420 million.

It follows that the 50% percentileshould be used only in instanceswhere investors are willing to take ahigh degree of risk that cost overrunwill occur and/or in situations whereinvestors are funding a large numberof projects, and where cost savings(underruns) on one project may beused to cover the costs of overruns onother projects. The upper percentiles(80–90%) should be used wheninvestors want a high degree of certain-ty that cost overrun will not occur; forinstance, in stand-alone projects withno access to additional funds beyondthe approved budget. Other percentilesmay be employed to reflect otherdegrees of willingness to accept riskand the associated uplifts as shown inFigures 5–7.

Only if project managers have evi-dence to substantiate that they wouldbe significantly better at estimatingcosts for the project at hand than their

colleagues were for the projects in thereference class would the managers bejustified in using lower uplifts thanthose previously described.Conversely, if there is evidence that theproject managers are worse at estimat-ing costs than their colleagues, thenhigher uplifts should be used.

The methodology previouslydescribed for systematic, practical ref-erence class forecasting for transporta-tion projects was developed in2003–2004, with publication by theDepartment of Transport in August2004. From this date on, local author-ities applying for funding for trans-portation projects with theDepartment for Transport or with HMTreasury were required to take intoaccount optimism bias by using upliftsas previously described and as laid outin more detail in guidelines from thetwo ministries.

Forecasting Costs for the

Edinburgh Tram

In October 2004, the first instance ofpractical use of the uplifts was record-ed, in the planning of the EdinburghTram Line 2. Ove Arup and PartnersScotland (2004) had been appointedby the Scottish Parliament’s EdinburghTram Bill Committee to provide areview of the Edinburgh Tram Line 2business case developed on behalf ofTransport Initiatives Edinburgh.Transport Initiatives Edinburgh is theproject promoter and is a private limit-ed company owned by the City ofEdinburgh Council established todeliver major transport projects for theCouncil. The Scottish Executive is amain funder of the Edinburgh Tram,having made an Executive Grant of£375 million (US$670 million) towardlines 1 and 2, of which TransportInitiatives Edinburgh proposed spend-ing £165 million toward Line 2.

As part of their review, Ove Arupassessed whether the business case forTram Line 2 had adequately taken intoaccount optimism bias as regards capi-tal costs. The business case had esti-mated a base cost of £255 million andan additional allowance for contin-gency and optimism bias of £64 mil-lion—or 25%—resulting in total

Roads

Rail

Fixed links

Building projects

IT projects

Standard civil engineering

Non-standard civil engineering

15% 32%

40% 57%

23% 55%

4-51%*

10-200%*

3-44%*

6-66%*

MotorwayTrunk roadsLocal roads Bicycle facilitiesPedestrian facilities Park and rideBus lane schemesGuided buses on wheels

MetroLight railGuided buses on tracksConventional railHigh speed rail

BridgesTunnels

StationsTerminal buildings

IT system development



Category Types of Projects

Applicable Optimism Bias Uplifts

50% 80% percentile percentile

*Based on Mott MacDonald (2002, p. 32) no probability distribution available.

Table 4: Applicable capital expenditure optimism bia uplifts for 50% and 80% percentiles,

constant prices


capital costs of approximately £320million. Ove Arup concluded aboutthis overall estimate of capital coststhat it seemed to have been rigorouslyprepared using a database of costs,comparison to other U.K. light railschemes, and reconciliations with ear-lier project estimates. Ove Arup found,however, that the following potentialadditional costs needed to be consid-ered in determining the overall capitalcosts: £26 million for future expendi-ture on replacement and renewals and£20 million as a notional allowancefor a capital sum to cover risks offuture revenue shortfalls, amountingto an increase in total capital costs of14.4% (Ove Arup and PartnersScotland, 2004, pp. 15–16).

Using the U.K. Department forTransport uplifts for optimism biaspreviously presented on the base costs,Ove Arup then calculated the 80th per-centile value for total capital costs—the value at which the likelihood ofstaying within budget is 80%—to be£400 million (i.e., £255 million x1.57). The 50th percentile for totalcapital costs—the value at which thelikelihood of staying within budget is50%—was £357 million (i.e., £255million x 1.4). Ove Arup remarked thatthese estimates of total capital costswere likely to be conservative—that is,low—because the U.K. Department forTransport recommends that its opti-

mism bias uplifts be applied to thebudget at the time of decision to build,which typically equates to businesscase submission. (In addition, TramLine 2 had not yet even reached theoutline business case stage, indicatingthat risks would be substantially high-er at this early stage, as would corre-sponding uplifts. On that basis, Arupconcluded that “it is considered thatcurrent optimism bias uplifts [for TramLine 2] may have been underestimat-ed” [Ove Arup & Partners Scotland,2004, p. 27].)

Finally, Ove Arup mentioned thatthe Department for Transport guid-ance does allow for optimism bias tobe adjusted downward if strong evi-dence of improved risk mitigation canbe demonstrated. According to OveArup, this may be the case if advancedrisk analysis has been applied, but thiswas not the case for Tram Line 2. OveArup therefore concluded that “thejustification for reduced Departmentfor Transport optimism bias upliftswould appear to be weak” (Ove Arup& Partners Scotland, 2004, pp.27–28). Thus, the overall conclusionof Ove Arup was that the promoter’scapital cost estimate of approximately£320 million was optimistic. Mostlikely Tram Line 2 would cost signifi-cantly more.

By framing the forecasting prob-lem to allow the use of the empirical

distributional information made avail-able by the U.K. Department forTransport, Ove Arup was able to takean outside view on the EdinburghTram Line 2 capital cost forecast andthus unbias what appeared to be abiased forecast. As a result, Ove Arup’sclient, The Scottish Parliament, wasprovided with a more reliable estimateof what the true costs of Line 2 waslikely to be.

Potentials and Barriers for Reference

Class Forecasting

As previously mentioned, two types ofexplanation best account for forecastinginaccuracy: optimism bias and strategicmisrepresentation. Reference class fore-casting was originally developed to miti-gate optimism bias, but reference classforecasting may help mitigate any type ofhuman bias, including strategic bias,because the method bypasses such biasby cutting directly to empirical outcomesand building forecasts on these. Even so,the potentials for and barriers to refer-ence class forecasting will be different insituations in which (1) optimism bias isthe main cause of inaccuracy as com-pared to situations in which (2) strategicmisrepresentation is the reason for inac-curacy. We therefore need to distinguishbetween these two types of situationswhen endeavoring to apply referenceclass forecasting in practice.

In the first type of situation—inwhich optimism bias is the main causeof inaccuracy—we may assume thatmanagers and forecasters are makinghonest mistakes and have an interestin improving accuracy. Consider, forexample, the students who were askedto estimate their future academic per-formance relative to their peers. Wemay reasonably believe that the stu-dents did not deliberately misrepresenttheir estimates, because they had nointerest in doing so and were notexposed to pressures that would pushthem in that direction. The studentsmade honest mistakes, which pro-duced honest, if biased, numbersregarding performance. And, indeed,when students were asked to take intoaccount outside-view information, wesaw that the accuracy of their estimatesimproved substantially. In this type of

-20% 0% 20% 40% 60% 80% 100%


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Distribution of Cost OverrunsRail

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


Figure 3: Probability distribution of cost overrun for rail, constant prices (N=46)


situation—when forecasters are hon-estly trying to gauge the future—thepotential for using the outside viewand reference class forecasting will begood. Forecasters will be welcomingthe method and barriers will be low,because no one has reason to beagainst a methodology that willimprove their forecasts.

In the second type of situation—in which strategic misrepresentation isthe main cause of inaccuracy—differ-ences between estimated and actualcosts and benefits are best explainedby political and organizational pres-sures. Here, managers and forecasterswould still need reference class fore-casting if accuracy were to beimproved, but managers and forecast-ers may not be interested in thisbecause inaccuracy is deliberate.Biased forecasts serve strategic purpos-es that dominate the commitment toaccuracy and truth. Consider, forexample, city managers with responsi-bility for estimating costs and benefitsof urban rail projects. Here, theassumption of innocence regardingoutcomes typically cannot be upheld.Cities compete fiercely for approvaland for scarce national funds for suchprojects, and pressures are strong topresent projects as favorably as possi-ble; that is, with low costs and highbenefits, in order to beat the competi-tion. There is no incentive for the indi-vidual city to unbias its forecasts, butquite the opposite. Unless all othercities also unbias, the individual citywould lose out in the competition forfunds. Project managers are on recordconfirming that this is a common situ-ation (Flyvbjerg & Cowi, 2004, pp.36–58; Flyvbjerg & Lovallo, inprogress). The result is the same as inthe case of optimism: actors promoteventures that are unlikely to perform aspromised. But the causes are different,as are possible cures.

In this type of situation, thepotential for reference class forecastingis low—the demand for accuracy issimply not there—and barriers arehigh. In order to lower barriers, andthus create room for reference classforecasting, measures of accountabilitymust be implemented that would

reward accurate forecasts and punishinaccurate ones. Forecasters and pro-moters should be made to carry thefull risks of their forecasts. Theirwork should be reviewed by inde-pendent bodies such as nationalauditors or independent analysts,and such bodies would need refer-ence class forecasting to do theirwork. Projects with inflated bene-fit-cost ratios should be stopped orplaced on hold. Professional andeven criminal penalties should be con-sidered for people who consistentlyproduce misleading forecasts. The

higher the stakes, and the higher thelevel of political and organizationalpressures, the more pronouncedwill be the need for such measuresof accountability. Flyvbjerg,Bruzelius, and Rothengatter (2003)and Flyvbjerg, Holm, and Buhl(2005) further detailed the designof such measures and how they maybe implemented in practical projectmanagement.

The existence of strategic misrepre-sentation does not exclude the simul-taneous existence of optimism bias,and vice versa. In fact, it is realistic to

0% 10% 20% 30% 40% 50% 60%

Acceptable Chance of Cost Overrun

Requ

ired

Uplif

t

Required UpliftRoads

70%

60%

50%

40%

30%

20%

10%

0%


Figure 5: Required uplift for roads as function of the maximum acceptable level of risk for cost

overrun, constant prices (N=172)

-20% 30% 80% 130% 180%


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Distribution of Cost OverrunsFixed Links

100%

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80%

70%

60%

50%

40%

30%

20%

10%

0%


Figure 4: Probability distribution of cost overrun for fixed links, constant prices (N=34)


expect such co-existence in forecastingin large and complex projects andorganizations. This again underscoresthe point that improved forecastingmethods—here, reference class fore-casting—and measures of accountabil-ity must go hand in hand if theattempt to arrive at more accurate fore-casts is to be effective.

Finally, it could be argued that insome cases the use of reference classforecasting may result in such largereserves set aside for a project that thiswould in itself lead to risks of ineffi-

ciencies and overspending. Reserveswill be spent simply because they arethere, as the saying goes in the con-struction business. For instance, it isimportant to recognize that, for thepreviously mentioned examples, theintroduction of reference class fore-casting and optimism-bias upliftswould establish total budget reserva-tions (including uplifts) which forsome projects would be more thanadequate. This may in itself create anincentive which works against firmcost control if the total budget reserva-

tion is perceived as being available tothe project and its contractors. Thismakes it important to combine theintroduction of reference class fore-casting and optimism bias uplifts withtight contracts, and maintained incen-tives for promoters to undertake goodquantified risk assessment and exerciseprudent cost control during projectimplementation. How this may bedone is described in Flyvbjerg andCowi (2004).

Notes1 Inaccuracy is measured in percent as(actual outcome/forecast outcome -1) x100. The base year of a forecast for aproject is the time of decision to buildthat project. An inaccuracy of 0 indi-cates perfect accuracy. Cost is measuredas construction costs. Demand is meas-ured as number of vehicles for roadsand number of passengers for rail.

2 The closest thing to an outside viewin large infrastructure forecasting isGordon and Wilson’s (1984) use ofregression analysis on an internationalcross section of light-rail projects toforecast patronage in a number oflight-rail schemes in North America.

3 The fact that this is, indeed, the firstinstance of practical reference classforecasting has been confirmed withDaniel Kahneman and Dan Lovallo,who also knows of no other instancesof practical reference class forecasting.Personal communications with DanielKahneman and Dan Lovallo, author’sarchives.

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0% 10% 20% 30% 40% 50% 60%


Requ

ired

Uplif

tRequired Uplift

Rail90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


Figure 6: Required uplift for rail as function of the maximum acceptable level of risk for cost

overrun, constant prices (N=46)

0% 10% 20% 30% 40% 50% 60%


Requ

ired

Uplif

t

Required UpliftFixed Links

160%

140%

120%

100%

80%

60%

40%

20%

0%


Figure 7: Required uplift for fixed links as function of the maximum acceptable level of risk for

cost overrun, constant prices (N=34)


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BENT FLYVBJERG is professor of planning at the Department of Development and Planning at Aalborg University,

Denmark. He has doctor of technology from Aalborg University and holds a PhD in urban geography and planning from

Aarhus University, Denmark. He was twice a visiting Fulbright Scholar to the U.S., where he did research at the University

of California at Los Angeles and Berkeley and at Harvard University. He has been a visiting fellow with the European

University Institute in Florence. He has written several books: Megaprojects and Risk: An Anatomy of Ambition, MakingSocial Science Matter, and Rationality and Power: Democracy in Practice. His books and articles have been translated into

15 languages. His main research interest is urban policy and planning. He is currently conducting research on

megaprojects, phronetic planning research, and the relationship between truth and lying in policy and planning. He has

two decades of practical experience from working as a policy and planning adviser and consultant to more than 30 public

and private organizations, including the EU Commission, the United Nations, national and local government, auditors

general, and private companies. His work covers both developed and developing nations. He has been adviser to the

government of Denmark in formulating national policies for transportation, environment, and research. He is founding

chairman of the Geography Program at Aalborg University, co-founder of the university’s Program in Planning and

Environment, and founding director of the university’s Research Program on Large Infrastructure Projects. He has received

numerous honors and awards, including the Danish National Science Council Distinguished Research Scholarship

(equivalent to the MacArthur Fellowship). In 2002, Queen Margrethe II of Denmark conferred upon Bent Flyvbjerg the

Knighthood of the Order of the Dannebrog for his professional accomplishments.


AN EMPIRICAL INVESTIGATION OF THESPONSOR’S ROLE IN PROJECT INITIATION

Although most organizational projects

have many interested parties or stake-

holders, the executive with the fiscal

authority, political clout, and personal

commitment to see a project through is

the project sponsor. Certainly, there are

project sponsor tasks associated with

the successful completion of a project.

Yet, very little research exists that

attempts to identify and validate a set of

executive sponsor behaviors necessary

for successful project implementation.

Using a previously established database

of project risk avoidance and mitigation

strategies that was supplemented by an

updated literature search, we examine

and classify behaviors associated with

the role of a project sponsor. The scope

of this exploratory research includes: (1)

identifying project sponsor-related

behaviors; (2) validating and prioritizing

the sponsor behaviors utilizing an estab-

lished procedure; (3) empirically validat-

ing the behaviors; and (4) empirically

testing the association of the project

sponsor behaviors with various dimen-

sions of project success (project out-

comes).

Keywords: project sponsor; project suc-

cess; sponsorship


Introduction

A lthough most organizational projects have many interested parties or stake-holders, someone must, in all projects, take the primary role of sponsor-ship. The senior executive—the one who “owns” a project and is considered

responsible for ensuring its success—is typically the one who proposes a projectand whose business unit will reap the benefits of a successfully completed project.The effectiveness of this senior executive, often labeled the executive sponsor, isfrequently a predictor of project success. Involved and committed executive spon-sors must have enough clout to make the changes that are deemed necessary tosuccessfully complete a project (Perkins, 2005). Many of these changes must occurduring the initiating stage of the project life cycle. Interestingly, very little researchexists specifying exactly what tasks or behaviors constitute the role of an effectiveexecutive sponsor and ultimately a successful project.

The basis of this research is to identify and validate empirically critical spon-sor behaviors. In the paper, we describe the mechanisms employed to initiallyidentify effective sponsor behaviors associated with the initiating stage of a proj-ect. Once identified, these behaviors are subjected to a validation and prioritiza-tion process utilizing an established procedure. Next, an exploratory factoranalysis of the behaviors is conducted followed by tests of association between theproject sponsor behaviors and project outcomes.

The paper is organized in the following manner: The first section outlines the cur-rent status of research on the role of the executive sponsor in projects. Next, theresearch methodology is presented, followed by the results of empirical analyses. Thepaper ends with a discussion of the results and recommendations for project sponsors.

Background

Sponsor BehaviorAlthough most project management literature recognizes the project sponsor asa key stakeholder in most projects, very little research has examined the role ofthe executive sponsor in achieving project success. Project sponsors are primarilyconsidered responsible for project resources (Helm & Remington, 2005). This isevident in the definition of a sponsor as provided in the PMBOK® Guide: “theperson or group that provides the financial resources, in cash or in kind, for theproject” (Project Management Institute [PMI], 2004, p. 26). Additionally, the

TIMOTHY J. KLOPPENBORG, PMP, Xavier University

DEBORAH TESCH, Xavier University

CHRIS MANOLIS, Xavier University

MARK HEITKAMP, PMP, American Modern Insurance Group

ABSTRACT


project manager is considered the primary risk taker forwhom the project is undertaken (Association for ProjectManagement, 2005).

Recent anecdotal evidence, as stated in articles such as“The Elusive Executive Sponsor” (Perkins, 2005), “Survivingthe Sponsor Exit” (Melymuka, 2004a), and “Firing YourProject Sponsor” (Melymuka, 2004b), stress the role of theproject sponsor with respect to project success, often quotingadvice from senior project managers about how to deal withinadequate project sponsors. Helm and Remington (2005)undertook a combined analysis of the roles and responsibil-ities of the project sponsor in relation to the project organi-zational structure and the behavior and practices of keyidentified agents. Based on evidence from the literature,questions were formed into guided in-depth interviews withselected project personnel. Project managers and sponsorswere asked to define the role of the project sponsor and theway that that role contributed to project success. The mostfrequently cited project sponsor characteristics included:

1. Appropriate seniority and power in the organization2. Political knowledge and savvy3. Ability/willingness to make project/organization

connections4. Courage/willingness to go to battle with others on

behalf of the project5. Ability to motivate the team and provide ad hoc sup-

port to the team6. Willingness to partner with the project team and

project manager7. Excellent communication skills8. Personally compatible with other key players9. Ability/willingness to challenge the project and provide

objectivity (Helm & Remington, 2005)

In the public sector, the project sponsor is described asthe person responsible for representing the public client andacting as a day-to-day manager of the client’s interests with-in the project. Hall, Holt, and Purchase (2002) conducted aseries of interviews considering the role of the project spon-sor in areas where New Public Management1 is being prac-ticed. An analysis of the sponsor interviews revealed thecomplexity of the sponsor’s role. Unable to consider anyone theme in isolation, sponsors are at once involved withjuggling multiple needs of stakeholders and user groups,departmental procedures, and government edicts whiledealing with a legacy of mistrust and adversarial contracts.The dominant recommendation for these sponsors was todevelop a mechanism for dealing with the “softer” culturaland attitudinal issues culminating in a mechanism toencourage dialog and promote cooperation. Thus, in orderto cope with the variety of demands, project sponsors needto develop long-term relationships with constituents andacquire significant experience per their role.

For this study, we consider the four stages of initiating,planning, executing, and closing to describe the project lifecycle. We limit our evaluation to the initiating stage, whichstarts when the project idea is first identified and ends when

the project is formally authorized, often in the form of asigned charter. We focus exclusively on the initiating stagebased on, one, the belief that sponsors have a more direct rolein the initiating phase of a project (versus later stages), and,two, the importance of getting a project off to a good start.

Dimensions of Project SuccessDeLone and McLean (1992) identified key indicators ofinformation technology (IT) project success that form aninitial framework for measuring system performance. Thisframework expanded on the early “triple constraint” notionof time, cost, and performance to consider information andsystem quality dimensions as well as use and satisfactionconstraints. In addition, the impact of the system was exam-ined from the perspective of its impact on individuals (oftencustomers) and the organization.

Shenhar, Tishler, Dvir, Lipovetsky, and Lechler (2002)considered 13 success measures from a previous implemen-tation grouped into three dimensions: meeting design goals,benefits to customers, and commercial success and futurepotential. Pinto (2004) included the time-dependentdimension considered in Shenhar, Tishler, Dvir, Lipovetsky,and Lechler (2002) as a separate dimension in assessing theeffectiveness of a project, indicating that we must not onlyevaluate projects in current terms, but also look to the futurepotential that a project offers in terms of generating newbusiness and new opportunities. The four relevant dimen-sions of success, as described by Pinto (2004), include proj-ect efficiency, impact on the customer, business success, andfuture potential. In the current study, we adopt this contri-bution to the literature in establishing project success oroutcome measures.

Research Objectives

In this research, we propose to test the effects of rigorouslyidentified project sponsor behaviors on project outcomes.That is, based on the previous discussion, we predict thatderived sponsor behaviors will be significantly associatedwith various project outcomes.

Methodology

Identifying Sponsor BehaviorThe role of the executive sponsor is best examined in con-text. The present research started by exploring the role of theexecutive sponsor in the context of IT and project risk with-in specific stages of a project’s life cycle. In order to increasethe success rate of information systems (IS) projects, man-agers must identify risks, understand their consequences,and plan to either avoid or mitigate their impact (Royer,2000; Project Management Institute, 2004). Much of theidentified project risk literature in the IS/IT area has focusedon the identification and/or quantification of risk factors.Once these factors are identified, researchers often attemptto develop risk management frameworks. From a compre-hensive list of risk factors, a set of nine risk factor groups wasdeveloped (Kloppenborg & Tesch, 2004) that are consistentwith previous research—particularly the five risk groups pre-


viously established by Barki, Rivard, and Talbot (1993) andthe 14 groups established by Schmidt, Lyytinen, Keil, andCule (2001). The risk groups used in the second studyincluded corporate environment, sponsorship/ownership,relationship management, project management, scope,requirements, funding, scheduling, development of process,personnel, staffing, technology, external dependencies, andplanning. The background work just described was our firststep toward identifying successful sponsor behavior.

Using the list of (identified, classified, and quantified)risk factors, a group of project management professionalsin a local Project Management Institute (PMI) profession-al development seminar were asked to define avoidanceand mitigation behaviors associated with identified risks.A total of 745 behaviors were developed and stored in adatabase. Each of these behaviors was then applied to oneof seven project leadership task areas in each of the fourproject life cycle stages (Kloppenborg, Shriberg, &Venkaraman, 2003). Furthermore, the leadership role(sponsor, project manager, etc.) that had responsibility forthe behavior was identified. This categorization of riskavoidance/mitigation strategies in terms of project leader-ship offers project management professionals a frameworkuseful in examining successful executive sponsor behav-iors. Of these identified behaviors, 142 are associated withsteering teams and sponsors specifically during the initiat-ing stage (Kloppenborg & Tesch, 2004). In a subsequentliterature review, we considered all types of projects andadded eight new initiating stage sponsor behaviors for atotal of 150 avoidance/mitigation behaviors. Ultimately,the behaviors were described in short written statementsand arranged in a survey-like format.

In the next phase of the research, a select group of five sen-ior project management professionals (PMPs) examined thelist of behavior statements in order to eliminate redundancy,validate behaviors, and simplify narrative descriptions. Theseprofessionals, or experts, collectively represent 167 years ofbusiness experience, much of which is in project management,and have worked in insurance, health care, information sys-tems, government, military, consulting, and manufacturingenvironments. The PMPs used the method for priority mark-ing (MPM); this is an established technique useful in reducinglarge amounts of language data to a vital subset (Center forQuality of Management [CQM], 1997). According to MPM,teams or individuals select the best qualitative data by elimi-nating non-candidates in several phases (CQM, 1997). PMPswere asked to mark each behavior that they considered to beassociated with a sponsor and had at least a moderate impacton project success. Each expert considered each behavior atleast twice. Fifty-six behaviors that all five experts agreed uponthat either had little impact on project success, should not havehappened during the initiating phase, or that sponsors had noresponsibility for, were deleted.

Next, the PMPs grouped the behaviors into sets of sim-ilar groups for the purpose of further eliminating duplicatebehaviors. The difficult part of the deduplicating effort was,one, the determination of which similar behaviors were real-

ly the same, resulting in an elimination of one behavior;two, the determination of which behaviors had minor dif-ferences and thereby should be retained; and, three, ensur-ing that wording was clear for all behavior statements. Atleast two experts were required to agree on each behavior. Asa result, 22 behaviors were removed as duplicates, and vari-ous revisions were made to other behavior statements. Thisphase resulted in a list of 72 behaviors. The next logical pro-gression is to establish and confirm empirically this list ofinitiating sponsor behaviors, and to test their associationwith various project outcomes.

The SampleTo establish and confirm empirically the list of 72 initiatingsponsor behaviors, we constructed a survey and utilized aconvenience sample of 109 respondents that was developedfrom contacts at Project Management Institute conferencesand other professional settings. Demographics for the samemay be found in Figure 1. Approximately 60% of the respon-dents described their field of work as general management,information systems, or operations. Similarly, about 60%said their industry was consulting, manufacturing, service, oreducation. About half said projects in their organizationaveraged less than one year in length, and just over 25% helda PMP certification. While the level of experience variedgreatly, about 29% had 30 or more years of experience. Therespondents are largely from North America. In summary,the sample is quite diverse in several ways.

Procedure and MeasuresRespondents were administered an online survey and askedto consider behaviors that a project sponsor might engagein during the project initiation stage in order to facilitatethe success of a project. Project initiation was defined asbeginning with the idea for a potential project and endingwith a commitment, often in the form of a charter that issigned by both the sponsor and the project team. The spon-sor was described to respondents as a senior executive whohas an interest in the results of a project. This executive mayalso have monetary control over the project. Often, theexecutive has organizational clout but does not have signif-icant time to personally manage the project.

Respondents were asked to rate a series of 72 sponsorbehavior statements using a Likert-type response scaleranging from 1 (strongly disagree) to 7 (strongly agree). Foreach behavior, respondents were asked to consider howimportant the behavior is with respect to facilitating a suc-cessful project.

Respondents were next asked to consider 13 perform-ance dimensions as described in Pinto (2004) that areoften used to describe the value of a project upon comple-tion, or project outcomes. For each outcome or outcomestatement, respondents considered the extent to which theoutcome is significant in terms of a project’s success. The13 outcome items also followed a 7-point, Likert-typeresponse scale ranging from 1 (strongly disagree) to 7(strongly agree).


Questionnaire DataIn order to reduce the number of variables on the question-naire, principle components analyses (with varimax rota-tion) were conducted separately for the sponsor behaviorand project outcome statements (items). Based on theseanalyses and a priori reasoning, eight behavior and threeoutcome composite variables or factors were created. Theitems constituting each factor are depicted in Figure 2. Thefactors, some of which are explained in greater detail later inthe paper, include the following:

Sponsor Behaviors Factors1. Commitment—Eleven items asking respondents

about the importance of establishing communica-

tions and commitment2. Alignment—Eight items asking respondents about the

importance of defining and aligning project commitment3. Performance—Four items asking respondents about the

importance of a sponsor defining performance/successstandards on behalf of a project manager

4 Project manager—Three items asking respondentsabout the importance of a project sponsor bothselecting and mentoring project managers

5. Prioritize—Five items asking respondents about theimportance of prioritizing tasks

6. Teams—Ten items asking respondents about theimportance of selecting and establishing projectteams

N 109 Sex Males 78 71.6% Experience 1 - 5 years 2 1.8% Females 24 22.0% 6 - 10 years 10 9.2% No response 7 6.4% 11 - 15 years 9 8.3% 16 - 20 years 14 12.8%Level Front line 5 4.6% 21 - 25 years 19 17.4% First level 6 5.5% 26 - 30 years 17 15.6% Second level 18 16.5% > 30 years 32 29.4% Executive 46 42.2% No response 6 5.5% Other 27 24.8% No response 7 6.4% Duration < 4 months 6 5.5% 4 mo to 1 yr 52 47.7%Field ACCT 1 0.9% 1 - 2 years 24 22.0% FIN 4 3.7% 2 - 3 years 11 10.1% GM 27 24.8% 3 - 5 years 9 8.3% HR 5 4.6% 6 or more yrs 0 0.0% IS 20 18.3% No response 7 6.4% MKT 2 1.8% OP 19 17.4% Certification Certified 29 26.6% Other 25 22.9% Pursuing certification 5 4.6% No response 6 5.5% Not certified 69 63.3% No response 6 5.5%Industry Consulting 21 19.3% Construction 2 1.8% Region Eastern Europe 1 0.9% Education 12 11.0% Western Europe 10 9.2% Engineering 7 6.4% North America – 15 13.8% Canada Manufacturing 18 16.5% North America - US 71 65.1% Retail 5 4.6% South America 1 0.9% Service 15 13.8% Asia – China 0 0.0% Other 23 21.1% Asia – India 1 0.9% No response 6 5.5% Asia – other 2 1.8% Africa 2 1.8% Australia/New Zealand 0 0.0% No response 6 5.5%

Figure 1: Sample demographics


Factor Items Constituting Factor Cronbach’s Coefficient Alpha Establishing communications and commitment

Defining and aligning the project

Selecting and establishing project teams

Risk planning

0.90

0.86

0.91

0.79

Communicating support for a project is importantDemonstrating the proper level of commitment to a project is importantUnderstanding the expectations of management is importantMaking sure a project has the support of management is importantEnsuring that executives are committed to a project is importantPersonally demonstrating appropriate levels of participation in a project is importantEnsuring that identified stakeholders support the project is importantEnsuring that plans are communicated with stakeholders is importantEnsuring that communication procedures with management are established is importantDemonstrating a high enough level of commitment to a project is important

Aligning the objectives/goals of a project with the objectives/goals of a firm is importantEnsuring that expected project benefits to the business are defined is importantAligning project scope and funding is importantEnsuring that project goals and objectives are clearly defined is importantValidating project priority in terms of business value is importantEnsuring that a project’s goals and success factors are clearly defined is importantPersonally communicating the strategic value of a project is importantEnsuring that the scope of a project is clearly defined is important

Staffing a project with people who have appropriate skills is importantWhen selecting team members and subject-matter experts for a project, understanding the required skills necessary to ensure project success is importantSelecting people with proper knowledge is importantEnsuring that a team has proper training and tools is importantEnsuring that all parties involved know and understand their personal responsibilities is importantSelecting people with appropriate people skills is importantEnsuring that project managers quickly resolve issues that could hinder the performance of a project is importantEnsuring that regular meetings to review the status of a project are held is importantEnsuring that team operating procedures are included in a charter is importantEnsuring written documentation of required involvement by all parties is important

Ensuring that risks are identified is importantEnsuring a risk assessment plan is developed is importantEnsuring that project risks are analyzed is important

Figure 2: Composite variables: Behavior and outcomes


Factor Items Constituting Factor Cronbach’s Coefficient Alpha Establishing change control

Defining performance/success

Prioritizing

Selecting and mentoring the project manager

Future(outcome)

Meeting agreements(outcome)

Customer (outcome)

0.78

0.70

0.77

0.77

0.93

0.83

0.75

Ensuring that a formal change process is in place is importantEnsuring that project goals and objectives are approved is importantEnsuring that a “change control board” is established is importantEnsuring that any and all changes are noted and understood is importantEnsuring all parties agree on project scope is important

Ensuring that metrics to measure a project’s success are established is importantEnsuring that the strategic value of a project is communicated is importantEmpowering project managers so that they can do their job effectively is importantDefining a project manager’s performance expectations is important

Ensuring that a “project feasibility study” is conducted that includes expected benefits to the business is importantIt is important that general project goals and objectives are agreed upon prior to more detailed planning Ensuring that a steering committee prioritizes projects is importantEnsuring that all stakeholders of a project are identified is importantEmphasizing the benefits of the project to the steering team is important

Helping the project manager develop people skills is importantMonitoring a project manager’s performance is importantHelping the project manager understand the “big picture” is important

Increasing market shareOpening new lines of productsOpening new marketsGenerating a large market shareDeveloping a new technologyAchieving significant commercial success

Meeting schedule expectationsMeeting budgetFinishing a project on timeMeeting technical specifications

Creating a project that leads to enhanced satisfaction on the part of the customerCreating a project that is used by the clientAddressing customer needs

Figure 2 (cont.): Composite variables: Behavior and outcomes


7. Risk—Three items asking respondents about theimportance of risk planning (i.e., predicting andassessing risk)

8. Change—Five items asking respondents about theimportance of establishing change control (i.e., hav-ing procedures in place for handling change)

Outcome Factors9. Agreements—Six items asking respondents about the

importance of meeting agreements (budgets, sched-uling expectations, etc.)

10. Customer—Four items asking respondents aboutthe importance of pleasing the customer (customer satisfaction)

11. Future—Three items asking respondents about theimportance of creating future benefits (commercialsuccess, increased market share, new products andtechnologies, etc.).

In order to test the internal-consistency reliability ofthese factors, Cronbach’s coefficient alphas were comput-ed (see Figure 2). The reliabilities for these 11 variables

ranged from .70 to .93, with a mean of .81. Although notdepicted in Figure 2, each of the sponsor behavior factorswere significantly and positively correlated (p’s < .05)with one another, and all but two of the outcome factorswere significantly and positively correlated (p’s < .05)with one another.

Results

To test the association or relationship between the spon-sor behavior and the project outcome variables, correla-tional analysis was utilized. Illustrated in Figure 3, theresults reveal several significant and positive correla-tions. First, the agreements outcome variable was posi-tively and significantly related to the commitment,alignment, performance, and project manager behaviorvariables. Next, the customer outcome variable was pos-itively and significantly related to the alignment, per-formance, project manager, prioritize, and teamsbehavior variables. And, finally, the future outcome vari-able was positively and significantly related to the per-formance, project manager, prioritize, and teamsbehavior variables.

Establishing commitment and communications Meeting Agreements:

specifications,schedule

Customer:needs,

use

Future:commercial success,

market share,new products

Aligning and definingthe project

Definingperformance/success

Selecting and mentoringthe project manager

Prioritizing

Selecting and establishingproject teams

OutcomesBehaviors

(r = .23, p < .03)

(r = .33, p < .00)

(r = .24, p < .01)

(r = .28, p < .01)

(r = .22, p < .03)

(r = .28, p < .01)

(r = .43, p < .00)

(r = .41, p < .00)

(r = .29, p < .00)

(r = .29, p < .00)

(r = .26, p < .01)

(r = .38, p < .00)

(r = .31, p < .00)

Figure 3: Significant associations between sponsor behavior and project outcomes


Discussion

Based upon a very thorough and exhaustive process, thisresearch accurately identified and measured both projectsponsor behaviors and project outcomes. The identifiedconstructs demonstrate satisfactory levels of both reliabil-ity and validity. The research also tested associationsbetween these behaviors and desired project outcomevariables. This analysis provides important insight intobehaviors that executive sponsors might exhibit if theywish to attain successful project outcomes.

Each of six behavior factors (establishing communi-cations and commitment, defining and aligning the proj-ect, defining performance/success, mentoring the projectmanager, prioritizing and selecting, and establishing proj-ect teams) is significantly correlated with at least one ofthe three outcome measures (meeting agreements, cus-tomer, and future). Most of the behavior factors are asso-ciated with more than one outcome measure. We nowconsider each outcome measure and its associated behav-ior factors.

Meeting Agreements

The items constituting the meeting agreements factorinclude meeting technical specifications while not exceed-ing cost and schedule constraints. The first four behaviorfactors (establishing communications and commitment,defining and aligning the project, defining perform-ance/success, and mentoring the project manager) are allassociated with meeting agreements. Establishing com-munications and commitment includes direct sponsorbehaviors, such as personally demonstrating commit-ment, and indirect sponsor behaviors, such as ensuringthat communication channels with executives and otherstakeholders are established and used. Logically, havingstrong communications and commitment would seem tobe consistent with the outcome of meeting agreementsregarding cost, schedule, and specifications. As a projectruns into inevitable difficulties, having strong commit-ment on the part of many participants and clear commu-nication channels would appear to be very advantageous.

Defining and aligning the project includes direct spon-sor behaviors, such as aligning the project goals with thoseof the firm and aligning project scope with project funding.It also includes indirect sponsor behaviors, such as ensur-ing that the project goals are clearly defined. The clarity andfocus these behaviors bring would also seem be consistentwith successfully achieving the agreed-upon project specifi-cations subject to constraints of time and money.

Defining project performance and success includesdirect sponsor behaviors, such as defining performanceexpectations and empowering others, and indirect spon-sor behaviors, such as ensuring that success metrics areestablished. Knowing what is expected certainly appearsto be consistent with meeting cost, schedule, and specifi-cation agreements.

The final sponsor behavior that is significantly associ-ated with meeting agreements is that of mentoring the

project manager. This consists of behaviors such as help-ing the project manager develop people skills and moni-toring the project manager’s performance. An effectiveproject manager must be helpful in achieving agreements,and the sponsor mentoring the project manager is intend-ed to help.

Customer Success

The outcome entitled the customer includes meeting thecustomer’s needs (whether they are specified or not), cre-ating a project result that the customer uses, and enhanc-ing customer satisfaction. The sponsor behaviorsassociated with customer success include defining andaligning the project, defining project performance andsuccess, mentoring the project manager, prioritizing theproject, and selecting and establishing the project teams.

Defining and aligning the project includes sponsorbehaviors that focus on the expected project benefitsand success factors. These should be items that wouldhelp the project team focus on the customer’s real useof the project results.

Defining the project performance and successincludes a focus on metrics to measure project success, astrategic consideration of the project’s value, and empow-erment of the project manager to make decisions that heor she feels are necessary. Each of these is consistent withkeeping the needs of the project customer (and not justthe technical specifications) in mind.

Mentoring the project manager includes helping theproject manager understand the “big picture.” Once again,this goes beyond meeting project agreements to realizingthe impact that the project results will have. This is alsoconsistent with helping the project’s customer to succeed.

Prioritizing the project includes sponsor behaviors thatensure that the expected project benefits are understoodand that all stakeholders have been identified. These behav-iors once again reinforce the notion that the project is beingperformed so that someone (a customer) can effectively usethe results.

Finally, selecting and establishing the project team isassociated with customer success. This factor includessponsor behaviors that deal with issues such as teammember skills, knowledge, training, and responsibilities.It also includes helping the team to establish effectiveoperating methods, resolve issues, and review project sta-tus. The sponsor behaviors comprising this factor arelargely indirect—ensuring that things are done right. Theintent is to develop effective teams that can keep cus-tomers’ needs in mind as they make decisions.

In short, the behaviors in these five factors are associ-ated with the second project outcome—that of helpingthe customer to succeed. This is largely consistent with thefirst outcome of meeting project agreements, but goesbeyond. These behaviors both set the broad direction andunderstanding for the project and help the project man-ager and team to become effective. All of these are corre-lated with customer success.


The Firm’s Future

The last outcome factor is composed of more individualitems than the first two. The firm’s future includes itemssuch as increasing market share, opening new technologiesand markets, and ultimately achieving commercial success.The associated sponsor behavior factors are defining projectperformance and success, mentoring the project manager,prioritizing the project, and selecting and establishingproject teams.

Defining the project performance and success includesensuring that the project’s strategic value is communicated,and defining the project manager’s performance expecta-tions. These behaviors can help project participants keep inmind the value of the project to the firm—which is certain-ly consistent with market share and commercial success.

Mentoring the project manager includes helping theproject manager understand where the project fits and mon-itoring his or her performance. It would seem that a projectmanager’s understanding of how the project is related to thefirm’s success, and awareness that her or his performance isbeing monitored, could be related to the firm’s success.

Prioritizing the project includes ensuring that projectbenefits to the firm are studied, the benefits of the project areemphasized to the steering team, and the steering team pri-oritizes the project. These behaviors are certainly related to astrong awareness of how the project will benefit the firm.

Selecting and establishing project teams includes select-ing team members based upon an understanding of theskills they need, ensuring that all participants agree on theirspecific involvement in writing, and ensuring that a teamquickly resolves any issues that could hinder project per-formance. These sponsor behaviors and others that helpdevelop an effective team can help the firm succeed.

Conclusions

We would like to make two final notes regarding sponsorbehaviors. First, two of the behavior factors were associatedwith all of the success factors. Defining project performanceand success, and mentoring the project manager, might beespecially important since each is correlated with all of thesuccess factors.

The second comment has to do with what we did notfind in our analyses. After starting with 150 sponsor behav-iors, we ended up with 41 behaviors that clustered into sixreliable factors that were each correlated with at least oneoutcome factor. There were two additional behavior fac-tors, but neither correlated with any of the success factors.The factor risk planning consists of three behaviors. Thechange control factor has five behaviors. The fact that nei-ther factor is significant in the analysis only means that ourrespondents do not feel that they are important for thesponsor to perform during project initiation. They may still beimportant during the more detailed project planning stagesthat follow initiation.

In summary, there are six sponsor behavior factors that,if performed during project initiation, are associated withthree project success outcomes. Of those, two—definingproject performance and success, and mentoring the projectmanager—are associated with all of the outcome measures.They would appear to be very important behaviors for spon-sors. The other four (establishing communications andcommitment, defining and aligning the project, prioritizingthe project, and selecting and establishing the project team)are each significantly associated with at least one outcomefactor. These six behavior factors and the 41 specific itemsthat comprise the factors should become regular practice forproject sponsors.

Notes1 New Public Management is a term used to describe dis-tinctive new themes, styles, and patterns of public servicemanagement, primarily in Europe.

References

Association for Project Management. (2005). Glossaryof terms. Retrieved October 29, 2005, fromhttp://www.apm.org.uk/page.asp?categoryID=4&subCategoryID=29&pageID=0

Barki, H., Rivard, S., & Talbot, J. (1993, Fall). Toward anassessment of software development risk. Journal ofManagement Information Systems, 10(2), 203–225.

Center for Quality of Management. (1997). The methodfor priority marking (MPM). Cambridge, MA: Center forQuality of Management.

DeLone, W. H., & McLean, E. R. (1992). Informationsystems success: The quest for the dependent variable.Information Systems Research, 3(1), 60–95.

Hall, M., Holt, R., & Purchase, D. (2003). Project spon-sors under new public management: Lessons from the front-line. International Journal of Project Management, 21(7),495–502.

Helm, J., & Remington, K. (2005). Effective projectsponsorship: An evaluation of the role of the executivesponsor in complex infrastructure projects by senior projectmanagers. Project Management Journal, 36(3), 51–61.

Kloppenborg, T. J., Shriberg, A., & Venkatraman, J.(2003). Project leadership. Vienna, VA: ManagementConcepts Incorporated.

Kloppenborg, T. J., & Tesch, D.B. (2004). Using a proj-ect leadership framework to avoid and mitigate InformationTechnology (IT) project risks. In D. P. Slevin, D. I., Cleland,& J. K. Pinto, (Eds.), Innovations: Project management research2004 (pp. 23–34). Newtown Square, PA: ProjectManagement Institute.

Melymuka, K. (2004a). Surviving the sponsor exit.Computerworld, 2/16/2004, 38(7), 40.

Melymuka, K. (2004b). Firing your project sponsor.Computerworld, 2/23/2004, 38(3), 35


Perkins, B. (2005, September). The elusive executive spon-sor. Computerworld, 39(32), 46.

Pinto, J. K. (2004). The elements of project success. In D. I.Cleland (Ed.), Field guide to project management. (pp. 14–27).Hoboken, NJ: John Wiley & Sons, Inc.

Project Management Institute. (2004). A guide to the projectmanagement body of knowledge (PMBOK® guide) (3rd ed.).Newtown Square, PA: Project Management Institute.

Royer, P. S. (2000). Risk management: The undiscovered

TIMOTHY J. KLOPPENBORG is a professor of management at Williams College of Business, Xavier University. He holds a

PhD in operations management. He is a certified project management professional (PMP), and has authored approxi-

mately 60 publications including two books: Managing Project Quality and Project Leadership. Managing Project Qualityhas been translated into Japanese and Chinese. He is also a syndicated columnist, writing on the topic of project spon-

sorship. Dr. Kloppenborg is a retired United States Air Force Reserve Officer. His early work experiences were in manu-

facturing and construction. Mid-career, he took a leave from academia to consult full-time in project management.

DEBORAH TESCH is an associate professor of management information systems at Xavier University. Her current research

interests include the role of project participants in project success, system development, and curriculum outcomes

assessment. She obtained her DBA in quantitative analysis and management information systems at Louisiana Tech

University. She has numerous articles in conference proceedings and journals and a Visual Basic projects text. She is a

member of AITP, IACIS, and the Project Management Institute.

CHRIS MANOLIS, PhD, is an associate professor of marketing at Xavier University in Cincinnati. Dr. Manolis’ research has

appeared in a number of journals, including the Journal of the Academy of Marketing Science, Journal of Business Research,Journal of Consumer Psychology, Journal of Consumer Marketing, Journal of Services Marketing, Marketing Theory, and

Basic and Applied Social Psychology.

MARK HEITKAMP is the vice president of Project Office and joined American Modern in March of 2000 to establish a newly

formed project office department within the organization. Prior to this, Mark was vice president of information services at

Charter Insurance Companies based in Richardson, TX, USA. His background includes over 25 years insurance industry

experience within the project and software development arena. Mark has his PMP from the Project Management Institute

along with majoring in computer science at the University of Cincinnati.

dimension of project management. Project Management Journal,31(1), 6–13.

Schmidt, R., Lyytinen, K., Keil, M., & Cule, P. (2001, Spring).Identifying software project risks: An international Delphi study.Journal of Management Information Systems, 17(4), 5–36.

Shenhar, A. J., Tishler, A., Dvir, D., Lipovetsky, S., & Lechler,T. (2002). Refining the search for project success factors: A mul-tivariate, typological approach. R & D Management, 32(2),111–126.

ON THE NOVELTY DIMENSIONIN PROJECT MANAGEMENT

Novelty has substantial implications for project

management. Because novelty is not objec-

tively determined but perceived by project ini-

tiators and participants, diverging perceptions

establish first-source management tasks. Also,

novelty is a multidimensional construct. A

review of dimensions proposed in empirical

measurement of novelty shows that, although

about 20 items are used in many studies, no

standard measurement approach has yet

emerged. This hinders comparability and

learning from empirical research on project

management. Novelty should be considered as

moderating the effects of management on suc-

cess, because this is the more encompassing

approach. The paper presents empirical

research results on role structures of project

management, team performance, autonomy of

project management and clarity of objectives

as well as ideal versus real characteristics of

project managers. These results are primarily

taken from studies by German authors with the

aim of introducing this research to a broader

audience. Although a substantial wealth of

research results is available to support project

management, optimisation is not yet possible.

But, “one size fits all” is certainly not the right

approach, and research results give some indi-

cations of how to respond to specific project

characteristics. Furthermore, radically innova-

tive projects call for more specific characteris-

tics of projects managers than for more

sophisticated planning aids.

Keywords: novelty dimension;

multidimensional construct; role structures

©2006 by the Project Management Institute

Vol. 37, No. 3, 26-36, ISSN 8756-9728/03

Central Concepts

Projects might be characterized by different degrees of novelty perceived bythose who are involved in them. This can influence success, as shown in anumber of contributions (for a summary, see Schlaak, 1999, p. 102). In this

paper, we draw primarily on earlier empirical research to develop an understand-ing of the consequences of different degrees of novelty for project management. Atthe same time, we want to introduce results from German studies that have not yetbeen reflected in the non-European scenes of project management practice or theliterature on project management research.

ProjectA project is defined in many different ways in the literature. It is not intended hereto discuss these differences, sometimes resulting from distinctions in purpose forthe definitions chosen. To some, it may come as a surprise that, in Germany, evenan industry norm sets out to define a project. Since 1980, DIN (German IndustryNorm) 69901 considers a singular combination of objectives, resources devoted toreaching the objectives, duration, separation from other activities, and a specificorganization as constituent elements of a project. Separation from other activitieswill become of interest later, when measurement of novelty comes into play. Evenwithout this particular perspective, it is obvious that in complex, large and fre-quently also highly innovative projects, interaction among teams that contributeto one overall goal is mandatory (Hoegl, Weinkauf, & Gemünden, 2004). Thisincreases complexity beyond the projects performed by one team, and it differsfrom the allocation problem arising from one team serving many projects. It leadsto the differentiation of project-level versus team-level management functions(Hoegl & Weinkauf, 2005).

In other definitions, the complexity of projects and their “relative novelty” arementioned (Frese, 1980). This element, however, is not further specified. Itbecomes immediately clear that adding the element of relative novelty to theaforementioned project definition might lead to difficulties. As in radically newprojects, neither objectives, resources, nor duration might find a clear enough fix-ation to meet the definition. This is a first indication of the importance of thedimension of novelty in project management. Radically new projects, however, arenot only difficult to subsume under standard project definitions. These projectsalso call for management approaches that differ from the routine. As a first requi-

KLAUS BROCKHOFF, WHU – Otto Beisheim Schoolof Management, Germany

ABSTRACT



knowledgeable person may help totransfer eventual tacit knowledge. Thiscan help the larger number of peopleinvolved in learning.

Type 4 projects are those in which—if not in a very strict sense—“nobodyknows.” These are truly innovativeprojects, on which everyone involvedagrees. As compared with the Type 1projects, this might require a differentmanagement approach. Informationon the choice and application ofappropriate project management toolsis largely missing. Flexibility accompa-nying project progression is important.Evaluations of intermediate results arenecessary as a basis for continuation ortermination decisions.

One of the implications that thefour project types have is for projectplanning. If novelty perceptionsdiverge, preferred planning modes willdiverge as well for the different peopleinvolved. This could become a sourceof conflict. Problems of a similarnature might arise if multiple teamprojects are considered in which eachteam perceives its task as involving adifferent degree of novelty. Securingcooperation among the teams toenhance team innovation (Tjosvold,Tang, & West, 2004) might be difficultto achieve.

Because novelty evaluations suchas in Figure 1 apply to a specific pointin time, project progress will lead to achange of the respective evaluations(Lange, 1993, p. 125 et seq.). There areindications that this calls for phase-specific project management (Hoegl &Weinkauf, 2005) or, putting this differ-ently, novelty-specific project manage-ment. Although both technicaluncertainty and market uncertainty arereduced in successful novel productdevelopment projects, market uncer-tainty is not reduced as frequently inunsuccessful projects (Lange, 1993).

The project types sketched inFigure 1 have another important impli-cation, namely for empirical researchas well as for reporting. The potentialdisagreement by project contributorson the evaluation of novelty tends toproduce substantial single-informanterrors in empirical research. Therefore,data should be collected from many

site to choose and apply suchapproaches, one has to come up withan understanding of novelty.

NoveltyThe Subjectivity IssueNovelty, newness, or innovativeness,which are widely used as synonyms,are at least as difficult to define as theterm project itself. Novelty cannot bedefined in strictly objective ways.Therefore, various “perspectives”(Daneels & Kleinschmidt, 2001) areconsidered. However, even one per-spective, namely that of a firm engagedin a project, cannot be considered tobe homogeneous. Rather, because nov-elty is imagined, it is a subjective phe-nomenon. Excluding one-personprojects, the definition derives fromthe imaginations of a group of peoplewho are related as contributors to aproject. Because separation of projectactivities from other activities is part ofthe project’s definition, this group ofpeople should be identified. Only ifperceptions of all these individuals areidentical might we speak of an objecti-fied notion of novelty. However, suchagreement cannot be assumed as arule. By abstraction, let us assume thata group of people related to a projectcan be partitioned into one individualand the remaining members of thegroup, where the individual mightagree or disagree with the rest of thegroup with respect to the novelty of aparticular project. It is not uncommonto find a powerful project promoter toassume that a project is not reallynovel, while experts despair of the levelof novelty they encounter. A similarobservation with respect to top man-agement as the promoter was made byGreen (1995). This leads to four majortypes of projects (see Figure 1).

Type 1 projects are routine projects.All people involved agree on the zero-to-low degree of novelty. With respect tothe knowledge necessary to perform theprojects of this type, one might say that“we know” how to do it. Standardizedproject planning can be applied.

Type 2 projects are considered rou-tine by all but one individual (or aminority of a few). This individualconsiders the respective project to be

rather novel. The reason might be thatonly “they know.” Should “they” beright, the remaining individual couldcatch up by learning. This tells us thatthe spectrum of activities necessary forsuccessful project completion is differ-ent from the Type 1 projects: Learningneeds to be included in the projectplanning and activities. Should “they”be wrong, the project is likely to fail ifthe routines applied do not match withthe requirements of novelty. This fate,then, is recognized by one person alone.

Type 3 projects are essentially theopposite of the Type 2 projects. Exceptfor one individual, who considers thisproject type not to be rather novel, allothers lack the special knowledge thatthe one individual seems to have. “Iknow,” this person could say. Lotka’sLaw (1926) describing the skewness ofexpertise distribution among a groupof people gives an explanation for thedivergent perceptions of novelty.However, the problem for project man-agement is that the disagreeing personmight either be a genius or a swindler.It would be nice to have signals, suchas exams, papers, references etc., to tellone from the other. But even signalsmight not be foolproof. JohannKunckel (1630 to 1703) was a chemistwho, among other things, successfullycompleted projects to produce rubyglass in large quantities, and who re-discovered phosphorus. He wrote anumber of well-received books, in par-ticular on glass making, but neverreceived an academic education.Obviously, he had promised to theSaxon king that he was also able toproduce gold. After the king’s death, hefought for outstanding remuneration.However, the chancellery told him that“if He could produce gold He does notneed a salary; but if He cannot producegold, why then should He be remuner-ated?” With respect to this project type,supervision might therefore be of pri-mary importance. Defining milestonesand checking on project performanceare mandatory activities. Incentives orcontrols that prevent opportunismresulting from the asymmetric distri-bution of knowledge are mandatory.Documentation of the project progressand the cooperation of many with the


informants in order to control thiserror. This is of particular interest forType 2 projects and Type 3 projects. Inthe most encompassing review of newproduct success studies to date, Ernst(2001, 2002) identified only two outof 51 studies that explicitly and sepa-rately studied the hierarchical or func-tional levels of respondents as a sourceof error. In his own study, he finds thatthe informant bias is responsible forroughly 30% of the total variance inproduct success measures. The sameauthor makes it clear that indirect aswell as direct indications show sub-stantial respondent errors with respectto variables that are associated withnovelty in many of the ways in whichthis is measured. These differentapproaches of measurement need tobe explained:

Measuring NoveltyNovelty has no meaning by itself, butonly in relation to some characteristic.Even if we limit further considerationsto the Type 1 and Type 4 projects, thecharacteristic to which novelty relatesneeds to be made explicit. This is onesubject of measuring novelty. Even ifwe limit ourselves to product innova-tion projects, this field has produced asubstantial number of approaches,ranging from the earlier and simple“new/not new” dichotomies—which,in their most simple form, do not evenaddress which novelty characteristic is

indicated via one-dimensionalscales—to the multivariable approach-es of today (for instance see Daneels &Kleinschmidt, 2001, p. 359; Garcia &Calantone, 2002; Hauschildt, 2004, p.14; Schlaak, 1999, p. 91). With respectto the latter approach, four contribu-tions are of major importance. Theseare very shortly reviewed, keeping thedefinitional problems in mind.

(1) Green, Gavin, & Aiman-Smith(1995) considered four constructs todefine novelty characteristics: techno-logical uncertainty, technical inexperi-ence, technology cost, and businessinexperience. These are operational-ized by 17 items, one of which hasbeen eliminated for statistical reasons.Although the first of the constructs,technological uncertainty, offers analmost objective view of how the sci-entific community is able to handlethe project, the remaining three itemsrefer to the performing firm alone.

(2) Daneels and Kleinschmidt(2001) used 19 items to operationalizefour constructs: familiarity of the firmconsidered with the technology andfamiliarity with the market, as well asthe fit or adequacy of the firm’sresources in the marketplace, and withrespect to its technological capabilitiesto achieve the project objective. Thisfirm-specific approach has some over-lap with the firm-specific items ofGreen et al. (1995). However, exceptfor “technological cost,” which is oper-

ationalized in a way that displays theadequacy or fit of technologicalresources, the remaining two con-structs cut across the fit and familiaritydimensions chosen by Daneels andKleinschmidt (2001).

(3) Schlaak (1999) substantiallybroadened these concepts. Starting outfrom Leavitt’s (1965) four dimensionsof organizational change—task, struc-ture, technology, and actors—heexpands technology into a resourcesconstruct, and substitutes processes forthe actors’ dimension. These constructsare operationalized by 40 items, 20 ofwhich can be related to the familiarityconstruct and another 17 to the fit con-struct. Careful analysis of a set of proj-ect data narrows the number of itemsto 24, grouped into seven factors. Threeof these represent the fit, while fourrepresent familiarity. Consequently,Schlaak (1999) argues that hisapproach is different from that ofGreen et al. (1995). However, the sevenfactors used to measure novelty reachfar beyond the earlier two dimensionsof market and technology. In fact, theypoint at a strategic issue of the projectdefinition. As already mentioned, thisincludes “separation from other activi-ties,” mostly meaning other projectsperformed in parallel. Schlaak (1999)showed how a project can have sub-stantial influence on the whole organi-zation into which it is embedded. Evena product innovation project can leadto novel procurement and productionprocesses, and to changes in the infor-mal or formal organization. In thissense, there is no separation from otheractivities, particularly if high degrees ofnovelty are observed. Such emanationeffects can be a source of oppositionagainst projects, because not everybodyloves innovation. Explicit considera-tion of emanation effects might movea project from Types 1 or 2 to Types 3or 4. The research by Schlaak (1999)also casts doubt on the proposition ofindependence of the familiarity and fitdimensions. As observed in many fac-tor analysis studies, the seven factorshe identifies are not completely inde-pendent of each other. This couldmean that fit and familiarity are nottotally independent of each other. For

Obje

ctiv

e No

velty

Subjective Novelty

High

Low

Type 3Genius or Swindler

“I know”

Type 1Routine

“We know”

Type 4Innovation

“Nobody knows”

Type 2Learning

“They know”

Low High

Figure 1: Quasi-objective or subjective perceptions of novelty and project types


instance, novelty to the sales market isa familiarity dimension, while the fitdimension is represented by resourcecosts in R&D, production, and market-ing. Both are correlated at a lowerlevel. Similarly, the “higher order” fac-tor of technology and production iscomposed of two familiarity factorsand one fit factor.

(4) An even broader perspectivewith respect to the consequences ofproject novelty is taken by the meas-urement approach of Gemünden andSalomo (2005). Their four dimensionsof novelty relate to the market, thetechnology, the organization intowhich the project is embedded, andthe external environment as defined byregulatory or societal aspects. Twentyitems is used for construct definitions.Again, familiarity and fit cut across thefour constructs. The broadening of theperspective is not only manifest in theenvironmental construct, but also, forinstance, in the market aspects of nov-elty. The authors ask project represen-tatives to what degree they think thatcustomers need to change their behav-ior and attitude to appreciate the proj-ect outcome. Other than originallyimagined, the perspective taken in theevaluation is not represented by amember of the group who holds a spe-cific perspective similar to that of thefirm hosting the project.

What can be learned from this?Even though great progress has beenmade in measuring novelty, no stan-dard has yet been established. This iseven more disturbing as the approach-es previously referred to focus only onproduct innovation projects. Noveltywith respect to other types of projectsshould be measured by the samemethodological rigor. The broadeningof the novelty perspective adds morerealism to the evaluation, but at thesame time might be an additionalsource of variance.

Plausible concepts of novelty arenot easily replicated in follow-on stud-ies. Constructs cannot be consideredgenerally valid, although authors tendto use about 20 items for their meas-urement and at least some basic agree-ment exists as to the necessity ofincluding technology and market char-

acteristics in measuring novelty. Multi-informant approaches are called for,but are not common. These could helpto control for single informant errors.Perceptions matter, as can be seen byreferring to the project categories ofFigure 1.

A standard measurement proce-dure would establish an importantstep toward better comparison of theresults of empirical studies, and itwould help management to better clas-sify their projects.

How Novelty Works: The Principlesof InfluenceAnother important aspect is that ofwhether novelty is a moderator or anindependent variable (Daneels &Kleinschmidt, 2001). These can beconsidered as two different principlesof influence that novelty may have onprojects. Assuming strictly linear rela-tionships, and using {y, x, z} as vari-ables and {a, b,…, f} as parameters,the two principles can be illustratedvery easily. The variable y indicates aparticular project outcome, such asone dimension of project success or acomposite measure of project success.The variable x indicates a project man-agement characteristic, while z is ameasure of novelty. The latter implies acharacteristic, which could also be rep-resented by a vector with respectiveconsequences for the parameters. Errorterms are neglected here. Then, noveltyas an independent variable is observedin the following equations:

x = a + bz (1)y = c + dx = c + d(a + bz) (2)

In Equation 2, z is simply substi-tuted for x. As a moderator, novelty ismodeled in the following equations:

d = e + fz (3)y = c’ + x(e + fz) (4)

It is easily seen that Equations 2and 4 are conceptually different, andalso that Equation 4 is the more gener-al approach. In empirical estimation ofunknown parameters, it will not bepossible to differentiate between c’ andc + da, both being considered as an

increment. Thus, in Equation 4 anadditional parameter (e) is estimated.Although this consumes anotherdegree of freedom, it adds explanatorypower if e is estimated as significantlydifferent from 0. An even moreexpanded approach is represented by acombination of Equations 2 and 4,which leads to Equation 5:

y = c’ + x(e + fz) + d’z (5)

with d’ = db. Because plausibility, occa-sionally supported by scatter plots, hasit that some independent variables canhave nonlinear effects on the depend-ent variable beyond the multiplicationof x and z, linear approaches can beoverly simplistic. Comparing a nonlin-ear expansion of Equation 1 with anapproach such as Equations 4 or 5might therefore be of interest.

From this short presentation, it isconcluded that further empiricalresearch should adopt the moderatorprinciple in trying to explain influ-ences of novelty on project manage-ment. Furthermore, nonlinearitiesshould attract more attention thanthey have to date.

Novelty Effects on Project Management

The following presents selected empir-ical findings of effects of novelty onproject management. This has twomajor limitations, besides the inabilityto cover all studies. First, the measure-ment issues previously raised limitcomparisons. Second, we draw onstudies that advance the hypothesis ofa causality that is mostly tested by non-causal approaches. Thus, the possibili-ty of project management influencingnovelty rather than the other wayaround is not explicitly covered (seeFigure 2). The dotted line shows thiscausality. However, this relationshipdoes not appear to exist. Rather, bothproject management and noveltymight be determined by underlyingfactors, such as the governance of theorganization into which the project isembedded. In Equations 1 through 4,this is implicit in a lack of time indicesat the variables. The bold lines and thedashed line show the relations mod-eled in Equation 5.


purchases of computers in companies.He identified a sponsor’s role (calledpower promoter) and an expert’s roleas the two important roles that need tobe present and represented at the sametime to enhance the chance of projectsuccess. This research was expandedinto integrating the role of the projectchampion (process promoter), andmore recently to the gatekeeper for thetransfer of knowledge as well as therelationship promoter to support proj-ect relations with other organizationsbeyond the project’s host (Chakrabarti& Hauschildt, 1989; Hauschildt &Gemünden, 1999). The promoter rolesare associated with particular hierar-chies of their representatives as well aswith particular resources that their rep-resentatives can mobilize for projectsuccess. A recurrent result of empiricalresearch is that the roles should all berepresented in project managementand that cooperation among the repre-sentatives of these roles is decisive forproject success.

If one accepts Lechler’s associationof people and roles, it is possible tostudy the importance of each of thethree roles for project success (Table 1).Here, this is of particular interest withrespect to the novelty dimension. Forboth, the project manager (champion)and the project team (experts), theiraffect on project success increases withthe two novelty variables. The effect oftop management is almost identical,with a slight reduction of influenceon success for the most innovativeprojects. The top management (spon-sor) influences success directly aswell as indirectly via its influence onproject management and teams. The

project management influences projectsuccess only via its influence on theteams. For the most novel projectsstandard instruments of project man-agement play a very reduced role. It issuggested that these projects requireconsiderable new knowledge, whichconsequently increases the importanceof the team for project success. Also,because these projects are relativelycomplex and consume more resourcesthan any other type of project, the roleof the project management is stressed.The slight reduction of the importanceof top management’s role is explainedby the assumption that this type ofproject is so prominent within theorganization that it does not need asmuch top management attention asmight be necessary to keep a lessprominent project on a path to success.

In this study, an overly simplis-tic—namely, static—view is presented.In reality, the roles of promoters areevaluated differently with respect todifferent project phases. The peoplerepresenting different roles can change,and the relevance of certain roles forproject success can vary with novelty(Folkerts, 2001). In particular, if spon-sors’ support in highly novel projects isdiscontinued, these projects tend tofail. Furthermore, the interaction orcooperation of the three role bearers isnot studied. In addition, the inclusionof the novelty dimension is a rathercrude one. Both of these aspects arecovered in a much more elaboratestudy in which the novelty dimensionis the major issue (Papies, 2005). Atthe same time, this study looks at thesame projects in different phases oftheir development.

With respect to novelty, Papies(2005), with some restrictions, followsthe previously-mentioned concept ofSchlaak (1999). Furthermore, helooked at the same new product devel-opment projects in the three phases ofconcept development, advanced devel-opment, and testing or market intro-duction. In the first two phases,interactions of the roles of sponsor,champion and expert are studiedtogether with top management sup-port and cooperation of the promoter’sroles. The sponsor, the champion and

In the following, three aspectsshall be considered: project manage-ment structure, clarity of project objec-tives and autonomy of projectmanagement, and the project manager.

Project Management StructureProject management structure reflectsa hierarchy of top management, withproject manager and project team asthe acting persons. Involvement of topmanagement, competencies assignedto the project manager, and expertiseof the project team have positive influ-ences on project success. Lechler(1999) presented an overview of theresults that support this. The sameauthor shows in his LISREL study of257 successful and 191 unsuccessfulprojects that the total affect on projectsuccess of these individuals or groupsof people can vary with project type.Three types of projects identified byLechler (1999) exhibit—among othercharacteristics—increasing “innova-tiveness” and “technological risks.”This observation helps in integrating astream of research on the managementstructure for innovative projects, whichwas not originally integrated with theproject management literature. In thisdescriptive, rather than normative, lit-erature, the roles of sponsor, championand expert together with their cooper-ation are identified as crucial for proj-ect success. Lechler (1999) associatestop management with the role ofsponsor, the team with the role of theexperts, and project management withthe role of the champion.

The role model was originallyadopted by Witte (1973). He studiedprojects set up to manage first-time

Project Management (x)

Project Success (y)

Novelty (z)

d’z

(4)

Figure 2: The causality issues between project management and novelty


effectiveness. Otherwise, insignificantresults are noted for this phase of proj-ect development.

In the advanced development phase,it is notable that higher degrees of nov-elty have a negative influence on effi-ciency in all cases. Obviously, highdegrees of novelty are correlated withhigh degrees of uncertainty, which inturn lead to surprises, spoiled well-laid-out plans, etc. The moderatingeffect is similar to that of the precedingphase with respect to top managementsupport. It is even stronger with respectto the influence of a sponsor or anexpert on USP. However, effectivenessof team quality and cooperation, aswell as efficiency of team quality, areall negatively influenced by highernovelty during this phase. This mayresult from the weakness of team man-agement in dealing with a situation ascomplicated as that of high novelty.

In software development, projectteam performance can be moderatedby novelty of the projects assigned to ateam. Interestingly, high levels of nov-elty impact on the relationshipbetween team quality and efficiency,but do not significantly impact on therelationship between team quality andeffectiveness as seen by team leadersand managers; team member ratingsare non-significant overall (Hoegl,Parboteeah, & Gemünden, 2003).Non-significant negative impact ofhigher novelty levels on team qualitycan be compensated by the moderat-ing effect. This result seems to contra-dict earlier findings, and suggestsmanaging team quality in response tonovelty rather than using unifiedapproaches across the board.

Clarity of Project Objectives andAutonomy of Project ManagementSome of the negative direct influences ofhigh novelty on efficiency and effective-ness of projects might be related to a lackof structuring objectives in such projects.Prescriptive literature suggests that proj-ect objectives should be non-complex,measurable, specific, tangible and easilyverified, among other characteristics(Kerzner, 1984, p. 344). Primarily, thisseems to apply to Type 1 projects (seeFigure 1). There is nothing wrong with

the expert roles are all identified andconsidered with respect to their influ-ences on the success variables. Thus, avery elaborate approach is chosen.Novelty is considered as a moderator,as in Equation 5.

In Tables 2 and 3, a summary ofresults is presented. In these tables, – or+ signs represent a significant parame-ter estimation in the respective direc-tion, while a 0 stands for aninsignificant result. It is found that inthe two relevant project phases, noveltyitself (as measured by the parameter d’in Equation 5) is perceived as havingmostly significant negative effects onproject efficiency and project effective-ness, but positive effects on the contri-

bution to the project’s USP. The moder-ating effect of novelty (represented bythe parameter f in Equation 5) is signif-icant in only a few situations.

In the conceptual phase of the proj-ects studied, a significantly positivemoderating effect occurs five times.This means that, although noveltymight reduce the value of the successvariables considered, this reductioncan be more than compensated for byhigher degrees of novelty if an expert isinvolved or if cooperation amongsponsors is ensured, or if top manage-ment lends its support, or if team qual-ity can be assured. In four of these fivecases, this occurs with respect to effi-ciency, and only once with respect to

Novelty Low Medium High

Risk Low Medium High

Project size Medium Small Large

Total impact of top .60 .64 .59management

Total impact of .12 .16 .23project management

Total impact of .41 .40 .63project team

Project Type A Project Type B Project Type C (n=192) (n=120) (n=102)

Source: Lechler (1999, pp. 205 & 207)

Table 1: Impact on project success by three types of role representatives and project characteristics

ConceptDevelopment

Effectiveness EfficiencyUSPEffectiveness Efficiency USPEffectiveness Efficiency USPEffectivenessEfficiency USPEffectivenessEfficiency USPEffectivenessEfficiency USP

SponsorSponsorSponsorChampionChampionChampionExpertExpertExpertCooperationCooperationCooperationTop man. supportTop man. supportTop man. support Team qualityTeam qualityTeam quality

--+--+--0--0--+--+

000000++00+00+00+0

Phase Success Promoter Type / d’ f Measure (y) Variable (x)

Source: Own construction according to results by Papies (2005)

Table 2: Novelty as moderator in structuring project management in the concept development phase


trying to achieve these characteristics,even in novel projects (of Type 4 inFigure 1). However, such objectivesshould not be upheld irrespective ofthe path of the knowledge accumula-tion in the project. Case studies showthat this request, while naively natural,is frequently not met, particularly ifcommitments among different con-tributors to a project have to be agreedupon (Hauschildt & Pulczynski, 1992;Hauschildt & Pearson, 1994). Penaltyfor breach of contract at the institu-tional level, or face-saving at the indi-vidual level, might work towardinflexibility, but also, unfortunately,toward project failure. To achieve flexi-bility in project management withouttotally losing sight of the originalobjectives, a particular set of character-istics of the project manager or thechampion could be called for, or a cer-tain level of autonomy in managingthe project. Results on both of theseissues can be presented.

As mentioned before, separationfrom other activities is considered adefinitional characteristic of projects.This could help to achieve the level offlexibility needed for successful high-novelty projects. The same idea seemsto have led quite a number ofresearchers to suggest that a highdegree of novelty might best be man-

aged if project managers enjoy a highlevel of autonomy with respect to orga-nizational structure and physical sepa-ration from routine operations,resource availability and use (Krieger,2005), as well as social autonomy. Thelatter is a short description for eitheroffering personal, face-to-face coopera-tion among team members or for teammembers remaining in their homeinstitutions with only virtual coopera-tion (Gemünden & Salomo, 2005). Afine overview of these suggestions andfindings is given by Krieger (2005, p.37). Another quite similar expressionfor this suggestion is the high-poweredproject management (Wheelwright &Clark, 1992).

As before, the novelty dimensioncan be studied as moderating possibledirect relationships between variablesmeasuring various dimensions ofautonomy and project success. Thiscasts doubts on earlier findings ofextending autonomy in projects withincreasing novelty to achieve projectsuccess (see for instance, Christensen &Overdorf, 2000; Gerwin & Moffat,1997; Simon, Houghton, & Gurney,1999). Several arguments can beadvanced to explain findings that donot show positive effects of structuralautonomy and limited effects ofresource autonomy on success

(Krieger, 2005). Increasing autonomyof the project management can lead tocutting ties with the originally support-ing organization together withinsignificant effects of the noveltymoderator. Thus, for instance, recourseon knowledge or other resources mightbe cut off. Face-to-face interaction asan indicator of social autonomy of aproject is, however, significantly posi-tively associated with success, and thenovelty moderator has a positive influ-ence. This calls for co-locating teamsthat work on highly innovative proj-ects within the organization to benefitfrom the richness of personal informa-tion exchange and an easier way ofmotivating identification of teammembers with the project.

With respect to another autono-my dimension, namely autonomy informulating objectives, it is foundthat too much autonomy might para-lyze the synergies that the supportingorganization, hopes for when startingthe project (Brockhoff & Schmaul,1996). A loss of focus can be theresult. Even the Internet pages thatreport on project failures are abun-dant with not only the usual criticismof lack of resources, weakness of proj-ect management or failure of topmanagement support, but also withrespect to overambitious goals, proj-ect objectives driving away from thevision of the supporting organizationor goal changes by top managementwithout proper communication (forexample, Hedman, 2005; Rossi,2005). Again, the novelty dimensionmay come into play as a moderatingfactor. Because some projects are driv-en by the availability of resources(means), including knowledge, andother are driven by the availability ofa clear view of purposes (ends) (forthe means-end-classification of inno-vative projects, see Hauschildt &Pearson, 1994), the change of objec-tives can have substantially differentsuccess influences. It is quite plausi-ble to assume that such changes canbe helpful and supportive forresource-driven projects, while it cankill purpose-driven projects, unlessthe purpose itself undergoes respec-tive parallel changes.

ConceptDevelopment

EffectivenessEfficiencyUSPEffectiveness Efficiency USPEffectiveness Efficiency USPEffectiveness Efficiency USPEffectiveness Efficiency USPEffectiveness Efficiency USP

SponsorSponsorSponsorChampionChampionChampionExpertExpertExpertCooperationCooperationCooperationTop man. supportTop man. supportTop man. supportTeam qualityTeam qualityTeam quality

0-+0-+0-+0-+--+0-+

00+00000+-00++0--0

Phase Success Promoter Type / d’ f Measure (y) Variable (x)

Source: Own construction according to results by Papies (2005)

Table 3: Novelty as moderator in structuring project management in the advanced development phase


The findings call for a complicatedmultidimensional optimization ofautonomy as a means to achieve theflexibility necessary when noveltyincreases. First, the optimization has tobe achieved with respect to the noveltydimension, where we have indicationsthat with respect to the market andtechnology dimensions more autono-my can be allowed as compared withthe organizational and environmentalfit dimensions. This can be concludedfrom the observation that the level ofmarket or technological novelty in thesense of fit does not significantly corre-late with success measures, while somenegative correlations can be observedwith respect to organizational andenvironmental novelty dimensions.These come close to a familiaritydimension. The management task herewas nicely phrased by YasutsuguTakeda, then head of research atHitachi Corp. He did not like “bluesky” research projects, but rather“north star” projects: almost equallyremoved from the present technologyand market, but organizationallymuch better focused. Second, the opti-mization has to be achieved withrespect to the dimension of autonomy,where issues of organizational struc-ture, resource availability, and freedomto dispose of resources as well as socialautonomy have to be considered.Third, optimization has to be achievedwith respect to the success dimensionand the phase of project work, whichmight serve as signals for the ultimatebut hardly controlled financial successin the market.

It is obvious that the project man-agement knowledge to date does notoffer enough information for such anoptimization. This is particularly so,because the study by Krieger (2005),which opened this presentation of theoptimization problem was based on104 relatively radical or very novel typesof product innovation projects. Towhat degree the results can be corrob-orated with respect to other types ofprojects, we do not know.

Project ManagerTo what degree an able project manag-er can make good for missed optimiza-

tion is another interesting question.Even a casual look at the project man-agement literature reveals the extreme-ly demanding set of characteristics thatthe “ideal” project manager shouldmeet. As previously speculated, thismay be even more important in thecase of high-novelty projects becausethe multidimensional optimizationhas to be negotiated with the manage-ment of the supporting organization,and because maintaining the optimaldegree of internal flexibility—forinstance, with respect to the projectobjectives—is very demanding.Indeed, the accumulated characteris-tics that practitioners and the academ-ic project management literature use todefine “ideal” project managers has ledone researcher to speak of the idealproject managers as “heroes” in theclassical sense of the word or even“archangels” (Drumm, 1996).Friedman, Fleishman, and Fletcher(1992), looking at R&D projects, ques-tioned the necessity of technologicalqualifications for project managersand favor their managerial competen-cies to achieve success. A similar indi-cation, particularly from the point ofview of Japanese managers as com-pared with German or U.S. managers,supports this view (Brockhoff, 1990, p. 87), although with no particular ref-erence to projects. By application ofconjoint analysis, Keim (1997, p. 219)identified the relative weight of com-petencies requested for R&D managers(see Table 4). It is apparent that thepast experience on the job, togetherwith systematic and analytical think-ing, counts less than the combinationof creativity, motivation, and the abili-ties to plan and organize. The highestlevel of each characteristic is alwayspreferred to lower levels, with oneexception. For creativity of the projectmanager, both the lowest and highestlevel receive almost equal weight,while medium levels find small num-bers of supporters.

In reality, hardly any project man-ager will be able to live up to the high-est expectations with respect to eachand every one of the characteristicsmentioned in Table 4. Therefore, 24items were identified from the litera-

ture on project manager characteristicsto describe reality (Keim, 1997, p. 151).By employing factor analysis, thesewere assigned to seven factors, clus-tered to identify five types of projectmanagers. These, in turn, were relatedto project success. Success was mainlymeasured as technical success, but allprojects had already been introducedinto the markets, some showing a suc-cessful market life of three years. Againfollowing the analysis by Keim (1997),Table 5 summarized her results.

From Table 5 we can conclude thata project manager who interacts withhis or her team, who can motivate andwho can critically or logically evaluateproject performance, achieves the bestproject results. Positive, but not out-standing, values with respect to theother characteristics certainly help todo such an outstanding job. This char-acterization is particularly interesting ifconfronted with the results for thegroup of the least successful projectmanagers. They stand out with respectto their problem-solving capabilities,but they miss out on all other charac-teristics. One can imagine that thischaracterizes managers who are usedto exercising power, to put high pres-sure on a team with little regard for thespecific difficulties of highly uncertainand novel jobs. It was mentionedbefore that the dominance of a powerpromoter in novel projects is not afavorite driver of success. Type 2 repre-sents the most frequently observedproject manager. This manager comesclose to the mean of characteristics ofall project managers with respect tofive out of the seven characteristics, butwith lowest values for two of them.

Past development experience

Systematic and analytic thinking

Ability to plan and organize

Ability to motivate

Creativity

Characteristic Mean Weight

Source: Keim (1997, p. 234)

20.8

18.4

24.7

17.6

18.5

Table 4: Mean weights for characteristics of

“ideal” R&D project managers


One can imagine that working underthe leadership of this type of managermeans to live with a certain degree ofchaos, but the average business experi-ence and the average learning abilitymight still create acceptable results. Thewheeler-dealers of Type 3 have to fightagainst their lack of other characteris-tics, specifically learning and morereflective responses to problems thatarise. Type 4, finally, seems to lack expe-rience, which cannot be fully compen-sated for by their learning, initiative,motivation, and reflection. This typeseems to lack a frame of reference forthe positively marked characteristics.

Although these results offer a greatdeal of insight into the characteristicsof project managers for novel projects,it is unclear whether they can beapplied to other project types. Also,because all of the projects consideredin the study had been introduced intothe market, no major project failuresare included in the study. Their inclu-sion might sharpen the picture thatcould be drawn, or introduce a newtype of project manager who scoresbelow average on all characteristics.

Souder and Jenssen (1999, p. 198)concluded that “more exacting newproduct development practices arerequired to achieve success in unfamil-iar market environments.” First, thismeans that methods should be differ-

entiated with respect to the degree ofnovelty and novelty characteristics.Second, this suggests that the applica-tion of more exacting practices andmethods needs particular project man-ager abilities or characteristics. Thiscould well add a third dimension toTable 5. Rubenstein, Chakrabarti,O’Keefe, Souder, & Young (1976, p. 18)once said that one should not believethat “organization structure, controlmechanisms, formal decision-makingprocesses, delegation of authority, andother formal aspects of a so-called well-run company are sufficient conditionsfor successful technological innova-tion.” In view of the results in Table 5,one might say that these instrumentsare necessary, but they need to beapplied by project managers who knowwhen to choose which instrument, andto determine the level of its applicationif this is possible beyond a simple alter-native of choice.

In a separate part of her study,Keim (1997, p. 214) discussed thequestion of associating the characteris-tics of the five types of project man-agers can be associated with thepromoters. She concluded that Type 1can be associated with the championand Type 3 has a profile that corre-sponds with the expert. This followsthe same associative reasoning as isalready known from Lechler’s (1999)

study. We are critical of such associative,not empirically tested, reasoning, par-ticularly because the low levels of learn-ing and reflective abilities of Type 3project managers cast doubt on Keim’s(1997) conclusions. It would not besurprising if—in further, more expand-ed, analyses—one would find that, forinstance, Type 5 is the sponsor of a petproject that he or she personally man-ages. Type 4 has a number of charac-teristics that could more convincinglycharacterize them as experts.

Furthermore, no information isavailable on the cooperation amongthe team members. Thus, the extantwork is no true test of the promotermodel and its hypotheses. In all fair-ness, it was not planned as such a test.

Conclusion

In establishing efficient and effectiveproject management, a multidimen-sional optimization problem has to besolved. One of the driving forces to beobserved in striving for a solution isthe moderating effect of novelty, whichis itself a multidimensional concept. Itis difficult to assess novelty, because itis a subjectively held concept related todimensions that can be company-internal or -external. No standardmeasurement approach has yetevolved. In fact, the advance of meas-urement concepts is not without con-

Can interact with team

Has business experience

Has problem-solving capability

Shows initiative and creativity

Can learn and organize

Can motivate and cooperate

Reflective, logical thinker

Relative share of project manager types

Project success scale values

1.47

0.23

0.49

0.49

0.12

0.62

0.33

20%

5.6

0.12

0.04

-0.55

-0.62

-0.03

-0.35

-0.22

38%

4.8

-0.47

0.92

-0.15

0.95

-0.99

-0.0

-1.15

11%

4.7

-1.06

-0.57

0.07

0.68

0.47

0.40

0.32

20%

4.5

-0.15

-1.01

1.33

-1.25

-0.08

-0.21

-0.48

11%

3.8

Characteristics Project Manager Project Manager Project Manager Project Manager Project Manager Type 1 Type 2 Type 3 Type 4 Type 5

Source: According to Keim (1997, pp. 160–161, & 189)

Characteristics of project managers are evaluated by T-values, based on standardized factor values. They can be interpreted as deviations of one cluster of project managers from the overall mean. Extreme positive and negative T-values per each characteristic are highlighted for better reading.

Table 5: Realistic types of R&D project managers, their frequency of appearance, and success


flicts. This limits comparisons acrossstudies. Furthermore, the way that nov-elty is empirically modeled can haveinfluences on results with respect tothe success dimension of projects. It isshown that the approach to considernovelty as a moderator is more generalthan the approach to consider it as animmediate success variable alone.

One of the contributions of thepresent paper is to present a few resultsof empirical research on project man-agement done in Germany, and torelate this to some of the issues of proj-ect management that are discussedinternationally. Here, concepts as thatof the promoters of project manage-ment might prove to be fruitful inother research as well. The moderatinginfluence of novelty can be combinedwith the promoter concept to explainproject success. It can also be used toidentify more formal project manage-ment methods as being adequate forthe less novel projects, while certaincharacteristics of project managersmight be more important than projectmanagement methods for achievingsuccess of highly innovative projects.

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KLAUS BROCKHOFF, PhD, has held business faculty positions at six universities, including the University of Bonn

(Germany), University of Kiel (Germany), University of Lund (Sweden), New Jersey Institute of Technology (United

States), and currently, since 1999, WHU—Otto Beisheim Graduate School of Management (Germany). A graduate of the

University of Bonn and the University of Münster, and a former research fellow at the University of California, Berkeley,

Dr. Brockhoff has documented his research in the areas of technology management, innovation management, business

strategy, and business policy in 21 books and more than 270 articles, many of which were published in leading inter-

national research journals, such as Management Science, Journal of Product Innovation Management, IEEE Transactions

on Engineering Management, and Research Policy. He has consulted for numerous government and business organi-

zations and has received two noteworthy awards, the Max Planck Research Award and Karl Heinz Beckurts Award. Dr.

Brockhoff is also an elected member of the Berlin-Brandenburg Academy of Sciences, the European Academy of Arts

and Sciences, and the Academy of Technology; he sits on the board of six journals, two corporations, and three foun-

dations. He holds an honorary doctorate from the University of Berne (Switzerland).

THE PERCEIVED VALUE AND POTENTIALCONTRIBUTION OF PROJECT MANAGEMENTPRACTICES TO PROJECT SUCCESS

This paper contributes to the ongoing work

and debate on the value of project man-

agement, accomplishing this through an

empirical investigation of practitioner per-

ceptions on the relative value of different

project management practices and their

potential to contribute to improved project

performance. This investigation is based

on a large-scale survey of 753 project man-

agement practitioners. This paper aims to

answer four questions relating to the value

of project management. By identifying the

most valued practices, practitioners and

organizations can identify their priorities

when developing their project manage-

ment competencies. This can also guide

the profession in selecting priorities for

future development. When choosing prior-

ities to develop and implement, organiza-

tions can look to the tools that

practitioners identify as most valuable, as

having the most potential for increased

contribution to project performance, and

as presently under-utilized. In order to fully

understand the nature of project manage-

ment practices, and the mechanisms

through which these create value,

researchers must better clarify the distinc-

tion between the project phases and proj-

ect processes. These findings can help

project management professionals in

selecting priorities for future development.

Keywords: project management practices;tools and techniques; project success


Vol. 37, No. 3, 37-48, ISSN 8756-9728/03

Introduction

T he organizational value of practicing project management is a central themecomprising much of the field’s current research and debate (Thomas &Mullaly, 2005). Such value, however, particularly in terms of return on invest-

ment (ROI), is one that researchers and practitioners cannot easily calculate forevery aspect of professional practice. Investigating which practices have the poten-tial to enhance project performance—and identifying which are perceived as themost valuable—is an alternative method for gauging this value in day-to-day pro-fessional practice. Many studies analyzing the most valued practices have focusedon investigating one aspect of practice: the use of tools and techniques. The signif-icance of this one aspect of practice, albeit an important one, is readily observable.

This paper presents and discusses the results of a large-scale survey on projectmanagement practices. The results of the first part of the survey were presented atthe third Project Management Institute (PMI) Research Conference (Besner &Hobbs, 2004). These results showed the extent of tools and techniques use. Theresults presented and discussed in the present paper are based on the survey’s sec-ond part, which investigated practitioner perceptions of the potential contributionof tools and techniques to project success. More precisely, it examined which toolsand techniques possess the greatest potential for improving performance throughmore extensive or better use. The measurement of the potential for improvementwas then integrated in a construct to measure the value of each tool. Identificationof the most valued practices can identify priorities for individual practitioners andindividual firms in the development of their project management competencies.This finding can guide project management professionals in selecting priorities forfuture development. The paper aims to answer four questions:

1. Which set of tools and techniques—and therefore, which practices—doprofessionals consider as having the greatest potential and the least poten-tial, as possessing the most value and the least value?

2. How does this perceived value vary in different contexts and in relation tothe different phases in the project life cycle?

3. What priorities should practitioners and organizations set when they arechoosing to invest in developing project management practices?

4. What future developments in project management practice and theory dothese results suggest?

CLAUDE BESNER, PMP, University of Quebec, Canada BRIAN HOBBS, PMP, University of Quebec, Canada

ABSTRACT



PMI’s PMBOK® Guide (Project Management Institute,2004) identifies an extensive set of project managementtools and techniques, all of which are generally consideredvaluable and applicable to most projects most of the time(p. vii). This publication does not, however, outline the rel-ative importance of the many tools and techniques in theproject manager’s toolbox. The PMBOK® Guide states that itis necessary to adapt practice to the particular situation bychoosing which tools and techniques to employ, but doesnot provide guidance as to which tools are most valuable indifferent contexts (p. vii). These considerations are outsidethe PMBOK® Guide’s scope.

At an operational level, information on the relativevalue of tools and techniques and on the variations of thisvalue in different situations can have very practical implica-tions. Examining the differences in value of tools and tech-niques and the variations in different contexts and phases isalso a way to reflect on professional practice at a higherlevel. Project management is usually primarily associatedwith the planning and the controlling of project execution.This operational view contrasts with the strategic view ofproject management, as conceptualized in organizationalproject management (Dinsmore, 1999; Project ManagementInstitute, 2003). The present investigation on the currentpractice and the perceived value of project managementtools and techniques can shed light on both the operationaland the strategic roles of practicing project management.

The Literature on Project Management Tools

Many project management tools are inherently value-orient-ed. The practice of value analysis (VA) is devoted to minimiz-ing the cost and optimizing the performance of projects anddeliverables. Earned value management (EVM) uses value asa metric for gauging cost and schedule performance duringproject implementation. Financial measurement tools—suchas cost/benefits analysis (CBA)—are also used to measureorganizational value. These tools provide useful informationfor implementing rational decision-making processes.

Besides these value-oriented tools, there are other toolsin the practitioner’s toolbox that have the potential toimprove projects’ success and contribute to value creation.For example, Raz and Michael (2001) examined the use ofrisk management tools in Israeli high-tech industries inves-tigating the frequency of use, the perceived contribution ofuse to project success, and the extent to which use was asso-ciated with high performance. Thamhain (1998) studied theuse and the perceived value of 29 project management toolsand techniques. He concluded that the contribution of proj-ect management tools and techniques to project perform-ance is conditional: Contribution is based on the wayproject managers integrate these into the project manage-ment process and the way project teams accept theseprocesses. White and Fortune (2002) examined tool-and-technique use in relation to project outcomes and projectsuccess. Their study brought to light many details concern-ing the varying levels of usage of project management toolsand techniques.

The specific contribution of tools to different contexts isanother important part of the relation to value creation.Besner and Hobbs (2004) examined the complex reality ofthe varying use of different sets of tools in relation to con-text and provide detail on the variation in project manage-ment practice by project type. Milosevic andIewwongcharoen (2004) explored the contingent use ofproject management tools and techniques and the affect ofthis use on project success. Hargrave and Singley (1998) sur-veyed project managers in the United States Army Corps ofEngineers on the use of the 37 processes and 116 techniquesand tools. McMahon and Lane (2001) studied the use oftools in the specific in relation to the phases of the projectlife cycle; they classified the tools by phase to underline thevariation in use throughout the project life cycle.

Research on the Value of Project Management Practice

Over the last 30 years, several noteworthy studies have iden-tified project success factors. Cooke-Davis (2004) summa-rized these and proposed a distinction among three levels ofproject success: Doing projects right, doing the right proj-ects, and doing the right projects right, time after time. Mostof the literature focuses on doing projects right. But asCooke-Davis demonstrated, the practices that are associatedwith success are different at each level. The research on suc-cess factors has shown that the question of what constitutessuccess is complex and multifaceted. Although these studieshave identified some significant and consistent results, thefactors only partially explain project success. The dynamicsleading to project success remain largely undisclosed.

Demonstrating the business value of practicing projectmanagement is one of the major issues in project manage-ment today. Because of this, it is a high-priority concern forPMI’s Research Department and the subject of severalresearch efforts recently initiated by PMI (Hobbs, Thuillier,& Aubry, 2005; Thomas & Mullaly, 2005). But attempts tofind a simple and direct relationship between project man-agement practice and ROI have failed to find a statisticallysignificant link (Ibbs, Reginato, & Kwak, 2004). Such a fail-ure, however, may have resulted from an insufficient samplesize. Researchers have argued that the benefits of projectmanagement practice are not all captured by ROI metrics;because of this, the field may underestimate the discipline’simpact on innovation (Turner & Keegan, 2004), on processimprovements (Winch, 2004), and on personnel(Thamhain, 2004). It is also possible that past research hasfailed to identify the factors that truly determine project suc-cess. Although this issue is certainly complex, currentresearch efforts should help clarify this issue.

The present paper aims to contribute to the study of thevalue of project management practice. Successful projectsprovide value to organizations; project management prac-tices provide organizations with a strategic and valuableasset. Value is created when good project management prac-tices and good measurement tools improve project success.Studying tools and techniques is a tangible way to researchproject management practices because tools and techniques


are directly related to the things practitioners do. These arethe means through which project managers execute projectmanagement processes. These are also the means projectmanagers can use to measure dimensions of project per-formance and success: cost, time, quality, progress, satisfac-tion, and other dimensions of success.

A project manager’s practical know-how—those skillsused to execute processes and practices—is an importantpart of the organization’s tacit knowledge asset (Koskinen,Pihlanto, & Vanharanta, 2003; Nonaka, 1994). The opera-tional complexity associated with the integrated use of aspecific set of tools and techniques represents an intricatesubsystem of tacit knowledge that is hard to replicate.Therefore, organizations can consider the underlying practi-cal knowledge associated with a set of tools as a strategicasset. In order to implement its strategies, organizationsmust possess the capabilities needed to execute projects.Jugdev and Thomas (2002) found that these “capabilitiesare combinations of proprietary resources, knowledge, andskills that become institutionalized into operating routinesand tacit knowledge” (p. 281).

Organizations and their project managers must choosethe sets of tools that comprise their toolbox. They must inte-grate these tools to practice project management as a meansfor building a strategic asset. They should align these toolswith the project context. Milosevic and Ozbay (2001) foundthat when organizations use a set of context-compatibleproject management tools, they enhance their project deliv-ery capability. Milosevic (2003) proposed a model in whichan organization’s project management toolbox stands as thefoundation for its strategic project management process. Inthis model, organizations align their toolbox and theirchoice of project management tools and techniques withthe organization’s strategy and with the project environmentand context. The study of the value of project managementtools can thus contribute both to immediate practical con-cerns of tool selection and to higher-level concerns of theorganizational value of project management practice.

Variations Throughout the Life Cycle

The project life cycle can be defined as a sequence of majorphases through which the project evolves from beginning toend, a sequence in which each phase is separated byapproval gates. The practice of managing by phase has occu-pied a prominent position in the project management liter-ature and practice for a very long time. The phase in whichthe project stands at any moment in its life is an importantpart of its context. The PMBOK® Guide (Project ManagementInstitute, 2004), however, does not identify management-by-phase as a fundamental project management process ThePMBOK® Guide (Project Management Institute, 2004) doesintroduce the concept of process group and the idea thatprocesses from these groups are repeated during each phase.The process groups of initiating, planning, executing, andclosing have names and definitions that are very close tothose used to identify project phases. It is, therefore, notalways easy to maintain the distinction between the phase

and the process group. Furthermore, the treatment byprocess group rather than by phase begs the question as towhether there are significant differences among the phases.This study addresses this issue.

The front-end of the project has received less attentionin the project management literature than the subsequentphases that deal with detailed planning and execution.Wideman (2002) reviewed the literature on the project lifecycle and its importance. Morris (1998) argued that “Thedecisions made at the early definition stages set the strategicframework within which the project will subsequentlydevelop. Get it wrong here, and the project will be wrong fora long time” (p. 5). The role of the initiation phase in defin-ing the project—and its influence on project success or proj-ect failure—poses a strong argument for integrating theinitiation phase into the project management domain.

In many organizational contexts, however, a projectonly becomes a project after it has been authorized for exe-cution, which takes place after the front-end phase has beencompleted. For example, the front-end often takes place in acustomer organization before a request for proposals ismade. In this case, the customer front-end is not part of themandate to the supplier’s project management team. In thecase of in-house projects, non-project personnel often dothe front-end. And project management personnel are typi-cally given the project mandate only after it has beenapproved. Thus, the front-end is not part of the project man-agement personnel’s mandate. The project management lit-erature in general—and the PMBOK® Guide (ProjectManagement Institute, 2004) in particular—downplay theimportance of the initiation phase. PMI’s argument fordoing so is that most project personnel are not involved inthis phase (p. vii & p. 43). Data from the present study isanalyzed to address this issue.

Methodology

A description of project management practice has been builtbased on a survey focused on tools and techniques that arespecific to project management. In contrast with previousresearch, general concepts and processes (e.g., training pro-grams, performance measurement) have been excluded fromthe study. The tools and techniques selected are more specificand closer to day-to-day practice, closer to the things peopleregularly do. Although this involves a partial view of projectmanagement practice, it restricts the investigation to thosewell-know tools and techniques that are specific to projectmanagement. Doing so ensured that the practitioners partici-pating in the study easily understood the questionnaire.

Figure 1 lists the 70 tools and techniques that wereincluded in the survey questionnaire. Use levels vary con-siderably, from 1.4 to 4.1, based on a scale ranging from 1(not used) to 5 (very extensive use). Figure 1 shows decreasinglevels from left to right and from top to bottom.

Many analyses were performed on the different datasubsets, but the lists for most often used tools and leastoften used tools produced results very similar to most of thesubsamples. Thus, the basic toolbox is more or less the same


for everybody. But there are significant differences betweenspecific groups of users. This allowed us to identify distinctsets of specialized tools. A previous paper (Besner & Hobbs,2004) discussed the data on the use of tools and techniques.

The questionnaire also collected contextual data onrespondents (position, education, experience, etc.), theirorganizations (size, industry, project management maturity,etc.), and their projects (more than 10 variables). This infor-mation allows for segmentation of the data to determinehow project management practices varied among the differ-ent respondents, organizations, and project contexts. Thefact that the sample is split evenly for many of these vari-ables renders the analysis easier and more reliable.

The Web-based questionnaire was completed by 753experienced project practitioners, most of whom were PMPs.

The respondents had the following demographics:• Age: 30–50 (74%)• Gender: Male (67%); Female (33%)• Current primary role:

– Team member (8%)– Project manager (51%)– Program manager/director (24%)– Other (17%)

More than half (58%) are currently working on projectsin information technology and telecommunications. Thispercentage is approximately 5% higher than in PMI mem-bership. About 12% of the participants reported working onengineering and construction projects and another 12%reported working on business services projects. The respon-

Progress reportKick-off meetingPM software for task schedulingGantt chartScope statementMilestone planningChange requestRequirements analysisWork breakdown structureStatement of workActivity listPM software for monitoring of scheduleLesson learned/post-mortemBaseline planClient acceptance formQuality inspectionPM software for resources schedulingProject charterResponsibility assignment matrixCustomer satisfaction surveysCommunication planTop-down estimatingRisk management documents

Contingency plansRe-baseliningCost/benefit analysisCritical path method and analysisBottom-up estimatingTeam member performance appraisalTeam-building eventWork authorizationSelf-directed work teamsRanking of risksFinancial measurement toolsQuality planBid documentsFeasibility studyConfiguration reviewStakeholders analysisPM software for resources levelingPM software for monitoring of costNetwork diagramProject communication room (war room)Project Web siteBid/seller evaluationDatabase of historical dataPM software multiproject scheduling/levelingEarned valuePM software for cost estimatingDatabase for cost estimatingDatabase of lessons learnedProduct breakdown structureBidders conferencesLearning curveParametric estimatingGraphic presentation of risk information

Life cycle cost (LCC)Database of contractual commitment dataProbabilistic duration estimate (PERT)Quality function deploymentValue analysisDatabase of risksTrend chart or S-curveControl chartsDecision treeCause and effect diagramCritical chain method and analysisPareto diagramPM software for simulationMonte-Carlo analysis

From Limited to Extensive Use From Very Limited to Limited Use Less Than Very Limited Use

Figure 1: The 70 tools in decreasing order of average use


dents were specifically asked to indicate the phase(s) ofprojects during which they are most often involved. Manyrespondents indicated involvement in more than one phase.

Initiation/Concept 52%Planning/Development 83%Execution/Implementation 77%Finalization/Commissioning/Handover 54%

Statistical significance reported in this paper is from theresults of t-tests used to verify differences between meansand chi-square for contextual differences. More completeinformation on the survey and methodology can be foundin Besner and Hobbs (2004).

The Potential Contribution to Improved Project Performance

The survey questionnaire makes a distinction between theusefulness of present practices and the potential impact ofimproved practice on project performance. The left-handcolumn of Figure 2 presents a summary of the results for thepotential impact of improved practice.

There are four databases among the tools with thegreatest potential to improve project performance. Thesefour databases comprise lessons learned, historical data,risks, and cost estimating data. Besner and Hobbs (2004)showed that database tools have low use rates and that thislow use rate seems related to the project manager’s need fororganizational support. It is very difficult for individualpractitioners to create and use such databases without orga-nizational support.

The first three tools in this list are related to organiza-tional learning and memory: database of lessons learned, les-sons learned/post mortem, and database of historical data.The databases for lessons learned and historical data havevery limited current use; but practitioners considered thesethe tools with the greatest potential to increase project suc-cess rates. Lessons learned/post-mortems are already amongthe most extensively used tools but still have the potential forcontributing significantly to improved performance.

The use of the concept of the learning organization hasbecome widespread in management. Sense and Antoni (2003)established a useful distinction about learning from projects: Alesson learned can be about learning between projects or with-in a project. The databases mentioned here are potentially partof the organizational infrastructures identified by Sense andAntoni, as those resulting from learning between projects. Thepost-mortem—during which lessons learned are established—is most often completed at a project’s end; it is potentially ameans for learning between projects.

The list of tools with the greatest unexploited potentialcontains four tools related to risk management: risk man-agement documents, ranking of risks, database of risks, andcontingency plans. Practitioners responding to this surveyindicated that there is much potential for increasing projectperformance through more or better use of risk manage-ment tools and techniques.

Although it is a little surprising to see tools that alreadyhave high use levels appear in the list of the tools with the

greatest potential for increased contribution to project per-formance, this is indeed the case. There are seven tools thatappear in both the list of the most often used tools and thelist of the tools with the greatest potential to contribute toimproved project performance.

• Lessons learned/post-mortems• Requirements analysis• Scope statement• Work breakdown structure (WBS)• Project management software for monitoring of schedule• Project management software for task scheduling• Project management software for resource scheduling.

It is also worthy to note that six of the eight proj-ect management software functions proposed in thequestionnaire are listed in the top 20 tools with thegreatest potential for increased contributions to proj-ect performance.

There are two potential explanations for this phenome-non of highly used tools having significant potential forincreased contribution to performance. The unexploitedpotential may involve the possibility of increasing use or ofbetter use. One possible explanation is that some tools areused often enough but not well enough. This is the case forlessons learned, which are often accumulated without fur-ther application for guiding future projects. It is difficult toimagine more frequent use of scope statements than whatthis study showed. The potential may well involve better—not more frequent—use.

An examination of the tools with the least potential forincreased contribution to project performance also yieldedsome interesting results. An examination of the list of thetools with the least potential reveals two types of tools:Tools with low use levels and tools with moderate use lev-els. In both cases, the respondents reported that their pres-ent use enabled them to adequately complete their projects.For tools such as the three tools associated with contractualbidding and the war room, the results indicate that presentuse levels are moderate and satisfactory.

Many of the other tools identified as possessing theleast potential contribution were also among the least used.Monte-Carlo analysis is at the very bottom of the list. Thepractitioners surveyed did not value such tools. One couldargue that the cause for this very poor perception is igno-rance, but the data suggests otherwise. The respondents wereinvited to indicate when they had insufficient knowledge ofthe tool or technique, when they were unable to offer anopinion about more extensive or better use. The tools andtechniques identified in this survey are all very well known.The survey results indicate that the respondents were famil-iar with these tools.

The Intrinsic Value of Tools

A variable was developed to measure the intrinsic value oftools, as perceived by respondents. This variable was createdby adding the present extent of use to the potential contri-bution to project performance of more or better use. This


1 Database of lessons learned2 Lesson learned/post-mortem3 Database of historical data4 Risk management documents5 Requirements analysis6 Ranking of risks7 Database of risks8 Scope statement9 Database for cost estimating10 PM software monitoring schedule11 Work breakdown structure12 PM software for multiproject13 Contingency plans14 PM software resources scheduling15 PM software for task scheduling16 Team-building event17 PM software for monitoring cost18 Stakeholders analysis19 Communication plan20 PM software for cost estimating

56 Top-down estimating57 Self-directed work teams58 Learning curve59 Work authorization60 Trend chart or S-curve61 Network diagram62 PERT analysis63 Control charts64 Bid documents65 Bid/seller evaluation66 Decision tree67 Cause-and-effect diagram68 Pareto diagram69 Bidders conferences70 Monte-Carlo analysis

PM software for task schedulingProgress reportScope statementRequirements analysisKick-off meetingGantt chartLesson learned/post-mortemChange requestPM software monitoring scheduleWork breakdown structureMilestone planningStatement of workPM software resources schedulingRisk management documentsActivity listQuality inspectionBaseline planContingency plansRanking of risksClient acceptance form

Life cycle cost (LCC)Graphic of risk informationParametric estimatingLearning curveQuality function deploymentValue analysisTrend chart or S-curveCritical chain method and analysisControl chartsPERT analysisCause-and-effect diagramPM software for simulationPareto diagramDecision treeMonte-Carlo analysis

Potential Intrinsic ValueLo

wes

t

H

ighe

st

•••

•••

•••

Figure 2: Unexploited potential and intrinsic value in decreasing order


yielded a measure of the tool’s overall potential to con-tribute to project success or its intrinsic value. The result of thismeasure is presented in the right-hand column of Figure 2. Itis expressed as follows:

Present extent of use + Potential improvement = Intrinsic value

From an examination of Figure 2 and the lists of toolswith the highest and lowest intrinsic values come two cate-gories of tools: super tools and discredited tools.

Super ToolsTools with high intrinsic value could be called super tools.These are divisible into two groups. The first group con-tains the most extensively used and those with the greatestpotential for increased contribution to project perform-ance. These, therefore, score very high on value. Despiteextensive use, these tools still have the potential of con-tributing to increased performance if more or better use ismade of these. Their high value is attributable to the com-bination of these two factors. The following are this group’sfour most valued tools:

• Software for task scheduling• Scope statement• Requirements analysis• Lessons learned/post-mortem.

Another group of super tools also shows very highscores for use, but does not show high scores for potentialimprovement. Theses tools are very valuable but are usuallyused at levels close to their full potential. The following arethis group’s four most valued tools:

• Progress report• Kick-off meeting• Gantt chart• Change request.

Discredited ToolsMost of the tools with the least intrinsic value are tools thatare rarely used and are perceived as having very little poten-tial. Next are this group’s four least valued tools:

• Monte-Carlo• Decision tree analysis• Pareto diagram• Cause and effect diagram.

This evaluation underscores the need to reconsider theposition of these tools in the project management literatureand training as well as in the PMBOK® Guide (ProjectManagement Institute, 2004). However, practitioners con-sider some tools with very low intrinsic value to have somepotential, even if they infrequently use these tools, theseinclude the following:

• Project management software for simulation• Critical chain method and analysis• Value analysis• Quality function deployment.

Caution should be exercised in interpreting these previ-ously-mentioned lists because the cut-off in Figure 2 and theselection of just the four tools for presentation in eachgroup were selected arbitrarily.

Adequately Utilized ToolsFrom the previous discussion, one can see that some toolsare important to practitioners and the present use is ade-quate. In other words, some tools are creating consider-able value at their present level of use but increased use isneither necessary nor desirable. The following toolsshowed a higher than average level of use and a lowerthan average level of potential for contributing toimproved performance:

• Activity list• Gantt chart• Work authorization• Self-directed work teams• Top-down estimating• Bid documents• Client acceptance form.

The first three tools are among the most extensivelyused. The others are in the middle range with respect toactual application. All are well understood and present usewas reported as satisfactory. Organizations already usingthese tools should probably continue doing so. Others notusing these tools regularly might consider adopting these.

Underutilized ToolsFrom the previous discussion, one can see that some toolspossessing a considerable potential to contribute to improvedperformance are underused. The following tools presentlyshow a higher than average level of potential and a lower thanaverage level of use:

• Database of lessons learned• Database of historical data• Database of risks• Database for cost estimating• Database or spreadsheet of contractual commitment data• Project management software for multiproject

scheduling/leveling• Project management software for monitoring of cost• Project management software for cost estimating• Project management software for resources leveling• Earned value• Feasibility study• Stakeholders analysis• Configuration review• Graphic presentation of risk information.

Organizations can consider these underutilized tools aspotential investment and development opportunities. Thelist contains five different types of databases. To implementand use these tools, project managers would require organi-zational commitment and support. The survey results sug-gested that such investments are worth considering because


the practitioners believe that these tools will contribute toimproved project performance.

As shown in Figure 1, project managers already usethree project management software tools extensively. Thesetools are all related to scheduling. The survey participantsidentified four additional project management softwaretools that are underutilized; these involve relatively complexor sophisticated application of project management soft-ware with significant potential to contribute to improvedperformance. These underutilized tools include earnedvalue, stakeholder analysis, and feasibility study.

A word search in the PMBOK® Guide (ProjectManagement Institute, 2004) reveals several references tothese underutilized tools. PMI even has the College ofPerformance Management that promotes the use of earnedvalue; it also publishes a standard on the subject. Identifyingearned value and stakeholder analysis as important andunderutilized tools validates the already significant status ofthese tools within PMI standards. The PMBOK® Guide’s ref-erences to feasibility studies place it outside the scope ofproject management. Identifying the feasibility study as animportant but underutilized tool reinforces the need toincrease its importance in the project management literatureand practice. Moreover, the feasibility study is related to thestrategic front-end phase, as discussed in the next section.The list of underutilized tools with significant potential alsoincludes the configuration review and the graphic represen-tation of risks.

Setting Priorities for Development and ImplementationThe most valued tools and the most underutilized tools canprovide organizations with the guidance they need in devel-oping and implementing project management tool andtechniques. The survey respondents identified the tools andtechniques that organizations should develop and imple-ment to improve project performance. Inversely, partici-pants believe that the least valuable tools and the tools withthe least potential are poor investment choices. ThePMBOK® Guide states that organizations must adapt theirchoice of appropriate tools and techniques to match theirspecific projects and contexts (2004, p. 3). Next, this paperaddress the variations involved when practicing projectmanagement in different contexts, focusing on the differ-ences among the project life cycle’s phases.

Variationsin the Value ofToolsand Techniquesin DifferentContexts

Besner and Hobbs (2004) showed that the basic projectmanagement toolbox is very similar across different con-texts. The common pattern that exists across the projectmanagement community constitutes the generic pattern ofpractice that is applicable to almost all projects in almost allcontexts. This generic practice is the basis of the PMBOK®Guide (Project Management Institute, 2004). The authorsalso found significant and important differences in relationto working in a different context. The same is true of the per-ceived value of tools and techniques in different contexts.The set of most valued tools (Figure 2) is consistent across

most contexts. At the same time, systematic significant dif-ferences exist. For example, almost all tools and techniquesare more valued by practitioners working on large projectsand in organizations with high levels of project manage-ment maturity. About half of the tools are more valued forexternal projects and for long-duration projects. Practicallynone are significantly more valued in the opposite contexts(small projects, low maturity organizations, internal orshort duration projects). A discussion of one importantaspect of context, the generic phases of the project life cycle,focusing on the initiation phase follows.

Involvement in Different Phases

The survey questionnaire reports data on the respondents’project management positions and their involvement in dif-ferent phases of the project life cycle. This information ispresented in Figure 3.As one would expect, participant involvement is highest inthe planning and execution phases. However, practitionersdemonstrated significant involvement in both the initiation(52% of respondents) and closing phases (54% of respon-dents). Although participant involvement in the initiationphase is high for the entire sample, it is the program man-agers/directors who are particularly active during this phase.It is during this phase when organizations align the projectwith their needs and strategy. The high percentage of seniorpersonnel involvement reflects this. Further analysis showedthat program and project managers do not use different setsof tools during the initiation phase, indicating that there isa similarity in the nature of these roles during initiation.

An analysis of the socio-demographic data revealed thatthe respondents and the characteristics of their organiza-tions and projects showed no significant relationshipsbetween their involvement in the different phases, their per-

90

80

70

60

50

40

30

Initiation Planning Execution Finalization

Generic Project Life Cycle Phases

% o

f Res

pond

ents

Invo

lved

Program Manager/DirectorProject ManagerTeam MemberTotal

Figure 3: Involvement of different project management roles in

different project phases


sonnel characteristics (sex, age, or education level), the pro-ject’s size or complexity, their organizational maturity levelor overall size—or the fact that the projects have internal orexternal customers.

There is a significant relationship, however, betweenrespondents’ involvement in the initiation phase, their hier-archic level (as measured by level of authority (p < 0.000),and their project role, as shown in Figure 3 (p < 0.000).There is also a significant relationship between one’sinvolvement in the initiation phase and the presence ofboth a multiproject environment (p = 0.003) and multidis-ciplinary teams (p = 0.003). Further analysis revealed thatone’s involvement in this phase is associated with the busi-ness development function (p < 0.000), with formal train-ing in business (p = 0.006), and less strongly, withinvolvement in business services projects (p = 0.038). Therelationship with business development is natural giventhat business development takes place during the earlyfront-end of project initiation. The relationship with formaleducation in business is indicative of the skill set requiredin project initiation.

Most Valued Tools by Phase

The comparisons between most and least valued tools forgroups of respondents participating in different phases pro-duce almost identical lists to those shown in Figure 2. This isin part due to the fact that most of those reporting involve-ment in the initiation phase also report involvement in otherphases. It is also because even in the initiation phase, the typ-ical processes of planning and control are applied to thephase’s specific activity. Nevertheless, statistically significantdifferences were also revealed. Figure 4 shows the tools thatare significantly more valued in each phase; the plus sign inthe columns shows that those tools are significantly morevalued by those participating in the specified phase as com-pared to those not participating in this phase (p<_0.01).

The greater value of these tools in a particular phasedoes not mean that these are not valued during the otherphases. Four of these tools are included in both the list ofthe ten most used and the list of the ten most valued tools.Despite the generally recognized value in the overall sample,the four tools in the following list show statistically signifi-cant variations in value by phase:

• Project management software for task scheduling• Scope statement• Requirements analysis• Work breakdown structure.

The kick-off meeting is among the five most used andvalued tools, but it did not show statistically significantvariation in value by phase. As a result, it is not listed inFigure 4. The kick-off meeting is clearly associated withthe initiation process; it is repeatable for each new set ofactivities throughout the project life cycle. The initialproject kick-off often plays a very important role duringthe initiation phase. However, some aspects of the initia-tion phase are specific to this phase and are not typical ofthe initiation process in other phases. It is easy to under-stand why cost/benefit analysis and feasibility studies areimportant during the initiation phase. It is not, however,easy to see these as important tools during other phases.

The most obvious observation from Figure 4 is thatthe initiation phase is very different from the other phas-es. The activities of this phase are quite specific. To saythat the initiation phase and the initiation processes ineach phase are the same is to underestimate these differ-ences. The use of the same term—initiation—for both thephase and the process, as is the case in the PMBOK®Guide (Project Management Institute, 2004) underesti-mates the specific nature of the initiation phase and cangenerate confusion.

The list’s first three tools are directly related tochoosing the best project or finding the best solution tothe project mission. These refer to the strategic role of thefront-end phase of the project. The feasibility study hasbeen identified above as an underutilized tool. Becausethe PMBOK® Guide (Project Management Institute, 2004)excludes project initiation from the scope of most proj-ects, it is not surprising that this publication does nothighlight cost-benefit analysis and feasibility studies.

The set of tools identified as being valued during theinitiation phase appears very well integrated. The generalscope of the project is first determined during the initia-tion phase. The first scope statement and the correspon-ding higher levels of the WBS—for which responsibility isthen assigned to key project resources—are crucial outputdecisions made during the front-end phase. The responsi-bility assignment matrix is a structure that relates the proj-ect organization structure (more specifically, all projectstakeholders) to the WBS. This ensures that responsibili-ty is assigned for each element of the project’s scope ofwork. The responsibility assignment matrix can be direct-ly linked to the theory of management-as-organizing, as

Cost/benefit analysis + – –Feasibility study +Financial measurement tools +Scope statement +Work breakdown structure +PM software for cost estimating +Responsibility assignment + matrixPM software for resources + schedulingPM software for resources + levelingStakeholders analysis + +Requirements analysis + + +Team-building event +PM software for task scheduling +

Tools Value Init. Plan. Exec. Final.

Figure 4: Tools showing significant differences in values in each phase


opposed to management-as-planning, as discussed byKoskela and Howell (2002). According to Koskela andHowell, managing-as-organizing helps bring together man-agement and action, which are often disconnected, in themanagement-as-planning view. The higher level of authori-ty of the practitioners participating in this phase confirmsthe phase’s more strategic nature.

Practitioners participating in the initiation phase apparent-ly recognize that the major goals of the strategic front-endphase are planning the right allocation of resources and findingthe right people to manage the key deliverables identified in theWBS. Resource scheduling and leveling in this phase are, there-fore, related to the “rough-cut-capacity-planning” as describedby Hendricks, Voeten, and Kroep (1999). As previously men-tioned, respondents’ involvement in the initiation phase is sig-nificantly related to their presence on multidisciplinary teamsand in multiproject environments. In this context, long- ormedium-term resource allocation is an important functionof program and portfolio management. Cost concerns sug-gested by attributing greater value to project managementsoftware for cost estimating are related to allocatingresources and to evaluating the project’s cost and benefits,possibly in terms of ROI.

Requirements and stakeholder analysis are highly val-ued during both the initiation and the finalization phases.During project initiation, identifying requirements is veryclosely related to identifying stakeholder expectations.Because two key and related closeout activities involve veri-fying that the project meets its requirements and the stake-holder expectations, it is not surprising to see that these twotools are valuable elements during both closeout and initia-tion. Requirements analysis is also highly valued during theplanning and development phase. The work on require-ments during the planning and development phase is morefocused on technical elaboration and is less tightly related tostakeholder expectations.

An element often related to commissioning, handover,implementation, and ramp-up of operations is project termi-nation. At commissioning, a new group of stakeholders getsinvolved in the project. These individuals will take charge ofproject deliverables. This may also explain the importance ofstakeholder analysis at this stage of the project.

A Further Examination of “Requirement Analysis”Koskela and Howell (2002) challenged the traditional theo-retical view of project management. They proposed the“value generation” view as part of a new enlarged theory ofproject management that includes the fundamental aspectof customer requirements and therefore of business pro-pose. The findings from the present study provide detailedempirical evidence supporting Koskela and Howell’sassumptions.

Requirement analysis may be used to different ends inthe different phases. The list of requirements is an importantoutput of the initiation phase. The use of requirement analy-sis during initiation focuses attention on the productionand validation of the project’s requirements. During the

planning and development phase, the requirements are ana-lyzed to clarify their meaning, to elaborate upon—and todevelop—detailed technical specifications, and to plan thetasks necessary to meet requirements. During termination,the deliverables are analyzed to determine if the require-ments have been met.

Requirement analysis is one of the “super tools” previ-ously identified. It is among the most used and the most val-ued tools. The very definition of project management iscentered on meeting requirements: “The application ofknowledge, skills, tools and techniques to project activitiesto meet project requirements” (Project ManagementInstitute, 2004, pp. 8 & 368). A word search in The PMBOK®Guide reveals that the expression “requirement analysis” isnot used in the Guide. Rather, the PMBOK® Guide identifiesrequirements as one of the important elements of the proj-ect charter that is issued by the project sponsor, by the proj-ect initiator that operates outside the project organization(pp. 81–82). The PMBOK® Guide identifies requirements asexisting prior to and outside of the project: It does not iden-tify these as the object of analysis. This survey’s results indi-cate that requirement analysis is a very important activity forproject practitioners to perform. This evidence demonstratesthat requirements analysis is within the scope of the projectand that PMI should include it within future versions of thePMBOK® Guide.

Conclusions

Setting Priorities for Development and ImplementationBoth individual organizations and practitioners—and thefield of project management as a whole—can identifyways to develop and enhance their project managementpractices by examining the tools identified in this study asmost valuable, as having the most potential for increasedcontribution to project performance, and as presentlyunder-utilized. For example, this study identified thosetools related to organizational learning and memory asamong the tools showing the greatest potential forimproving project performance. The results of this surveyalso indicate that the current set of well-known projectmanagement tools and techniques is more highly valuedin the context of large projects for external customers andless highly valued for smaller projects for internal cus-tomers. Given the very large number of these latter typesof projects, the field should focus its efforts on developinga new set of project management tools and techniques,one that focuses on small and internal projects. The devel-opment of a project management tool set for a specificorganization will, of course, need to be based on an analy-sis of the current state of practice in the organization andthe specific characteristics of the projects being managedand the organizational context.

The Specific Characteristics of Project InitiationOne purpose of this paper has been to investigate projectpractice through each phase. Slightly more than half ofthe survey respondents reported substantial involvement


in the initiation phase. This brings into question the argu-ment that this phase is outside the scope of most practi-tioners’ project work. If the initiation phase is as critical assome of the literature claims, then downplaying thisphase reduces the emphasis on a subject that is critical toproject success and value creation.

The analysis has shown that the front-end phase hassome very specific characteristics. It draws upon businessskills to make greater use of tools directly associatedwith the strategic front-end, such as choosing the rightproject and managing the organizational interfaces—stakeholder analysis, cost/benefit analysis, feasibilitystudies, responsibility matrix, and resources orientedtools, among others.

The authors conclude that the initiation phase isimportant and specific: In order to adequately portrayproject initiation, both the initiation phase and the initi-ation processes occurring during each project phase mustbe taken into account. The distinction between the twoneeds to be made explicit and to be used consistently, oth-erwise confusion is likely. Downplaying one at the expenseof the other leads to an incomplete view of project man-agement practice.

Acknowledgment

The authors wish to thank Dr. Lynn Crawford for her gen-erosity in allowing them to use questions on contextual vari-ables drawn from her research on project managementcompetency. The authors also wish to thank Harry Stefanou,previous Manager of PMI’s Research Department, for hissupport in data collection.

References

Besner, C., & Hobbs, J. B. (2004). An empirical inves-tigation of project management practice: In reality, whichtools do practitioners use and value? In D. Slevin, D.Cleland, & J. Pinto (Eds.), Innovations: Project managementresearch 2004 (pp. 337–351). Newtown Square, PA: ProjectManagement Institute.

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Koskinen, K. U., Pihlanto, P., & Vanharanta, H. (2003).Tacit knowledge acquisition and sharing in a project workcontext. International Journal of Project Management, 21,281–290.

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Turner, R. J., & Keegan, A. E. (2004). Managing technol-ogy: Innovation, learning, and maturity. In P. W. G. Morris& J. K. Pinto (Eds.), The Wiley guide to managing projects (pp.576–590). Hoboken, NJ: John Wiley & Sons.

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CLAUDE BESNER, PMP, holds a degree in architecture, an MBA, and a PhD in management. He is a professor in the

Management and Technology Department at the University of Quebec at Montreal (UQAM). He is a past director of the

UQAM master’s program in project management, which is accredited by PMI’s Global Accreditation Center. Dr. Besner has

more than 15 years of experience as consultant and project director. He is active internationally in the project management

community and has presented papers at both research and professional conferences organized by project management

organizations worldwide.

BRIAN HOBBS, PMP, holds a degree in industrial engineering, an MBA, and a PhD in management. He has been a pro-

fessor at the University of Quebec at Montreal in the master’s program in project management for more than 20 years.

This program, of which he is a past director, is accredited by PMI’s Global Accreditation Center. Dr. Hobbs is very active

internationally in both the project management professional and research communities. He served a three-year term

on PMI’s Standards Members Advisory Group (MAG) ending in 2002. He is a reviewer for both the Project ManagementJournal and the International Journal of Project Management. He has presented several papers at both research and

professional conferences organized by PMI and other project management organizations worldwide. In recent years, he

has been the member of three teams of researchers that have been awarded competitively bid research grants by PMI.

He will be the chairperson of the UQAM Research Chair in Project Management, which will be created in the fall of 2006.


MECHANISMS FOR INTER-PROJECTINTEGRATION–EMPIRICAL ANALYSISIN PROGRAM CONTEXT

This exploratory study focuses on the problem

of inter-project integration and how the per-

ceived uncertainty and structural complexity

affect the importance of different integration

mechanisms used. Four case programs from

four companies were chosen as a source of

empirical data. Data collection in the selected

case programs was multifaceted and included

in-depth interviews, questionnaires, and docu-

ments and archives. Fifteen integration mecha-

nisms were identified and further categorized

into five different classes based on the formal-

ity of the mechanism and whether the integra-

tion mechanism is personalized or

impersonalized in nature. This study provides

valuable insights for both researchers and pro-

gram managers challenged to introduce strate-

gic or large-scale changes in organizations.

The study demonstrates that proper mecha-

nisms for inter-project integration are depend-

ent on the uncertainty and complexity of the

program, and that the proper integration strat-

egy in multi-project programs should allow the

use of various alternative mechanisms for

information delivery.

Keywords: inter-project integration;

project uncertainty; structural complexity;

information delivery


Vol. 37, No. 3, 49-61, ISSN 8756-9728/03

Introduction

Project management researchers have recently started to recognize that proj-ects and project management do not only represent operational tools toorganize minor tasks, but strategically important organizational capabili-

ties (Artto & Dietrich, 2004; Cleland, 2002; Gareis, 2004). This ongoing discus-sion on the strategic role of projects has led to an emergence of a novel researcharea related to management of multiple simultaneous projects organized asmultiproject programs. Multiproject programs represent vehicles that areincreasingly used to develop and implement strategic organizational changes,too complex or vague in their objectives to fit into the traditional project man-agement frame.

Several authors have presented their concerns that the project managementliterature is too heavily based on the ideology that projects are fundamentallysimilar (Milosevic &Patanakul, 2002; Shenhar, 2001; Shenhar & Dvir, 1996).Guided by these concerns, some research attempts have focused on factors thatmake projects essentially different from each other. A project’s size, uncertainty,complexity, and pace are examples of factors that are suggested to have majorimpacts on a project’s execution strategy (Milosevic and Patanakul, 2002;Shenhar, 2001; Shenhar and Dvir, 1996, Tatikonda and Rosenthal, 2000). Thesefactors resemble those suggested in classical contingency theory, in which differ-ent modes of organizing are explained by complexity, uncertainty and size(Donaldson, 2001). Thus, a similar kind of thinking is starting to emerge amongproject management researchers.

Researchers studying programs and their management have observed a needto extend the emerging contingency thinking from single-project context to mul-tiproject context (Pellegrinelli, 1997; Ribbers & Schoo, 2002; Vereecke, Pandelare,Deschoolmeester, & Stewens, 2003). However, the existing literature on programmanagement is still heavily based on the “one-size-fits-all” thinking. Moreover, itis not sufficiently explored to determine whether the results from the studies oncontingent single-project management apply to multiproject setting.

This study aims to open up the contingency view to program management.To be more exact, this study focuses on the problem of inter-project integrationand how the perceived uncertainty and structural complexity affect the perceivedimportance of different integration mechanisms used. Two research questionsguide this study:

PERTTU DIETRICH, Helsinki University of TechnologyBIT Research Centre

ABSTRACT


• What kind of different mechanisms are used to ensureeffective integration between different projects in intra-organizational development programs?

• How does the perceived uncertainty and structuralcomplexity affect the perceived importance of themechanisms?

• In order to answer the research questions, this studyreports findings from the empirical analysis of inter-project integration mechanisms in four case programs.

Problem of Integration

The problem of integration is a consequence of organiza-tional fragmentation. It is proposed that the external require-ments emanating from the environment leads tosegmentation of organizations into various units (subsys-tems), each having its own responsibilities and tasks(Lawrence & Lorsch, 1967). Organizational segmentationenables organizational subsystems to focus the attentioneffectively on a particular problem or task. However, in orderto accomplish the overall purpose of the organization, theseorganizational subsystems have to be linked together(Lawrence & Lorsch, 1967; Thompson, 1967). In organiza-tion theory, the management of the linkages among differentorganizational subsystems is called integration or coordina-tion (Hage, Aiken, & Marrett, 1971; Van de Ven, Delbecq, &Koenig, 1976).

Different studies in the organizational field reveal thatthe integration between different tasks or activities oftendetermines how effectively and efficiently the overall goalsare achieved (Gittell, 2002). For example, in product devel-opment, the way that the work is broken down and the inte-gration among different tasks has a significant impact onproductivity, quality, and development time (Clark &Fujimoto, 1991; Cohen & Regan, 1996). Gittell (2002)noted that similar kinds of results have been achieved inapparel production (Albernathy, Dunlop, Hammond, &Weil, 1999), air travel (Gittell, 2001), and healthcare deliv-ery (Argote, 1982).

Three different studies have had major impact onincreasing our understanding of organizational integra-tion. First, Lawrence and Lorsch (1967) proposed that theappropriate way for integration among different organiza-tional units is dependent on the degree of differentiationamong the units. Moreover, in their study, Lawrence andLorsch found that the level of differentiation is consistentwith the diversity of the different parts of the environ-ment. Thus, they concluded that the integrating mecha-nisms in an effective organization are consistent with thediversity of the environment so that, the more diverse theenvironment, the more differentiated and integrated the effective organization.

Second, Thompson (1967) suggested that the type ofinterdependence among organizational tasks determinesthe appropriate integration mechanisms in organizations.He categorized interdependencies among different organi-zational tasks into pooled, sequential, and reciprocal. Wheneach task delivers a discrete contribution to the whole and

the delivery process is independent on delivery processes ofother tasks, it is called pooled interdependence. Second,when the output of one task is an input for a second, it is aquestion of sequential interdependence. Finally, reciprocalinterdependence means that the output of each taskbecomes input for others. In addition, Thompson (1967)argued that when the interdependencies among organiza-tional tasks grow from pooled to reciprocal, integrationamong tasks through rules and procedures does not sufficeanymore, but participatory mechanisms such as mutualadjustments are needed to deliver new information duringthe process of action.

Finally, Van de Ven, Delbecq, and Koenig (1976) pro-posed that the use of different integration mechanisms iscontingent on three different factors: perceived task uncer-tainty, work flow interdependence, and work unit size. Theirstudy on integration modes in 197 formal work unitsexposed that integration through impersonal mechanisms,such as plans and schedules, is negatively correlated withperceived task uncertainty and positively correlated withwork unit size. In addition, they found that the use of hori-zontal communication channels is positively correlatedwith the perceived task uncertainty. Moreover, the use ofscheduled meetings as integration mechanisms wasobserved to correlate positively with perceived task uncer-tainty and workflow interdependence. Finally, they foundthat perceived task uncertainty correlated positively with theuse of unscheduled meetings as an integration mechanism.

The three studies have all contributed to research onintegration by showing that different kinds of conditionsexternal and internal to the organization lead to differentkinds of integration requirements, and that the effectivenessof integration is dependent on the fit between selected inte-gration mechanisms and the existing integration needs.

Within organization theory, the studies of integrationare largely focused on the integration mechanism amongdifferent parts of the “permanent organizational arrange-ments,” more precisely integration between formal workunits (Van de Ven et al., 1976) or functional departments(Hage et al., 1971; Lawrence & Lorsch, 1967), to mention afew. Another area of interest has been integration in teamsor groups (Gittell, 2002; Perlow, Gittell, & Katz, 2004). Evenif the problem of integration has been studied extensively indifferent kinds of organizations and in team and grouparrangements, relatively little is known about integration incomplex multiproject entities—i.e., programs.

Programs are multiproject entities that differ from the“permanent” organizations through their temporally limit-ed life, and through their action orientation. Programs areoften characterized by a combination of uncertainty relatedto goals and tasks, and complexity emanating from largesize and numerous dependencies among different activi-ties. In addition, programs require the involvement ofmany individuals and the integration of knowledge fromvarious disciplines, and are constantly subject to influencesand development emanating from the external environment(Pellegrinelli, 2002). Consequently, integration requirements


for multiproject programs are different from the integrationrequirements of permanent organizations. Furthermore, it isproposed that programs differ fundamentally from singleprojects because they often produce not just a single, clearlydefined deliverable, but rather multiple deliveries. In addi-tion, single projects are often focused on delivering an assetor a change, whereas programs aim to produce strategic orextra-project objectives (Pellegrinelli, 1997).

The empirical studies on integration in multiple-projectcontexts are relatively few, if any. However, some empiricalstudies on integration in the single-project environment havebeen accomplished that might help us to understand someaspects of integration in the multiproject environment. First,Andres and Zmud (2001) studied the effects of task interde-pendence, integration strategy, and goal conflict on the suc-cess of software projects through laboratory experiment. Theresults of the study revealed that organic integration strategycharacterized by decentralized structure, informal communi-cation and cooperative decision-making provided higherproductivity than mechanic integration strategy character-ized by centralized structure, formal communication, andunilateral decision-making. In addition, organic integrationstrategy was found to be especially effective when highlyinterdependent tasks were included in the project.

Second, Kraut and Streeter (1995) studied integrationtechniques in software development projects. They definedfive categories for different integration techniques. First, for-mal impersonal integration procedures referred to writtenrequirements documents, modification request tracking anddata dictionaries. Second, formal interpersonal integrationtechniques referred to requirement review meetings, statusreview meetings, and code inspection meetings. Third, infor-mal interpersonal procedures referred to unscheduled groupmeetings or co-location of requirements and design staff.Fourth, electronic communication—such as electronic mailand electronic bulletin board—was classified as one distinctintegration technique. Finally, interpersonal networks referredto integration through individuals’ interpersonal contactsoutside the projects. The results of their study revealed thatthe use of formal impersonal, and interpersonal, procedurescorrelates positively with the size of the project. The study alsoshowed that informal interpersonal procedures were usedespecially in the planning stage of the project. In addition, theresults suggest that electronic communication was used moreoften when the project was dependent on other groups in theorganization. Finally, the use of interpersonal networks corre-lated positively with a project’s small size, certainty anddependency of input from other groups.

Third, Nidumolu (1996) studied the affect of require-ment uncertainty and integration mechanisms on the per-formance of 64 information systems projects. The results ofthe study revealed that the vertical integration through deci-sions by authorized entities, such as project managers or steer-ing committees, enables project teams to reduce project riskand uncertainty, and horizontal integration through mutualadjustments and communications correlates with improvedproject performance.

Finally, Adler (1995) examined integration in 13 inter-departmental product development projects. The distinctintegration mechanisms characteristic of the product devel-opment context that they observed in their study includecompatibility standards, capabilities development sched-ules, coordination committees, joint development, designrules, tacit knowledge, producibility design reviews, jointteams, exception resolution plans, and transition teams. Theresults of the study reveal that the use of integration mecha-nisms is contingent on task analyzability and novelty. Theyfound that decreasing analyzability in the projects requiresadditional integration effort in the later phases of the proj-ect, and increasing novelty in the projects requires the use ofmore interactive integration mechanisms, such as mutualadjustment and team coordination.

Based on the previous studies of integration in perma-nent organizations (Lawrence & Lorsch, 1967; Thompson,1967; Van de Ven et al., 1976) and in single-project context(Adler, 1995; Andres and Zmud, 2001; Kraut & Streeter,1995; Nidumolu, 1996), it is assumed that uncertainty andcomplexity serve as principal contingency factors, explain-ing the adoption of different integration mechanisms inmultiproject programs. However, since the multiprojectcontext differs from the permanent organizations’ context,and from single-project context, it is expected that the inte-gration needs and the strategies to respond to those needswill be different in multiproject context. This study aims toextend the emerging contingency thinking from single-project context to multiproject context by exploring theeffects of complexity and uncertainty on inter-project inte-gration in multiproject programs. The methods for theempirical exploration of the phenomenon are explained inthe next section.

Methodology

Data CollectionInductive, multiple case-study strategy was selected for thisstudy (see Eisenhardt, 1989). Four case programs from fourdifferent companies were chosen as a source of empiricaldata. Of the four selected case programs, one was alreadycompleted and three were ongoing. Data collection in theselected case programs was multifaceted and included in-depth interviews, questionnaires, and documents andarchives. In each case, 6 to 11 informants were interviewed. Atotal of 33 interviews were conducted, of which two wereopen and 31 semi-structured. Notes were taken during all theinterviews. In addition, of the 33 interviews, 30 were tape-recorded and transcribed. The informants served variousroles in the case programs, such as program managers, proj-ect managers, project employees, and members of the pro-gram steering group. The collection of empirical data wasperformed during the three-month period from Septemberto November of 2005.

In order to measure the perceived uncertainty and effec-tiveness of integration in case programs, the interviews werecomplemented with 30 structured questionnaires. The fill-ing out of questionnaires was integrated into the interviews.


Researchers monitored and tape-recorded the filling out ofquestionnaires in order to ensure that the respondentsunderstood the questions. This process of monitoring alsogave respondents the opportunity to comment on the ques-tions and to explain their choices, when necessary. In thequestionnaire, the 7-point Likert scale was used.

Data AnalysisThe first phase of the analysis of qualitative interview dataincluded in-depth, within-case analysis. This within-caseanalysis phase resulted in an initial list of different inte-gration mechanisms that was further complemented dur-ing the cross-case analysis phase. Second, in order tocompare different cases the level of perceived uncertainty,structural complexity, and perceived integration effective-ness was analyzed in each case. The analysis of perceiveduncertainty and effectiveness of integration was based onthe data acquired through questionnaires. The structuralcomplexity was defined based on the analysis of inter-views, and documents such as program plans, schedules,and monitoring reports.

Finally, the cross-case analysis included the compari-son of integration mechanisms in different cases. Thisfinal phase of the analysis resulted in a complete list of dif-ferent integration mechanisms and their perceived impor-tance for each case. Moreover, the cross-case analysisprovided a suggestion of the effects of perceived uncertainty,and the structural complexity of the importance of differentintegration mechanisms.

Case Programs

Overview of the Case ProgramsCase Alpha represents a strategic intra-organizational devel-opment program executed in a medium-sized, private-sectorFinnish organization. The program was initiated in March2000 by the CEO of the organization in order to respond tothe changes in the society’s monetary politics and to ration-alize the internal information delivery processes of theorganization. The results of the program were implementedin January 2002 and, as an outcome, the program produceda novel information system that supports the organization’srenewed internal business processes.

Case Beta is an ongoing development program in a largeinternational private sector-organization. The program wasset up at the beginning of 2004 with an objective to improveand develop organizational capabilities related to the man-agement processes in the customer interface. The plannedduration of the program was initially two years. But after suc-cessful outcomes, the role of the program has shifted from ashort-term, temporally-limited development activity to amore stable form of organization of the development of capa-bilities by projects.

Case Gamma represents an ongoing renewal programin a large, international private-sector organization. The pro-gram was initiated in spring 2004 with an objective to devel-op and launch a new operations management system in onebusiness unit of the organization. The system—planned to

launch in spring 2007—is used to integrate and unify prac-tices with several customers of the organization.

Case Delta is an ongoing strategic organizational devel-opment program in a large, public-sector Finnish organiza-tion. The program was established in December 2004 by thehead of the organization in order to develop services provid-ed by, and internal processes of, the organization. The aim ofthe program is to both increase the quality of the services andthe intra-organizational processes, and to decrease the unitcosts related to producing service products for customers.

Analysis of Effectiveness in Inter-Project IntegrationIn order to study the challenge of inter-project integration incase programs, it was essential to first measure how well theintegration efforts succeeded in the case programs. The eval-uation of integration effectiveness was based on the analysisof four different indicators: participants’ awareness of thesituation of different projects in a program, participants’awareness of the linkages between different projects in aprogram, adequacy of communication among differentprojects in a program, and the integrity of projects’ results.In order to measure the values for the indicators, eachinformant was asked to commit to four statements in a 7-point Likert scale. For more in-depth information of aver-aged values for each statement and the respective ranges inanswers, see Table 4 in Appendix 1.

The results of the analysis reveal that integration effec-tiveness in case companies varied from moderate (Alphaand Delta) to high level (Beta and Gamma). From an inte-gration perspective, the cases of this study do not representeither extremely successful ones or total failures.

Because all the case programs are characterized by eithera moderate or high level of averaged integration effective-ness, it can be assumed that adopted integration mecha-nisms in each case fit with the integration requirements ofthe respective case. However, the fact that the range of opin-ions of integration effectiveness is rather wide, especially inthe case of Delta, indicates that there might be the potentialin the case programs to improve the effectiveness of integra-tion and thus possibly improve the performance of the pro-gram organization. The discussion of whether theimprovements in integration effectiveness are necessary—and whether they would enhance the performance of theprogram radically or would only lead to minor improve-ments and would thus require an excessive increase inresource utilization—is left out of this study. Instead, it isassumed that the environment forces program organiza-tions to adopt forms of integration that are appropriate fortheir purposes.

Analysis of Structural ComplexityIn order to evaluate the structural complexity in the caseprograms, two different indicators were analyzed: the num-ber of projects in the program and linkages among the proj-ects. It was assumed that an increase in both number ofprojects and linkages among them will increase the struc-tural complexity of the program.


First, because the number of projects may vary during theexecution of the program, it was decided that the number ofprojects refers to the maximum number of concurrent projectsin the program. Second, in order to map the network of linkagesamong different projects, program managers and project man-agers in each case were asked to draw the organization of theprogram with different projects. In addition, they were asked toindicate with arrows existing linkages among the projects. Theconcept of linkage was explained to refer to interdependencybetween two projects that affects the execution of either or bothof them. Furthermore, program managers and project managerswere asked to explain in their own words the nature of each link-age. The overall picture of linkages among different projects ineach case program was formed by integrating different drawingsand explanations provided by the program manager and projectmanagers. Table 1 includes descriptive numbers related to bothindicators of structural complexity.

The analysis of structural complexity revealed that thecase programs differ in the number of projects and in thenature of the linkage network among the projects. CaseDelta represents the largest program of the four cases interms of number of projects. The network structure in thiscase is highly fragmented. The program is divided into threedifferent categories, reflecting the existing structure of theparent organization. Furthermore, projects inside each cate-gory either serve as isolated entities or form small clusters oftwo to five projects. The linkages among projects that existin different clusters are rare. Projects inside the same clustersare linked to each other through a common goal. However,the execution of different projects is relatively independentfrom each other. Thus, based on the categorization pro-posed by Thompson (1967), it is concluded that thedependency among the projects is mainly the pooled type inthis program.

Case Gamma is the smallest program of the four casesin terms of number of projects. The structure of the link-age network is very dense because the program representsa coherent entity. The execution of each project is depend-ent on the others. Dependencies among the projects aresequential in nature. Each project in the program providessome input for other projects, but at the same time oper-ates as an independent entity.

The cases Alpha and Beta are approximately the samesize in terms of the number of projects. The network oflinkages in both cases is relatively dense, case Alpha hav-ing, however, on average more linkages per project thancase Beta. The structure of linkage network in neither ofthe cases is as homogenous as in case Gamma. In caseBeta, dependencies among the projects are either pooledor sequential. In the case Alpha the dependencies betweenthe projects are either sequential or reciprocal in nature.

Analysis of UncertaintyThe perceptional uncertainty related to execution of theprograms was measured through two concepts: noveltyand analyzability. First, novelty was used to refer to thedegree to which the program was different from the previ-ous programs executed in the organization from the tech-nological perspective, the structural perspective, and theresource or competence requirements perspective.Second, analyzability was used to refer to the degree ofunderstanding at the beginning of the program relatedto the program’s goals, schedule, budget, resource needs,working methods, and internal dependencies. In thisstudy, it was assumed that the level of novelty is directlyproportional to the perceived uncertainty, and that thelevel of analyzability is reversibly proportional to theperceived uncertainty.

Structural Alpha Beta Gamma DeltaCharacteristics

Maximum number of concurrent projects

Average number of linkages from/to a project

Number of linkages from/to a project

Description of the inter-project linkage network of the program

6

3,67

2 to 4

Network of linkages between projects dense, interdependen-cies between projects mostly reciprocal, high level of required integration

5

2,8

1 to 4

Network of linkages between projects relatively dense, interdependencies between projects mostly sequential, moderate level of required integration

3

2

2

Network of linkages between projects very dense, interdependencies between projects sequential, moderate level of required integration

40

< 1

0 to 2

Network of linkages between projects sparse, interdependencies between projects mostly pooled, low level of required integration

Table 1: Characteristics of structural complexity in the case programs


In each case, the level of novelty and analyzability wasmeasured through 10 7-point Likert scale statements. Theperceived level of novelty and analyzability related to eachcase program is summarized in Figure 1. For more in-depthinformation of averaged values for each statement andrespective range in answers, see Table 5 in Appendix 1.

The perceived levels of novelty and analyzability revealmajor differences among the case programs. In Case Alpha,the perceptual uncertainty is the highest. Case Alpha repre-sents a highly novel program with a moderate level of ana-lyzability. Case Beta is highly analyzable in all measureddimensions, and not very novel from technological,resource or structural perspectives. Programs Delta andGamma are characterized by a moderate level of novelty andanalyzability.

The wide range of answers (Table 5, Appendix 1) ineach case can be explained by several observed facts. First,each of the cases’ programs represents a complex collectionof different projects, some of which are more uncertain innature than others. Second, all case programs involved vari-ous individuals representing different disciplines and differ-ent organizational levels, such as shop-floor-level specialists,professional project managers, middle-level managers, andeven representatives of top management. Due to their dif-ferent positions in permanent organization, all these peoplehave different perceptions of novelty and analyzability.Furthermore, different individuals have different experienceon projects and programs that finally affect their concep-tions of novelty and analyzability.

Integration

Integration Mechanisms and Their ImportanceThe in-depth analysis of interview data revealed 15 differentintegration mechanisms. The analysis based on searchingidentifiable patterns (integration mechanisms) from thetranscribed interview data and from the filed notes. Theobserved patterns were coded using descriptive coding logic(Miles & Huberman, 1994). The codes changed and devel-oped during the analysis process, until the additional analy-sis no longer refined the patterns. The process of data

analysis proceeded iteratively, including various compar-isons among existing theories and empirical data.

The integration mechanisms, obtained as a result of theanalysis, were further categorized into five different classes,based on the formality of the mechanism and whether theintegration mechanism is personalized or impersonalized innature. Categorization of the integration mechanisms ismodified from that proposed in the previous studies of Vande Ven et al. (1976), Kraut and Streeter (1995), and Tsai(2002). The respective categories for the observed integra-tion mechanisms in this study are: formal group mecha-nisms, informal group mechanisms, formal personalmechanisms, informal personal mechanisms, and formalimpersonal mechanisms (Table 2).

Group modes of integration refer to mechanisms inwhich mutual adjustments occur in a group of occupants(more than two) through meetings. Formal group mecha-nisms refer to meetings that are planned or scheduled,whereas informal group mechanisms refer to autonomous,unscheduled meetings. The analysis of data revealed threedifferent types of formal group mechanisms: regular pro-gram core team meetings, regular decision-making commit-tee meetings, and the collocation of program employees.The third mechanism does not represent a meeting in itsdeepest sense; however, it is included in this categorybecause it was mentioned in several cases as an importantmechanism that enables face-to-face communicationamong several individuals. Three different types of informalgroup mechanisms for integration were found: autonomousunscheduled face-to-face meetings among several projectmanagers, facilitated informal face-to-face meetings amongseveral project managers, and informal network meetings.The informal network meetings refer to situations thatenable participants of the program organization to meeteach other outside the program. Project management semi-nars and special focus group meetings are examples of net-work meetings that were mentioned in the interviews.

Personal mode of integration refers to the mecha-nisms in which individual role occupants make mutualtask adjustments through vertical or horizontal commu-nication. Formal personal integration mechanisms arethose in which the use of individual role occupants asintegrators is planned, whereas informal personal integra-tion mechanisms refer to integration through theautonomous behavior of an individual role occupant.Three different formal personal integration mechanismswere found. First, a program manager was used as a mes-senger who participates actively in execution and deci-sion-making in different projects, serving as an integratorwho delivers information between projects. Second, thesame employees and project managers were used asliaisons, participating in several projects in order toensure information sharing among projects. Third, anexternal consultant was used as a coordinator, monitoringthe execution of projects and delivering informationabout critical points and boundaries among projects. Twoinformal personal integration mechanisms were found:

7,00

5,00

3,00

1,00

High

Moderate

Low

1,00 3,00 5,00 7,00

Low Moderate High

Analyzability

Nove

lty

Alpha

Gamma

Beta

Delta

Figure 1: Uncertainty in the case programs


direct contact between project managers or projectemployees via e-mail or phone, and direct face-to-facecontacts between project managers or project employees.

Formal impersonal integration mechanisms refer tothe use of a codified blueprint of action that is imperson-ally specified. In-depth analysis of each case revealed sev-eral integration mechanisms that fell into this category.The observed mechanisms are the use of formal docu-ments and reports, formal plans and schedules, definitionof roles and responsibilities, and the use of standardizedinformation systems such as a common database.

In order to evaluate the importance of different inte-gration mechanisms, the informants were asked to specifythe three mechanisms that they considered to be the mostimportant from an information acquisition perspective,and to rank these three mechanisms from most importantto least important. Furthermore, these perceptional evalu-ations of each informant were quantified by assigning themost important mechanism four points, the second-most-important three points, and the third-most-important twopoints. All other mechanisms mentioned in the interviewreceived one point each.

In order to calculate the importance of each mechanismin each case, the points assigned each informant (in the

case) were summed. Thus, the importance of integrationmechanism i in case X (IMP) was calculated using Equation 1:

(1)

where denotes the importance of integration mechanism iperceived by informant j in case X, and m denotes the num-ber of informants in case X. Moreover, in order to comparethe results among the cases, the relative importance of theintegration mechanisms was calculated. The relative impor-tance of integration mechanism i in case X (RIMP) was ana-lyzed using Equation 2:

(2)

where N indicates the total number of integration mecha-nisms found in the study.

Table 6 in Appendix 2 includes the summary of theresults of the quantification of perceived importance of dif-ferent integration mechanisms in each case. First, the resultsof the analysis reveal that in each case several different

Formal Group Mechanisms

1 Regular program core team meetings 2 Collocation of core persons 3 Decision-making committees

Informal Group Mechanisms

4 Autonomous unregular face-to-face meetings (between several project managers) 5 Facilitated informal meetings between several project managers 6 Integration through informal interpersonal network meetings

Formal Personal Mechanisms

7 Integration via liaisons (project employees or project managers program coordinator) 8 Integration through messenger (program manager) 9 External consultant as a coordinator

Informal Personal Mechanisms

10 Direct contact between persons via e-mail or phone 11 Direct personal face-to-face contacts between employees or project managers

Formal Impersonal Mechanisms

12 Information exchange through reporting and formal documents 13 Integration through plans and schedules 14 Organizing: definition of roles, responsibilities 15 Information database

Table 2: Observed integration mechanisms and categories for integration mechanisms

∑ ==

m

jXij

Xi MMIMP

1)(

))(),...,((

)(

1

XN

X

XiX

i MIMPMIMPMaxMIMPRIMP =

XijM


(8-11) integration mechanisms were used. In addition, therelative perceived importance of different integration mech-anisms changed case by case. In all the cases, formal groupmechanisms were seen as the most important. Also, infor-mal group mechanisms and informal personal mechanismswere seen as highly important. Formal personal mecha-nisms and impersonal mechanisms were only seen as mod-erately important. Second, analysis reveals how theperceived uncertainty and structural complexity affects theperceived importance of different integration mechanisms.The summary of integration mechanisms, uncertainty, andstructural complexity in each case is included in Table 3.

The Effects of UncertaintyThe cross-case analysis between case Alpha (high novelty) andcase Beta (low novelty) reveals that the novelty of the programseems to increase the importance of autonomous unsched-uled meetings among projects managers, the use of projectmanagers and employees as a messenger delivering informa-tion among the projects, and the use of an external coordina-tor enabling integration among the projects. Moreover, it wasobserved that, in case Delta, decision-making committees ofthe permanent organization were seen as more importantintegration mechanisms than in other case programs. In addi-tion, the analysis revealed that the more novel the program isto the organization, the less important are the formal plansand schedules from the inter-project integration perspective.A somewhat surprising result is that the less novel the pro-gram is for the organization, the more important the directface-to-face contacts among program employees or projectmanagers are seen as an integration mechanism.

The effects of analyzability of the program for theimportance of integration mechanisms did not appear veryclearly in this study because the cases represented only mod-erate (Alpha, Gamma, Delta) and high (Beta) levels of ana-lyzability. However, the importance of two integrationmechanisms differ remarkably among the case Beta, inwhich the analyzability of the program was high, and casesAlpha, Gamma, and Delta, which all represented moderateanalyzability. In case Beta, formal plans and schedules, anddirect personal contact among project managers or programemployees via e-mail or phone, seemed to be more impor-tant than in other less analyzable programs.

The Effects of ComplexityThe number of projects indicates the size of the program. Incase Delta, which represents a large program in terms ofnumber of projects, the interpersonal networks external tothe program were perceived as more important integrationmechanisms than in smaller programs. In addition, report-ing and formal documents played a more important rolethan they did in other case programs. Furthermore, a highnumber of projects seemed to decrease the importance ofdirect contacts among project managers or program employ-ees as an integrating mechanism among projects.

Finally, interdependence among projects was highest incase Alpha and lowest in case Delta. The cross-case analysis

revealed that the interdependence among projects seems toincrease the importance of autonomous unscheduled groupmeetings among project managers and the use of an exter-nal coordinator. Moreover, interdependence among theprojects decreased the importance of interpersonal net-works, reporting and formal documents, and the use of proj-ect employees or project managers as liaisons deliveringinformation between the projects.

Discussion and Conclusion

This study provides novel insights on integration in a multi-project context. First, the in-depth analysis of four multipro-ject programs results in fifteen different mechanisms thatare used to ensure proper integration among different proj-ects. Moreover, the different mechanisms seem to vary bothin their formality and to the extent to which they are per-sonalized. Furthermore, the perceived importance of eachmechanism seems to be different in each case.

Second, by expanding the emerging contingency think-ing from a single-project context to a multiproject environ-ment, the study demonstrates how the classicalcontingencies, uncertainty and complexity, affect the per-ceived importance of observed integration mechanisms. Theresults of the study suggest that high uncertainty increasesthe importance of an informal group mode of integrationand a formal personal mode of integration. In addition, theresults reveal that the high level of uncertainty decreases theimportance of formal impersonal integration mechanismsand informal personal integration mechanisms. The resultsof the study partly support Daft and Lengel’s (1986) “theo-ry” of information requirements effects to the structuraldesign of the organization. However, the results also revealthat, rather than emphasizing either integration mecha-nisms with high capacity to process information or integra-tion mechanisms with low capacity to process information,the use of various different integration mechanisms withdifferent information processing capabilities is important ina program context.

The analysis of complexity in the case programs also pro-vided useful explanations for integration. Surprisingly, thedistinctions among formal and informal, or personal, group,and impersonal did not seem to produce any significant dif-ferences among the cases. Nevertheless, the analysis of indi-vidual mechanisms among the cases reveals that a largeamount of projects increases the importance of formal deci-sion-making committees, and reporting and formal docu-ments in integration. In addition, informal interpersonalnetworks external to the program seem to be importantmechanisms to complement otherwise hierarchically-orient-ed integration when the amount of projects is large. Theresults of the study support those of Mintzberg (1979), whohas acknowledged that a rich network of informal communi-cation is, from an organization’s perspective, a highly impor-tant complement to otherwise relatively formal structures.

Finally, the study exposed some effects of inter-projectinterdependence on the importance of integration mecha-nisms. The in-depth analysis of the inter-project network


Alpha Very High Moderate Low High

Beta Low High Low Moderate

Gamma Moderate Moderate Low Moderate

Delta Moderate Moderate Very High Low

Integration strategy utilizes various channels of information delivery in order to assure proper inter-project integration. Formal and informal group mechanisms of integration are appreci-ated as highly important. The most important mechanisms for integration are regular program core team meetings and informal irregular ad hoc face-to-face meetings among several project managers. Formal and informal personal mechanisms of integration are perceived as moderately important. Program manager plays an especially important role as a liaison delivering information among different projects. Impersonal mechanisms of integration are low in importance.

Integration among different projects is primarily based on formal group mechanisms and informal personal mechanisms of integration. Formal program core team meetings and direct face-to-face or e-mail contact among project managers or project employees are highly important mechanisms in coordination. Impersonal integration mechanisms, especially integration through formal plans and schedules, is perceived as relatively important. Informal group mechanisms and formal personal mechanisms of integration are not perceived as important from the inter-project integration perspective.

Integration strategy is heavily based on group modes of integration. Regular program core team meeting and facilitated informal meetings among project managers are the most important integration mechanisms in this case. Informal personal integration through direct contact among projects via e-mail or phone was perceived as relatively important. Also integration through impersonal vehicles such as a common database was seen as moderately important. Use of liaisons, messengers or coordinators was not perceived as important from the integration perspective.

Integration is based on information delivery in parent organization’s permanent decision-making committees. This strongly hierarchy-based integration strategy is complemented with formal reporting practices that are perceived as moderately important. Informal interpersonal network meetings, and direct face-to-face contacts among projects support this mechanistic-oriented integration strategy. These mechanisms are also perceived as relatively important from the integration perspective.

Case Uncertainty Complexity Integration Strategy

Novelty Analyzability No. of Projects Interdependence Among Projects

Table 3: Inter-project integration mechanisms, uncertainty and complexity


within each case and among cases revealed that the highamount of interdependency seems to create a need for atwo-fold structure. First, interdependence leads to the adop-tion of a separate coordinator serving as a formal linkageamong different projects. In addition, interdependenceamong projects induces autonomous informal meetings inorder to respond to local emerging problems.

The analysis of structural contingencies in multipro-ject environments reveals that not all organizational theo-ries apply in a complex multiproject context. Neither areall ideas from the traditional single-project context appli-cable to programs. The study provides valuable insights forboth researchers and program managers challenged tointroduce strategic or large-scale changes in organizations.First, the study reveals that, in addition to the formal plan-ning perspective, emphasized in managerial guidebooks,informal mechanisms are highly essential from an integra-tion perspective. Moreover, the study demonstrates thatproper mechanisms for inter-project integration aredependent on uncertainty and the complexity of the pro-gram. Thus, “one-size-fits-all” solutions do not lead todesired results. It should be noted that, in all types of pro-grams, the proper integration strategy should allow the useof various alternative mechanisms for information deliv-ery. The key question is: what kinds of mechanisms are themost essential in each situation?

When interpreting the results of this study, it should benoted that this research focused on intra-organizationaldevelopment programs. Thus, other types of programs—e.g.,research programs or policy programs—might require dif-ferent types of integration mechanisms that have not beenobserved in this study. Furthermore, it is essential to under-stand that this research is explorative in nature and that thelogic of analysis is based on an in-depth understanding of arelatively small number of cases. Thus, the results of thestudy should be seen as propositions rather than statistical-ly verified laws. Finally, more research is clearly needed totest the results of this study and to explore additional con-tingencies and respective management strategies in a multi-project context. An important area of further research is theexploration of the way that the importance of different inte-gration mechanisms change and develop during the pro-grams’ “lifecycle.”

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Table 4: Perceived effectiveness of inter-project integration in the case programs

Appendix 1

PERTTU DIETRICH works as a researcher and project manager in BIT Research Centre in Helsinki University of Technology.

Mr. Dietrich has several years experience on research and development work with public and private sector organizations.

His research interests include the following themes: project management, multiproject management, program

management, coordination theory, contingency theory, innovation management, and strategy management.


Uncertainty Alpha Beta Gamma Delta

Statement

NOVELTY

The outcome of the program differed remarkably from the previous programs in the organization from the technological point of view

The execution of the program differed remarkably from the previous programs in the organization from the technological point of view

The resource and completence needs of the program differed remarkably from the previous programs in the organization

In the program there were much more dependencies between projects compared to previous programs in organization

Average

ANALYZABILITY

In the beginning of the program there was understanding about the dependencies (related to projects’ execution) between different projects in a program

In the beginning of the program there was understanding about the work methods to be used in projects

In the beginning of the program there was defined a clear schedule for the projects in the program

In the beginning of the program there was defined clear budget for the projects in the program

In the beginning of the program there were defined measurable goals defined for the projects in the program

In the beginning of the program the resource needs were defined for the projects in the program

Average

No.

1

2

3

4

5

6

7

8

9

10

Average

6,33

5,83

6,00

6,17

6,08

5,00

4,67

6,33

2,60

5,50

4,00

4,68

Range

4 to 7

3 to 7

5 to 7

5 to 7

4 to 6

2 to 6

5 to 7

1 to 4

4 to 7

2 to 5

Average

3,00

2,50

2,63

3,13

2,81

4,75

5,13

6,00

6,38

4,57

4,86

5,28

Range

1 to 6

1 to 6

2 to 6

1 to 7

2 to 7

3 to 6

4 to 7

5 to 7

3 to 6

2 to 7

Average

3,8

2,6

3,4

5,2

3,75

5,00

5,00

5,60

5,20

4,40

3,20

4,73

Range

2 to 5

2 to 3

2 to 5

4 to 6

2 to 6

2 to 6

3 to 7

2 to 7

2 to 7

2 to 6

Average

4,00

3,56

4,22

4,22

4,00

3,56

3,67

5,33

3,78

4,56

3,33

4,04

Range

2 to 6

1 to 5

1 to 6

1 to 6

2 to 6

2 to 7

2 to 7

2 to 7

2 to 7

2 to 7

Appendix 1 (cont.)

Table 5: Perceived level of uncertainty in the case programs


Appendix 2

No. Observed Integration Mechanisms Alpha Beta Gamma Delta

Formal Group Mechanisms

Regular program core team meetings

Collocation of core persons

Decision-making committees

Informal Group Mechanisms

Autonomous unregular face-to-face meetings (between several project managers)

Facilitated informal meeting between several project managers

Integration through informal interpersonal network meetings

Formal Personal Mechanisms

Integration via liaisons (project employees or project managers program coordinator)

Integration through messenger (program manager)

External consultant as a coordinator

Informal Personal Mechanisms

Direct contact between persons via e-mail or phone

Direct personal face-to-face contacts between employees or project managers

Formal Impersonal Mechanisms

Information exchange through reporting and formal documents

Integration through plans and schedules

Organizing: definition of roles, responsibilities

Information database

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

1,00

0,13

-

0,81

-

-

0,06

0,50

0,31

0,56

0,13

0,31

-

0,13

-

1,00

0,44

-

-

0,06

-

0,19

-

-

0,69

0,81

0,31

0,50

0,06

0,13

1,00

0,08

-

0,31

0,92

0,08

0,15

0.23

-

0,54

0,31

-

0,08

-

0,46

-

-

1,00

-

-

0,48

0,28

0,20

-

0,16

0,40

0,60

-

-

0,36

(*) Number 1,00 indicates the most important integration mechanisms in each case and numbers < 1,00 indicate the relative importance of each other mechanism in the case, “-” indicates that integration mechanism was not observed in the case.

Table 6: Relative perceived importance of integration mechanisms in the case programs (*)

This paper examines and identifies core

dimensions of assessment frameworks,

including five core requirements for con-

ducting assessments, two key processes

of assessing organizations (audit and

self-assessment), and two dimensions of

improving performance (delivering data

and applying data). It discusses the evo-

lution of using maturity models to assess

organizational capabilities and the devel-

opment of maturity models to assess

project management competencies. It

then outlines a five-level project manage-

ment maturity model that the authors

used to assess the way 550 international

organizations practice project manage-

ment. The paper lists the challenges,

advantages, and disadvantages of using

this model; it identifies the practices syn-

onymous with improvements in demon-

strated maturity. It also compares the

results of data collected since this bench-

marking study’s inception, results that

show underlying project management

trends, such as changes in organizational

capabilities and performance. It reviews

the impact of these trends on the studied

organizations and the way they manage

their projects. It concludes by detailing

four key—and unexpected—results.

Keywords: project management maturi-

ty; organizational capabilities; organiza-

tional assessments


Vol. 36, No. 3, 62-73, ISSN 8756-9728/03

Introduction

T he assessment of organizational capabilities is a core dimension of organi-zational learning and improvement. As organizations strive to attain andretain competitive advantage, an understanding of their capabilities and how

these compare with competitors and best-in-class organizations is essential.Within the project management sphere, assessment frameworks have becomeincreasingly prevalent, and, in particular, the development and application ofproject management maturity models. The majority of frameworks have beendeveloped in the last three to five years.

Although there has been a growing emphasis and focus on assessing projectmanagement capabilities, there is little data that is available to provide an objec-tive understanding of the current state of practice. What data does exist tends to beproprietary in nature, and as a result there is little information in the publicdomain that organizations can utilize to understand and benchmark their capa-bilities. More particularly, there is very little longitudinal data of project manage-ment capabilities and performance over time. Because principles of organizationaldevelopment require the ability to progressively evaluate progress (Nielsen &Kimberly, 1976), lack of a longitudinal view of project management capabilityseriously curtails the ability of organizations to identify key drivers of project man-agement improvement.

This paper provides a review of the literature associated with organizationalassessment, identifying the core dimensions that assessment frameworks need toaddress. It discusses the rise of maturity models as a means of assessing specificfunctional capabilities within organizations, and explores the history and devel-opment of one particular model for assessing project management maturity.Although the model discussed in this paper is proprietary in nature, the paperexplores the results of a series of benchmarking studies that have placed assess-ment results in the public domain. Most importantly, it provides an initial longi-tudinal analysis of the changes in capabilities and performance of organizationsin managing their projects.

Approaches to Organizational AssessmentOrganizations continually engage in assessment activities. According to Nielsenand Kimberly (1976), this is a product of the organizational need to rationallysearch for opportunities for continued improvement, assign priorities, and make

ABSTRACT

LONGITUDINAL ANALYSIS OFPROJECT MANAGEMENT MATURITY

MARK MULLALY, School of Business, University of Alberta



decisions. To support this assessment, they identify five corerequirements for assessment:

• The availability and interpretation of information, ina form that is of use and at the time that it is required

• An understanding of what has been assessed, with aclear understanding of the goals of the assessmentand a defined knowledge of the outcomes and conse-quences that result from the assessed resources andprocedures

• The availability of relevant and appropriate measuresof the consequences being assessed

• A data collection strategy by which to gather theappropriate measures

• An assumption of the cause-and-effect relationshipsthat define the beliefs and support the decisions to bemade as a result of the assessment.

Because these cause-and-effect relationships are oftenoversimplified, and the causal linkages are generally morecomplex than the decisions and beliefs imply, from the per-spective of Nielsen and Kimberly they are nonetheless nec-essary in order to make meaningful interpretations.

The increasing prevalence of knowledge work createsadditional challenges in assessment (Tuttle & Romanowski,1985). Although the underlying performance of an organi-zation can be measured by five dimensions—efficiency, pro-ductivity, effectiveness, quality, and quality of work—theseare less easily measured as the complexity of work increasesand its tangible nature declines. Direct outcomes, wherethere is a direct relationship between outcome and output,are more reliant upon measures of efficiency, productivity,and quality. Indirect outcomes, where there is a greater vari-ability of potential outputs, and greater complexity inchoosing the right output for the desired outcome, places amuch greater importance on the assessment of effectiveness,and to a lesser extent productivity and efficiency.

Although the core emphasis of all assessments is onorganizational learning (Hellsten & Wiklund, 1999), themajority of assessment frameworks draw on the underlyingprinciples of total quality management, rooted in the plan-do-check-act cycle of Deming (1993). These assessments aretypically divided into two key assessment processes: auditand self-assessment (Karapetrovic & Willborn, 2001). Auditscollect and compare data against a reference standard, eval-uating the degree to which the criteria have been fulfilled,whereas self-assessments are designed to evaluate thestrengths, weaknesses, and opportunities for improvementagainst a number of dimensions. Audits are primarilydesigned to support an external driver of compliance,whereas self-assessments are more typically internallyfocused on improvement.

Karapetrovic and Willborn suggested that not only canassessments provide a means of performance measurement,but by their nature they are also enablers of improved per-formance, particularly with respect to self-assessments. Tobe effective in improvement, however, requires two dimen-sions: delivery of the survey data itself, as well as the impact

and resulting actions resulting from delivery of the surveydata (Conlon & Short, 1984). Conlon and Short stated thatthe way in which information is delivered is an importantdeterminant of the effectiveness of an assessment.Effectiveness has been found to increase based on memberinvolvement, where the receiving audience is prepared forthe assessment feedback and where they are able to under-stand and take action on the data received.

A large number of assessment frameworks have beenadopted organizationally in recent years. Audit frameworksare generally tied to external quality standards such as thevarious versions of ISO 9000. Tools for self-assessment arealso rooted in total quality management, generally based onquality award criteria, such as the Malcolm BaldrigeNational Quality Award (MBNQA) and the EuropeanQuality Award (EQA). Although these provide generalframeworks for evaluating organizational effectiveness, therisk with any assessment is that it will lead to a long list ofstrengths and weaknesses that are not tied to any specificstrategies leading to sustainable competitive advantage(Duncan, Ginter, & Swayne, 1998). Furthermore, customersof assessment frameworks need to cast a critical eye on whateach assessment offers, recognizing that their underlyingapproaches and ability to support differentiation vary sig-nificantly (Biazzo & Bernardi, 2003).

Role of Maturity ModelsModels such as those used by the MBNQA and EQA supportan overall assessment of organizational excellence. Similarforms of self-assessment addressing specific functional areasof concern have been popularized through the variousmaturity models. The concept of maturity models has beenfamiliar for some time; however, their popularization as ameans of assessment has been more recent. One of the best-known maturity models, originally referred to as the capa-bility maturity model for software (CMM-SW) anddeveloped by the Software Engineering Institute (SEI) ofCarnegie Mellon University, has significantly increasedawareness and acceptance of the concept. Originallyreleased in 1991, the CMM-SW popularized the concept ofmaturity models as consisting of a series of levels across anumber of capability areas (Humphreys, 1992). Since thepopularization of the CMM and its siblings by SEI, a varietyof maturity models have been developed to support a rangeof functions, including innovation (Aiman-Smith,Goodrich, Roberts, & Scinta, 2005), strategic management(De Vries & Margaret, 2003), contract management (Garrett& Rendon, 2005), and even more specific purposes such asthe use of enterprise resource planning software (Holland &Light, 2001).

The application of maturity models to project manage-ment is comparatively recent. Despite their relative novelty,a large number of models have been released in recent years(Cooke-Davies & Arzymanow, 2003; Hillson, 2003; Ibbs &Kwak, 2000; Jachimowicz, 2003; Sawaya & Trapanese, 2004;Skulmoski, 2001). Many of those developed have adoptedthe framework and structure originally established by the


CMM, with five levels and a number of capability areas asthe focus for assessment. These maturity models have vary-ing levels of formality, and there is little documentation inthe public domain regarding their structure, contents,assessment approach, or results. Even less information isavailable as to the degree to which maturity models actual-ly support improvement in project or organizational results.The most widely known study of the relationship betweenmaturity and organizational results (Kwak & Ibbs, 2000)demonstrated no statistically significant correlation betweenprocess maturity and project results, despite the lack of hardresults an anecdotal link was claimed.

In evaluating the use and effectiveness of project man-agement maturity models, Jugdev and Thomas (2002)found that the claimed correlation between process capa-bility and project success of many maturity models has notbeen substantiated. For prospective customers seeking a rel-evant assessment framework, the failure of any one modelto achieve widespread acceptance is equally problematic.Building upon the observations of Duncan et al. (1998),the larger concern is of the ability of project managementmaturity models to offer a demonstrable means of compet-itive advantage. Although it can be argued that maturitymodels have in fact helped to elevate the discussion of proj-ect management and raised awareness of its contribution toorganizational success (Jugdev & Thomas, 2002), there isstill very little empirical information currently available tosupport their use. No recognizable standard has emerged toassess project management practices, and in particular thereis little to no evidence-based data to support assessmentand improvement using the available models What infor-mation does exist regarding organizational capabilitiestends to be proprietary and therefore not publicly available,and in particular there has typically been no longitudinaldata available.

One Approach to Assessing Project Management Maturity

Although project management maturity models have notnecessarily fully demonstrated their contribution, anyinsights that can be derived can still be of some value. Thispaper provides a comparison over time of how organizationshave been assessed against one project management maturi-ty model. The value of conducting this longitudinal analysisis that it provides an initial understanding of how both theapplication of project management in organizations mayhave changed over time, and the corresponding impact thesechanges have had on the organizations making them.

The data in this paper derives from a benchmarking ini-tiative conducted by a project management consulting com-pany since 1997. Over the six years that the organization hasconducted the benchmarking, the results have increasinglysuggested a link between the improvement of project man-agement capabilities in organizations and the delivery ofsuccessful project results. As well, the findings for each yearhave identified practices that have had a strong correlationwith improvements in demonstrated maturity as definedwithin the underlying maturity model. Comparing the

results over the six years for which data exists providesinsights into underlying trends and the impacts of thesetrends on organizations.

The results of this benchmarking effort have been pub-lished in the public domain since the first year, with theexecutive summary of each year’s research published onInterthink’s web site (www.interthink.ca). More resultsincluded in this analysis (Mullaly, 2004) reflect the consoli-dated findings of the 2003 study. Until now, the results havebeen limited to the findings for the year in which the bench-marking survey has been conducted, with no longitudinalanalysis of the resulting data. This paper provides this lon-gitudinal perspective by evaluating the changes in resultsand their underlying causes over the period that this bench-marking has been conducted.

The Maturity ModelThe findings within this paper are derived from a maturitymodel initially developed in 1993. Similar in structure tomany others, this model originally drew its inspiration fromthe framework and assessment approach of the CMM(Humphreys, 1992). The structure of five levels that isdefined within the CMM has been adapted in order to pro-vide relevance for project organizations, resulting in the fol-lowing descriptors:

• Level 5. A fully mature project organization, withprocesses consistently applied throughout the organi-zation as part of the overall management process.

• Level 4. A mature project management process appliedconsistently on all projects, with project managementrecognized as a formal management discipline.

• Level 3. An organization with a defined and integrat-ed project management process that is consistentlyapplied on each project.

• Level 2. Some project management capabilitiesdefined, but not consistently applied.

• Level 1. A fully ad-hoc project management capabili-ty; no consistent or repeatable processes.

As well as the levels of maturity previously defined, theother dimensions of assessment are comprised of 12 capa-bility areas that reflect the aspects of project managementpractice within organizations being assessed. Within eachcapability area, a number of capabilities are defined thatrepresent how each might be carried out in an organiza-tional context. Within each capability, a number of practicesare identified that align with each of the levels within thematurity model.

One of the early challenges recognized in using themodel was the lack of comparative information to supportassessment of an organization’s practices against otherorganizations, as well as the difficulty in quantifying theimpact of improvements on an organization’s practices. Inan effort to provide a context by which comparisons couldbe better established, the survey instrument was developedto support assessments against the model. Subsequently,public benchmarking activities were initiated by the firm.


The model offers a number of advantages and disad-vantages that need to be understood in evaluating the datapresented here.

• The model itself is proprietary, and has never beenpublished. Although the benchmarking results havebeen placed in the public domain, there has been noempirical verification or validity assessment of theconstructs within the model, which were developedprimarily through expert opinion, analysis of existingproject management standards, and testing and vali-dation of the principles with consulting customers.However, the results of more than 60 organizationalassessments have been reviewed directly with projectmanagement stakeholders, and findings of the modelhave shown a high level of face validity in describingthe practices and capabilities.

• The maturity model aligns with the principles of aself-assessment model as described by Karapetrovicand Willborn (2001). It does not offer a prescriptivemodel of project management, but allows organiza-tions to evaluate their relative strengths and weak-nesses against a range of practices.

• The focus of the model is one of promoting under-standing and improvement. As per the analysis ofTuttle and Romanowski (1985), project managementaligns with their definition of an indirect outcome;therefore, the model has been designed primarily as ameasure of effectiveness. Productivity and efficiencyare not factors that are measured within the model,and both quality and quality of work life are evaluat-ed only to a lesser degree.

• The assessment of effectiveness is not as optimallylinked to project success as would generally be desired.Although the underlying assumption of the model is acorrelation between process maturity and project suc-cess, the benchmarking results to date are primarilybased upon self-report data. Only a subset of respons-es has been verified through interviews and follow-upreviews of defined and applied practices. Because ofthe difficulty of normalizing project measures acrossorganizations, project success as measured by deliveryon time, budget, effort estimate, customer expectation,and customer satisfaction have been evaluated by self-reported ranges of result (>-25%, -25% to -10%, -10%to +10%, +10% to +25% and >+25% of target).

• Although the model embeds an understanding andassumptions of cause and effect, these are inherent inthe model itself and are applied equally to all organi-zations. As per Nielsen and Kimberly (1976), theseare not adapted or tailored to the individual contexts,needs, or goals of individual organizations, althoughthe nature of the results do enable organizations todefine their specific project management improve-ment goals relative to the reported results.

• The model could be considered analogous to a level 3assessment model as described by Biazzo andBernardi (2003). Although not a framework for qual-

ity awards, the model adopts a similar framework inthat it is not simply prescriptive as would be definedby a level 1 or 2 instrument and it allows organiza-tions to evaluate their capability against a range ofpotential practices. It is also not as open and fluid asa level 4 instrument in that it does not allow for diag-nosis or design without relying on judgment criteria,and it certainly cannot be associated with openness ofthe level 5 practices—the majority of project manage-ment organizations would not have sufficiently struc-tured processes to support the causal analysis thislevel requires.

Even taking into account these factors, the use of themodel as a framework to assess project management matu-rity over time still offers significant value in that it has beenused to collect a large base of benchmark data, predomi-nantly from North American organizations, over a period ofsix years. Within this base of data, a number of organiza-tions have participated over several years, offering furtherinsights into the impact of longitudinal changes within aspecific organization as well as the overall trends of thestudy as a whole.

ParticipantsData presented in this paper is derived from a public bench-marking project. This effort was initially limited to organi-zations in Canada, but was subsequently expanded to NorthAmerica in 1998 and worldwide in 2001. More than 550organizations and 2,500 individuals have participated in thestudy since its launch in 1998.

Participant organizations were solicited through directmail, e-mail, advertisements, and editorial articles to con-tribute to the study. No compensation was provided toorganizations for participating, although organizations withmore than 10 participants were offered a complementarycustomized briefing of their individual results. For the firsttwo years of the study, the Project Management Institute(PMI) made available its mailing list within Canada toinvite participants; in subsequent years, direct mailings wereprimarily drawn from the firm’s contact database.

Organizations were encouraged to have a cross-section ofparticipants contribute to the survey, including project man-agers, sponsors, stakeholders, and team members. This diver-sity helped ensure a more balanced view of how projects areconducted, capturing both the perceptions of project man-agers in describing their activities and the degree to whichthese activities are actually observed by other participants.

In general, participant organizations were those whoalready had some form of organizational project manage-ment capability being developed, drawn from a wide arrayof industries.

ProceduresIn responding to the survey, participants completed a 135-question multiple-choice survey, describing practices theyutilized or observed in their most recent project.


Participants could provide more than one answer, butwere asked to rank multiple answers relative to the degreeto which the described practice reflected how projects wereactually managed.

The survey results were correlated to the maturitymodel, so that the described practices were each related to aparticular level within each of the defined process capabili-ties. Not all capabilities have practices associated with alllevels, and multiple practices described within a questioncould be associated with the same level. The results for eachlevel were averaged using a weighted formula, so that for anorganization to be ranked at a level 2, for example, all prac-tices associated with level 1 and level 2 at a minimum need-ed to be met.

Where organizations had more than one respondent,the results of each respondent were averaged to produce theoverall results for the organization. As well, the standarddeviation of responses was assessed to understand the rela-tive consistency and range of differences in responses acrossparticipants in each individual organization. The compositeorganizational results were then used for all subsequentdata analysis in presenting study findings.

In addition to describing their project managementpractices, participants also responded to a number of demo-graphic questions associated with them as a person, theirorganization, and their most recent project. In all instances,participants were asked to respond to the survey in the con-text of this project in order to best reflect the most currentpractices within their organization.

Longitudinal Analysis

Demographic ChangesIn understanding changes in results over time, it is firstimportant to understand what changes have been reflectedin the respondents to the study and the organizations theybelong to. The following sections provide a summary of thechanges and trends in demographic information.

RespondentsTable 1 shows that the number of respondents year over yearhas been reasonably consistent, with the exception of theyear 2000. An average of approximately 300 participants peryear and 70 organizations per year contributed to the study(omitting the anomalous years from the average). The fig-ures for 2000 were much lower as a number of organiza-tions declined to participate, citing in particular the focus of

their project management staff on the year 2000 remedia-tion efforts. Since this time, the number of individual par-ticipants has been growing, while the number oforganizations remains fairly static—this is largely a result ofa larger number of participants per organization respond-ing, with organizations being encouraged to provide multi-ple respondents in order to provide as relevant a picture oftheir processes and capabilities as possible.

For participants, overall experience in project man-agement has remained relatively static year after year,with results consistently reflecting a broad range of expe-rience in managing projects. On average, 32.5% ofrespondents report less than 5 years experience, 27.2%report between 5 and 10 years, and 40.3% report morethan 10 years of experience.

What has seen a change from year to year has been thetraining experience reported in project management.Although the numbers without formal training and with abachelor’s degree in project management or a related disci-pline have remained fairly static, there has been a slightincrease in those reporting a master’s degree in project man-agement or a related discipline. There has also been a rela-tively large increase in those reporting a certificate in projectmanagement, rising from low of 11.4% in 1998 to a high of26.3% in 2002, with an average of 23.5% of respondents forthe last three years.

OrganizationsThe size of participating organizations has remainedextremely consistent from year to year, with the majority oforganizations (greater than 70% in all but one year) havingmore than 1,000 employees. The year 2001 also saw a high-er percentage of smaller organizations.

The structure of participating organizations has showna much greater degree of variation than other dimensions.While incorporated, publicly-traded organizations have rou-tinely represented a significant percentage of participants,privately-held organizations have declined in overall pres-ence in the study from an initial proportion of nearly a thirdof all organizations to just above 10% in the most recent twoyears. Government participation has shown the most dra-matic shift. Although 1999 saw a significant proportion ofgovernmental organizations participating, this rapidlydecreased in 2000 but has since grown in size every year,with the most recent year representing over half of all organ-izations when included with crown corporations.

Changes to Overall MaturityAnecdotally, organizational emphasis on project manage-ment has been increasing. Intuitively, what would be expect-ed as a result is relatively stable to somewhat increasinglevels of maturity being exhibited in organizations as theycontinue to invest in developing and improving their proj-ect management capabilities.

However, analysis of the overall levels of maturity fororganizations has shown a surprising and counterintuitiveshift, as shown in Figure 1. For the first two years of analy-

# Respondents # Organizations

1998 280 671999 337 632000 152 222001 246 892002 342 962003 579 89

Table 1: Summary of respondents by year


sis, the proportions of organizations assessed overall at lev-els 1, 2, and 3 were relatively constant—approximately 30%of organizations were at a level 1, while two-thirds of organ-izations reflected a level 2 capability (all capability areaswere assessed at or above level 2) and approximately 5% oforganizations were assessed at level 3. Since 2000, there hasbeen a marked increase in organizations that were assessedat level 1, with the percentage of organizations being greaterthan 60% for all subsequent years. In the period between2001 and 2003 the average percentage of level 1 organiza-tions was 70.1%.

As a result of the increase in organizations at level 1,there has been a corresponding decrease over time inorganizations evaluated at level 2 or above. Level 3 organi-zations declined to 0% by 2003; the average proportion oflevel 3 organizations in the first three years was 5.1%, com-pared with an average of 1.1% in the last three years. Theproportion of level 2 organizations for the period has beena surprisingly steady, with close to 30% of organizations atlevel 2 since 2000.

The trends viewed at a macro level in terms of overallassessment results are also reflected when viewing the over-all results by year against each of the capability areas. Theresults for 1998 and 1999 show a clear difference of approx-imately one half a level greater maturity overall over theresults for all subsequent years. Beginning in 2000, the aver-age results by capability area are surprisingly consistent, par-ticularly in the process capability areas—the variationbetween years is typically less than one fourth of a leveloverall from 2000 to 2003.

What is most significant in these findings is the absenceof any gradual shift in results—the 1998 and 1999 resultsare remarkably consistent, as are those from 2000 through2003, but there is a significant drop in maturity from the1999 to the 2000 results that remains through all subse-quent years. The challenge is to understand the reason forthis significant shift. Within the demographics of respon-dents and respondent organizations, there is minimal indi-cation that any real change in maturity should bereasonably expected. While there was a decline in the num-ber of organizations participating in the study in 2000, sub-sequent years have seen participation levels similar to thoseseen in 1998 and 1999. As well, although there has been anincrease in government participation and a decrease in par-ticipation by privately-held incorporated organizations, thishas been a progressive change year after year, which doesnot explain the rapid change or the subsequent static profileof maturity in each year.

There have also been no significant changes to theassessment survey or the means by which survey results areevaluated that would explain this shift, as mentioned previ-ously. There have been few changes to the survey, and all ofthose changes that did occur in the period being exploredwere clarifications of terminology in a small number ofindividual questions rather than a significant restructuringof the survey.

The source of the change appears to be external, andattributable to one of two factors: either there has been amaterial change in how organizations approach projectmanagement since 2000, or there has been a significant shift

1998 1999 2000 2001 2002 2003 Overall 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 6.0% 4.8% 4.5% 1.1% 2.1% 0.0% 2.6% 64.2% 65.1% 31.8% 29.2% 29.2% 28.1% 39.9% 29.9% 30.2% 63.6% 69.7% 68.8% 71.9% 57.5%

Level 5Level 4Level 3Level 2Level 1

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Figure 1: Overall levels of maturity of participating organizations


in the composition of organizations participating in thestudy since that time. The challenge in interpreting theunderlying reason for this shift is that there is minimal datato support resolving the question one way or the other.

While a significant change in overall approach to proj-ect management could be plausibly the result of changes inthe business environment—as a reaction to the manage-ment efforts associated with the year 2000 as well as aresponse to the economic downturn that occurred through-out 2001 for many regions—the data appear too neat interms of the suddenness of the change and its subsequentconsistency to support this as an explanation.

A more likely and reasonable interpretation is a changeas to the organizations participating in the benchmarkingstudy. Although some organizations have been consistentsupporters and participants of the benchmarking study fromthe outset, for the most part there tends to be a turnover inorganizations participating from year to year of approxi-mately 50%. For the first two years of the study, participantswere solicited in part through PMI’s mailing list—invita-tions to participate were therefore received by participantswho had selected into the project management communityand whose organizations as a result could arguably beexpected to demonstrate a higher degree of maturity thanthe general population. Although the community withinPMI has still received invitations through their chapters, this

has been a less effective and reliable means of reachingprospective respondents and the primary means of solicitingparticipants is through direct mail to an extensive databaseof contacts maintained by the consulting firm.

As discussed previously, the data does not supportbeing able to effectively understand the reason for this shiftin overall maturity. Further analysis of future years, follow-ing up with previous participants and longitudinal assess-ment of individual companies within the data set would allhelp to better understand what is influencing the changesbeing observed within the results.

Changes Within OrganizationsWhile not all organizations that have contributed to thebenchmarking effort firm have participated in multiple years,there are a sufficient number of participating organizationsthat have done so to enable an initial longitudinal analysis atthis level. The following sections provide comparisons acrossmultiple years for three different organizations that have par-ticipated in the study for at least two years.

CommunicationsOne of the participating organizations that provides thegreatest understanding of how changes in maturity canoccur as organizational priorities change is illustrated inFigure 3. The graph provides an overview of the results for

Program Initiation

2.60

3.07

3.22

2.48

2.35

2.25

2.31

Project Initiation

2.67

3.10

3.17

2.51

2.47

2.49

2.44

Project Plan Sched & Budget

2.55

3.97

3.03

2.45

2.37

2.41

2.28

Project Management

2.53

2.93

3.04

2.39

2.35

2.37

2.35

Project Tracking

2.13

2.47

2.48

2.08

1.97

2.02

1.97

Project Reporting

2.37

2.70

2.67

2.43

2.27

2.20

2.18

Risk Management

2.40

2.72

2.77

2.10

2.26

2.31

2.35

Technology

2.28

2.51

2.55

2.24

2.30

2.14

2.08

Environment

2.23

2.61

2.46

2.20

2.15

2.09

2.03

Organization

2.65

2.95

3.04

2.60

2.55

2.54

2.33

Resource Management

2.26

2.60

2.56

2.28

2.16

2.14

2.02

Contract Management

2.25

2.64

2.56

1.88

2.11

2.19

2.01

5.00

4.00

3.00

2.00

1.00

Average

1998

1999

2000

2001

2002

2003

Figure 2: Overall maturity by capability areas of participating organizations


the organization for each year that they have participated inthe study. The organization is a significant player within thetelecommunications field. They have participated in thestudy each year since 1998, and provide an interesting casestudy in the evolution of process maturity.

Interestingly, the process capability areas show a fairlyconsistent maturity of process from 1998 through 2001,with the project initiation, project planning, scheduling andbudgeting, and project management capability areas scoringat or above level 3. For these four years, there was very littlevariation in process results, except for a slight improvementin project tracking after 1998, a slightly greater degree ofmaturity for project planning, scheduling and budgeting in1999 and a shift in the degree of maturity associated withprogram initiation. There was a larger variation in the orga-nizational capability areas, with there being a particularimprovement in risk management for 2000 and 2001 overthe results for 1998 and 1999.

What is particularly noteworthy in this organization’sresults is the significant decline in the overall demonstratedprocess maturity that has occurred in the 2002 and 2003results. The 2002 results show a decline of nearly one half alevel in the process capability areas and approximately onefourth of a level for the six organizational capability areas.From 2002 through 2003, there was a subsequent drop of anadditional one half a level in almost all capability areas.Finally, the results for the organizational capability area pro-

vide almost a leading indicator of potential problems; thereis a decline in maturity in almost every year for which thestudy has been conducted.

In discussing these results with the organization, whatemerged was an interesting profile of why the observeddecline had occurred. The economics for telecommunica-tions companies has been a challenge for a number of years.The year 2002 saw an extensive number of layoffs, particu-larly for senior staff within the organization, resulting inmany senior project managers leaving the organization.Finally, the emphasis placed organizationally on effectivelymanaging by projects disappeared—instead, the philosophyshifted from ensuring a formal approach to one of “get itdone.” As a result, organizational participants strongly rec-ognized the shift in maturity being reflected within theirorganizations results.

GovernmentThe organization shown in Figure 4 had a similar profile interms of their results, while not as drastic as that of the pre-vious organization. The organization is a municipal govern-ment, with participation in the benchmarking studycoordinated by the PMO within the organization for eachyear except 1999. The highest demonstrated maturity of theorganization again was reflected in 1998 and 2000; lateryears demonstrated a corresponding reduction in overallmaturity. In 2001 through 2003, there was again a remark-

Program Initiation

2.40

3.63

2.97

2.46

2.50

1.55

Project Initiation

3.33

3.34

3.18

3.14

2.57

1.73


3.05

3.41

2.97

3.02

2.33

1.57

Project Management

3.14

3.19

3.01

3.08

2.36

1.70

Project Tracking

1.91

2.24

2.28

2.35

2.08

1.25

Project Reporting

2.80

2.65

2.76

2.67

2.24

1.57

Risk Management

2.00

1.87

3.06

3.20

2.63

1.75

Technology

2.50

2.50

2.39

2.29

2.26

1.53

Environment

1.75

2.28

1.96

1.95

1.61

1.85

Organization

4.00

3.39

3.13

3.30

2.70

2.21

Resource Management

2.33

2.52

2.35

2.41

2.29

1.79

Contract Management

3.00

2.46

2.30

2.49

1.88

1.31

5.00

4.00

3.00

2.00

1.00

1998

1999

2000

2001

2002

2003

Figure 3: Maturity results—Communications organization


able consistency in terms of process, which was in part attrib-utable to a common methodology being introduced in late2000, but ironically this consistency appears to have comeat the expense of greater maturity—the overall scores arelower than they were prior to the methodology being intro-duced. After 2001, there have been capability areas thathave demonstrated improvement—in particular risk man-agement and technology, as well as the organizational capa-bility. Interestingly, the net effect of the improvements from2001 to 2003 had only been to restore these capability areasto the levels they were at the outset. For the process capa-bility areas, the demonstrated maturity remained approxi-mately one half a level below that of the results for 1998.

In reviewing the results with the organization, therewas a high degree of face validity of the results beingdemonstrated within the benchmark study. Althoughrecent years have focused on improving the areas of riskmanagement, technology, and organization, there has beenlittle coordinated focus on the processes since 2000, result-ing in correspondingly lower results from 1998 and 1999.The decline has also been attributed to the champion of theimprovement effort retiring from the organization.

TransportationThe last organization is a much more straightforward exam-ple, and one that reinforces what is typically expected incomparing results of organizations year over year. As can beseen in Figure 5, there have been few changes in the process

capability areas between the 2002 and 2003 studies, withthe results varying by less than one fourth of a level in eachyear. There has been a significant improvement in risk man-agement, with an improvement of almost one half of a levelover previous years. This result can reasonably be predictedgiven the emphasis the organization has placed on improv-ing and formalizing its risk management approach sincethe presentation of the initial findings in 2002.

Although there is less variation in the results and asmaller number of time periods reflected than for the pre-vious examples, this organization demonstrated theimpacts that should appear from period to period whereconscious improvement efforts are undertaken in responseto participating in the study. Given the emphasis on projectmanagement within this organization, improvement inoverall maturity can be expected in future years.

Conclusions

The previous section provides an assessment of organiza-tional project management capability using descriptive sta-tistics. Although the results that are conveyed areindividually interesting, it is helpful to explore how theycontribute to our overall understanding of organizationalproject management. In this section, we summarize theoverall results, provide an assessment of the implicationsand meaning that can be interpreted from these results, andexplore how a better understanding could be developedthrough subsequent research efforts.

Program Initiation

2.22

2.92

2.46

2.29

2.68

Project Initiation

3.19

3.92

3.46

3.38

2.56


2.84

2.63

2.23

2.24

2.40

Project Management

2.14

2.19

2.01

2.08

2.36

Project Tracking

2.29

2.05

1.80

1.90

1.77

Project Reporting

2.51

2.26

2.21

2.04

1.99

Risk Management

2.36

2.32

1.99

2.42

2.30

Technology

2.27

1.88

1.47

1.91

1.81

Environment

2.75

2.28

1.96

1.95

1.61

Organization

2.29

2.29

2.01

2.23

2.30

Resource Management

2.54

2.36

2.00

2.04

2.22

Contract Management

2.56

2.11

1.92

2.16

1.90

5.00

4.00

3.00

2.00

1.00

1998

2000

2001

2002

2003

Figure 4: Maturity results—Municipal government organization


Observed ResultsThe analysis produces some interesting observations, manyof which were not expected at the outset. A summary of thekey observations within the study are as follows:

• Overall, there has been minimal change within thedemographics of the individual and organizationalparticipants with two specific exceptions. The overallcomposition of individual participants is relativelyconsistent, with the only change being an increase inthe education of participants—particularly as demon-strated by either a certificate or a master’s degree inproject management or a related field. For organiza-tions, there has been a greater emphasis on govern-ment organizations and proportionately lessparticipation from privately-held organizations. Thisgradual shift in demographics does not explain therapid shift in results being demonstrated, however.

• Even with the shift in reflected maturity, interestingquestions are raised about the profiles of both sets oforganizations—those participating in 1998–1999 andthose participating in 2000–2003. The demographicinformation suggest some changes that could haveresulted: with the growth in governmental participa-tion, there could have been a corresponding declinein overall assessed maturity. As well, the increase ineducation suggest a greater awareness of the projectmanagement discipline, which could result in a moreaccurate perspective of actual practices being provid-ed. Finally, the change in marketing away from themembership of PMI could indicate that subsequentrespondents had less of a vested interest in ensuringassessed project management capability is high.

• Since the initial decline reflected in the third year ofthe analysis, there have been few meaningful changesin assessed maturity—the overall maturity of organi-zations since then has been relatively static. Given thestated focus that many organizations have on improv-ing their project management capabilities, this raisessignificant questions as to the degree to which theseefforts are occurring or are having a demonstrableimpact. One possible explanation worthy of consider-ation is that with the significant investment made inproject management that occurred leading up to theyear 2000 projects, the changes observed could alsosuggest a subsequent abandonment of the capabilitiescreated during this period.

• Within individual organizations that have participat-ed in multiple years, the results of improvementefforts as well as changes in strategy are stronglyreflected in changes to assessed maturity. The impactsof the changes reflected within the study are alsobeing confirmed as valid in follow-up consultationswith the organizations.

ImplicationsThe observations and conclusions raised by this study pres-ent some interesting implications for project managementin organizations. Even if the shift in maturity reflected in theresults is due to a change in those organizations choosing toparticipate, rather than a real change in how project man-agement is practiced, it raises questions regarding the on-going commitment of organizations to projectmanagement. The implication would be that those organi-zations that have been assessed as being more mature no

Program Initiation

2.97

2.78

Project Initiation

2.65

2.86


2.54

2.65

Project Management

2.45

2.49

Project Tracking

2.26

2.15

Project Reporting

2.52

2.67

Risk Management

2.40

2.87

Technology

2.22

2.10

Environment

2.27

2.26

Organization

2.87

3.05

Resource Management

2.11

2.18

Contract Management

2.38

2.20

5.00

4.00

3.00

2.00

1.00

2002

2003

Figure 5: Maturity results—Transportation engineering organization


longer see value and relevance in benchmarking their capa-bilities. Although intuitively one would expect the oppositeto be true, the individual case studies provide two instancesthat illustrate the tendency of organizations to make signif-icant investments in project management only to subse-quently abandon them.

As well, the lack of any significant improvement inmaturity over the subsequent four years of the study pres-ents implications regarding the improvement efforts beingconducted. On an anecdotal basis, many organizations pro-fess to be making conscious efforts to improve their projectmanagement capabilities. While within individual organiza-tions there are some impacts reflected in assessed maturityin response to specific improvement efforts, there does notappear to be a meaningful overall improvement as a com-munity in how project management is practiced. Similar tothe “productivity paradox” of IT investments, this raisesquestions as to the degree to which improvement efforts arein fact being undertaken, and the effectiveness of thesechange programs in bringing about real improvements inmaturity and capability

Overall, these results lead to a question about the rolethat project management has for organizations—whether itis viewed as a strategic enabler, core competency or simplya fad whose time has come and gone. The most likely cur-rent answer, based upon both the stated commitment toimprove organizations and the evidenced commitment oftime and effort in participating in benchmarking exercisessuch as this, is that project management is viewed as impor-tant by organizations but has not fully developed as anorganizational capability. As a result, its role as a strategicenabler or core competency is still in question, and issomething that organizations will still need to answer in thecoming years.

Opportunities for Further RefinementAlthough the descriptive statistics within this paper providessome useful insights into the changes that have occurred—and not occurred—in how participant organizationsapproach developing and applying project management, itfrankly raises as many if not more questions as it answers.Many of the questions arise from an inability to support fur-ther analysis of underlying causes—this is in part a chal-lenge created by the benchmarking effort being largelysurvey-based, without follow-on interviews, focus groups orcase studies to provide additional context in understandingthe choices and influences of organizations.

Some specific opportunities for further improvement ofthis analysis include:

• Providing a more rigorous and comprehensive statis-tical analysis of the underlying data. Although thispaper provides a descriptive analysis of the availablestatistics, a more in-depth statistical analysis couldprovide additional information to support or refutethe inferences being drawn here.

• Encouraging repeat participation from a greater num-ber of organizations, providing a greater understand-

ing of the longitudinal changes that occur within asufficiently large subset of participating organizations.

• Including a greater degree of follow-up with partici-pants to verify and validate the results being self-reported. This could include a definition of moreconcrete and specific measures for project results,allowing a more granular understanding of the asso-ciation between described project managementprocesses and delivered project results. The limitationon the ability to gather this information, however, isthe degree to which organizations track and are ableto segment their project results to align with thedefined measures.

• Including greater understanding of the dynamicsoccurring within organizations. Being able to build inmore of this context would help answer many of thequestions underlying why changes were beingobserved that could not be answered in the currentdataset.

• Looking at the outside influences on the organization,in terms of its economic environment, marketplaceand competitive pressures. Understanding the marketcontext will help to provide a better understanding ofhow these factors also influence observed results.

Although the longitudinal analysis in this paper pro-vides some valuable understanding of the context of proj-ects in organizations, the answers it provides are stillfragmented and incomplete. By incorporating these changesinto future versions of the study, it is hoped that greater rel-evance and insight will result that can constructively con-tribute to organizations better defining and realizing theirproject management goals. In the meantime, this publicbenchmarking initiative continues as it originated, as ameans to help organizations and project managers developgreater understanding of our complex world of work. Theauthor wishes to think those individuals and organizationsthat have contributed their time and effort to the bench-marking study over the years, and who in doing so havemade the analysis in this paper possible.

References

Aiman-Smith, L., Goodrich, N. Roberts, D., & Scinta, J.(2005). Assessing your organization’s potential for valueinnovation. Research Technology Management, 48(2), 37.

Biazzo, S., & Bernardi, G. (2003). Organisational self-assessment options: A classification and a conceptual mapfor SMEs. The International Journal of Quality & ReliabilityManagement, 20(8/9), 881.

Conlon, E. J., & Short, L. O. (1984). Survey feedback asa large-scale change device: An empirical examination.Group & Organization Studies (pre-1986), 9(3), 399.

Cooke-Davies, T. J., & Arzymanow, A. (2003). Thematurity of project management in different industries:An investigation into variations between project manage-ment models. International Journal of Project Management,21(6), 471.


De Vries, H., & Margaret, J. (2003). The developmentof a model to assess the strategic management capability ofsmall- and medium-size businesses. Journal of AmericanAcademy of Business, Cambridge, 3(1/2), 85.

Deming, W. E. (1993). The new economics: for industry,government and education. Cambridge: MassachusettsInstitute of Technology.

Duncan, W. J., Ginter, P. M., & Swayne, L. E. (1998).Competitive advantage and internal organizational assess-ment. The Academy of Management Executive, 12(3), 6.

Garrett, G. A., & Rendon, R. G. (2005). Managing con-tracts in turbulent times: The contract management matu-rity model. Contract Management, 45(9), 48.

Hellsten, U., & Wiklund, P. S. (1999). Self-assessmentas a facilitator for learning. Quality Congress. ASQ’s…Annual Quality Congress Proceedings, 423.

Hillson, D. (2003). Assessing organisational projectmanagement capability. Journal of Facilities Management,2(3), 298.

Holland, C. P., & Light, B. (2001). A stage maturitymodel for enterprise resource planning systems use.Database for Advances in Information Systems, 32(2), 34.

Humphreys, W. (1992). Introduction to software processimprovement. Pittsburgh, PA: Software EngineeringInstitute, Carnegie Mellon University.

Ibbs, C. W., & Kwak, Y. H. (2000). Assessing project

management maturity. Project Management Journal,31(1), 32.

Jachimowicz, V. A. (2003). Project management matu-rity model. Project Management Journal, 34(1), 55.

Jugdev, K., & Thomas, J. (2002). Project managementmaturity models: The silver bullets of competitive advan-tage? Project Management Journal, 33(4), 4.

Karapetrovic, S., & Willborn, W. (2001). Audit and self-assessment in quality management: Comparison and com-patibility. Managerial Auditing Journal, 16(6), 366.

Kwak, Y. H., & Ibbs, C. W. (2000). Calculating projectmanagement’s return on investment. Project ManagementJournal, 31(2), 38.

Mullaly, M. E. (2004). Executive Summary of the 2003Organizational Project Management Baseline Study.Edmonton, Interthink Consulting Incorporated.

Nielsen, W. R., & Kimberly, J. R. (1976). Designingassessment strategies for organization development.Human Resource Management (pre-1986), 15(1), 32.

Sawaya, N., & Trapanese, P. (2004). Measuring projectmanagement maturity. SDM, 34(1), 44.

Skulmoski, G. (2001). Project maturity and compe-tence interface. Cost Engineering, 43(6), 11.

Tuttle, T. C., & Romanowski, J. J. (1985). Assessing per-formance and productivity in white-collar organizations.National Productivity Review, 4(3), 211.

MARK MULLALY has more than 20 years of project management experience, working in a variety of industries, including

information technology, communications, utilities, insurance, finance, engineering, construction, high tech and the arts.

As president of Interthink Consulting Incorporated, a company based in Edmonton, Alberta, Canada, Mark has been a

pioneer in the development of organizational project management capabilities. Interthink is renowned for its Organizational

Project Management Baseline Study and PM:RoadMap organizational assessment tool, both of which are based on Interthink’s

project management maturity model. Current areas of work include the strategic alignment of projects and the impacts of

personality on project manager development and competency.

Mark is a popular and engaging speaker who has been invited to address conferences across North America. His widely

read column, Project Management in Practice, appears monthly on gantthead.com, and he is an instructor in project management

with the School of Business at the University of Alberta. He is also currently pursuing a doctoral degree at University ofTechnology,

Sydney. Mark is the past president of the Northern Alberta Chapter of the Project Management Institute.


This paper traces the evolution of con-

ceptions of project management from the

use of tools and techniques on stand-

alone projects to the conceptualization

of project management as an organiza-

tional capability. Working from the prem-

ise that project management is a socially

constructed field of practice that has

developed through the conversations

and deliberate efforts of practitioners,

principles of discourse analysis are used

as a framework for studying the extent to

which practice reflects the espoused the-

ories of organizational project manage-

ment capability development. The

actuality of practice is represented by

periodic reports over a five-year period

by the “owners” of project management

in an organization with an expressed

commitment to development of organiza-

tional project management capability

and is analysed with reference to the

related espoused theories of practition-

ers as represented in the project man-

agement literature, including bodies of

knowledge, standards, and guides.

Keywords: organizational project man-

agement capability; theory and practice


Vol. 36, No. 3, 74-97, ISSN 8756-9728/03

Introduction

Project management as a field of practice has been brought into being throughthe conversations, writing, and collaborative activities of practitioners, con-sultants and academics with a shared interest in dealing with phenomena

that are perceived to have similar characteristics and challenges (Parker, 1992).As project management evolves in this way as a field of practice, there is often

an interesting tension between practitioners and academic researchers in projectmanagement, with the practitioners claiming that the discourse in the field is tootheoretical while the academics claim that it lacks theoretical foundations (Betts &Lansley, 1995; Koskela & Howell, 2002; Shenhar, 1998). Although, in a strictsense, the academics are correct, the field is rich in espoused theories of practi-tioners (Argyris, 1995; Argyris & Schon, 1977). Project management is construct-ed by the actions and interactions of practitioners, consultants, andacademics/researchers through their use of language, communication of beliefs,and interaction in social situations (van Dijk, 1997), and as represented in writtenand spoken language, cultural artifacts, and visual representations (Hardy, 2001).Discourse analysis, the systematic study of texts, provides a useful framework forgaining an enhanced understanding of the nature and evolution of project man-agement theory and practice. This paper uses the principles of discourse analysisas a framework for study of the relationship between espoused theory and practiceconcerning organizational project management capability. In this analysis, theactuality of practice is represented by periodic reports over a five-year period by the“owners” of project management in an organization with an expressed commit-ment to development of organizational project management capability. The prac-titioner experience is presented against a backdrop of the evolution of conceptionsof project management from the use of tools and techniques on stand-alone proj-ects to the conceptualization of project management as an organizational capa-bility. This evolution is presented through discussion of the espoused theories oforganizational project management capability as represented in the project man-agement literature, including bodies of knowledge, standards, and guides.

Background

Discourse analysis provides a way of studying phenomena through interactionsand the use of language in order to gain new insights and understanding. Fromthis perspective, discourses are considered constructive in that they “bring reality

ABSTRACT

DEVELOPING ORGANIZATIONALPROJECT MANAGEMENT CAPABILITY:THEORY AND PRACTICE

LYNN CRAWFORD, ESC Lille, France and University of Technology,Sydney, Australia


into being by making social relationsand material objects meaningful”(Hardy, 2001). Discourse and its effectsare therefore constantly shaping andbeing shaped by their context and byother discourses. This paper looks attwo related discourses. The discoursechosen as representative of espousedtheory (Discourse 1) is the discourseevidenced and constructed by talk andtexts through the project managementliterature and in the form of standardsand guides. The discourse representingpractice (Discourse 2) is that of ownersof project management in one organi-zation over a four-year period. This dis-course operates within, and isinfluenced by, the wider context ofDiscourse 1.

In undertaking an analysis of thisnature, important elements are thechoice of talk and text, and the loca-tion of discourses in their historicaland social context. According to vanDijk (1997, p. 4), we may need:

• Theoretical notions that definethe beginning or the end of textand talk

• Their unity or coherence• Inter-textual relations between

different discourses• Intentions of speakers or writers• Settings, time, place, and other

aspects of the communicativecontext.

It is important to know somethingabout who is talking or writing, aswhat is said is the negotiation ofmeaning and will be affected by theinterests and power relations of thevarious actors and groups of actors. Forexample, practitioners in organizationsmay express desire for a common lan-guage with shared meanings for use inrelation to projects. Consultants andproject management associations,however, may have a commercial orproprietary interest in encouragingspecific or more diverse terminologyand meanings. In organizations, thespecific interests and agendas of theactors will influence what they consid-er important and the ways in whichthey present it. What they say may beinfluenced by issues of ego or concernthat what they say may be reported by

others. A further and related consider-ation is the need for reflexivity (Hardy,2001), whereby the researchers reflecton their role and the influence thattheir own interests and choices willhave on interpretation and outcome.

This discussion on discourses isorganized into three sections:

• Section 1: Evolution of Conceptsof Project Management providesan introduction to Discourse 1through an overview of the histor-ical and social setting for bothespoused theory and practice.

• Section 2: Conceptualization ofOrganizational Project ManagementCapability gives brief coverage ofthe relevant espoused theories ofpractitioners.

• Section 3: Practitioner Experiencein Developing OrganizationalProject Management Capabilitydescribes the specific texts and con-text of the discourse relating to theactuality of organizational projectmanagement capability develop-ment (Discourse 2).

Evolution of Concepts of Project

Management

Project management can be seen as asocially constructed field of practicethat has developed from tools andtechniques designed to support themanagement of major projects, fromthe conversations of practitioners andfrom their deliberate efforts to define afield of practice through definition of adistinct body of knowledge and associ-ated standards. Fundamental to this isrecognition of projects as phenomenawith shared characteristics.

The first signs of project manage-ment as a distinct field of practicewere the network analysis and plan-ning techniques, like PERT and CPM,that emerged in the 1950s for use onmajor projects in construction, engi-neering, defense, and aerospace indus-tries (Kerzner, 1979; Morris, 1994;Stretton, 1994a). Users of these toolsand techniques recognized sharedinterests leading to the formation ofproject management professionalassociations in the late 1960s, initiallyto facilitate knowledge sharingbetween practitioners.

The mid-1990s were a crucialpoint in the development of projectmanagement standards and relatedcertification programs. Indicative ofthe conception of project managementat this stage in its development, all ofthe emerging standards focused onstand-alone projects and individualproject management practitioners. TheProject Management Institute issued AGuide to the Project Management Body ofKnowledge in 1996, and in the sameyear the Association for ProjectManagement in the U.K. issued theThird Edition of its Body of Knowledge.The Australian and United Kingdomgovernments endorsed performance-based competency standards for projectmanagers in 1996 and 1997, respec-tively. The British Standards Board alsoissued their Guide to Project Managementin 1996. The International ProjectManagement Association issued theirIPMA Competence Baseline in 1998.

From the mid-1990s onward,interest in project management grewprogressively stronger, with a movetowards the concept of project man-agement as an organizational capabili-ty, fuelled by a series of articles inPMNetwork by Paul Dinsmore (1996a,1996b, 1996c, 1996d) who has consis-tently acted as a chronicler of projectmanagement practice. In this periodalso, an interest in benchmarking ofcorporate project management prac-tices emerged. Two notable initiativeswere the PMI-supported Fortune 500Project Management BenchmarkingForum, which was formed in the mid-1990s, and the Human SystemsKnowledge Network, which startedcollecting organizational project man-agement practice data and facilitatingknowledge sharing between corporateowners of project management in1993. Both initiatives have contributedto the development of the concept oforganizational project managementcapability through publication andconference presentations. Meanwhile,the majority of key project manage-ment professional associations havebroadened their attention from facili-tating the knowledge sharing and pro-fessional development of individualpractitioner members to engaging and


addressing the needs of what they term“corporates” either as a new class ofmembership or in other ways as keystakeholders.

This change from focus on theindividual project and practitioner toproject management as an organiza-tional capability reflects the wideradoption of project management and achange in the nature of the concernsand conversations of this broadergroup of practitioners. When the projectmanagement associations first devel-oped, the conversations between mem-bers involved senior project managersof large and often high-profile projects.As the disciplines developed on thesemajor projects have been adopted “tocope with the management of employeesinvolved with irregular assignments and toapply a structure to complex and discontin-uous undertakings” (Hodgson, 2004, p.82) in finance and other sectors, theactors and their context have changed.There are now many conversations tak-ing place at many different levels. Theshift can be seen in the membershipand participation of the project man-agement associations, which are nowdominated by consultants, trainersand relatively junior project managersand team members. Staff and leader-ship of the associations conduct con-versations with the seniormanagement of “corporates,” whomay have no direct experience in man-agement of projects. The managers ofmajor projects whose shared experi-ence and interactions led the develop-ment of the field until the early tomid-1990s now tend only to appear asthe occasional invited keynote speakerat a conference. With a change in theactors and their context, the nature ofthe discourse has changed.

The desire of senior practitionersto share and codify their experience inmanagement of major projects hasbeen replaced by the desire of relative-ly junior practitioners for training andcertification for career advancementand the desire of senior managers forguidance in development of organiza-tional capability, one aspect of whichis the project management compe-tence of their personnel. This changein focus has been accompanied by

practitioner- and association-led initia-tives for development of standards andguides that structure understanding oforganizational project managementcapability. A key issue is recognitionthat in this broader application, proj-ects in organizations are rarely isolatedfrom environments that organizationsmust balance the re-sourcing of portfo-lios of projects, and that more thanone project may be responsible for thedelivery of the same strategic goal orset of outcomes or desired benefits.

Conceptualization of Organizational

Project Management Capability

The previous section has given a briefoverview of the historical and socialsetting of the field of project manage-ment. It focused on the evolution ofthe concept and context of projectmanagement through the interactionsof practitioners. The current sectionwill focus on the evolution of the con-cept of organizational project manage-ment capability (OPMC) as a specificdiscourse within the wider field ofproject management. The intent is toprovide the context for the followingexamination of a specific organization-al discourse as a basis for comparingespoused theories, represented byDiscourse 1 with theories in use orpractice (Discourse 2), and to testwhether development of OPMC inpractice reflects the espoused theoriesas presented in the literature and stan-dards for practice.

Extension of the focus of projectmanagement beyond the individualproject to encompass multiple projects,programs, portfolios, and enter-prisewide approaches has changed thecontext, the actors, and the nature ofconversations between them. Thechanging nature of the discourse isreflected in the commencement ofdevelopment in 2005, by the ProjectManagement Institute, of standards andguides for Program and PortfolioManagement and the development, bythe Association for Project Managementin the United Kingdom, of A Guide toGovernance of Project Management(Association for Project Management,2004). Another strong voice in theconceptualization of project manage-

ment as an organizational capability,has been the development and promo-tion by the U.K. government of a projectmanagement methodology, PRINCE2,initially designed for use on IT projectsbut further developed for wider applica-tion. Although the standards and guidesfor management of individual projectsfocused on project-related practicesrelating to time, cost, quality, risk,human resources, communication, andprocurement, the shift toward projectmanagement as an organizational capa-bility has been accompanied by interestin benefits management and gover-nance which are featured in bothPRINCE2 and Managing SuccessfulPrograms (MSP), developed and pro-moted by the U.K. Office ofGovernment Commerce, ostensibly tohelp public sector organizations toimprove their efficiency, gain bettervalue for money from their commercialactivities, and deliver more successfulprograms and projects.

Development of the ProjectManagement Institute’s OrganizationalProject Management Maturity Model(OPM3®) commenced in 1998 and wasreleased in 2003 (Project ManagementInstitute, 2003). During this time, itgenerated its own discourse with severalhundred volunteers taking part in thediscussions, the talk, and the text sur-rounding its development. Althoughthe content of OPM3 is not widelyknown beyond those who wereinvolved in its development, andbecause it is potentially too diverse(with more than 600 “best practices,”more than 3,000 “capabilities,” andmore than 4,000 relationships betweencapabilities [Cooke-Davies, 2004]) tohave clear impact on the constructionand conceptualization of practice, ithas already had a pervasive influenceon the discourse by institutionalizingthe notion of project managementmaturity. As early as 1998, the PMIStandards Committee established astandards project that was initiallyconceptualized as a guide to creatingorganizational environments to sup-port management of projects1. BothGraham and Englund (1997) andDinsmore (1999), who was a memberof the PMI Standards Committee,


contributed to development of thisconcept. However, early development ofOPM3 was influenced by the discoursein software engineering around capabil-ity maturity (Humphrey & Sweet, 1987;Paulk, Weber, Curtis, & Chrissis, 1995),and the consequent emergence of anumber of project management maturi-ty models in the mid-1990s(Cooke-Davies, 2004; Cooke-Davies, Schlichter, & Bredillet, 2001; Pennypacker& Grant, 2003), so it is not surprisingthat the initial idea was re-formulated asan organizational maturity model.

In Europe, the concept of organiza-tional project management maturityhas been reinforced by the work ofRoland Gareis who has been a leader inpromotion of the concept of manage-ment by projects (Gareis, 1992a) ratherthan the traditional concern with man-agement of projects. In the early 1990sGareis talked of project-oriented com-panies performing “simultaneouslysmall and large projects, internal andexternal projects, and unique andrepetitive projects to cope with newchallenges and potential from adynamic business environment”(Gareis, 1992b). He also talked aboutthe need to support the performance ofprojects with adequate strategies, struc-tures, and cultures.

Through the discussions, confer-ence presentations, and papers of con-sultants, academics and practitioners,project management as an organiza-tional capability has become animportant focus for discourse in thefield. Strongly associated with this areideas of assessment and developmentin terms of capability maturity. AsCooke-Davies suggested, maturitymodels “seek to do for organizationsseeking to implement strategy throughprojects what ‘bodies of knowledge’have done for individual practitionersseeking to improve their ability tomanage projects” (Cooke-Davies,2004). Interestingly, while there ismuch written about maturity models,the focus is not so much on the con-tent as on the concept of maturityitself. Although the concept of maturi-ty is generally accepted and much dis-cussed, the aspects of capability thatare assessed in the various maturity

models (the OPM3 team examinedmore than 30 extant models (Cooke-Davies et al., 2001), and otherapproaches to organizational projectmanagement capability are, in the lit-erature, often left unstated. Whenlooked at they have strong similaritiesand some differences. However, whileinterpretations may differ acrossindustries, application areas andregions, the concept of organizationalproject management capability and ofmaturity of that capability has becomea widely accepted feature of the discourse.

Another strong emergent theme inorganizational project management isthe project or program managementoffice (PMO), an organizational entityestablished to provide coordination orsupport for management of a numberof projects or programs. Although it isgenerally agreed that one size does notfit all, there is some consistency in thetypes of functions provided, as foundin studies reported by Crawford(2004b), Hobbs and Aubry (2005),and Dai and Wells (2004). See Table 1.

Examination of a number of stud-ies of trends and topic coverage in theproject management journals (Betts &Lansley, 1995; Crawford, Pollack, &England, 2006; Kloppenborg & Opfer,2000; Morris, 2000; Morris, Patel, &Wearne, 2000; Themistocleous &Wearne, 2000; Urli & Urli, 2000; Zobel& Wearne, 2000), the content of anumber of the maturity models andother publications relating to aspectsof organizational project managementcapability, reveals common themes.Clearly, the PMBOK® Guide bothreflects and has had a pervasive influ-ence on the rhetoric of both manage-ment of, and by, projects, asintegration, time, cost, quality, humanresources, communications, risk, andprocurement appear consistently inboth the general project literature and,in one form or another, in many of thematurity models. From an organiza-tional perspective, they are generallyassociated not only with projectprocesses, but in some cases at pro-gram or portfolio level as well.

Program and portfolio manage-ment are emergent themes in the liter-

ature. Associated with this is strategicalignment of projects and programswith organizational aims. Further,increasing application of project man-agement to internal projects—particu-larly in business—changes and, in thefinancial and government sectors, hasraised interest in benefits managementand governance, both of which havealso been highlighted by the wider dis-course on corporate governance.Leadership, performance manage-ment, and top management support,including the role of the project/execu-tive sponsor have also attractedincreasing interest in recent years.Appendix A of this paper presents top-ics and themes that are representativeof the espoused theories of projectmanagement in general, and for orga-nizational project management capa-bility in particular.

Practitioner Experience in Developing

Organizational Project Management

Capability

The previous section has presented thediscursive context, which might rea-sonably be expected to influence peo-ple in organizations as they discussand take action to develop corporateproject management capability. In tak-ing action, they will be drawing ideasfrom a range of sources and may influ-enced by this wider discourse in for-mulating and articulating plans and actions.

Alvesson and Karreman (2000)stated that “with a lot of discourse talk,it is sometimes rather unclear what‘discourse’ refers to” (p. 1140). As withany study, there are multiple discours-es. This study is specifically comparingtwo identified discourses—the concep-tualization of organizational projectmanagement capability as representedin the standards, journal articles, con-ference papers, and presentations pro-duced by the project managementcommunity (Discourse 1); and thepractice of organizational project man-agement capability development asrepresented in the reports of practice inone organization over a four-year peri-od (Discourse 2). There are other dis-courses that influence the actors in theorganization that is the focus of study


and that should be acknowledged.Although discussed and referred to asapparently coherent entities, organiza-tions are themselves an emergentproperty of discourse. Within eachorganization, there will be a numberof competing discourses; for instance,between functional divisions.Organizational representatives whosevoices contribute to the specific dis-course under study (Discourse 2) willbe influenced by the talk and text oftheir organizational environment and,as they may come from different disci-plines—such as engineering, IT,human resources, accounting, or busi-ness administration—their world viewand language may be influenced by thediscourse in these fields. Each of theseoverlapping and intersecting discours-es potentially shape and are shaped byone another. The boundaries betweenthe various discourses are permeable,and the definition of a particular “dis-course” is therefore a theoretical dis-tinction. As van Dijk (1997) said, thedefinition of the beginning or end oftext and talk is a theoretical notion.

ApproachThe approach taken can be describedas a long range/determination position(Alvesson & Karreman, 2000) in whichit is assumed that dominant and wide-

spread discourse—in this case, thewider discourse on organizationalproject management capability—“shapes both how to talk about subjectmatter and the meanings that wedevelop about it” (p. 1138). The focusof concern is a perceived general ten-dency relative to the research questionwhich is the extent to which the realityof practice reacts to, reflects, and/orinfluences the espoused theories oforganizational project managementcapability and its development.

Data: Text and ContextThe text that has been selected as thebasis for this analysis of organizationalproject management capability devel-opment in practice is a transcription ofreports made several times a year byorganizational representatives attend-ing knowledge-sharing workshops asmembers of the human systems proj-ect management knowledge andbenchmarking networks. Membershipis entered into on an annual basis sothat there is continuity in participationin workshops, a process that facilitatesongoing conversations. Although thereare usually a number of attendees atworkshops that have not been therebefore, there are always those whohave attended on more than one occa-sion, often over a number of years. The

relationship between many of the par-ticipants has developed beyondacquaintance, to friendship, and thereis considerable background knowledgeabout other organizations and the his-tory of their improvement initiatives.Regular attendees are familiar with theprocess and with one another, and thiscreates an environment in which newattendees are quickly influenced by aculture of open sharing of knowledgeand experience. All organizations rep-resented can be assumed to have ashared and active interest in improvingtheir organizational project manage-ment capability as they have made afinancial commitment to membership.In fact, the networks have the charac-teristics of an effective community ofpractice (Hildreth, 2000; Wenger &Snyder, 2000).

One of the characteristics of aneffective community of practice is acommon language. For members of thehuman systems networks, this is pro-vided by the corporate practices ques-tionnaire (CPQ), a tool used forassessing, auditing, and benchmarkingof corporate project management prac-tices. Each member uses this and otherassessment tools to baseline their cor-porate project management capability,to develop a plan for improvement andthen, through further assessments, to

Dai & Wells, 2004Hobbs & Aubry, 2005 Crawford, 2004

Planning and control supportreporting

PM methodology and standardsPM toolsPM competency and career development

Linking projects to strategic goals

Resource management

Audit/reviewLessons learned and continuous ImprovementCommunications and PM community

Purchasing and contract administration

Providing project administrative support

Developing and maintaining PM standards and methodsProviding PM consulting and mentoringProviding or arranging PM training

Providing human resources/staffing assistance Developing and maintaining project historical archives

Monitoring and controlling project performance

Development of PM competencies and methodologies

Strategic management

Multiproject management

Organizational learning

Table 1: Functions of a project or program management office


demonstrate results. Although not con-ceived as a “maturity model,” asdescribed earlier in this paper, the CPQcan be considered in this light, andresults can be mapped to CMMI(Chrissis, Konrad, & Shrum, 2003),OPM3 and other maturity models. TheCPQ has been shaped by, and shapes,the discourse of network members. Itwas first developed in 1994, by mem-bers of the network, and has subse-quently been continuously used anddeveloped by them. As the instrumentis used by all member organizations asa basis for their capability improve-ment programs, its language is familiarto all participants. It provides a com-mon language that is widely used bynetwork members and therefore formsan important aspect of their discourse.It both constructs and is constructed bythe talk and text of network members.

Workshops of the network aredesigned to provide members with anopportunity to address specific issuesthat are of concern to them, to learnfrom other members, and to share andcreate knowledge relating to organiza-tional project management capability.The members select the themes andtopics for the workshop in a processthat relies upon discussion and negoti-ation. Although the format of work-shops varies, there has been oneconsistent element—a report by mem-ber representatives, usually at the startof each workshop, on current concernsand project management improve-ment activities and achievements sincethe last workshop. As member repre-sentatives verbally deliver their briefreports, they are directly transcribedonto computer, following the wordingpresented as closely as possible, andthis is projected to enable on-the-spotcorrections or amendments by mem-bers. Only on rare occasions havemembers requested that any informa-tion be suppressed, sometimes becauseof information embargoes affectingpublic companies, and sometimesbecause the information shared couldbe of a commercially sensitive nature.These transcribed reports are madeavailable to all members by e-mail andvia a member intranet as part of aworkshop review report. It is the text

taken from the talk of member repre-sentatives that forms the basis for thefollowing analysis.

MethodologyThe transcripts of verbal reports fromone of the member organizations havebeen selected to represent Discourse 2,the development of organizationalproject management capability inpractice. The organizational text waschosen at random from more than 20possible sets of text. Selection of a sin-gle case study allows in-depth analysisof the text in order to examine theextent to which the theory in use oractuality constructed by the discourse(Discourse 1) reflects the espousedtheories as documented in the litera-ture and standards (Discourse 1). Asignificant feature of the chosen dis-course (2) is that the text does not justrepresent one point in time, but is rep-resentative of a four-year period. So, bylooking at one organization, it is pos-sible to examine the characteristics anddevelopment of the discourse overtime as it interacts with and affectsboth global and local context (vanDijk, 1979, p. 19).

The transcripts of reports havebeen coded by two researchers andanalyzed using proprietary text analy-sis software. Both a priori and emer-gent codes were used. The a prioricodes were chosen as representative ofthe espoused theories of project man-agers and researchers as presented inthe project management literature andstandards. These codes were based on48 topics identified from review oftopic coverage in project managementjournal articles (Themistocleous &Wearne, 2000) and project manage-ment standards and guides (Crawford,2004a; Crawford et al., 2006). To thiswere added a number of terms repre-sentative of organizational projectmanagement as outlined in the con-ceptualization of organizational proj-ect management capability section ofthis paper. A small number of emer-gent codes represent recurring themesin the transcripts of reports that werenot clearly covered by the a prioricodes and which became evident tothe researchers as they reviewed the

text. These codes related both to charac-teristics of the text (e.g., nature of languageused) and the context (e.g., businesschange/restructuring) (Appendix A).Where text related to more than one topicor theme, multiple codes were applied.For instance, if cost was mentioned in thecontext of organizationwide project man-agement processes or methodology, thetext would be coded both for “CostManagement” (6) and “PM Policies,Processes, Methodology & Tools” (58).

ContextTo maintain confidentiality, the organ-ization whose report transcriptionshave been selected for analysis will bereferred to as The Organization.Reports cover from 2000 to 2004. Atthe start of this period, the IT division,tasked with improving their perform-ance in management of projects,joined the Network to enable them toestablish a baseline for performanceusing the Network’s assessment tools,to identify strengths and weaknessesand to develop an improvement plan.Within a year of joining the Network,the IT capability of The Organizationwas outsourced. Following a presenta-tion to representatives of a number ofdivisions, The Organization decided tocontinue its membership of theNetwork. Initially, this was driven bythe internal audit function of TheOrganization, which saw a strong link-age between the performance of proj-ects, particularly related to change, andthe financial performance of theorganization, and were therefore verysupportive of organizational improve-ment to manage projects.

Throughout this period, TheOrganization has had over 20,000employees, and a number of local andglobally distributed subsidiary compa-nies. It is an extremely complex organ-ization and the part directlyparticipating in the Network has anumber of divisions or business units.As often happens, “ownership” ofNetwork membership was required tobe held by one division, and thischanged from time to time during theperiod of membership. As Networkmembership requires the nominationof one or two key representatives, these


representatives and the guests theybring with them to Network meetingswill change from time to time. Otherreasons for change in the individualsparticipating are staff changes includ-ing resignations, retirements, promo-tions, and relocations. However, thereis generally a reasonable degree of con-sistency, and this was the case with TheOrganization. The main changes werefrom the IT division, to the internalaudit function, and then to representa-tives of the corporate program officewhen it was formed in 2003.

AnalysisThe relationship between the reality ofpractice (Discourse 2) and the espousedtheories of organizational project man-agement capability and its development(Discourse 1, Appendix A) was firstanalyzed by comparing the recurrenceof themes from Discourse 1 in thetranscripts of reports from TheOrganization (Discourse 2). The focusof their reports was current concernsand project management improve-ment activities and achievements atvarious times over a four-year period.

The most popular themes or top-ics for The Organization, over a four-year period, were:

• PMO/support office • Reporting• Project management policies,

processes, methodology, and tools• Benefits management• Project management compe-

tence and career development• Governance• IT/software• Business change• Management by projects• Organizational learning.

Of these themes, only PMO/supportoffice; reporting; project managementpolicies, processes, methodology andtools; benefits management; and projectmanagement competence and careerdevelopment were mentioned in everyyear. Emergent themes relating to contextare marked in bold, indicating that busi-ness change and IT/software were signif-icant issues for The Organization at onetime or another during the period ofstudy. All of the most popular

topics/themes are with organizationalproject management capability ratherthan with individual projects.

Topics and themes mentioned butwith lower frequency and not in eachof the four years were as follows inTable 2.

Other topics and themes listed inAppendix A were not evident in thetext. This initial analysis confirmedthat the reality of practice reflects theespoused theories of organizationalproject management capability and itsdevelopment. The only topics andthemes not mentioned in practice arematurity and ethics/rules of conduct.Improvement programs were generallyimplied and improvement in a generalsense mentioned occasionally, but nocoherent approach to capabilityimprovement was evident in the text.Analysis of trends over the period ofstudy will be covered in the following,more detailed discussion.

Discussion

A preliminary analysis of key themesin the text indicates a relationshipbetween the discussion of organiza-tional project management in the liter-ature and standards (Discourse 1)representing espoused theories and theexpressed concerns and project man-agement improvement activities andachievements of “owner” of organiza-tional project management capability

in The Organization. It is particularlyinteresting that the majority of thethemes identified in the text did relateto organizational project managementcapability and that terms more directlyrelated to management of individualprojects, specifically time/scheduleand cost did not feature strongly evenin the context of organizationwideapplication. The following discussionwill deal with each of the popularthemes, and will include treatment ofchanges in emphasis of each of thesethemes over the period of study.

Organizational Project ManagementCapabilityPMO/Support OfficeThis was the most important andrecurring theme in the text, appearingin every year of the study period, butpeaking in 2003 when an enterpriseprogram office (EPO) was established.The concept was first mentioned in2000 in the context of a “pilot schemewhere the project office works with theproject manager before startup of aproject as a way of improving projectperformance and delivery.” The voiceat this time was that of the IT divisionprior to the outsourcing of this func-tion. In 2001, there was reference to“each division setting up their ownPSO or each providing similar servic-es” and the impact of the Network dis-course was evidenced by a report that

Mentioned Only OnceMentioned More Than Once

• Top management support• Resource management• Requirements management• Quality management• Estimating• Culture• Cost management• Contractors

• Project monitoring control• Sponsorship• Risk management• Quality management• Program management• Community• Strategic alignment• Project initiation/startup• Outsourcing• Project Closeout/finalization• Benchmarking• Information/communication Management• Stakeholder/relationship Management

Note: Items marked in bold are emergent themes. Items in italics relate to organizational project management rather than the managemant of individual projects.

Table 2: Lower frequency topics and themes


“a couple of the business units thatattended the last workshop have usedthat input in setting up their ownPSOs.” In 2002, the discussion contin-ued to refer to divisional project sup-port functions. In 2003, an EnterpriseProgram Office was established basedon a written recommendation to man-agement by the internal audit function“to improve commercial outcomes ofprojects across [The Organization].”

Near the end of 2003, the repre-sentative of The Organization (includ-ing representatives of internal auditand one or two divisions) reportedthat there were “good early signs.”Indicative of the different views thatexist even within one organization,there were varied perceptions of theexpectations, roles, and function of theEPO. While the divisions were lookingto it for “solutions and support,” it wasperceived by some as “more financial-ly and reporting driven,” yet earlier itwas claimed that the purpose was to“go well beyond reporting,” operatingin “a more low profile way, respondingas required to the circumstances thatarise in order to keep the wheels turn-ing.” Others described the intendedrole of the EPO as “looking at a highlevel vision for projects” including the“financial side from business plan andbusiness case to business implementa-tion review and getting this across tothe project managers who often comefrom an operational background.” Aconcern was expressed that many proj-ects were not defined as such, werefunded from operational budgets, anddid not have “visibility.” Also near theend of 2003, there was mention of an“intranet site that sets some high levelpolicies in terms of projects—businessplan, business case, benefits realiza-tion, status reporting formats andplanning guidelines.”

Although the EPO was only estab-lished in early 2003, there was alreadymention in that year of “difficulties interms of management buy-in to sup-port continuity,” and also of the set-upof divisional support offices. In 2004,the participation in the Networkchanged. Internal audit was no longerparticipating in the network, and par-ticipation was largely by a small num-

ber of committed and interested indi-viduals. Messages became mixed—varying from a recap of the formationof the EPO in 2003, to expressions ofconcern, on more than one occasion,that it was a “diverse organization”and that there was “no clear centralprogram office.” By the end of 2004,the role of the EPO had been refo-cused on support of organizationalchange initiatives and was restated asthat of consolidating “reporting (costand benefits) and monitoring of KPIs”of the change initiatives. It was statedthat the EPO, now apparently a some-what different entity than had been setup at the start of 2003, was “chargedwith increasing execution capability”of the organization.

ReportingDiscussion of reporting peaked in2004. Up until this time, it was prima-rily discussed in passing as one of theroles of the EPO, although there wasmention of a “home grown projecttracking system… plus Web-based proj-ect reporting system from the centralserver,” which would enable a centralregistry of projects. Little more was saidspecifically about reporting until 2004.Early in the year, they were “looking atthe reporting of small projects—whichtogether are to deliver significant ben-efit and add up to a considerable cost”with “concerns about data integrity inreporting.” These and other concernsappear to have influenced a move toimplementation of software to pro-vide integrated project reportingacross the organization.

PM Policies, Processes, Methodology, and ToolsDiscussion of this topic was fairlyeven throughout the period of study,but peaked in 2004, as did the vol-ume of discussion in general. In2001, although senior managementhad “given authority to achieve con-sistency in PM processes,” the orga-nizational representatives reported a“challenge to apply a project/pro-gram discipline across the group” asthey had “pockets of project man-agers with different processes andgovernance.” This was furtheraddressed in 2002, in the context of

reviewing methodologies that were“different across various areas.” Theywere “aiming to get people to use thesame methodologies,” but by 2003,they were meeting resistance andfinding that “some of the processesappear too cumbersome to projectmanagers.” However, there wereother indications that the pressure toperform was increasing as well as aconcern that project managers were“just getting projects done quickly sothat benefits can be realized—oftenwithout due process.”

By 2004, they had initiated aspecific project to establish a “stan-dard methodology through theentire life cycle of projects” acrossthe organization and the earlier con-cern about “cumbersome” processeswas reflected in a desire for “mini-mum governance and reporting.” Asense of tension between desire forcorporate control and standardiza-tion and corporate pressure for per-formance, allied with projectmanagement reluctance to followprocess, emerges from the text.

Benefits ManagementBenefits are referred to in each yearof the study period but with increas-ing emphasis in 2003 and 2004.Benefits tracking is first mentionedin 2000. In 2001, there is mention ofthe rollout of a tool for benefits real-ization and reporting “with interest-ing feedback.” Benefits are discussedin association with “definition,development and monitoring ofKPIs” and value of project benefits isrelated to total project “spend.” Thisdiscussion has a board-level dimen-sion, reflected in the statement(2002) that the “board has realizedhow much is spent on projects so arefocusing on linking to benefits” withattempts to “express project benefitsin relation to P & L on the balancesheet.” The corporate project man-agement representatives were con-cerned, however, that seniormanagement “doesn’t recognizewhat is required to improve scopingand benefits reporting.” Throughout2003 and 2004, there is increasingreference to “benefits realization.”


PM Competence and Career DevelopmentThis topic has a number of subsidiarythemes, including the following:

• Training• Mentoring• Human factors• Competence• Career development• Accreditation.

Training and competence are thepredominant subthemes. As early as2000, there is an expressed aim toachieve professional accreditation ofproject managers across the organiza-tion and there is reference in 2002 and2003 to application of project/programdiscipline and need for professionaltraining of project managers, many ofwhom are thrown into the position. Onereason given for concern with compe-tence of project managers was that theyhad “a couple of projects that couldhave gone better and this has highlight-ed need to improve project manage-ment on a formal level.” Saying thatsome “projects could have gone better”was an understatement, as the organi-zation, like many others, had experi-enced a number of significant failures.Throughout 2004, there was continuedreference to assessment of competenceto “get an organizational benchmark”and to providing a “development pro-gram for all individuals.”

GovernanceReference to governance begins in2001 and peaks in 2002. This timing isinteresting as it coincides with a num-ber of regulatory initiatives aimed atimproving governance such as OECD(OECD, 2004) Principles of CorporateGovernance, the Sarbanes-Oxley Act of2002, aimed at protecting investors byimproving the accuracy and reliabilityof corporate disclosures, and the BaselII New Accord, revising internationalstandards applicable to financial insti-tutions, released in January 2001(Basel Committee on BankingSupervision, 2001). The focus on cor-porate governance, as part of a widerdiscourse, clearly has an influence onthe language and activities of people inThe Organization at this time.Although governance must have been

in place prior to this time, it seems thatthe term started to become popular tocover a range of activities that mightwell have been referred to in a differentway previously. In 2001, TheOrganization representatives recognizethat there are different approaches togovernance throughout the organiza-tion and in 2002 identify a “splitbetween project governance and busi-ness-as-usual governance.” Although itis seen as important, there are three ref-erences to a desire for “minimum gov-ernance,” which appear related to theexpressed concerns not to burden theproject management community with“cumbersome” processes, especially ifthey may stand in the way of “delivery.”

Governance potentially representsan instance of the influence of practice(Discourse 2) on Discourse 1, as it is arelatively new theme in the projectmanagement literature. While gover-nance was mentioned in the study textfrom 2001 onward, governance onlybegan to appear as a theme in confer-ence presentations in 2004, as did theAssociation for Project Management’sguide to governance of project man-agement (Association for ProjectManagement, 2004).

IT/SoftwareApart from reference to outsourcing ofthe IT division in 2000, there is no ref-erence to IT/Software until 2002, whenthe “rollout” of a project to provide astandard project managementmethodology to cover the “entire lifecycle of projects” across the organiza-tion is first mentioned. As this pro-gresses, there is mention in 2003 ofconcern with “linking with ERP sys-tems… streamlining reporting,improving efficiency.” An intranet siteis mentioned along with concern that“PMs may not be aware of it, may findit cumbersome, may be concerned thatit is all financially driven” because itdoes not deal with such “project man-agement issues such as stakeholdermanagement” and there is “confusionas to the process to follow.” Reflectingthese concerns, there are subsequentreferences, on several occasions, to “re-launch” of the intranet site. In 2004,discussion of the intranet site and stan-

dard methodology are overtaken byfocus on the identification of softwarethat will provide enterprisewide “proj-ect and program perspectives.” Inselecting the software, they expressed adesire for “full integration of reportingand other functionality” and confi-dence that the supplier was a “marketleader in development of this kind ofproject.” It was clearly also importantthat the software providers were “veryamenable to making changes” and“easy to deal with.”

Management by ProjectsAn organization-wide approach toproject management is inherent inmuch of the general reporting from therepresentatives of The Organization, asalready discussed above. In eachinstance, when they refer explicitly toprojects as a way of doing business, itis associated with direct or implied ref-erence to senior management. In 2001,there is reference to the CEO seeing theorganization as “becoming more proj-ect focused” and in 2002 of “seniorexecutives taking project managementseriously.” Underlying this is an ongo-ing concern with retaining senior man-agement support, a concern that isshared and well documented else-where (Thomas, Delisle, & Jugdev,2002). Therefore, any instance ofexpressed senior management supportis reported as an achievement.

Organizational LearningOrganizational learning comprisesboth knowledge management and les-sons learned. It is also associated withproject management community.There are several references to a “PMForum,” set up in 2002, initially look-ing at areas that were not being han-dled well, such as project closings, andsetting up groups to examine them.There is no indication to suggest thatthese initiatives continued or had anysignificant impact.

The primary interest in knowledgemanagement appears focused on theuse of contractors and concerns aboutminimizing the “external consultantspend and keep[ing] knowledge in-house.” In 2004, they reported that “asmall team of six people is looking at


setting up our own KM system.” Aswith project management forums,there was no indication of the suc-cess or continuity of this initiative,and, although there was one refer-ence to recognition that projectsmight have been handled more effec-tively, there was very little evidencethat organizational learning is a sus-tained interest.

Text and ContextBusiness ChangeThis is clearly an important contextu-al issue, as there is reference to busi-ness change throughout the studyperiod. “Restructuring” occurs in2000, 2001, and 2002. By 2003, thediscourse has changed so that now,instead of “restructuring,” there isreference to “transformation.” Theinfluence of this “restructuring” and“transformation” can be seen in vari-ous ways. First, it affects the voicesthat present the reports on currentconcerns and activities in terms oforganizational project management.As mentioned earlier, this shiftedfrom the IT division to the widerorganization, initially driven by peo-ple from internal audit although, onone occasion, “four people from fourdifferent areas” attended, indicating“how diverse [The Organization] isin terms of project management.”When the EPO was formed, the peo-ple responsible for the EPO were thedominant voice, but in 2004, thisdominance was weakened and canbe seen in some of the conflictingmessages being presented.

The presentation of businesschange as “transformation,” as a con-sistent theme in Discourse 2 from2003 onwards, reflects the wider dis-course of business, management,and organizational development. Ina paper reviewing the major areas offocus in the literature base of theorganizational development field(covering empirical findings, theory,practice, applications, and interven-tions) (Piotrowski & Armstrong,2004) “organizational or transfor-mational change” was identified asthe most popular area of study in theperiod from 1992 to 2003.

The Nature of LanguageThe affect of business change in the“transformation” phase can be seen bylooking beyond the organizationalproject management themes to thenature of language used. The pace andtone of the text change noticeably in2003. Prior to this, the language is rel-atively placid. The terms “progressingwith,” “aiming for,” “revamping,” and“looking at” are used on a number ofoccasions in the periods from 2000through 2002 in reporting on thekinds of concerns and activities beingundertaken. In 2003, the pace andnature of activity appears to increase.There is a sense that the peoplereporting are feeling a degree of pres-sure to perform which is expressed interms such as “fast track”—which isrepeated on several occasionsthroughout 2003 and 2004—and inassociation with other terms such asthe need to “fast track” to “achieveaggressive targets.” This sense of pres-sure to perform is reinforced byphrases such as “accelerated delivery,”“delivering on promises,” “executioncapability crucial,” and “charged withincreasing execution capability.”

The phrases “looking at” and“rolling out” appear regularly through-out the entire study period and appearto be characteristic of the ongoing dis-course of organizational project man-agement capability improvement, notonly within The Organization butamong all the organizations involvedwith the Network. In a keyword analy-sis of the text of reports from all organ-izations in the network from 2000 to2005, the phrase “looking at” washighlighted as unusually frequentwords in this body of text as comparedto a reference corpus.

Surprisingly, given that the repre-sentatives of The Organization were,by their membership in the Network,interested in improving organizationalproject management capability, therewere few references to improvementand no references to any coherentimprovement program. There is nosense, either implicit or explicit, of aclear plan for improvement. The con-cerns, activities, and achievements thatare reported appear relatively ad hoc

and driven by the pressures of themoment; although, given the domi-nance of the concept in the organiza-tional project management rhetoric,there are no direct use of the term“maturity” and/or any text that couldbe construed as referring to or imply-ing the concept. Of the organizationalproject management capability-relatedterms (49 to 62 in Appendix A), theonly terms that do not appear at all,either directly or by implication, are“maturity” and “ethics/rules of con-duct.” Although there is no referenceto, or indication that there is, anycoherent “improvement program,”there is a general sense of striving forimprovement, albeit with no clearlystated baseline or goals. The lack ofbaseline and improvement goals isinteresting, as The Organization diduse the Network tools to assess theirorganizational project managementcapability. But there is no evidence inthe text to suggest that the feedbackfrom this was used to inform andguide improvement. This is a point ofdifference between the discourse with-in The Organization and the discoursewithin other organizations involved inthe Network, as analysis of the dis-course in some other organizationsover the same period reflects a farstronger and more coherent commit-ment to improvement of organization-al project management capability. Thereality of experience within TheOrganization, however, demonstratesthat despite expressed commitment toimprovement, organizations do notnecessarily follow the step-by-stepprogress toward “maturity” of theirproject management capability as pro-moted in the literature and standards.

Conclusion

This paper has used the principles ofdiscourse analysis as a framework forstudying the extent to which practicereflects the espoused theories of orga-nizational project management capa-bility development. This has beendone by comparing two discourses,one representing the espoused theoriesof project management practitioners(Discourse 1) and the other represent-ing the reality of practice (Discourse 2).


The evolution of project management,as a field of practice brought into beingthrough the conversations, writing,and collaborative activities of practi-tioners, consultants, and academicshas been described as a journey fromthe conversations of senior practition-ers and application of tools and tech-niques on stand-alone projects to theconceptualization of project manage-ment as an organizational capability.Themes and topics evident in the liter-ature, standards, and guides have beenidentified as representative of theespoused theories of project manage-ment practitioners (Discourse 1). Thetext of periodic reports on current con-cerns and project managementimprovement activities and achieve-ments of one organization over a four-year period have been analyzed as aninstance of practice (Discourse 2).

The underlying proposition is thatdiscourses are constructive and con-stantly shaping, and being shaped by,their context and other discourses.Results of analysis demonstrate that thediscourse of practice (Discourse 2)does reflect the majority of key themesspecific to organizational project man-agement capability represented in proj-ect management literature, standards,and guides (Discourse 1, Appendix A).Analysis indicates that those taking anorganizational view of project manage-ment capability show little interest intopics and themes that have tradition-ally been applied to individual orstand-alone projects (e.g., time, cost,and quality), and significantly moreinterest in those topics and themes thatreflect a wider organizational perspec-tive. However, although the concept ofmaturity is pervasive in Discourse 1, itdoes not appear either directly or indi-rectly in practice (Discourse 2). Thoseengaged in the reality of organizationalproject management capability devel-opment are more concerned with capa-bility and results than they are with theconcept of maturity. Reference to ethicsand rules of conduct is similarly absentfrom the discourse of practice. In thisparticular text (The Organization),there is no evidence of any coherentplan for improvement. Instead, thereare a number of initiatives undertaken

in a relatively ad-hoc manner respond-ing to increasing pressure from seniormanagement to deliver desired bene-fits. The path for developmentappears opportunistic and highly sub-ject to changes in organizationalstructure and priorities.

The influence of other discoursesis evident in the impact of demand forhigher standards of corporate gover-nance and in the effect of restructuringand business change, also referred to as“transformation,” reflecting a key pre-occupation of the organizationaldevelopment field.

This in-depth study of the dis-course of organizational project man-agement capability development inone company over a four-year periodprovides a very useful insight into thereality of practice, and the extent towhich it reflects or may influenceespoused theories as embodied inproject management literature, stan-dards, and guides. Although general-ization is not possible on the basis ofone case, additional studies along sim-ilar lines will be the subject of futureresearch, leading to opportunities forgeneralization across multiple cases.

Notes1 The author was a member of the PMIStandards Committee when this stan-dards project was initiated.

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LYNN CRAWFORD is a professor of project management at ESC Lille, France Director, Project Management Research

Group, University of Technology, Sydney Managing Director, Human Systems Pty Ltd. She is involved in project man-

agement education, practice, and research. Through human systems, she works with leading corporations that are

developing organizational project management competence by sharing and developing knowledge and best practices

as members of a global system of project management knowledge networks. She is currently involved in two PMI-fund-

ed research projects—Exploring the Role of the Executive Sponsor and The Value of Project Management. Results of a

completed study have been published in 2005, in a book titled Project Categorization Systems: Aligning Capability with

Strategy for Better Results. Lynn has directed major research projects on project management competence and soft sys-

tems for soft projects.


Selected Organizational PM Capability-Related Terms

48 Topics/Themes from PM Literature, Standards and Guides (Crawford, 2004)

Context

1. Benefits management2. Business case3. Change control4. Configuration management5. Conflict management6. Cost management7. Design management8. Document management9. Estimating10. Financial management11. Goals, objectives and strategies12. Information/ communication management13. Integration management14. Leadership15. Legal issues16. Marketing17. Negotiation18. Organizational learning (inc. Lessons)19. Performance measurement (inc. EVM)20. Personnel/human resource management21. Problem solving22. Procurement23. Program/programme management24. Project appraisal

25. Project closeout/ finalization26. Project context/ environment27. Project evaluation review28. Project initiation/start-up29. Project life cycle/ project phases30. Project monitoring control31. Project organization32. Project planning33. Quality management34. Regulations35. Reporting36. Requirements management37. Resource management 38. Risk management39. Safety, health and environment40. Stakeholder/relationship management41. Strategic alignment42. Success43. Team building/ development/teamwork44. Technology management45. Testing, commissioning handover/acceptance46. Time management/ scheduling/phasing47. Value management48. Work content and scope management

49. Benchmarking50. Improvement programs51. Ethics/rules of conduct52. Culture53. Governance54. Management by projects55. Maturity56. Community57. Competence career development58. Policies, processes, methodology tools59. PMO/support office60. Portfolio management61. Sponsorship*62. Top management support

63. Business change/ restructuring64. Contractors65. IT/software66. Outsourcing

Note: Items shown in italics above are more directly related to organizational project management capability than to the management of individual projects.

Appendix A: Codes Used in Text Analysis


This paper examines project-based man-

agement as an organizational innovation.

Institutional theory and innovation diffu-

sion literature suggest that the drivers for

adopting an organizational innovation

may differ across organizations, and that

the drivers may be linked with the timing

of the innovation. A survey questionnaire

was used for data collection, and the sam-

ple consisted of 111 companies represent-

ing a variety of industries. The results of

this study identified external pressure and

internal complexity as drivers for introduc-

ing project-based management. The

degree of process change, depth of proj-

ect-based management adoption, and

local success of project-based manage-

ment introduction as changes caused by

adopting project-based management are

examined. The study also reveals benefits

from introducing project-based manage-

ment in the form of improvement in proj-

ect culture, and efficiency improvement.

Keywords: innovation management;

organizational innovation; project-based

management


Vol. 36, No. 3, 87-97, ISSN 8756-9728/03

Project-Based Management as an Organizational Innovation

One track of innovation management literature examines innovations thatchange the ways in which the organization operates. Organizational inno-vation can be considered an idea or behavior new to the adopting organi-

zation (Damanpour & Evan, 1984). Organizational innovation may encompassnew products or services, new process technologies, new organizational structuresor administrative systems, or new plans or programs pertaining to organizationalmembers (Alänge, Jacobsson, & Jarnehammer, 1998; Damanpour, 1996;Damanpour & Evan, 1984). The idea may be internally generated or borrowedfrom other organizations (Damanpour & Evan).

Project-based management can be considered an organizational innovationthat may influence both the technical and social system of the organizationthrough new structures, methods, technical systems, and behavioral patterns.Project-based management has at least four special features, as compared to otherforms of management.

1. Project-based management is directed toward organizing activities toachieve goals of scope, cost, and time (PMI, 2004; Turner, 1999) and,increasingly, toward broader customer and business goals (Shenhar, Dvir,Levy, & Maltz, 2001). In earlier research, management by objectives hasbeen considered as an organizational innovation, as well as goal-orientedprograms (Fennell, 1984).

2. Project-based management induces a temporary organizational structure aspart of or replacing the old organizational structure (Packendorff, 1995;PMI, 2004). Earlier, M-form or matrix organizational structures (Burns &Wholey, 1993; Mahajan, Sharma, & Bettis, 1988; Teece, 1980), and flowmanufacturing in multiple plants (Maritan & Brush, 2003) have beenexamined as organizational innovations.

3. Project-based management can include both standardized and organiza-tion-specific tools and good practices (Milosevic & Patanakul, 2005; PMI,2004; White & Fortune, 2002). As a comparison, studies on total qualitymanagement (TQM) and ISO 9000 have earlier been considered as organi-zational innovations (Guler, Guillén, & Macpherson, 2002; Westphal,Gulati, & Shortell, 1996; 1997). Also data processing and IT solutions havebeen studied (Kimberly & Evanisko, 1981).

ABSTRACT

PROJECT-BASED MANAGEMENT AS ANORGANIZATIONAL INNOVATION: DRIVERS,CHANGES, AND BENEFITS OF ADOPTINGPROJECT-BASED MANAGEMENT

MIIA MARTINSUO, Helsinki University of Technology

NICOLE HENSMAN, University of Sydney

KARLOS ARTTO, Helsinki University of Technology

JAAKKO KUJALA, Helsinki University of Technology

ALI JAAFARI, Asia-Pacific International College


4. Project-based management pro-motes distributed and project-specific responsibilities in theorganization (PMI, 2004; Turner,1999). Each project has a dedicat-ed project manager and projectorganization that dissolves as theproject ends. New managementsystem has earlier been consid-ered as organizational innovationin somewhat different settings,i.e., administrative process or staffdevelopment program in libraries(Damanpour, 1987; Damanpour& Evan, 1984; Damanpour,Szabat, & Evan, 1989).

A specific feature of organization-al innovations is that the “product” isnot as clear as in other types of inno-vations, and the incentives for devel-oping them are not immediatelyapparent (Alänge et al., 1998). Yet,organizational innovations have beenconsidered particularly important andinteresting for the survival and successof the firm. For example, Powell(1995) has examined TQM as an orga-nizational innovation and proposedthat it contributes to a sustained com-petitive advantage. Due to the coexis-tence of the previously mentionedfeatures, project-based managementcan be considered a highly interestingorganizational innovation that mayface difficulties when being adoptedand developed.

Adopting Organizational Innovations

One inherent feature of organizationalinnovations is that their imitation, i.e.,spread in and across organizations, isdifficult if not impossible due toorganization-specific implementationconditions, and the local interpreta-tions necessary (e.g., Mahajan et al.,1988; Teece, 1980). However, compa-nies do attempt to imitate organiza-tional innovations because they seekthe same benefits as many other firmsand because there are no obvious pro-tective barriers such as patentingopportunity for the use of these inno-vations (Teece, 1980).

Adoption of organizational inno-vations is a process that includes thegeneration, development, and imple-

mentation of new ideas or behaviors inor across organizations. Earlier researchon institutionalization suggests thatthose companies that adopt an organi-zational innovation early have morefreedom to modify practices to increaseorganizational efficiency. Lateradopters, in turn, have normative pres-sures to comply with the practicesdeveloped by the early adopters(Westphal et al., 1997). This mecha-nism of institutional isomorphismmay force organizations to take intouse practices that do not fit with theorganization (e.g., DiMaggio & Powell,1983). As a result, the way in whichthe organizational innovation is intro-duced and, thereby, adopted mayinfluence the degree to which it suc-ceeds in bringing about sustainablecompetitive advantage.

Project management research hascovered development of project-basedmanagement through different maturi-ty models, competency models, excel-lence models, and scorecards (e.g.,Andersen & Jenssen, 2003; Cooke-Davies & Arzymanow, 2003; Cormican& O’Sullivan, 2004; Ibbs & Kwak, 2000;Jugdev & Thomas, 2002; Kwak & Ibbs,2002; Westerveld, 2003). Many of suchstudies examine the maturity or com-petence areas relevant to successfulproject-based management, differencesacross firms or industries, and the stepsthrough which companies developtheir project-based management. Suchstudies often assume that project-basedmanagement is already in use and thatcompanies differ in their maturity ofproject-based management. The origi-nal introduction or adoption of project-based management has received littleattention. Therefore, utilizing innova-tion diffusion and institutional theoryto better understand the early phasesand diffusion of project based manage-ment in and across firms could con-tribute to project managementresearch. Both innovation and institu-tional theory literature encourageexamining three topics: rationale forproject-based management, and thechanges, and benefits stemming fromadopting project-based management.

First, companies may differ in theadoption of an innovation in terms of

their rationale (motives or drivers).Innovation diffusion literature sug-gests that firms adopt new organiza-tional innovations to maintain andenhance their performance(Damanpour, 1987)—e.g., ensure costeffective production of high qualityproducts and services. Institutional the-ory provides a complementary ration-ale: new innovations are adopted toensure social fitness and legitimacy(Meyer & Rowan, 1991). Organizationsthat adopt organizational innovationsincrease their legitimacy and survivalprospects regardless of the efficiency ofthe adopted practices (Meyer &Rowan). Institutional theory differenti-ates between the early and late adoptersof innovations and have identifiedsomewhat different drivers for thesegroups. For example, research on theadoption of TQM in the healthcare sec-tor has reported that earlier adoptersimplemented TQM mainly to increaseefficiency and effectiveness of theirwork processes (Westphal et al., 1997).They modified the innovation for theirown needs and integrated new prac-tices into the working processes. Lateradopters rather focused on the symbol-ic benefits of such an innovation. Ourfirst research question is: What are themain drivers for introducing project-basedmanagement?

Second, the actual changes causedby the adoption process are relevant indetermining whether adoption hastaken place or not. Damanpour andEvan (1984; also Damanpour, 1987)pondered whether an innovation hasbeen adopted upon its decision, startof implementation, or only after suc-cessful implementation. They conclud-ed that the idea can be consideredadopted (well or poorly) only whenthe idea is actually being used.Abrahamson (1991) has drawn atten-tion to the fact that some innovationsare actually rejected, and that organiza-tional processes sometimes promptthe adoption of inefficient innova-tions, besides the efficient ones. BothDamanpour’s and Abrahamson’s stud-ies suggest that the actual changesaccomplished through adopting anorganizational innovation are relatedto the drivers and adoption conditions


(also Alänge et al., 1998; Kimberly &Evanisko, 1981). Our second researchquestion is: What kind of changes hasthe introduction of project-based manage-ment caused in practices and processes inthe organization, and are these changesassociated with the drivers?

Third, the benefits or outcomes ofadopting an innovation can be consid-ered relevant. Abrahamson (1991)noted the proinnovation bias in inno-vation diffusion research: the domi-nant assumption is that innovation isalways brought to completion andwould benefit adopters. In reality,good innovations may be rejected andbad ones adopted. Fads and fashionsmay promote even quite unbeneficialinnovations in uncertain environ-ments, and encourage imitation acrossorganizations. Earlier research indi-cates that some aspects of the innova-tion diffusion process, e.g.,standardization of the innovation, orthe use of an external, trustworthyinstitution of expertise, may impactboth the adoption of the innovation,and the associated benefits (Alänge etal., 1998; Fennell, 1984; Westphal etal., 1997). Our third research questionis: What are the perceived benefits fromintroducing project-based management,and how are these benefits associated withthe drivers and changes?

The purpose of this research is toexamine project-based management asan organizational innovation. Morespecifically, we study the drivers,changes and benefits of introducingproject-based management, and link-ages between them.

Research Method

A questionnaire survey was used toexamine the introduction, current stateand future prospects in project-basedmanagement. The questionnaire wasoriginally developed in Germany(Volkswagen Coaching, 2002) andlater adopted by other countries. TheAustralian version is a modification ofthe original survey, developed furtheron the basis of expert interviews andliterature review (the background andmethodology of the entire research isexplained more thoroughly inHensman, Valenta & Jaafari, 2004).

This paper covers only those surveytopics that focus on the introductionof project-based management.

Survey Sample The survey was carried out acrossAustralian companies representing avariety of industry sectors. Originally,the questionnaire was mailed to 4,800companies based on AustralianBusiness Review listing of top firms inthe country. Of these, 111 companiesresponded to the survey, with a totalresponse rate of 2.3%. A number ofpeople in the original target popula-tion reported lack of project-basedmanagement in their organization and,therefore, non-response. The lowresponse rate may also have resultedfrom the rather heavy questionnaireform, and another survey on the samepopulation being launched at the sametime. The sample characteristics indi-cate a skewedness toward rather experi-enced project personnel, which mayinfluence the results and need to beconsidered as a limitation of the study.

A majority of the responses werereceived from public sector and serviceorganizations, with a minority ofresponses representing the more tradi-tional project businesses such as capi-tal industry, manufacturing, and ITand telecommunications. Small tomedium-sized companies dominate inthe sample. A majority of responsescome from firms where project man-agement has been officially introducedthroughout the firm. The time of intro-ducing project-based managementvaries strongly. Background informa-tion on the companies participating inthe survey is presented in Table 1.

Of the respondents, 80% aremale, and 27% are members of aproject management association.The respondents represent differentage groups, have dominantly aneconomics or business education,and a majority represent projectmanagement or finance tasks. Therespondents are very experiencedin project work, i.e., over 53% havemore than 10 years of experience inprojects. More information on theindividual respondents is present-ed in Table 2.

Questionnaire Items Included in the AnalysisFor the purposes of this study, we used23 questionnaire items to examine thedrivers, changes and benefits related tointroducing project-based management.

Benefits of Introducing Project-Based Management. The survey asked:What benefits has project-based man-agement brought to your company?Eight items were included: greaterentrepreneurship, more client satisfac-tion, more effective communication,more knowledge management andknow-how transfer, improved projectcontrol, better multiproject coordina-tion, greater project transparency, andbetter project performance. A scale of 1(completely disagree) to 5 (totally agree)was used.

Changes Through IntroducingProject-Based Management. Weexamined changes in three areas:degree of process change, depth ofproject-based management adoption,and local success of project-basedmanagement introduction. Degree ofprocess change examined how muchthe work processes changed as a resultof introducing project-based manage-ment for your area, for your depart-ment, and for you personally. A scaleof 1 (hardly at all) to 5 (a great deal)was used. Three questions in depth ofproject-based management adoptionexamined the presence of project-basedmanagement: project-based manage-ment culture is widely present at all lev-els of the hierarchy, project-basedmanagement is used sporadically in thecompany (scale inverted for furtheranalyses), and the project and lineorganizations work well together in thecompany. A scale of 1 (completely dis-agree) to 5 (totally agree) was used. Localsuccess of project-based managementintroduction was measured with twoitems that asked: How successful wasthe introduction of project-based man-agement in your area? How successfulwas the introduction of project-basedmanagement in your department? Theitems used a scale of 1 (unsuccessful) to5 (very successful).

Drivers for Introducing Project-Based Management. The question-naire asked for the main reasons for


introducing project-based manage-ment. Seven items were used: increasingproject complexity, increasing numberof projects, time pressure for projects,image of modernity, client demands,internationalization and globalization,and market or competitive pressure.These items were measured on a scale of1 (unimportant) to 5 (very important).

Control Variables. We used fourcontrol variables at company level, allintroduced in Table 1: industry, num-ber of employees, official introductionof project-based management, andyears from introducing project-basedmanagement. Additionally, we con-trolled two individual level variables:membership of an association for proj-ect management (dummy variable,1=member, 0=non-member), and

years of involvement with project work(ordinal scale, as in Table 2).

Preliminary Analysis and

Descriptive Statistics

To explore and identify the variablestructure, we conducted principal com-ponents analysis of the items and triedout different models. For the driversand changes we used orthogonal (vari-max) rotation. A two-factor model issuggested for “drivers”: internal com-plexity and external pressure, and the fac-tors account for 57% of the variance inthe model. For “changes,” a three-fac-tor model was used as indicated by thequestion setting: degree of processchange, depth of project-based manage-ment adoption, and local success of proj-ect-based management introduction, and

the factors explain 76% of the variancein the model. For the benefit items, weused oblique (direct oblimin) rotationdue to expected item intercorrelations.A two factor model was supported for“benefits” and explains 69% of thevariance. We named the benefit vari-ables as improvement of project cultureand efficiency improvement. Two itemshave fairly high component loadingsoutside of the proposed variable struc-ture, as shown in Appendix 1.However, we chose to include them aspart of the principal component factor.

We developed variables based onthe principal components for furtheranalysis. Scores for each variablewere calculated as average of theincluded items. To estimate the relia-bility of the variables, Cronbach’s

Industry % Number of Employees %

1 = Public sector 30.6 1 = Below 500 51.42 = Services 28.8 2 = 501-1000 16.23 = Manufacturing 15.3 3 = 1001-5000 21.64 = IT and telecommunications 15.3 4 = Over 5001 10.8

5 = Capital industries (construction, energy etc.) 9.9

Was PM Officially Introduced? % Years from Introducing PM %

1 = No, it was not officially introduced at department 29.7 1 = Below 1 6.3 or company level2 = Yes, it was officially introduced either at 27.0 2 = 1-3 years 35.1 department level or throughout company3 = Yes, it was officially introduced both at 38.7 3 = 4-10 years 28.8 department level and at company leveln.a. 4.5 4 = Over 10 years 23.4 n.a. 6.3

Table 1: Companies in the survey sample (N=111)

Age Group % Training Background % Area of Work % Years in Project Work %

Below 34 21.6 Economics, business 51.4 Project management 36.0 1 = Below 1 0.9

35-44 33.3 Engineering 15.3 Finance, accounting 20.7 2 = 1-3 8.1

45-54 38.7 IT 12.6 Internal consultancy, 12.6 3 = 3-10 37.8 staff

Over 55 6.3 Science 9.0 Information technology 10.8 4 = Over 10 53.2

Other 11.7 Strategy, planning, 6.3 development

Other 13.5

Table 2: Individual respondents’ background (N=111)


alpha coefficients were calculated. Thescores for benefit and change variablesare high (0.73 - 0.89), but slightly belowthe acceptable level of 0.7 for driver vari-ables (0.66 and 0.68). The content andreliability coefficients for the variablesare presented in Appendix 1.

Means, standard deviations, andcorrelation coefficients among thevariables are presented in Table 3.Internal complexity dominates as adriver for introducing project-basedmanagement, as compared to externalpressure. Of the change variables,local success of project-based man-agement introduction receives slightlyhigher scores, as compared to degreeof process change or depth of project-based management adoption. Of thebenefit variables, the score of efficien-cy improvement is somewhat higherthan improvement of project culture.

Of the control variables, indus-try, official introduction of project-

based management, timing of proj-ect-based management introductionand project management associationmembership have a few correlationswith the other variables. For instance,traditional project industries have alonger history with project-basedmanagement than does public sectorand services. Traditional projectindustries also report external pres-sure more often as a driver for intro-ducing project-based management,and higher depth of project-basedmanagement adoption. The driver,change, and benefit variables have anumber of significant correlationswith each other.

Drivers, Changes, and Benefits of

Adopting Project-Based Management

To better understand the links betweendrivers, changes, and benefits, we con-ducted linear regression analysis onthe variables. The scatterplots revealed

linear relationship between independ-ent and dependent variables. We trieddifferent models and decided to use afour-step regression approach for boththe dependent variables. First, weentered the control variables (model 1),then we added the drivers (model 2),third we added a degree of processchange and depth of project-basedmanagement adoption (model 3), andfinally we added the local success inintroducing project-based manage-ment (model 4). Model 1 (i.e., controlvariables alone) did not prove suffi-cient for explaining variance in eitherof the dependent variables.

Improvement of Project CultureModels 2–4 are suitable for explainingvariance in “improvement of projectculture,” but especially model 2 has alow explanatory value. In model 2, thecontrol variables and drivers togetherexplain only 18% of variance in

***p<0.001, **p<0.01, *p<0.05

Industry 111 2.45 1.33

Number of employees 111 1.92 1.08 -0.14

Official introduction of PM 106 1.09 0.85 -0.09 -0.05

Years from introducing PM 104 2.74 0.91 0.28** 0.12 -0.15

Are you member of an 111 0.27 0.45 0.02 -0.11 0.09 -0.02association for PM

Years in project work 111 3.43 0.68 0.19* 0.01 -0.12 0.45*** 0.09

Internal complexity 111 4.29 0.62 -0.01 0.13 0.06 0.08 -0.02 0.16

External pressure 111 2.67 0.90 0.28** -0.06 0.06 0.21* 0.20* 0.12 0.33***

Degree of process change 111 3.32 0.89 -0.13 0.13 0.05 -0.22* 0.05 -0.13 0.07 0.13

Depth of PM adoption 111 2.97 0.99 0.39*** -0.09 0.21* 0.30** 0.27** 0.27** 0.10 0.44*** -0.06

Local success of PM 108 3.63 0.97 0.05 0.07 0.27** 0.00 0.15 0.17 0.26** 0.23* 0.33*** 0.41***Introduction

Improvement of project 111 3.25 0.75 0.12 -0.02 0.07 0.10 0.22* 0.08 0.17 0.47*** 0.19* 0.44*** 0.39***culture

Efficiency improvement 111 3.78 0.76 0.05 -0.02 0.13 0.06 0.18 0.05 0.22* 0.30** 0.25** 0.38*** 0.58*** 0.63***

N

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Table 3: Descriptive statistics and correlation coefficients (PM = project-based management)


improvement of project culture.External pressure appears as a strongand significant contributing variable.The more external pressure is experi-enced as a driver for introducing proj-ect-based management, the moreimprovement is seen in project culture.Internal complexity as a driver forintroducing project-based manage-ment, however, does not explain vari-ance in the benefit “improvement ofproject culture.” Table 4 reports theregression analysis for improvement ofproject culture.

Model 3 explains 34% variance inimprovement of project culture andshows that depth of project-basedmanagement adoption adds explana-tory power and is a significant variable.This means that wide, consistent, andthorough use of project managementis reflected in perceived improvementsin project culture in terms of entrepre-neurship, knowledge transfer, clientsatisfaction, and communication.Also, depth of project-based manage-ment adoption and degree of processchange seem to mediate the relation-ship between external pressure and thedependent variable, but also a directrelationship between external pressure

and the dependent variable remainsalmost significant.

In model 4, altogether 38% ofvariance in the dependent variable isexplained. Local success of project-based management introductionappears as a significant variable, slight-ly mediating the impact of depth ofproject-based management adoptionand external pressure. If the introduc-tion of project management is per-ceived as successful locally, alsoimprovements in project culture areperceived high.

Control variables do not appearas significant, besides project man-agement association membership inmodel 1. This effect is removed in theother models, indicating that therelationship between associationmembership and improvement ofproject culture is mediated by driversand changes.

Efficiency ImprovementOnly models 3 and 4 are suitable forexplaining variance in efficiencyimprovement, and model 3 has still afairly low explanatory value. Controlvariables and drivers alone or togetherdo not explain much variance in effi-

ciency improvement. In model 3,degree of process change and depth ofproject-based management adoptionboth appear as significant and fairlystrong variables, and the modelexplains altogether 24% variance inefficiency improvement. That is, higherdegrees of process change and wide,consistent, and thorough use of projectmanagement are reflected in higherperceived efficiency improvements.Table 5 shows the regression analysisresults for efficiency improvement.

Model 4 explains 39% variance inefficiency improvement. Again, localsuccess of project-based managementintroduction is significant. It clearlymediates the relationship between theother change variables and efficiencyimprovement: the impact of degree ofprocess change on the dependent vari-able is largely explained through localsuccess of project-based managementintroduction, and also depth of proj-ect-based management adoption has aclearly lower score than in model 3.

Discussion

The results of this study have identifiedexternal pressure and internal com-plexity as drivers for introducing proj-

Industry 0.13 1.28 0.03 0.26 -0.05 -0.50 -0.03 -0.29

Number of employees 0.05 0.45 0.05 0.51 0.05 0.58 0.03 0.36

Official introduction of PM 0.08 0.80 0.04 0.42 -0.06 -0.67 -0.12 -1.34

Years from introducing PM 0.05 0.41 -0.03 -0.26 -0.08 -0.74 -0.05 0.54

Are you member of an 0.23 2.25* 0.14 1.50 0.05 0.61 0.06 0.68association for PM

Years in project work 0.05 0.41 0.03 0.31 -0.01 -0.10 -0.06 -0.64

Internal complexity -0.01 -0.11 -0.01 -0.12 -0.05 -0.54

External pressure 0.44 4.06*** 0.25 2.41* 0.26 2.57*

Degree of process change 0.14 1.62 0.05 0.50

Depth of PM adoption 0.47 4.41*** 0.37 3.35**

Local success of PM 0.28 2.68** Introduction R2 0.09 0.25 0.4 0.45

Adjusted R2 0.03 0.18 0.34 0.38

F 1.53 3.73** 5.93*** 6.43***

Standardized Beta coefficients are shown

***p<0.001, **p<0.01, *p<0.05

Table 4: Regression analysis, improvement of project culture as dependent variable


ect-based management (research ques-tion 1). The choice of introducing proj-ect-based management is dominantlymotivated by increased degrees of inter-nal complexity. Although the respon-dents seem to have rationalized theintroduction of project-based manage-ment with the intent to control com-plexity, this is not related to the changesachieved by project-based manage-ment, or its benefits. As internal com-plexity and external pressure correlate, itis possible that internal complexity isconnected to changes and benefits, butwith a time lag. Largely in line with ear-lier literature, our sample may represent(dominantly) early adopters who haveproactively sought to adopt project-based management to solve their effi-ciency and effectiveness concerns. Thesample characteristics may, therefore,explain the missing connection frominternal complexity to changes andbenefits. Furthermore, for instanceDamanpour (1987) reported that orga-nizational complexity can explain vari-ance in technical innovations, but notso much administrative (organization-al) innovations.

In turn, external pressure as a driv-er had a lower average score but was in

linear relation with some change andbenefit variables. External pressure inthese results may represent access toknowledge or collaboration in a widernetwork (Alänge et al., 1997; Fennell &Alexander, 1987; Westphal et al.,1997), strategic business and customerbenefit expectations (Shenhar et al.,2001), and possibly also isomorphicpressures from institutions in the samearea or industry (Abrahamson 1991;DiMaggio & Powell, 1983; Meyer &Rowan, 1991) that can be connectedwith the adoption of the organization-al innovation. Innovation diffusion lit-erature has posited that such an“efficient choice” perspective promptscompanies to adopt innovations thatclose their identified performance gaps(Abrahamson, 1991). Our results didnot find direct evidence on the differ-ences between early adopters and lag-gards suggested by innovationdiffusion and institutional theory;however, this may indicate more com-plex, path-dependent relationshipsbetween the timing of project-basedmanagement introduction, drivers,and other variables.

We examined the degree ofprocess change, depth of project-based

management adoption, and local suc-cess of project-based managementintroduction as changes caused byadopting project-based management(research question 2). Our resultsemphasize that achieving benefitsfrom project-based managementrequires both a wide, consistent, andthorough use of project managementthroughout the firm, and local successin introducing project-based manage-ment. This is in line with an earlierproposition that a great number ofunits should support the use of theorganizational innovation, and that alocalized search process is needed forthe organizational innovation to suc-ceed (Alänge et al., 1998). The resultsshow that depth of project-basedmanagement adoption and local suc-cess of project-based managementintroduction correlate with externalpressure, and mediate the relationshipbetween external pressure and thebenefit variables.

Degree of process change has onlyan intermediary role toward achievingthe benefits of project-based manage-ment through local success. While thedegree of process change may reflect thedegree of adoption of project-based

0.05 0.50 0.00 0.04 -0.06 -0.61 -0.02 -0.28

0.06 0.56 0.04 0.37 0.02 0.25 -0.01 -0.13

0.17 1.64 0.14 1.36 0.05 0.57 -0.05 -0.55

0.03 0.24 0.00 -0.04 -0.01 -0.08 0.03 0.31

0.17 1.64 0.13 1.25 0.05 0.52 0.06 0.66

0.10 0.81 0.06 0.53 0.05 0.44 -0.05 -0.46

0.12 1.06 0.11 1.07 0.04 0.45

0.21 1.79 0.01 0.06 0.02 0.22

0.29 2.99** 0.11 1.23

0.42 3.65*** 0.24 2.18*

0.48 4.74***

R2 0.07

Adjusted R2 0.01

F 1.22

Industry

Number of employees

Official introduction of PM

Years from introducing PM

Are you member of an association for PM

Years in project work

Internal complexity

External pressure

Degree of process change

Depth of PM adoption

Local success of PM Introduction

Model 1 t

Model 2 t

Model 3 t

Model 4 t

Standardized Beta coefficients are shown

***p<0.001, **p<0.01, *p<0.05

0.14

0.06

1.82

0.32

0.24

4.11***

0.46

0.39

6.69***

Table 5: Regression analysis, efficiency improvement as dependent variable


management, our results highlight theimportance of a subjective estimateof those changes, to be perceived asbeneficial. Additionally, the resultsmay suggest that other kinds ofchanges should be studied besidesprocess change (e.g., attitude andbehavioral changes may be equallyimportant for the adoption of projectbased management). Addition ofsuch variables could have improvedthe explanatory power of our regres-sion models. The relationshipbetween internal complexity, externalpressure and degree of processchange was not revealed with ouranalysis (i.e., the relationship could benonlinear or more complex).

The study revealed benefits fromintroducing project-based manage-ment in the form of improvement inproject culture, and efficiency improve-ment (research question 3). Even if theitems are strongly intercorrelated, theirrelation with drivers and changes ofintroducing project-based manage-ment are somewhat different. A signif-icant degree of variance inimprovement of project culture isexplained by external pressure, depthof project-based management adop-tion, and local success of project-basedmanagement introduction as depictedin Figure 1. Part of the impact of exter-nal pressure and depth of project-

based management adoption aremediated. These findings emphasizethe necessity to locally adjust andmodify (local success) the thorough,company-wide solution (depth ofproject-based management adoption)to reap the practical benefits of project-based management.

A significant degree of variance inefficiency improvement is explainedthrough depth of project-based man-agement adoption, and local success ofintroducing project-based manage-

ment as shown in Figure 2. Althoughthe drivers do not appear to have a sig-nificant role, degree of process changehas an indirect link to efficiencyimprovement through local success ofintroducing project-based manage-ment. This finding indicates thatprocess change as such is not self-evi-dently beneficial but, rather, must beapproved and adjusted at the local set-ting. These findings suggest that thelinkages from the studied drivers toefficiency improvement are mediatedby some other variables, or that effi-ciency improvements are originallydriven by some other forces than thosecovered in our study. Strategic choices,top management support, pressuresfrom outside institutions, project man-agement standardization, or the prac-tices used while introducingproject-based management are exam-ples of possible relevant factors.

Earlier studies suggest and reportsome individual and organizational back-ground variables relevant to the adoptionof organizational innovations For exam-ple, organizational complexity and sizehave been considered among significantbackground variables (e.g., Damanpour,1996; Kimberly & Evanisko, 1981). Ourresults did not directly confirm such find-ings. This may be explained through howour background question was set: small,medium, and almost large firms were

ExternalPressure

InternalComplexity

Depth of PMAdoption

LocalSuccess of Introducing

PM

Degree ofProcessChange

Benefit:Improvement ofProject Culture

Figure 1: Factors contributing to improvement of project culture as a benefit from introducing

project-based management

ExternalPressure

InternalComplexity

Depth of PMAdoption

LocalSuccess of Introducing

PM

Degree ofProcessChange

Benefit:Efficiency

Improvement

Figure 2: Factors contributing to efficiency improvement as a benefit from introducing

project-based management


included in a single response category(below 500 persons) and may haveblocked out the most influential differ-ences, and we did not use other complexi-ty variables. Also, our analysis setup didnot fully uncover the relationship betweencontrol variables and changes, whichcould be examined more in future studies.

Ideas for Further ResearchTo confirm the findings, more elaboratemodels should be developed on project-based management as an organizationalinnovation. Besides confirmatory analyseson our findings, additional research ques-tions have been identified. For instance,what is the relationship between improve-ment in project culture, and efficiencyimprovement? What is the temporal link-age between internal complexity andexternal pressure? What kind of factorsdrives the degree of process change and itsimpact on local success in project-basedmanagement adoption? What behavioraland attitude changes should be consid-ered as intermediary impacts of adoptingproject-based management?

Institutional theory and innova-tion diffusion research encouragestudying the role of standardizationand project management associationmembership with regard to the adop-tion of innovations. Project manage-ment research has to some extentalready covered standardization ofproject management, but its link withproject management maturity andevolution could be studied further.Top management support hasalready been mentioned as potentialarea for research. Our survey did notcover top management actions andpractices directly but only in theform of a control variable “officialintroduction of project-based man-agement.” Earlier studies emphasizethe role of top management supportthat could be examined also in theconnection with introducing project-based management.

More research is also suggested toexamine the diffusion of project-basedmanagement within and across industries.Institutional theory and innovation diffu-sion literature provide a good basis andsuggestions regarding relevant hypothesesand contingency factors.

LimitationsThe generalizability of the results of thisstudy is weakened by some limitationsregarding the sampling, survey design,and analysis setup. We have reported thesampling procedure, low response rate,and possible skewedness in the sample ascompared to the whole population.Despite these limitations, we succeededin having very diverse firms in differentindustries as part of the sample. The sam-ple size of more than 100 is alreadyappropriate for statistical testing. Even ifthe data cannot fully cover the currentstate of project-based management inAustralian firms, the findings with thesedata do tell many important things aboutintroducing project-based managementin these firms. Regarding the surveydesign, the use of subjective estimates ofthe introduction of project-based man-agement may have its drawbacks.Knowing that the sample was dominatedby very experienced project people, theresults could have looked different, hadwe had access to multiple opinions orobjective measures in the same firms. Toimprove the applicability of the findings,we have reported the sample characteris-tics as thoroughly as possible.

The validity of the survey and devel-oped variables could have been improvedby further testing and refinement. Withthe questions and scales used, the relia-bility of some variables was slightlybelow the acceptable level of 0.7, thevalidity of the entire factor structure couldnot be confirmed, and many interestingareas of innovation adoption remaineduncovered. In this sense, we must consid-er this study as exploratory: we probedwith a set of questions and variables, suc-ceeded in charting important aspects ofproject-based management as an organi-zational innovation, and opened up are-nas for further research.

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MIIA MARTINSUO, PhD, is a senior lecturer in industrial management at Helsinki University of Technology, Finland. Her teaching, student instruction,

and research work focus on the following aspects of project business: multiproject management, innovation management, and organization

development. Dr. Martinsuo has more than 10 years of experience in strategy, business process development and management development in

international private companies, especially in metal and electrotechnical industry. She has consulted industry, service and public sector

organizations as well as managed international research and development projects toward improved organizational efficiency and well-being. She

has written and co-authored more than 60 papers, book chapters and books especially in the areas of project portfolio management and organization

development. Dr. Martinsuo holds DSc, Lic.Tech., and MSc degrees in industrial engineering and management.

ALI JAAFARI, PhD, is professor and founding president at Asia Pacific International College in Sydney, Australia. As a long time international

consultant, author, researcher and educator in project, program and business management Professor Jaafari has wide expertise and professional

experience. He has acted as an expert consultant to industry and governments worldwide. Professor Jaafari has conducted courses and seminars

for more than 3,000 executives, managers and professionals in Australia, Asia, and Europe. He specializes in graduate education and professional

development, and has developed innovative online graduate programs that have won numerous Excellence Awards. Professor Jaafari has, to-date,

authored 150 publications in project, program, organizations and business management. Professor Jaafari’s current research efforts are focused

on strategic management of projects, programs and organizations, project, program and portfolio management, innovation and change

management, information management systems, total quality management and management of risks and liabilities.

KARLOS ARTTO, PhD, is professor at the Laboratory of Industrial Management at the Helsinki University of Technology, Finland, where he is responsible for

developing research and teaching in the field of project-oriented activities in business. His current research interests in project business cover: (1)

management of project-based organizations and strategic management of multiple projects, project portfolios, and programs; (2) management of innovation,

technology, R&D, new product development and operational development projects in different organizational contexts; (3) project networks and project

delivery chains, and; (4) management of uncertainty and risk in project business.

JAAKKO KUJALA, PhD, works as a senior researcher in BIT Research Center and lecturer in the Department of Industrial Engineering and Management.

He has an extensive industrial background in Metso Corporation in managing both customer delivery projects and internal development projects. He

holds an MSc degree in information technology and he received doctoral degree at the Department of Industrial Engineering and Management. He is

responsible for courses in the area of project marketing and customer relationship. His main research interests include network perspective to projects,

project marketing and project business management. In addition, he is also actively involved in the research in healthcare management.

NICOLE HENSMAN is a doctoral student at the University of Sydney, with project management as her field of research.


Internal complexity 0.66

Increasing project complexity 0.82

Increasing number of projects 0.80

Time pressure for projects 0.66 0.40

External pressure 0.68

Market /competitive pressure 0.79

Client demands 0.72

Image of modernity 0.71

Internationalization / globalization 0.53

Loadings below 0.3 omitted

Changes

Degree of process change 0.83

Degree of process change in your department 0.87

Degree of process change in your area 0.84

Degree of process change for you personally 0.81

Depth of PM adoption 0.73

PM culture is widely present at all levels of the hierarchy 0.87

PM is used consistently (=not sporadically) in the company 0.82

Project and line organizations work well together in the company 0.67

Local success of PM introduction 0.89

How successful was PM introduction in your department? 0.90

How successful was PM introduction in your area? 0.88


Benefits of Introducing PM

Improvement of project culture 0.80

Greater entrepreneurship 0.92

More knowledge management, know-how transfer 0.73

More client satisfaction 0.69

More effective communication 0.67

Efficiency improvement 0.86

Better multiproject coordination -0,88

Improved project control -0,81

Greater project transparency -0,80

Better project performance 0.47 -0,55


Component 1 Component 2 Component 3Drivers, Reasons for Introducing PM

Appendix 1: Variables, items included in them, principal component analysis results,

and reliability coefficients (Cronbach’s alpha)

A THEORETICAL FRAMEWORK FORALIGNING PROJECT MANAGEMENTWITH BUSINESS STRATEGY

This study addresses two aspects of a

topic under-researched in the strategic

management literature: the alignment of

project management and business strat-

egy. Two areas of this alignment were

studied: (1) The reciprocal influence

between project management and busi-

ness strategy, which we call the nature of

the project management/business strat-

egy alignment; and (2) the process used

to align project management and busi-

ness strategy. Then an empirically based

theoretical framework, which highlights

the impact of business strategy on proj-

ect management—and the impact of

project management on business strate-

gy—as well as the mechanisms used to

strengthen these alignments, was devel-

oped. This study expands on the previ-

ous, mostly anecdotal work, by using a

rigorous theoretical approach to develop

the proposed framework. This framework

is contingent upon the type of business

strategy—simple to understand and

use—developed through numerous proj-

ects that are typology-free and not

restricted to any particular business

strategy typology, through projects that

are empirically based on real-world data.

Keywords: qualitative research; project man-agers; pragmatic knowledge; skills development


Introduction

Historically, the world of business has recognized business strategy planning,portfolio management, and project selection as the responsibilities gov-erned by senior managers and project planning and execution processes as

the activities performed by project managers and their project teams. When theseprocesses are aligned, the strategic element feeds the portfolio element, the port-folio element feeds the project management element, and the project manage-ment element feeds projects and the team’s execution. But in many cases, theseprocesses are not aligned; as a result, organizations may fail to tie their projectseither to their business strategy or to their portfolio, which may cause them to ter-minate the project or to continue implementing projects that do not contribute tothe organization’s goals, thus wasting important organizational resources. Inmany instances, organizations treat all projects in the same way, regardless of thebusiness strategy that the organization chooses (Pinto & Covin, 1989; Shenhar,2001). When the organization’s business strategy is translated into project-levelgoals, its professional uniqueness—such as speed to market, superior productquality, among other factors—may dissolve. By understanding the challengesinvolved in aligning project management and business strategy, practitioners caneffectively manage their projects in today’s competitive environment.

Scant, however, is the empirical literature on aligning project managementand business strategy. This study, however, addresses lack of information byexploring two aspects of aligning project management and business strategy:

1. A two-way influence between project management and business strategy,one suggesting the nature of the alignment between project managementand business strategy.

2. A process used for aligning project management and business strategy.

We have developed an empirically based theoretical framework that shows theimpact of business strategy on project management—as well as the effect of proj-ect management on business strategy—and discusses the mechanisms used tostrengthen that alignment. We define this framework in regard to a set of welldeveloped concepts related to each other by statements of interrelationships, state-ments that include an integrated structure that can be used to describe phenome-na in a manner similar to the concept of theory defined by Strauss and Corbin

DRAGAN Z. MILOSEVIC, PMP, Portland State University

SABIN SRIVANNABOON, Portland State University

ABSTRACT



(1998). We also refer to the alignment between project man-agement and business strategy in relation to the compatiblepriorities between an organization’s project managementpractice and its business strategy.

Theoretical Background

To develop a theoretical framework for aligning projectmanagement with business strategy, we examined multiplestreams of related literature, streams that include businessstrategy and its typology (i.e., understanding the definitionsof business-level strategy and the conceptual basis of differ-ent strategic types), project management (i.e., identifyingproject management elements that should be aligned withbusiness strategy), and alignment literature (i.e., studyingprevious and recent alignment research to identify what hasbeen done and what is missing).

Business Strategy and Business Strategy TypologiesThough the definitions of business strategy vary, these—ingeneral—do focus on how to better deal with competition(Tse & Olsen, 1999) by means of creating competitiveadvantages (Hamel & Prahalad, 1989), advantages that pro-vide organizations with the benefits that will sustain themwhen attracting customers and defending themselvesagainst competitive forces (Thompson & Strickland, 1995).Although the literature discusses multiple business-strategytypologies, organizations should only consider those thatalign with their project management practice and their busi-ness strategy, e.g., Miles and Snow’s typology (1978),Porter’s generic strategies (1980), Treacy and Wiersema’stypology (1995). In this paper, we present only one, Porter’sgeneric strategies, using it as the foundation for aligningproject management and business strategy (see the ResearchDesign section for information about our reasoning).

Porter (1980) claimed that to achieve a sustainablecompetitive advantage, an organization must reinforce itschosen strategies. Depending on the scope, there are threegeneric strategies that can result: cost leadership, differentia-tion, and focus. According to Porter, generic strategies—when an organization chooses only one—provides theorganization with the ability to achieve competitive advan-tages and outperform their competitors. However, if anorganization pursues more than one generic strategy, it willperform below its capability. Porter referred to the latter typeof organization as stuck-in-the-middle. Despite this, the pro-liferation of global competition is compelling more organi-zations to focus on a single combination of genericstrategies (Harrison & St. John, 1998). Many researchers andpractitioners (e.g., Hill, 1988; Miller & Friesen, 1986;Phillips, Chang, & Buzzell, 1983; White, 1986) refer to thiscombination as the best-cost strategy. In this paper, we usedthree of the previously mentioned business strategies for ouranalysis, each of which we define as follows:

• Cost leadership: Organizations pursuing a cost leader-ship strategy seek to gain competitive advantage andincrease market share by being the lowest cost pro-ducers in the industry (Porter, 1980).

• Differentiation: Organizations pursuing a differentia-tion strategy seek to position themselves in the mar-ketplace with a distinct identity that satisfies thedesires of their customers (e.g., fast time-to-market,superior quality and service, innovative features). Thisdifferentiation allows the organization to charge apremium price (Porter, 1980).

• Best-cost: Under certain conditions, many researchersargue that a combination of strategies may be the bestway of creating a sustainable competitive advantage(e.g., Hill, 1988; Miller & Friesen, 1986; Phillips,Chang, & Buzzell, 1983; White, 1986). In particular,organizations may more effectively create a sustain-able competitive advantage when they combine costleadership and differentiation, when they providelow-cost products and address customer values (fasttime-to-market, superior product quality, etc.).

Project ManagementProject management is a specialized form of management,similar to other functional strategies, that is used to accom-plish a series of business goals, strategies, and work taskswithin a well-defined schedule and budget. The essence ofproject management is to support the execution of an orga-nization’s competitive strategy to deliver a desired outcome(i.e., fast time-to-market, high quality, low-cost products)(Milosevic, 2003). As opposed to the traditional stereotype,the recent literature recognizes project management as a keybusiness process (Jamieson & Morris, 2004). This viewdefines an organization as the process rather than the tradi-tional functional or matrix form and describes project man-agement as one of the key business processes that enablecompanies to implement value delivery systems. Therefore,when organizations link their projects to their businessstrategy, they are better able to accomplish their organiza-tional goals. Shenhar’s strategic project leadership (SPL)framework (1999) identifies the project management ele-ments that organizations should align with business strate-gy, elements such as project strategy, organization, process,tools, metrics, and culture. (For this paper, we have adaptedthe SPL framework, adding metrics and changing project spir-it to project culture.)

Alignment LiteratureResearch in the literature has examined the idea of align-ment in various management areas. For example, numerousstudies have discussed the alignment between tasks, poli-cies, and practices (e.g., Boyer & McDermott, 1999; Kathuria& Davis, 2001); others have emphasized the relationshipbetween alignment and performance in regards to organiza-tional hierarchy: corporate, business, and function (e.g.,Papke-Shields & Malhotra, 2001; Youndt, Snell, Dean, &Lepak, 1996). The literature frequently mentions researchand development (R&D), production, human resources,and information technology—among others—as functionalstrategies and uses these as the variables to examine align-ment in relation to the business strategy. Because project


management is similar to these functional strategies, it tooshould be aligned with the business strategy (Harrison,1992). However, the traditional literature on aligning proj-ect management with the business strategy is vague: Moststudies link the business strategy with project managementthrough project selection, viewing it as part of the alignmentprocess (e.g., Baker, 1974; Bard, Balachandra & Kaufmann,1988; Cooper, Edgett & Kleinschmidt, 1998a; Englund &Graham, 1999; Hartman, 2000). Added to this is projectportfolio management (PPM and also called pipeline man-agement), another concept suggested in the literature toensure the strategic alignment of project management andbusiness strategy (Turner & Simister, 2000). Cooper, Edgett,and Kleinschmidt (1998b) defined PPM as a dynamic deci-sion-making process through which an organization canupdate and revise its list of active projects. The organiza-tion’s choice of business strategy is what drives their PPMprocess, the major purposes of which are to select and pri-oritize projects (Cooper et al., 1998b), balance projects(Archer & Ghasemzadeh, 1999; Cooper et al., 1998b), alignprojects with the business strategy (Cooper et al., 1998b),manage rough-cut resource capacity (Harris & McKay, 1996;Wheelwright & Clark, 1992), and articulate empowermentboundaries for project and functional management (Harris& McKay, 1996).

Only recently have researchers started to explore thealignment of project management more thoroughly (e.g.,Artto & Dietrich, 2004; Jamieson & Morris, 2004; Papke-Shields & Malhotra, 2001; Srivannaboon & Milosevic,2004). For example, Jamieson and Morris (2004) suggestedthat most of the components comprising the strategic plan-ning process—internal analysis, organizational structures,control systems—have strong links to project managementprocesses and activities. As a result, these strongly influencean organization’s intended business strategies. Similarly,Artto and Dietrich (2004) suggested that an important man-agerial challenge involved in aligning project managementand business strategy is encouraging individuals to partici-pate in using emerging strategies to create new ideas andrenew existing strategies. These studies suggest a need formore research in this area; none, however, explicitly talksabout the process used to align project management andbusiness strategy cohesively and comprehensively.

Research Design

To complete this study, we integrated two overlappingresearch phases: data gathering and data analysis. Duringdata gathering (phase 1), we conducted a literature reviewso as to understand the general research on aligning projectmanagement and business strategy. In parallel with our lit-erature review, we researched case-studies over a 10-monthperiod, studying the nature of alignment in market-leadingorganizations through semi-structured interviews (rangingfrom 60 to 120 minutes per interview) with individualsholding key organizational positions, individuals such assenior managers, project managers, assistant project man-agers, and team members—as well as a few customers—in

order to obtain information from different perspectives(Boynton & Zmud, 1984). In addition to the interviews, wereviewed related documents—meeting minutes, projectdescriptions, risk logs—to triangulate and validate our findings.

In this study, we determined a case study to be a studyof a project in a distinguishable business unit, where a proj-ect is being executed. To select the reviewed cases (compa-nies, projects, and participants), we defined multiple criteriaand identified the cases most relevant to such criteria as the-oretical sampling and project frame of reference (projectscompleted in at least six month or under) as well as the proj-ect management experience of the participants (at leastthree years).

We then classified these projects into different types,including strategic projects (creating strategic positions inmarkets and businesses), extension projects (improving orupgrading an existing product), utility projects (acquiringand installing new equipment or software, implementingnew methods or new processes, reorganization, reengineer-ing), and R&D projects (exploring future ideas, no specificproduct in mind). These projects were also categorized inregards to external customers (external contract or con-sumers), internal customers (internal users or anotherdepartment), or both. We also evaluated each project in rela-tion to such success dimensions as project efficiency, impacton the customer, direct organizational success, and teamleader and team spirit.

After each interview (phase 2: data analysis), we tran-scribed the conversation and coded it. We then wrote casestudies—25–30 pages per case—about our interviews andstudy of the related documents. We sent these cases to thecompanies to verify the accuracy of our transcriptions so asto enhance the validity of the research. We then performedwithin-case, cross-case, and content analyses. Altogether, westudied eight cases (Cases A to H) in seven organizations, astudy that involved nine projects of differing size, type, andcomplexity (42 interviews). During phase 3, we engaged apanel of five experts—from academia (three professors) andindustry (two practitioners)—to validate the essential find-ings. These experts generally agreed on the findings; theyalso contributed views, which we integrated into our find-ings to sharpen our theoretical framework.

For each case study, we employed a self-typing method(Conant, Mokwa, & Varadarajan, 1990) to classify the busi-ness strategy, one based on Porter’s generic strategies(1980), which we used to illustrate the impact of the busi-ness strategy types on the composition of project manage-ment elements. We chose Porter’s generic strategies toclassify business strategies types because of the following:

• Porter’s generic strategies are well accepted and oper-ationalized in the literature (e.g., Harrison & St. John,1998; Kim & Lim, 1988; Miller & Dess, 1993;Reitsperger, 1993; Veliyath, 2000).

• Porter’s generic strategies focus on the strategic posi-tioning dimension of the business strategy (Kald,Nilsson, & Rapp, 2000), the underlying way in which anorganization relates to its product, where differentiation


(i.e., quality, time-to-market), cost, and a combina-tion of both are often addressed as a project’s majorobjectives, constraints, and requirements.

In studying the nature of alignment, we adapted the ele-ments of project management from Shenhar’s SPL frame-work (1999), elements such as project strategy,organization, process, tools, metrics, and culture. We adopt-ed this framework because it is well-publicized and tested.Our study comprised two differentiation strategy companies(Cases A and B), one cost leadership company (Case H), andfive best-cost companies (Cases C, D, E, F, and G). We codedthe examined project as xS or xUS, where x represents a case,S represents a successful project in that case (projects AS, BS,CS, etc.), and US represents an unsuccessful project in thatcase (project AUS).

Results

In this section, we divide our findings into two subsections:The nature of the alignment and the process used for thealignment.

The Nature of Aligning Project Management and Business StrategyFirst, we analyze the patterns of each of Porter’s genericstrategies in relation to each project management element.Then, we propose six propositions—one for each projectmanagement element—at the end of each generic strategy.Propositions for differentiation are represented as D, propo-sitions for cost leadership as C, and propositions for best-costas BC. We also use content analysis to compare cases anddevelop generic propositions (P) that address individualproject management elements without reference to any spe-cific type of business strategy. Lastly, we explain the recipro-cal relationship between project management and businessstrategy, discussing these as the emergent strategic feedbackadapting business strategy.

Patterns in Project Management Elements for DifferentiationBusiness Strategy

1. Project strategy: General rules to guide the behavior(strategic focus) of the project teams—designed tohelp accomplish the goals of differentiation—arerooted in competitive attributes (fast time-to-market,superior product quality). For example, the teamsimplementing projects AS and AUS were directed bytheir senior managers to drop some product features,if necessary, in trade-off situations so as to maintainthe project’s time-to-market focus as mandated bydifferentiation. Similarly, senior managers guidingthe team realized project BS would delay the project’sschedule by three months; as a result, they fixed thefunctionalities so as to retain the focus and contentneeded to achieve superior product quality, a com-petitive attribute of differentiation.

2. Project organization: The project organization tends topossess a high degree of flexibility when compared toother projects in this study; it is aiming to achieve the

competitive attributes associated with a customerfocus. For example, the structures of projects AS, AUS,and BS were relatively flexible in order to help themachieve their desired outcome (speed, quality, etc.).

3. Project process: Project process is relatively flexible,when compared to other projects in this study, andmandated by its competitive attributes of customerfocus. For example, we observed the overlapped andcombined phases in time-to-market differentiation(Case A); we found that the iterative phases ensurethe best quality in quality differentiation (Case B).

4. Project tools: Time-to-market differentiation focuses onscheduling tools, wherein cost tools are more flexiblethan scheduling tools. Quality differentiation focuseson quality control tools, wherein schedule and costtools are more flexible than quality control tools.

5. Project metrics: Project performance measures aredirected by the competitive attributes determined bythe differentiation strategy (e.g., the ability of projectsto meet the schedule, feature sets, quality, and finan-cial expectations). Similar to project tools, time-to-market differentiation focuses on scheduling metrics,wherein cost metrics are more flexible than schedul-ing metrics. Quality differentiation focuses on qualitycontrol metrics, wherein schedule and cost metrics aremore flexible than quality control metrics.

6. Project culture: A project culture of time-to-market dif-ferentiation is built around the schedule focus whereprojects must be finished at the earliest time possible.Therefore, a rapidly changing environment is com-mon; project teams are taking risks and proactivelyaccelerating the project cycle time; as a result, seniormanagers reward their speed. Similarly, product qual-ity is driving the project’s culture of quality differen-tiation; thus, project teams communicate openly andextensively to ensure they achieve a high level ofproduct quality. Such efforts are usually rewarded bysenior managers.

From these patterns we have developed six proposi-tions, one for each project management element:

On the basis of its competitive attributes, the differenti-ation strategy generally drives the focus and content of thefollowing:

Proposition D1: project strategyProposition D2: project organizationProposition D3: project processProposition D4: project toolsProposition D5: project metricsProposition D6: project culture

Patterns in Project Management Elements for Cost LeadershipBusiness Strategy

1. Project strategy: Project strategy is driven by cost lead-ership with the purpose of creating competitiveadvantage through a cost reduction (e.g., processimprovement), which may or may not lead to under-pricing the competition. Schedule is important


because it helps the cost leadership company savemoney if the project finishes on time.

2. Project organization: The structure of an organization’scost leadership strategy is flexible, when it is comparedto other projects in this study, enough to adapt to a lotof change through process improvement so as to attainits ultimate goal of saving costs.

3. Project process: The project process of cost leadershipstrategy is highly standardized and built on tem-plates. The observed project followed the genericsteps and procedures created by the organization (orbusiness unit). Because standardization reduces vari-ation and cost, the idea was that every project followsthe same steps.

4. Project tools: Schedule tools are important becausethese help projects finish on time, thus helpingincrease cost savings. Cost estimates and cost baselinesare required; Gantt charts are often used as a visual dis-play of the project schedule.

5. Project metrics: Schedule metrics are used as techniquesfor tracking projects; by meeting target dates, organiza-tions can save money. Cost-saving, or net present value(NPV), is the ultimate measure of project success.

6. Project culture: Team spirit is cost-centric, focusing oncost reduction goals and getting the job done. Someobserved attributes include open communication,flexibility, and cost efficiency.

From these patterns we have created six propositions,one for each project management element:

On the basis of its competitive attributes, the cost lead-ership strategy generally drives the focus and content of thefollowing:

Proposition C1: project strategyProposition C2: project organizationProposition C3: project processProposition C4: project toolsProposition C5: project metricsProposition C6: project culture

Patterns in Project Management Elements for Best-CostBusiness Strategy

1. Project strategy: The focus and content of project strat-egy are driven by the combination of its competitiveattributes (e.g., quality, innovative, customization,science) determined by best-cost strategy and cost.For example, project strategies of CS, DS, ES, FS, andGS were developed to balance customer needs (e.g.,quality, innovation, science) and project resources.The key is to find the level of the differentiation at areasonable cost.

2. Project organization: Project organization is fairly flex-ible, when compared to other projects in this study,and often involves different functions with the aim ofensuring the best quality, innovative features, ordesired science, and accomplishing this whiledecreasing project cost.

3. Project process: The project process is standardized andbuilt on templates. Every project follows the samesteps with a keen emphasis on achieving the bestquality, innovative features, or desired science at theminimum cost, as in projects CS, DS, ES, FS, and GS.

4. Project tools: Customer voice is crucial for hitting thecustomer’s required quality level and innovative fea-ture level in addition to the cost estimates and base-lines. Other tools—for schedule, scope, and risk—arealso used throughout the project life cycle.

5. Project metrics: Similar to project tools, projectprogress is measured by the ability of projects to meetor exceed the specification of the expected productswhile still maintaining or minimizing expected costs.Quality assurance, cost, and schedule metrics aredominant, important, and used throughout the proj-ect life cycle.

6. Project culture: To maintain a high level of productquality with a minimum cost, the examined projectculture of the best-cost strategy included open com-munication, intensive preparation, trade-off consid-erations, and rewarding project teams for productquality and cost efficiency.

From these patterns, we have outlined six propositions,one for each project management element:

On the basis of its competitive attributes, the best-coststrategy generally drives the focus and content of the following:

Proposition BC1: project strategyProposition BC2: project organizationProposition BC3: project processProposition BC4: project toolsProposition BC5: project metricsProposition BC6: project culture

Figure 1 summarizes the configuration of project man-agement elements, as influenced by each type of Porter’sbusiness strategies that we have previously discussed.

Patterns in Project Management Elements for Porter’s Generic StrategiesThe propositions presented in the previous section are stat-ed in a way that is specific to Porter’s generic strategies. Togeneralize these even more, we used a content analysisprocess to develop generic propositions that address indi-vidual project management elements without reference toany specific type of business strategy. The content analysisprocess searched for what the three strategic types have incommon in regards to how the business strategies dictatethe configuration of project management elements. Thecomparison of the propositions that describe how businessstrategy types of differentiation, cost leadership, and best-cost impact the project management elements revealed pat-terns: All three strategic types influence project managementelements through the competitive attributes that were cho-sen as a basis of competition for individual strategic types.

From the patterns previously outlined, we suggest sixpropositions, one for each project management element:


The competitive attributes of the business strategydrive the focus and content of the following:

Proposition 1: project strategyProposition 2: project organizationProposition 3: project processProposition 4: project toolsProposition 5: project metricsProposition 6: project culture

Reciprocal Relationship of Project Management and Business StrategyInterestingly, we found cases where project managementelements not only support but also impact businessstrategy. We call this relationship the reciprocal relation-ship of project management and business strategy. This rela-tionship occurs when companies obtain from theirprojects information about the ways they adapt theirbusiness strategy, a process that Mintzberg (1994) ref-ered to as an emergent strategy approach, one also knownas the redirection of projects.

An explicit example of this relationship is Project AUS andits business strategy. This project’s failure is related to the win-dow of opportunity. Although the project was initially alignedwith the organization’s business strategy, the product thatresulted from the project was released after the market hadshifted and customers began looking for a more complexproduct. This project also failed because the project team didnot appropriately validate the product definition (as part ofthe project’s strategy) with the key customers throughout itslife cycle. As a result, Project AUS failed because of inefficientstage gate reviews that lacked the feedback necessary to detectsignificant threats, such as a market shift. The company, how-ever, later adjusted its stage gate reviews to cover market shiftsas a measure to prevent such failure from repeating.

This example implies that in order to ensure project per-formance, project managers must realign the project strategy,the organization and its culture, and the processes, tools, met-rics of realizing projects with a project’s progress. Anotherproposition concerning the reciprocal relationship betweenproject management and business strategy involves the oper-

(1) Differentiation Strategy (Examples: Time-to-market or quality differentiation)

Emphasis is placed on:• (Strategy) Schedule or quality project success measure • (Organization) A flexible structure to facilitate project speed or product quality• (Process) A flexible process to speed up projects or maximize product quality • (Tools and Metrics) Schedule- or quality-oriented tools and metrics • (Culture) Rewarding time-to-market speed or quality

(3) Best-Cost Strategy (Example: Quality/cost)

Emphasis is placed on:• (Strategy) Quality and cost project success measures• (Organization) A flexible structure to ensure the best product quality at the minimum cost• (Process) A standardized but flexible process• (Tools and Metrics) Quality/cost-oriented tools and metrics• (Culture) Rewarding quality/cost culture

(2) Cost Leadership Strategy (Example: Process improvement)

Emphasis is placed on:• (Strategy) Cost-efficiency project success measures• (Organization) A flexible structure to adapt to changes in process improvement • (Process) A highly standardized and built-on template process • (Tools and Metrics) Cost- and schedule-driven tools and metrics • (Culture) Cost-conscious culture

Degree of DifferentiationCo

st

Low HighLo

wHi

gh

Figure 1: Summary of project management configuration per Porter’s generic strategies


ating conditions of reviewed projects, which are revealed atstage gate reviews. Results of stage gate reviews may impact thebusiness’s strategies and its competitive attributes because ofenvironmental changes (also known as the emergentapproach [Mintzberg, 1994]).

Proposition 7: Project management elements mayimpact business strategy, as based on the operating condi-tions of reviewed projects.

A Theoretical Framework: Nature of the Project Management-Business Strategy AlignmentTo construct a theoretical framework for the configuration ofproject management elements, one influenced by businessstrategy, we used the seven propositions previously outlined toconnect business strategy and each project management ele-ment (P1 to P6) and vice versa (P7). The nature of the projectmanagement/business strategy alignment is depicted in thetheoretical framework in Figure 2 as the impacting nature, asthat which addresses the relationship between the competitiveattributes of business strategy and the focus and content ofproject management elements.

A company (business unit) makes its strategic choice byselecting competitive attributes that are advantageous (e.g.,time-to-market, quality, cost, and features). These attributesare used to drive the different ways that projects are managedin terms of their foci and contents. For example, if the com-petitive attribute of time-to-market is chosen, the focus or pri-ority of project management elements (strategy, organization,

process, tools, metrics, and culture) is to accomplish the time-to-market competitive attribute. This study defines this focusas schedule-driven (see Figure 2). The content or configurationof project management elements (strategy, organization,process, tools, metrics, and culture) is also tailored to supportthis schedule-driven focus. For example, in case study A, theconfiguration of the project strategy (P1) was tailored to sup-port its schedule focus; the time-to-market competitive attrib-ute adopts a strategic focus that allows project managers toignore cost and product features in making trade-off decisionsin order to attain time-to-market goals. The project process(P3) is similarly tailored to deliver a time-to-market competi-tive advantage by overlapping or combining process phases,milestones, and activities. At the same time, operating condi-tions detected from stage gates (P7) help to redirect projects, ifthere is any change that might threaten the success of the proj-ects. There are infinite combinations of competitive attributesthat companies can use as sources of advantage to competewith their rivals. There are also unlimited alternatives for tai-loring project management elements to support these compet-itive attributes. Propositions 1 to 6 demonstrate how thecompetitive attributes of business strategy configure the indi-vidual project management elements. This should lead to onesingle and generic proposition that describes the interaction ofthe business strategy and project management elements:

Generic Proposition: The competitive attributes of thebusiness strategy drive the focus and content of project man-agement elements.

BusinessStrategy

Project ManagementElementsImpacting Nature

Org.

Process

Tools

Metrics

Culture

StrategyP1*

P2*

P3*

P4*

P5*

P6*

P7*

PM ElementsContents

PM ElementsFocus

Tailored to SupportSchedule-Driven FocusSchedule-Driven

Quality-Driven

Cost-Driven

Feature-Driven

CompetitiveAttributes

Time-to-Market

Quality

Cost Reduction

Feature

Tailored to SupportQuality-Driven Focus

Tailored to SupportCost-Driven Focus

Tailored to SupportFeature-Driven Focus

TheCompetitiveAttributes of

BusinessStrategy

*Propositions

Figure 2: A theoretical framework for the nature of the alignment


The Process Used for the Project Management/BusinessStrategy AlignmentIn this subsection, we analyze the patterns of the processesused by the companies we surveyed to align project man-agement and business strategy. In doing so, we discuss thesimilarities and the dissimilarities across all cases in order togenerate a theoretical framework of the processes thatorganizations use to ensure proper alignment. We per-formed a content analysis to compare these cases and iden-tify the patterns of the alignment processes used across thesecases. The pattern we found revealed that organizationscould divide the mechanisms used to align projects withbusiness strategies into three levels: the strategic, the tactical,and the corrective emergent strategic feedback. Each levelscontained distinct mechanisms to achieve alignment. Table 1summarizes the alignment process of different cases andpatterns upon these levels.

Level 1—Mediating Process at the Strategic LevelThe general steps of the alignment process begin at the strate-gic level, where the long-term business goals are defined andbusiness directions are determined through a strategic plan,through what Mintzberg (1994) called an intended strategy.We found that every sample company had a strategic plan;some used a formal plan, some used an informal one. In allbut two cases, these plans were developed to reflect a three-year planning horizon. One exception was Case B, which atthe time of our interview was a short-term plan (one-yearhorizon) that the company was actively expanding to a three-year range. The other exception was Case G, which used aninformal plan due to the nature of its business (construc-tion). In some cases, roadmaps were included in the strategicplan as the guidance for the company’s (or department’s)future interests, such as a product roadmap (Cases A and B)and an information technology roadmap (Case D).

We also observed that the sample companies used aproject portfolio process—again, some used a formalprocess, others used an informal one—as a mechanism forselecting the most valuable projects that would contribute tothe organization’s goals. To select such projects, and makethem part of the portfolio, many companies used matchedtheir strategic goals with the project’s contribution, with itsstrategic fit. In several cases, the term project portfolio wasnot recognized, but its project selection and prioritizationfunctions were employed (Cases B, E, F, G, and H). In addi-tion, two cases recognized the term project portfolio, but it wasstill an informal process (Cases C and D). Only Case A hada formal project portfolio management process and semi-annual portfolio reviews, one that included such functions asproject selection and prioritization, risk balance, strategicalignment, and capacity management. Table 2 summarizesthese project portfolio processes and functions used by thesample companies.

In general, the mechanisms to ensure the alignmentprocess at this level are what we refer to as “the mediatingprocesses at the strategic level,” which include a strategic planand project portfolio management.

Level 2—Mediating Process at the Project LevelOnce organizations select projects into their portfolio, theyfurther plan the details and execute these throughout the proj-ect life-cycle phases. We refer to these mechanisms so as toensure the proper alignment during the project life cycle asthe mediating processes at the project level, which can be clas-sified into the planning process and the monitoring process.

In the planning process, we found that the companiesused varying mechanisms to ensure proper alignment. Themost explicit planning mechanism used was in Case C: Thiscompany required that project managers identify the align-ment link of their project plans and the goals in their strategicplan. This was accomplished through product definition andproject definition, by linking these with the business goals out-lined in the strategic plan. In the other cases, this was implicit-ly accomplished through the development of the project plan,as based upon the objectives of the projects and the reasonwhy these existed, such as achieving business goals.

We found that as projects progress, most companies usecommon mechanisms to ensure these are properly alignedduring execution, using mechanisms such as project metrics,internal coordination mechanisms (i.e., project manage-ment office involvement and internal sign-off), customerinvolvement (sign-off), and stage gates. This last item, stagegates, is so important that we have separated it from this sec-tion to explain it separately as the mediating process at theemergent strategic feedback level.

Level 3—Mediating Process at the Emergent StrategicFeedback LevelStage gates are points in the project life cycle where projectstransition from stage to stage. The gates represent filters forproject status and provide project teams with the opportu-nity to realign the project to the requirements set by theproject owner. In the sample companies, we observed suchstage gates as milestone reviews for evaluating the projectstatus (time, cost, performance). An exception to this obser-vation is Case A. This company covered staffing level andmarket shift considerations as additional concerns. When aproject fails to meet a stage gate’s requirements (i.e., whenthe project is misaligned), the project team must adjust theproject (if the owner has not killed the project), in accor-dance with the operating conditions of the project.

In certain instances where the operating conditions ofthe project reveals significant changes resulting from inter-nal or external factors, revealing factors that may affect theoverall success of the project if the project manager fails tomanage the changes, the operating conditions will impactthe deployment of the business strategy by changing the pri-orities under which the project is managed. For example, wefound that one of the examined projects in Case A was con-sidered an unsuccessful project by its project team and thecompany’s upper management, even though the was initial-ly well aligned with the company’s business strategy. Part ofthe reason for this perceived failure was that the project wascommitted to the wrong set of customers, which led to apoor product definition of the overall market. By the time


Case Strategic Level of the Tactical Level of the Corrective Emergent Strategic Alignment Alignment Feedback Level of the Alignment

Case A

Case B

Case C

Case D

Case E

Case F

Case G

Case H

Patterns

• Three-year strategic plan (e.g., product map, technology roadmap, business model) • Project portfolio - Strategic table

• One-year strategic plan (four-stage product marketing, product roadmap)

• Three-year strategic information plan • Information technology activity management matrix• Informal project portfolio

• Three-year strategic information plan• Roadmap charts• Alignment charts• Informal project portfolio

• Three-year strategic plan (goals, recommendations and reviews)

• Three-year strategic plan (goals, recommendations and reviews)

• Informal strategic plan

• Three-year strategic plan• Dashboard

Level 1: Mediating Process at the Strategic Level

Strategic planning and project portfolio management processes are the major mechanisms to ensure the proper alignment.

• Dashboard• Flexibility matrix• Bounding box• Project life-cycle phases

• Project metrics and monthly status report• Project life-cycle phases






• Project list• Project metrics and monthly status report• Project life-cycle phases

Level 2: Mediating Process at the Project Level

Processes during project planning and execution are the mechanisms to ensure proper alignment.

• Semi-yearly project portfolio reviews• Gate reviews of individual projects (market shift, staffing level, project status)

• Gate reviews of individual projects (project status)






• Semi-yearly dashboard reviews• Gate reviews of individual projects (project status)

Level 3: Mediating Process at the Emergent Strategic Feedback Level

Stage gates are the mechanisms to ensure proper alignment.

Table 1: The alignment process and patterns across all cases


the project was finished, the operating conditions of theproject had changed (the market had shifted), and therewas no longer a place for the product developed throughthis project. In this case, the stage gate failed to providethe organization with the information it needed to realignits process of managing the project to meet those changes.Once the problem was identified at a subsequent stagegate, the project team should have adjusted the product’sdefinition (as part of the project strategy). Unfortunately,the project team failed to identify in a timely manner thechanges that were necessary to save this project. As aresult, the team was not able to react to those changeseffectively. To accommodate for this unsuccessful effort,the company later adjusted its stage gate reviews to covermarket shift considerations.

The mechanism previously explained is a feedbackloop that emerges during project execution. It is a resultthat is not planned or intended but that emerges from astream of managerial decisions through time, throughoutwhat Mintzberg (1994) calls the emergent approach. Inother words, the operating conditions of reviewed projectsare expected to support the company’s business strategiesby helping it adapt the business strategy and its competi-tive attributes to environmental changes.

Operating conditions refers to the actual conditions ofproject implementation, which may be equal to thoseassumed in the project-planning phase. These may alsodiffer from those assumed during planning as a conse-quence of environmental changes in the marketplace.These changing business and project conditions can berevealed during the stage gate reviews as well as any phaseof development. Therefore, a combination of intended andemergent strategies is needed to align project managementand business strategy.

A Theoretical Framework: Process for ProjectManagement/Business Strategy AlignmentTo further develop the theoretical framework we proposed inthe section titled Nature of the Project Management/BusinessStrategy Alignment, we combine propositions and mediatingprocesses into a single framework, as is shown in Figure 3. Thepropositions are used to connect business strategy and eachproject management element through statements of relation-ships (a two-way influence). Mediating processes are mecha-nisms that organizations use to align project managementand business strategy. For the sake of illustrating the process-es in general, we have used the traditional phases of the proj-ect life cycle, including conception, planning, execution, andclosing. Each company, however, uses different project life-cycle phases, selecting those that are most relevant to theirindustry, company culture, and other significant issues.

It is the competitive attributes of the business strategythat drive the focus and the content of the project manage-ment elements. The propositions we have outlined in theframework describe the interrelationships between projectmanagement elements and business strategy. To establishand maintain the processes used to align project manage-ment elements and business strategy, we suggest that organ-izations use mediating processes—strategic planning andproject portfolio management—at the strategic level tointerpret their business strategy in the context of projectmanagement. Organizations initiate and select projects fortheir project portfolio to fulfill business needs; they thenimplement a standard life cycle that includes project plan-ning and project monitoring (the primary mediatingprocesses at the project level) to ensure the quality of thealignment between project management elements and busi-ness strategy. One of the major control mechanisms organi-zations use to ensure that their projects align with their

Case Formality Used Project Portfolio Process Functions

Case A

Case B

Case C

Case D

Cases E & F

Case G

Case H

Formal and recognized

Informal and not recognized (the term is not used)

Informal but recognized

Informal but recognized




Project selection and prioritization, risk balance, strategic alignment, and capacity management

Project selection

Project selection

Project selection and prioritization

Project selection

Project selection and prioritization, and risk balance

Project selection and prioritization

Table 2: Project portfolio process


expectations as the project progresses from one projectphase to the next is the stage gate. This mediating processprovides strategic feedback that can lead to what Mintzberg(1994) calls emergent strategy.

Discussion

In this study, we explained an inductive logic process—fromspecific to general practices—as a means to derive ourpropositions. The general process of developing thesepropositions was based on case study research, which heav-ily used within-case, cross-case, and content analyses. Wealso developed detailed propositions for Porter’s genericstrategies, which we generalized into typology-free proposi-tions. We then developed a single proposition suggesting amost generic relationship between project management ele-ments and business strategy.

Similarly, we used inductive logic to develop anoverview describing the mediating processes at different lev-els. Our general process was based on our case studyresearch and used within-case and cross-case analyses. Theframework resulting from this analysis explains the align-ment process at the strategic level, the project level, and thecorrective emergent feedback level.

Our framework satisfies the major characteristics for a

theoretical framework, as suggested by Dubin (1978), whichincludes units/variables, laws of their interaction, systemboundaries, and propositions.

• Units/ variables: The variables or units of analysis in theframework consist of two major elements: projectmanagement elements (strategy, organization, process,tools, metrics and culture) and business strategies (dif-ferentiation, cost leadership, and best-cost).

• Laws of their interaction: The interaction of variables inthe framework can be seen as a two-way influencebetween project management elements and businessstrategy, one that is perceivable through a formal or aninformal alignment process by translating businessneeds into project actions and using project operatingconditions to more effectively deploy business strategy.

• System boundaries: The boundary of the framework isthe organizational business units or departments sup-porting them. The project management/businessstrategy alignment occurs within this boundary.

• Propositions: Seven propositions of the frameworkare derived from the content analysis of multiplecases. The propositions explain the unique interac-tions of each project management element with thebusiness strategies.

BusinessStrategy

PM Elements(Focus and Content)

Mediating Processes

Org.

Process

Tools

Metrics

Culture

StrategyP1*

PLC

P2*

P3*

P4*

P5*

P6*

P7*

Strategic Level

Emergent Strategic Feedback Level

Project Level

StrategicPlanning

Desired Products/Services

High Level Analysis

Projects Are Selected

Project PortfolioManagement

Portfolio Review

CompetitiveAttributes of

BusinessStrategy

*Propositions

Conceptual

Planning

Execution

Closing

Conceptual

Planning

Execution

Closing

Conceptual

Planning

Execution

Rejected/Killed

Closing

Represents Stage Gates

Represents a Feedback Loop (emergent approach) when the project is required to change or is rejected at the stage gates

Figure 3: A theoretical framework for aligning project management with business strategy


Our study expands on previous, mostly anecdotal workby incorporating a rigorous theoretical approach into theproposed framework. Although Jamieson and Morris (2004)identified strategic planning, portfolio management, andemergent approach as important steps in the alignmentprocess, with information that supports this research, theydid not provide a framework and did not position theirresearch as a set of case studies or as a theoretical foundationfor alignment. Furthermore, Turner and Simister (2000)argued, conceptually and without an empirical validation,that portfolio management is an important step in aligningprojects with the business strategy. In comparison with theexisting literature, our framework contributes three elements:

• Comprehensive: This framework includes—andrelates—all levels of participants (executives, middlemanagers, project managers, team members, cus-tomers), different levels of management processes(strategic, tactical, operational), and variables (projectmanagement elements, business strategy). It integratesthese into a coherent structured set of relationshipsbased on propositions that describe the phenomenonof the project management/business strategy align-ment in different situations.

• Empirically established and validated: The framework isbased on a diverse set of companies and projects aswell as real-world data. It also takes a multi-level view(no single-source bias), an approach that enabled usto develop a strong theoretical framework.

• Contingent: The framework captures different configu-rations of project management elements to accountfor specific business strategies (differentiation, costleadership, and best-cost), and thus presents a contin-gency approach based on the differences.

Research Limitation

Although Eisenhardt (1989) argued that four to ten casesprovide a sufficient range of measure and for analytic gener-alizations, one major limitation in our study is the relative-ly small number of cases that we used to develop theframework (eight cases). This study may also suffer from abias of company management views. However, we were ableto minimize any such bias by using multiple data sources(review of related documents received from companies, theexisting literature among others) and validating the findingswith a panel of experts.

Future Study

The research findings and limitations suggest that the align-ment measurement methodology deserves an empiricalstudy. If such a study uses a comprehensive approach,researchers could standardize the measurement and create aframework for comparative studies of aligning the variousproject and business strategy types. This would also enableresearchers to work toward determining the degree of align-ment required to assure project and business success in rela-tion to different circumstances. Researchers should apply sucha contingency approach in subsequent studies. What is also

needed is a large sample study that focuses on the quantita-tive correlations of various strategy types and project man-agement elements. The point here is to find which strategiesneed which project elements to contribute to project success.

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DRAGAN Z. MILOSEVIC, PMP, is an associate professor of engineering and technology management in the Department of

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SABIN SRIVANNABOON received a PhD in systems science in engineering management from Portland State University (PSU). He

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NEW POSSIBILITIES FORPROJECT MANAGEMENT THEORY:A CRITICAL ENGAGEMENT

This paper provides avenues for a broader

engagement with the conceptual consider-

ations of projects and project management

with the aim of creating new possibilities

for thinking about, researching, and devel-

oping our understanding of the field as

practiced. Attention is drawn to the legacy

of conventional but deeply rooted main-

stream approaches to studying projects

and project management, and implications

of the specific underpinning intellectual

tradition for recommendations proposed to

organisational members as best practice

project management. The identified con-

cerns and limitations are discussed in the

context of project management evolution

where taken-for-granted advantages of

project management as a disciplined effec-

tive methodology and its popularity are

reexamined. The paper sheds light on a

variety of voices from both scholarly and

practitioner communities that have

attempted to respond to this paradox and

move the field forward. Taking issue with

conventional labels of project success or

failure, and drawing attention to alternative

theoretical and methodological proposi-

tions, the argument turns toward critical

management studies, outlining the impli-

cations of this intellectual tradition for stud-

ies of projects, project management,

project performance, and individual skills

and competencies to cope with social

arrangements labelled “projects.”

Keywords: project management theory;project management methodology;research and development


Vol. 37, No. 3, 111-122, ISSN 8756-9728/03

Introduction

Concepts developed by the academic community… must be recoveredfrom operational and textbook definitions and reconnected to ways ofseeing and thinking about the world. In the dialectics of the situation

and the talk of individuals with different perspectives, the emergence of new waysof talking becomes possible” (Alvesson & Deetz, 2000, p. 146).

Several prominent authors (Koskela & Howell, 2002; Maylor, 2001; Morris,2004; Morris, Patel, & Wearne, 2000; Winch, 1996) have raised the need to intro-duce alternative theoretical approaches to the study of projects, and to identify theimplications that they may have for how we organise and manage projects. The pur-pose of this paper is to address this need, by identifying space outside of the tight-ly-defined and densely populated conceptual landscape of mainstream projectmanagement where other perspectives, other concerns, and other agenda may bearticulated and explored1. Extant project management literature, we would argue,tends to rely upon the language of design, regularity and control to propose mod-els and prescriptions as a route to increasing the ability of humans to control com-plex worlds (Stacey, 2001; Wood, 2002), to the exclusion of other approaches orways of reasoning. As a whole, research into projects and project managementremains heavily reliant on a functionalist, instrumental view of projects and organ-isations, where the function of project management is taken to be the accomplish-ment of some finite piece of work in a specified period of time, within a certainbudget, and to agreed specifications. Most textbooks and professional associationsfor project management promote this normative view of the field as practiced,which can be summarised as the application of knowledge, skills, tools, and tech-niques to project activities to meet project requirements. Governed by the traditionof “natural sciences” (e.g., systems theory), the project management body of knowl-edge emphasises the role of project actors and managers as “implementers” nar-rowing their role to the issues of control (time and cost) and content (plannedscope of work), marginalising their wider potential role as competent social andpolitical actors in complex project-labelled arrangements. Dissemination of “bestpractice” carries a message about the possibility of the progressive rationalisation ofaction and a belief in the progressive and cumulative character of knowledge. Thistypically assumes rationality, universality, objectivity, and value-free decision-mak-ing, and the possibility of generating law-like predictions in knowledge.

ABSTRACT

SVETLANA CICMIL, Bristol Business School,University of the West of England Bristol, U.K.

DAMIAN HODGSON, Manchester Business School, University of Manchester, U.K.

“


The limitations and challenges to this view of projectsare, however, widely recognised across the field, and increas-ingly within the project management community itself.Project management has attracted significant attention froman increasing number of researchers and practitioners acrossmanagement disciplines, coincident with the increased“adoption” of project-based work across industrial sectors(Cicmil, 2001; Hodgson, 2002; Kreiner, 1995; Packendorff,1995). At the same time, the foundations and practical appli-cation of this managerial technology, embodying the scien-tific achievements of operational research in work schedulingand control under specific constraints of time, cost, and aunique outcome, have been seriously questioned by both theacademic and practitioner communities. Several importantwriters in this field maintain that little radical examination ofthe intellectual foundation of project management has beendone within this stream of research, arguably since the 1960s(Koskela & Howell, 2002; Morris, 1997). In the same vein,writers such as Frame (1994, 1995, 1999), Morris (1997),and Maylor (1999, 2001), among others, have called for areexamination of the dominant doctrines in project manage-ment for their failure to deliver on their promises.Nonetheless, there are limitations to this self-critique; thetendency in the field is still to start from the assumption thatthe basic framework of project management is compellingand essentially sound. Efforts have therefore been directedinstead towards searching for improvements in traditionalmodels and skills (see, for example, Maylor, 2003; Meredith& Mantel, 2003; Young 1999, 2003) towards a model thatbetter represents the “true” nature of projects, or for amethod of project management based on “critical successfactors” (Belassi & Tukel, 1996; Belout, 1998; Boddy &Paton, 2004; Kharbanda & Pinto, 1996; Stallworthy &Kharbanda, 1985), with the assumption that such an idealmodel can objectively exist in the world of practice. There islittle evidence yet that the resulting torrent of competingstreams of thought, methods of inquiry, and best practiceclaims and propositions has creatively contributed either toconstructive debate in the field or to the resolution of diffi-culties encountered in practice.

To address this situation, we intend through this paperto create an opportunity to stand back and problematisethat which seems known and accepted about projects.Taking this concern as its point of departure, our aim is toopen up new trajectories within the research agenda in thefield of studies relevant to projects, project performance andproject management (Hodgson & Cicmil, 2006a). The start-ing objective is to critically evaluate the intellectual founda-tions of project management as a field of study and apracticing discipline, to expose and understand the keyobstacles to innovative research and the creation of knowl-edge communicable and relevant to practitioners, and tobroaden the research agenda by encouraging a more criticalapproach in this area of organisational life. In particular, thepaper will explore the potential of critical research inenhancing the intellectual basis of the project managementsubject area.

As a tentative starting point, therefore, we would pose somefundamental questions that might guide our reflection on howprojects are conceived and how they could be conceived:

• Is there a universal explanation of what projects areand how projects evolve?

• What is the meaning behind the concepts in use, thatis, the terms such as “project”, “project management,”and “project success”?

• What are the implications of the “mainstream” defi-nitions of “project’”and “project management” for thenature of knowledge and the intellectual foundationsof studies of project-based organising, work, andmanagement?

• What are the consequences of project organising ascurrently prescribed, both for project managers andproject workers?

• What alternative perspectives upon projects existbeyond the mainstream?

• Whose interests are being served by the reproductionof the status quo in the field?

To understand why we have highlighted this sort of con-cern (and, equally importantly, why we feel such concernsare not routinely considered in the vast “mainstream” liter-ature on projects), we will need to locate our discussionwithin a reexamination of the evolution of project manage-ment. In doing so, we aim to underline why projects meritsuch serious attention, and to account for their rising popu-larity and importance in contemporary organisations.

Project Management in Perspective

Project management emerged as a social practice in thepost-World War II development of technology and infra-structure. Although for many writers, project managementhas a much longer ancestry, traceable back to prehistorictimes, we would strongly oppose this ahistorical perspective(Hodgson & Cicmil, 2006b), which affords a spurious pedi-gree to techniques, models, and procedures that have exist-ed in something close to their current incarnation forcertainly less than a century. The emergence of project man-agement is described in some detail by Morris (1997) andEngwall (1995), highlighting its development in practicethrough a number of major projects that can be traced backto the Manhattan project in the 1940s. Although the U.S. oiland chemicals industry played a major role in this period,the majority of the groundwork was done in U.S. defenceand aeronautics in the 1950s, including widespread use inthe Apollo space programs (Harrison, 1981). As is evidentfrom contemporary writings (Gaddis, 1959), the Cold Waracted as a significant driver on project management devel-opment in the U.S. throughout this period. The intellectualactivity in developing the field until the 1960s was basedalmost exclusively on quantitative techniques within opera-tional research (OR). During the 1960s and 1970s, the pre-dominantly technicist approach was criticised and thetheoretical foundations of the field expanded (Packendorff,1995; Winch, 1996) to encompass traces of organisational


research and theories largely concerned with project organi-sation structures (i.e., the matrix form), project leadership,the role of human resource management in facilitating proj-ect work and advice on project team building. In the 1980sand 1990s, there was a revival of the OR-based project man-agement research driven by the developments of computer-based technology, which resulted in the creation andpromotion of sophisticated expert systems for project plan-ning, control and risk analysis, and an increased use of ter-minology such as project information systems, projectcommunication networks, etc. This was in no small measuredue to the awakening of public sector clients, including gov-ernment agencies, in their search for robust managementmodels and procedures to minimise disasters of budget andtime overruns and questionable quality associated with theproject work and outcomes delivered by contractors. A vari-ety of project control methodologies (for example, thePRINCE family) and risk management schemes have beendeveloped against such a background. Despite the increasedsophistication of these models for project planning andmonitoring, researchers found that only the most basic onesare actually used by practitioners and that they are notalways used as intended (Packendorff, 1995).

The 1990s saw an expansion of the project managementfield of study from its engineering heartlands into whatbecame widely accepted as a “multidisciplinary subject,” sig-nificantly engaging business and management researchersand educators (Winch, 1996). This coincided with the pro-motion and acceptance of project-based work, organising,and management across industries and sectors, as a power-ful and universal organisational response to the challengesof managing in a complex world. As Clarke (1999, p. 139)stated: “In a world where change is becoming increasinglyimportant, tools such as project management, if used prop-erly, can provide a useful way for organisations to managethat change effectively.” It is usually based on the introduc-tion of a set of procedures, or on a new model of adminis-tration with the strategic aim to enhance competitivenessthrough a more effective intra-organisational integrationand optimal utilisation of scarce resources (Cleland, 1997).

The contemporary surge in interest in project manage-ment is typically explained by reference to the increasingrecognition of “the project” as a versatile, flexible, and pre-dictable form of work organisation. Its image as a universalsolution to organisational problems has been establishedon the promotion of specific techniques for planning, mon-itoring, and control, tried and tested in the operations of tra-ditionally project-oriented industries such as defence,aerospace, and construction (see, for example, Frame, 1999;Maylor, 2001; Young, 1999). Projects and project teams havebeen hailed in both practitioner and academic discourses asunique economic and social processes on which the emerg-ing “knowledge economy” heavily relies (Briner & Hastings,1994; Clarke 1999; Cleland, 1997; Cleland & Ireland, 2002;Frame, 1994, 1995; Meredith & Mantel, 2003; Young,2003). They are promoted as universally applicable tem-plates for integrating, by design, diverse functions of an

organization that enable concentration of flexible,autonomous, and knowledgeable individuals in temporaryproject teams, for the focused accomplishment of goals effi-ciently, timely, and effectively, for customer satisfaction andcompany benefits. Despite the various streams of praise andcriticism in the last 50 years, then, project management andprojects have now been accepted by many both within andoutside the field as natural, self-evident, and indispensable.

The promotion of projects and project managementcontinues to expand as knowledge-intensive firms increas-ingly based on project models have been acclaimed by manyas the organisation of the future (Frame, 1999; Weick,1995). Thus, Frame, for example, claims confidently that theunderlying reason for the projects becoming the centralfocus of management activity in many organisations can bestated “in a single word: competition” (1999, p. 4, italicsoriginal). The literature since the 90s has drawn attention tothe centrality of project-based organizing and project work-ing in the processes of information sharing and knowledgemanagement in organizations (Davenport & Prusak, 1998;De Fillipi, 2001; Hansen, Nohria, & Tierney, 1999; Silver,2000Wiig, 1997). Cleland (1997) pointed out that, as proj-ect teams evaluate new technologies and resources, theygain insights into the need for making changes. Projects sup-posedly provide, according to Cleland, a central point wherenew knowledge, skills, and attitudes can be developed. Thereceived wisdom of this kind has resulted in a widespreadadoption of “the project” in contemporary organizations asthe focal unit of their operations. Not only are projects con-sidered suitable ways to control endeavours in a turbulentenvironment (Ekstedt, Lundin, Soderholm, & Wirdenius,1999), but also more importantly, they are regarded as theappropriate way to stimulate a learning environment andenhance creativity so as to deliver complex products(Hobday, 2000). Despite the inherent contradictionbetween these two arguments for project-based organising(Tjaeder & Thomas, 2000), it is precisely upon this ambi-tious promise to deliver both “controllability and adven-ture” (Sahlin-Anderson & Söderholm, 2002) that theattraction of organisational “projectification” is founded.

In certain academic circles, the expanding influence of“project-based work” has been referred to as the projectifica-tion of society (Jessen, 2002; Lundin & Söderholm, 1998;Midler, 1995; Sydow & Staber, 2002). In essence, this notionattempts to capture the growing colonisation of all quartersof life by project-related principles, rules, techniques, andprocedures, aspiring to form a new “iron cage” of projectrationality (Hodgson & Cicmil, 2003). As more and moreorganisational members are consequently being redefinedas project workers and project managers across industrial sec-tors, both scholarly and practitioner communities arereflecting upon the implications of this shift for employeesand organisations (Hodgson, 2002; Packendorff, 1995),particularly in terms of the impact on workplace identity,reshaped intersubjective interaction, and increased controlover the individual through ideologies of efficiency and per-formativity (Fournier & Grey, 2000). These mechanisms are


actualised in a number of project-related contemporary ten-dencies including the use of information technology (IT) inbusiness process restructuring, the promotion of self-man-aging teams, the ideology of the “knowledge society” andthe “knowledge worker,” and the emergence of the project-based organisation. The resulting drive towards the profes-sionalisation of the project management discipline has beenaccompanied by the struggle and tensions involved in con-ceptualising, promoting, and agreeing on the universallyacceptable document that should outline the formal bodyof project management knowledge. This struggle reflects andencapsulates the competition between the nationally-embedded professional associations of project manage-ment, with distinct bodies of knowledge proposed by the(U.S.-based) Project Management Institute, but also the(U.K.-based) Association for Project Management, theJapanese Engineering Advancement Association (ENAA),the International Project Management Association(European in origin), in addition to the British StandardsInstitute (BSI) Guide to Project Management (BS6079) andthe numerous corporate models such as Ericsson’s “PROPs”model (Linde & Linderoth, 2006). Despite the ongoingdebates, however, project management is the focus ofunprecedented interest in the first decade of the new mil-lennium. This interest in many senses flies in the face of thequestion marks that remain over the effectiveness of projectmanagement, the theoretical underpinnings of project man-agement theory, and the transferability of project manage-ment into novel industrial sectors and organisations.

Project Management in Question

In the closing decade of the 20th century, project manage-ment was challenged more seriously than in any previousperiod. Despite the levels of research founded on the pre-sumptions of instrumental rationality in decision-makingand control, it is increasingly apparent that accepting andapplying such orthodoxy does not eliminate project failures,nor does it guarantee project success (Williams, 2004).Although the project management body of thought hasbeen substantially modified over the last decade, the coreconcerns continue to shape academic enquiry and practi-tioners’ discourses about projects and project management.Contemporary studies of project performance continue toindicate the disparity between the maturing body of projectmanagement know-how and the effectiveness of its applica-tion (Atkinson, 1999; Belassi & Tukel, 1996; Baker, Murphy,& Fisher, 1983; Morris et al., 2000; Williams, 1995), as anincreasing visibility is being given to the claims about proj-ect and project management failures, and about dissatisfac-tion with project performance and outcomes by affectedstakeholders. Simultaneously, a growing body of literature,as well as a growing body of empirical evidence and thevoices of numerous practitioners, supports the view that thevery reason for using projects and project management as amethodology for organisational innovation and change is atthe heart of project failures (Clarke, 1999; Maylor, 2001;Thomas, 2000).

A glance at the content of recent public reports andthose recorded in previous studies (e.g., Atkinson, 1999;Ewusi-Mensah & Przasnyski, 1997; Flyvbjerg, Bruzelius, &Rothengatter, 2003; Flyvbjerg, Holm, & Buhl, 2002; Morris& Hugh, 1987; Standish Group, 1995; Williams, 1999;Winch, 1996) provides an insight into frequent cost over-runs, delays, and underperformance in terms of quality anduser satisfaction, which seem to have become the rule andthe reality of contemporary projects. In 1995, for instance, itwas estimated by the Standish Group that American compa-nies and government agencies spent US$81-billion on can-celled IT projects (Ewusi-Mensah & Przasnyski, 1997). Inaddition, the same source reports that, in total, 31% of IS/ITprojects were deemed complete failures; 53% were late, overbudget, and did not meet expectations; only 9% of IT proj-ects were delivered on time or within budget; and a mere16% were considered successful. The average time overrunhas been identified as being 222% of the original estimate.The question often raised in public about this issue is, gen-erally, how the IT/IS project risk (both financial and servicerisk) is shared and transferred among the public sector andprivate sector participants.

In January 2000, The Financial Times reported, for exam-ple, on the “fiascos” of the major government IT projects inthe U.K. “stemming from basic project errors” that “high-lighted the need for greater professionalism in project man-agement.… The government’s track record in projectmanagement has been, to say the least, poor” (Whitehall,2000). Here, the blame was attributed to a lack of specialistproject management knowledge among some civil servantsand ministers, and to different approval systems, whichhave, according to some observers, resulted in unrealisticproject deadlines. A growing body of evidence shows thatsimilar observations and conclusions have been made inrelation to IT/IS in other sectors and types of organisations.It is not only the poor performance of IS/IT projects that hascome under public scrutiny. Bowen, Clark, Holiday, andWheelwright (1994) reported that nearly 30% of productdevelopment projects never live up to business objectives.According to Winch (1996), U.K. government-procuredconstruction projects ranging from hospitals to roads, sufferfrom, on average, 14% cost overrun and 11% time overrun.More recently, the £214m refit project of the Royal OperaHouse in Covent Garden resulted in a cancelled openingperformance, and the remaining shows being run at hugetechnical risks associated with the operation of newlyinstalled but not properly tested and mastered backstageequipment (Royal Opera House, 1999). The Jubilee lineextension project for the London Underground, for exam-ple, has been characterised as having been “…a long saga ofovershot deadlines and overspent budgets” (Winder, 1999,p. 8). In the United States, the belated opening of DenverInternational Airport after four embarrassing postpone-ments, various scandals, and a final cost of US$5 billionagainst the budgeted US$1.5 billion, has been held up as yetanother example of project failure (Dempsey, Goetz, &Szyliowicz, 1997). The much-derided construction of the


Scottish Parliament Building was described by the Fraserreport in September 2004 as being two-and-a-half yearsbehind schedule with costs running approximately 10 timesmore than the original estimate of £40m. The conclusiondrawn about the destiny of such projects as a rule, inherentin their very nature, is simple: “These projects never goaccording to plan” (Royal Opera House, 1999).

In light of this, it is unsurprising that governments aretaking a greater interest than ever before in project manage-ment, in an attempt to address this apparently perennialfailing of project management techniques. As previouslynoted, governments, and, in particular, the U.S. government,has been closely involved in the development of projectmanagement models and techniques for over half a century.The U.K. Office of Government Commerce (OGC) withinthe British Treasury, for example, has developed and pro-moted the well-established PRINCE and PRINCE2 models,and is currently taking the lead in setting up Centres ofExcellence for Project and Programme Managementthroughout the U.K. Similar initiatives by government agen-cies in North America and elsewhere indicate the serious-ness with which project management models and practicesare now considered in the public sector. Meanwhile, theongoing professionalisation of the field of project manage-ment, and the increased influence of professional associa-tions through accreditation of training and credentialism,draws significant support and gains moral legitimacy fromthis perceived role in protecting public interests and ensur-ing the effective use of public funds.

Diagnoses and Prescriptions

Although the existence of a crisis of some kind in the fieldof project management is recognised in many (although notall) quarters, the diagnoses in the field are unsurprisinglyvaried. For many established project management writers,the failings of project management are to be expected in amaturing field. As techniques are further honed, and mod-els are perfected through longitudinal and cross-sectoralresearch, it is assumed that the field will one day settle upona reliable and basically effective model and array of tech-niques. Others see the problem as far more deeply rootedin the fundamental principles upon which the field ofproject management has been established. In this section,we will look at each of these accounts in turn, consideringfirst the attempts by the mainstream of project manage-ment to confront the very real failings in the discipline,before turning to a more critical diagnosis of the currentstate of project management.

It is not our claim, then, that project management as adisciplinary area is unaware of, or unconcerned by, the lim-itations and continued failings of project managementmodels and methods. There is a long-standing debate on theinternational scene about the formulation of the formal,professional project management body of knowledge, inwhich important questions are posed by the proponents ofproject management about the boundaries of the projectmanagement subject area, its purpose, practical application,

and relationship with other aspects of organisational andmanagerial reality (Frame, 1999; Meredith & Mantel, 1995,2003; Morris et al., 2000; Walta; 1995; Wideman, 1995;among others). Despite the significant presence of project-based working and organising across industrial sectors andthe problematic qualifications of project outcomes as suc-cess or failure, a number of authors note that the develop-ment of project management knowledge remains unstableand fragmented. As a consequence, the dream of establish-ing project management as an exemplary field of manage-ment science is becoming increasingly remote. Questionshave been raised about the underlying belief system thatexhibits a strong bias towards functionalist/unitarist tradi-tion, reductionism, operational research, and “how-to-do”prescriptive forms of intellectual output (Buchanan &Badham, 1999; Kreiner, 1995; Packendorff, 1995). It wasmainly in the 1990s that critical analysis of social and polit-ical power associated with projects as organisational andsocial arrangements, and project management as a practiceand as a social grouping emerged in an explicit form(Buchanan and Badham, 1999; Buchanan & Boddy, 1992;Kreiner, 1995; Lundin & Hartman, 2000; Lundin & Midler,1998; Packendorff, 1995).

Nonetheless, the response to this crisis has so far been ayet-greater emphasis on technicist solutions, quantitativemethodologies, positivist methodologies and a strongerreliance on instrumental rationality. In one attempt to movethe field forward, Atkinson (1999) asserted that it hasbecome an impossible, and, most likely, non-“value-adding”endeavour to define project management in terms of the tra-ditional “iron triangle” principles, emphasising the achieve-ment of time, cost, and quality objectives as the majorjustification for the role of project management. Accordingto Atkinson, the attention should be refocused from theseefficiency measurements, which are being questioned asappropriate measures of project success (see also Baldry,1998; Belassi & Tukel, 1996; Chapman, 1998; Maylor, 2001).

The issue of ambiguity associated with qualifying a proj-ect as success or failure has recently attracted scholarly atten-tion (e.g., Boddy & Paton, 2004; Buchanan & Badham,1999; Clarke, 1999). The debate focuses on a more strategiclevel of decision-making, in which project failure appears tobe “strategic” rather than linked to technical problems, andis seen as a result of political processes of resistance inorganisations. Accounts pointing to the evidence of mount-ing dissatisfaction and lack of support imply a range ofsocial and behavioural factors behind project failures. Otherauthors suggest the need for a wider picture of what goes onin social construction of projects and project managementby focusing on who is included in, and who is excludedfrom, the decision-making process, analysing what deter-mines the position, agendas and power of different partici-pants with respect to issues, and how these different agendasare combined and resolved in the process by which the deci-sions are arrived at (Flyvbjerg et al., 2003). In the context ofIT/IS project failures, Taggert and Silbey (1986) cynicallypropose a political-development cycle of projects: wild


enthusiasm, disillusionment, total confusion, search for theguilty, punishment of the innocent, and promotion of non-participants, in contrast to the conventional rational projectlife cycle (PLC) model, which neatly unfolds as a successionof stages: conception and feasibility study, requirementanalysis and specification, design and development, imple-mentation/execution, and project termination.

On the basis of his research into IT projects, Fincham(2002) argued that project failure can be interpreted in awide range of ways, joining the writers who focus on politi-cal discourses, language and interpretation related to organ-isational reporting on project performance. Arguing that allprojects exhibit, to a smaller or larger extent, a dimension oforganisational innovation and change, Fincham suggestedthat the attributions of “success” and “failure” can also beexplored as narratives that are involved in many forms ofchange and innovation in organisations. “Through a kind ofsocial labelling events are formulated into evolving ‘stories’that evoke either status or stigma and play a powerful role inordering behaviour” (Fincham, 2002, p. 1). From that per-spective, the management of projects and the change associ-ated with its initiation and outcomes is equated with the“management of meaning” (Huczynski & Buchanan, 2001),or with symbolic attempts to legitimise project proposalsand particular definitions of problems and solutions in theface of competing ideas. Similarly, Fincham (2002)observed that “[t]he gloss of success is often critical for proj-ects that may involve large expenditures and much uncer-tainty” (p. 1), with expectations to justify huge, riskyinvestments. Such a frame of reference emphasises the needto understand organisational processes of power, politics,structure, and their interplay with the nature of interactionamong individuals and interest groups involved in develop-ment and implementation of a project.

Table 1 summarises different approaches to under-standing project failure by distinguishing three perspectivesand linking them to a wider domain of the project manage-ment process. This table has been adapted from Fincham(2002), who termed the three approaches as rationalist,

process, and narrative. The first two essentially reflect theidea of Sauer (1999) who differentiates between a factor-based approach and a process approach to project failure,which is largely present in the extant project managementbody of thought. The third (narrative—Fincham, 2002) isrelated to a much less frequent approach to project per-formance research, but is the one that is of most interest tothis paper.

The exploration of the performance characteristics ofpublic initiatives, such as large-scale engineering projects,has expanded these performance measures to include a dis-cussion of the role of institutions, risks, and governance inproject success (Flyvbjerg et al., 2003; Miller & Lessard,2000). For others, it is the paradoxical feedback that hindersthe effective adoption of project-based working and organ-ising as a structural innovation in complex business envi-ronments. Whereas project management has beenmobilised as a blueprint for structuring and coordinatingorganisational change, according to Clarke (1999): “Peopleoften do not see project management as something to helpthem but rather something which is mandatory, serving lit-tle useful purpose” (Clarke, 1999, p. 144). Clarke identifiedthe following as problematic in the application of projectmanagement as a vehicle of change; the rigid “standardisa-tion” of project management as the mode of change man-agement that often causes cultural clashes; projectmanagement, or “managing by projects” or becoming a“project-based” organisation is often regarded as anothercontrol mechanism, a “corporate reporting” tool; the inade-quate formal completion of change projects; project over-load syndrome; individual resistance to imposed proceduresand practice, and a lack of confidence and motivation. Itbecomes obvious that, frequently, the very principles ofeffective, structured project management methodology aresimultaneously its major causes of failure.

Another influential attempt to address the malaisecomes from what is known as the “Scandinavian School” ofproject studies (Ekstedt et al., 1999; Lundin & Hartmann,2000; Lundin & Midler, 1998; Lundin & Söderholm, 1995;

Perspective Form of OrganisationalBehavior and Action

MethodologicalFocus

Success and FailureSeen As

Objective and polarised states

Outcomes of organizational processes

Social constructs; paradigms

Simple cause and effect

Socio-technical interaction

Interpretation and sense-making; rhetoric and persuasion; critical/ hermeneutics

Organisational goals; managerial and organizational structures surrounding the project

Organisational and socio-political processes; projects as form of a decision outcome

Organisational and socio-political processes; symbolic action; themes

Rational/normative

Processual

Narrative

Table 1: Perspectives on project success and failure (adapted from Fincham, 2002, p. 3)


Sahlin-Andersson & Söderholm, 2002; Söderlund, 2004). Inthe 1990s, Packendorff succinctly summarised the concernshared by a group of Scandinavian scholars, arguing thatcontemporary propositions for the improvement of projectmanagement knowledge and practice were ill-conceived,reflecting fundamental misconceptions within the field. Heidentified three major deficiencies which are ingrained,maintained, and reproduced across the research fieldthrough certain ontological, epistemological, and method-ological assumptions: (1) the assumed universality of proj-ect management theory, (2) the lack of empirical studies ofprojects, and (3) the lack of alternative representations of“projects” (summarised in Table 2),

Emerging from this school are a number of vital themesthat move beyond traditional understandings of projectsand their management: the conceptualisation of projects astemporary organisations (Lundin & Söderholm, 1995); therecognition of the historically-embedded nature of projects(Engwall, 2003; Kreiner, 1995); and the shift in focus fromsingle to multiple project management (Engwall & Jerbrant,2003). Although this introduction of sociological perspec-tives to the field of projects is clearly welcome—indeed,long overdue—the more conservative current work in thistradition remains strongly wedded to a functionalist view-point, focusing upon improving project performancethrough attention to social (i.e., human) factors. Equally,within this perspective, the inclusion of power and powerrelations tends to be limited to the introduction of a form ofmicropolitics, separated from the larger power differentialsinherent in modern, capitalist society. Although there ismuch to be drawn from the Scandinavian School, and muchthat improves upon the narrow mechanistic instrumental-ism of traditional project management, we would argue thatthe school remains too conservative in its ambitions, anddoes not take its argument to its logical conclusions. It does,however, open the space of project studies to more explicit-ly “critical” currents, and some of the strongest critical workon projects to have emerged so far has its roots in theadvances made by the Scandinavian School (see, for exam-ple, Lindgren & Packendorff, 2001, 2006).

Our proposal in this paper is to draw on the insightsoffered by writers and academics within the broad groupingof critical management studies to widen and deepen the the-oretical foundations of project management and to providenovel approaches to the entrenched challenges facing proj-ect management. We foresee that this would require a fun-damental reappraisal of many of the core tenets of projectmanagement theory and techniques, a stance that may beuncomfortable for many whose careers and indeed liveli-hoods are intimately connected to project management as itstands. Nonetheless, we argue that without such a radicalreappraisal of the field, project management as a disciplinewill not surmount the practical and philosophical concernsthat it currently faces, and will struggle to exercise a signifi-cant influence on the ever-wider application of projectorganising in the years to come.

Critical Perspectives on Projects

Critical work on management and organisations has abroad, even eclectic base, and draws upon a wide range ofsocial theories, philosophies, and ethical/moral positions,including Marxism, feminism, environmentalism, labourprocess theory, post-structuralism, post-colonialism andcritical realism. Work in this field draws its inspiration andtheoretical frameworks from a wide range of writers, includ-ing Weber, Braverman, Derrida, Latour, Bourdieu,Baudrillard, Foucault, Habermas, Bhaskar, among others. Inwhat stands as the most coherent summary of the principlesunderpinning this diverse field, Fournier and Grey (2000)set out three key tenets that critical work shares. They arguethat critical research on management and organisations:

1. Has a “Non-Performative Intent”—Starts out from theposition that issues of morality, equality and ethics areat least as important as, and in many senses moreimportant than, the traditional functionalist concernsof effectiveness and efficiency of management.

2. “Aims to Denaturalise Organisations &Management”—Challenges arguments that the cur-rent way in which organisations, economies, andsocieties are organised is somehow natural, normal

Common Assumptions Alternative Assumptions

Middle-range theories on different sorts of projects, classified according to different selection criteria

Descriptive theory, grounded in empirical narrative studies on human interaction in projects. Research undertaken as comparative case studies

A temporary organisation, an aggregate of individuals temporarily enacting a common cause

General theory for all kinds of projects, generic concept collecting different theories applicable to projects under one umbrella

Prescriptive, normative theory, grounded in ideal models of project planning and control. Research undertaken as survey studies of large samples of projects

A tool, a means for achieving higher-level ends

Project management theory

Aim of research on projects

Research metaphor for the project

Table 2: Common and alternative assumptions on project management (adapted from Packendorff, 1995, p. 326)


or inevitable, arguing instead that the status quo is aconsequence of the prioritisation of the agenda ofcertain social groups, and benefits these groups at theexpense of others.

3. “Aims to Prevent Oppression/Exploitation”—Theoverarching mission underpinning critical work is tohighlight and oppose oppression and exploitation inorganisations and societies. Typically, this refers tothe exploitation of employees, of women, of ethnicminorities, or of the environment.

Much of this work (for example, Alvesson & Willmott,1996; Reed, 1992; Thompson & McHugh, 2002) has sincethe mid-1990s been collectively referred to as critical man-agement studies(CMS), which has also lent its name to amajor international conference (CMS5, to be held in 2007),as well as to a major interest group at the Academy ofManagement. Such work takes issue with positivist episte-mology in the field of management, insofar as it perpetuatesthe belief that managers face an objective reality that they cancontrol by applying suitable methods for a rational assess-ment of the problematic situation in order to come up withthe correct solution. The consequence of this is a prolifera-tion of methods, tools, analytical techniques, and appliedinstruments with which management itself becomes identi-fied. Management skills and knowledge are reduced tovalue-neutral competence, ignoring the political aspect oforganisations, and ethical and moral issues, reinforcing thebelief that management can be conceptualised in a technicalway by agreeing on terminology and meaning. Managers areseen as rational technicians, dealing with technical issuesthat are resolvable through the application of superiorknowledge of the planning and control techniques.Alvesson and Deetz have commented on the problems withnarrow, conventional approaches to studying the phenome-non of management and the need to adopt a much morecritical stance and varying theoretical lenses:

There is considerable agreement that conventional, univer-sal statements of what management is about and whatmanagers do—planning, organizing, coordinating andcontrolling—do not tell us very much about organisation-al reality, which is often messy, ambiguous, fragmentedand political in character (Alvesson & Deetz, 2000, p. 60).

It is argued that conventional approaches to organisa-tional and management research have exposed managersand other employees involved in problem-solving and deci-sion-making to an overwhelming amount and range of tech-niques (empowerment, teamwork, flexibility), which can beinterpreted as “covert tools of manipulation and exploita-tion” (Huczynski & Buchanan, 2001, p. xxi).

More work has emerged that applies this critical posi-tion to project management, its nostrums and methods (see,for example, Bredillet, 2002, 2004; Buckle & Thomas, 2003;Cicmil, 2003; Cicmil & Hodgson, 2005; Gill, 2002;Hodgson, 2002; Hodgson & Cicmil, 2003; Metcalfe, 1997;Packendorff, 1995). The most important requirement for

the development of critical project management studies isthe inclusion of critical social theory into the researchprocess. Central to it is the need to explore how the rela-tionships between individuals and collectivities are beingconstituted and reproduced in the context of project man-agement, and how asymmetrical power relations create andsustain the social reality of projects. In this context, we arguethat the main issue for the project management researchcommunity should not be what form of critical analysis isbest suited for enhancing the intellectual basis of criticalmanagement studies. Drawing on critical theory and partic-ularly the contribution of Jurgen Habermas, Alvesson, andWillmott (1996) suggest that intellectual efforts should befocused on encouraging inspiration from a variety of theo-ries and ideas, as a counterforce to technicist and instru-mental forms of rationality in project environments. From aHabermasian perspective, it might be argued that the objec-tive, abstract and universal body of knowledge claimed in anumber of authoritative sources as proprietary to projectmanagement fails to live up to the challenges of the embod-ied and power-laden realities of its operation. “Project man-agement” as created by this school of thought, exhibits thecharacteristics of what Alvesson and Willmott (1996) calledmanagement as colonising power and management as distortedcommunication. From this perspective, the possibility of crit-ical project management will depend on the extent to whicha social theory about the nature of projects provides con-cerned actors with authentic insights into their position inproject environments, leading to their enlightenment,changed attitudes and emancipatory action.

Another major influence on critical work with implica-tions for an understanding of project management is thewide and varied oeuvre of Michel Foucault, drawn upon bywriters such as David Knights, Stewart Clegg, BarbaraTownley, and Stanley Deetz, among others. In particular, akey research theme is a focus on the consequences of thosetechniques of observation, measurement, and performancecontrol central to project management methodologies forboth the management and the self-management of workerswithin project settings. Work on project management in thistradition (Hodgson, 2002; Lindgren & Packendorff, 2003;Thomas, 2003) tends to criticise the implied calculabilityand formality of project management methodology, as itembodies a strong functionalist commitment to ensuring,first and foremost, the effective control of workers. In manyways, as previously noted, this control imperative in projectmanagement is traditionally based upon similar principlesto those underpinning scientific management: the fragmen-tation of work and the maximisation of visibility andaccountability. However, with isolated exceptions (Metcalfe,1997), the fundamentals of project work appear to haveevaded the practical and moral critique levelled at otherTaylorist work forms. At the same time, the ongoing profes-sionalisation of project management can also be interpretedin line with other professionalisation projects, as a mode ofcontrol over expert labour (cf. Larson, 1977; Abbott, 1988),implementing and enforcing a form of self-disciplinary con-


trol over project managers. A key challenge for critical workfrom this perspective is thus to draw attention to the powerrelations established and maintained by project manage-ment technologies, and the consequences of these powerrelations. Other critical work on projects includes analysis ofthe gendered nature of project management models (Buckle& Thomas, 2003), examinations of the impact of projectsworking on work-life balance (Lindgren & Packendorff,2003), investigations into the role of project management inperpetuating oligarchic elites in modern corporations(Clegg & Courpasson, 2004), and analyses of project man-agement as a form of bureaucratic control in post-bureau-cratic contexts (Hodgson, 2004).

To advance such critical work, we would argue that thescope for critical research into projects and project manage-ment, and in particular the emancipatory aspect of suchresearch needs to be expanded. This means a more radicalacknowledgment of voices from practitioners in projectenvironments, such as Balck’s:

Practitioners, in particular we as project managers, arewell advised to rid ourselves of the constricting histori-cal background of a mechanistic world image andrationalism. Without question the best method to helpus correct our way of traditional thinking is “on-the-jobtraining”—that is, experiencing the real success and fail-ures in dealing with our everyday business endeavours(Balck, 1994, pp. 2–4).

We would argue that taking this seriously means mov-ing beyond the narrow instrumentalism, which bedevils, yetlargely defines, the “iron triangle” approach to project man-agement. Our hope is that this paper may encourage move-ment towards the creation of a vocabulary and a resource fora critical engagement between practitioners and academicsbeyond the confines of the existing language, concepts andassumptions of project management.

Making Projects Critical: New Trajectories

At this point, it is opportune to return to the intentionsbehind this paper. As stated in the introduction, we aim toopen new trajectories within the research agenda in the fieldof studies relevant to projects, project performance and proj-ect management in order to address the persisting and pre-vailing concerns articulated in literature and practice, whichwe attempted to briefly illuminate. Our immediate objec-tive, therefore, is to signpost possible research trajectoriestowards a critical evaluation of the intellectual foundationsof project management as a field of study and a practisingdiscipline and to broaden the research agenda by encourag-ing a more critical approach in this area of organisationallife. Explicitly we take up the challenge offered by Flyvbjerg(2001, p. 166) to conduct research that “contributes to soci-ety’s capacity for value-rational deliberation and action”; inessence, to make social science matter in the context of proj-ect work. What, therefore, might it mean for both the schol-arly and the practitioner community, to encourage adifferent way of viewing and thinking about projects and

project management as social phenomena through criticalstudies? How might a consideration of lines of reasoningand practice other than those promoted by narrowly instru-mentalist project management thinking respond to theidentified crisis in the field?

The first and most important consequence of anengagement with critical work would be an increased sen-sitivity to the possibility of oppression and exploitation inproject settings, an outcome which is especially likelygiven the pressurised environment of most projects,regardless of sector and scale. A second important aspect ofcritical approaches to project management is to reexaminethe currently dominant imperative of performativity inrelation to how this shapes the development of the bodyof knowledge and best practice in the field (particularlyrelated to “critical factors for project success”) and illumi-nate the importance of considering other indicators of“project success” beyond time, cost, and quality perform-ance, to encompass environment, health and safety, econ-omy, and ethics. And, third, critical project managementresearch would engage directly with not merely projectmanagers but with practitioners at all levels of the projecthierarchy, as it is interested in specific local situations andthe lived experiences of various project actors, often withthe aim of initiating some transformative redefinition(Alvesson & Deetz, 2000) of actors’ own perception of self,their voice, and their influence in shaping their own socialroles and place.

Our intention in presenting these views is primarily tostart a dialogue, to raise the importance of such issues andconcerns within the field of project management, and todraw attention to broader theoretical resources available toconceptualise projects and their management. To this end,we have in the past organised workshops to act as forumsfor debates around these themes, of which the best papershave been published as a collection (Hodgson & Cicmil,2006b). We will continue to run these workshops, in thehope of extending the debate and learning from the views,experiences and insights of as broad a range as possible,and we would welcome interventions, participation, andeven counter-critique from all quarters. We hope that, at theleast, this paper has succeeded in raising new concerns andhas sharpened interest among project management aca-demics and practitioners to engage with these concerns,which are central to the future of a sustainable and ethicalproject management.

Notes1 In this sense, the paper continues the mission of two work-shops organised and held at Bristol Business School in the U.K.in 2003 and 2004, with the explicit aim to “make projects crit-ical.” These workshops brought together a diverse communityof researchers and practitioners from Europe, North America,and Australasia with a common interest in considering vitalissues and values that are both ignored and obscured by “main-stream” project management. Details can be found athttp://www.uwe.ac.uk/bbs/research/research/mpc/index.shtml


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Cicmil, S. (2003). Knowledge, interaction and projectwork: The perspective of complex responsive processes ofrelating. Paper presented at the 19th EGOS Colloquium,subtheme “Project Organizations, Embeddedness andRepositories of Knowledge,” Copenhagen, Denmark, 3–5July 2003.

Cicmil, S., & Hodgson, D. E. (2005). Knowledge, action,and reflection in management education—The case of projectmanagement. BBS Teaching and Research Review, Issue 7,September 2005; ISSN 1468-4578. Retrieved October 10,2005, from http://www.uwe.ac.uk/bbs/trr/Is7-cont.htm

Clarke, A. (1999). A practical use of key success factors toimprove the effectiveness of project management. InternationalJournal of Project Management, 17(3), 139–145.

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SVETLANA CICMIL, BSc (Civ. Eng), MBA, PhD, is the head of research in operations and information management and director of

MBA Programmes at Bristol Business School, University of the West of England, U.K. She has an extensive international teaching,

consultancy and industrial experience in the field of project management. Svetlana’s specific research interests lie in the areas of

complexity theory and sociology of project based work, project management education, and the development of project

management skills, competencies, and knowledge. She is also interested in the global aspects of management education, and the

international transfer of management knowledge. Svetlana is actively involved in Project Management Research Networks, regularly

speaks at conferences and has published widely. Recent articles written by Svetlana have appeared in International Journal of ProjectManagement, Building Research and Information, and International Journal of Diversity in Organisations, Communities, and Nations.In collaboration with Dr. Hodgson, Svetlana published an influential book Making Projects Critical (Palgrave), drawing on a series

of distinctive workshops with the same name with contributions from a range of international researchers.

DAMIAN HODGSON BA (HONS), MA, PhD is senior lecturer in organisational analysis at Manchester Business School, University of

Manchester. His key research theme at present is the phenomenon of projects in work organisations, encompassing an analysis of the

emergence of project-based organisations, the widespread adoption of project working across a range of industries, and ongoing efforts

to institutionalise project management as a professional discipline. In particular, he is keen to promote a critical analysis of project

management knowledge, in terms of its epistemology, ontology and related core assumptions. Damian is also co-investigator on the

EPSRC-funded network entitled “Rethinking Project Management” (www.rethinkingpm.org.uk). He has presented work at a variety of

international conferences including the Academy of Management, the Critical Management Studies Conference, the British Academy

of Management, and EGOS, and has published in a range of journals including the Journal of Management Studies, Organization,Management Decision and Gender, Work and Organisation.


SCOPEProject Management Journal is the professionaljournal of the Project Management Institute. Themission of the Journal is to advance the state ofthe art of the knowledge of project and programmanagement. The Journal presents useful infor-mation on both theory and practice in the fieldof project management. Authors are encouragedto submit the following types of original manu-scripts: descriptions of innovative practices; sum-maries of research results; reviews of currentliterature; surveys of current practices; criticalanalyses of concepts, theories, or practices; devel-opments of concepts, theories, or practices;analyses of failure. Manuscript length should notexceed 12,000 words. The selection of manu-scripts for publication is based on the extent towhich they advance the knowledge and under-standing of project management. PMI neitherapproves nor disapproves of any data, claims,opinions, or conclusions presented.

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Notes for Authors

SHORT ITEMSShort items do not need rigorous academicscrutiny and are not refereed. Upon receipt, how-ever, these items become the copyright propertyof PMI.� Opinion presents thoughtful discussion ofproject management issues. � Correspondence pertains to the project andprogram management profession, including ref-erences to literature, practice, and scholarship aswell as discussion and replies related to articlespublished in the Journal. � Book Reviews express opinions about booksrelated to the project management profession, orabout general management or technical booksthat cover topics of particular value to the projectmanager.� Calendar of Events offers notices of forth-coming meetings and calls for papers.

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REFERENCESFor questions regarding reference format, referto the Publication Manual of the AmericanPsychological Association, Fifth Edition.References used in the text should be identifiedby author name and publication date in paren-theses, e.g., (Cleland & King, 1983), and listedalphabetically at the end of the manuscript.Page numbers should be cited for all quota-tions. Follow the format example shown below:

Baker, Bud. (1993). The projectmanager and the media: Some les-sons from the stealth bomber pro-gram. Project Management Journal, 24(3), 11–14.

Cleland, David I., & King,William R. (1983). Systems analysisand project management. New York:McGraw-Hill.

Hartley, John R. (1992).Concurrent engineering. Cambridge,MA: Productivity Press.

Please ensure that references are complete, thatthey include, where relevant, author’s name,article or book title, volume and issue number,publisher, date and page reference.

The use of page footnotes should be keptto a minimum. Footnotes should be numberedconsecutively and listed at the end of the textas endnotes.


KEYWORDSKeywords categorize your manuscript. They cover project management methodologies and processes, tools and techniques, PMBOK® Guideknowledge areas, industries, types of projects, geography. Please list three or four keywords that best categorize your manuscript. Choosefrom the following list of suggested keywords (this is not a comprehensive list) or you may use your own.

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CHECKLIST� Manuscript via e-mail or on CD� 100-word abstract� Illustrations� Author biographies� Black and white author photographs

(upon acceptance)� Signed copyright agreement

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1PROJECT MANAGEMENT JOURNAL