February 2007

Making Project Management a Strategic Advantage

In the last decade, there has been a shift in how businesses think of technology. It was not long ago that businesses viewed IT services and technology as overhead and a cost of doing business. Business leaders have since recognized that technology is essential to support their core business strategies. In the same way that technology has moved from the backroom to the boardroom, project initiatives are now seeing an increased strategic focus due to their complexity and business impact. As projects increasingly support mission-critical deliverables, coordination between project management, business processes, and business strategy becomes essential. This paradigm is forcing leaders to evaluate their existing project management capability and its role within the organization; as a result, leading companies have begun to place an increased strategic focus on evolving their project management capabilities from a support function to a competitive advantage.

Characteristics that differentiate a strategically-focused project management organization from a traditional project management organization:

Characteristics of a strategic project management culture

  • Project management is a distinct business function with leadership representation
  • Project management organization is involved with business strategy planning, priority setting, and decision making
  • Project managers rely on standardized methodologies and tools that are updated regularly
  • Projects are defined and managed based on historical metrics and lessons learned
  • Projects are monitored as part of a portfolio or program
  • Projects are prioritized based on a weighted scale of considerations

Characteristics of a traditional project management culture

  • Project management is part of a support organization
  • Priorities are defined without project management organization involvement
  • Success of projects is based heavily on the skills of individual project managers
  • Projects are defined and managed on a “one-off” basis
  • Projects are monitored by individual business lines
  • Projects are prioritized based on financial impact

Making the shift…
Transitioning to a strategic project management environment is an evolutionary process that requires commitment and participation across the enterprise. An organization needs to determine the role project management will play by addressing the key question of whether to relegate project management to a function that supports the corporate strategy, or to embrace project management as an integral component of the corporate strategy. It must then ensure that it is capable of addressing the organizational and cultural aspects that support the transition. If a business intends to shift to a strategic project management style, it will need to make coordinated changes in several areas.

PROMOTING A PARTNERSHIP CULTURE
“Partnership” is one of the most commonly used business buzzwords and has numerous definitions. In the context of strategic project management, partnership includes building key business relationships and establishing effective communication across disciplines. It also reflects the importance of involving the right people in the decision-making process and striving for common business goals and priorities. In a traditional project management culture, the project manager may develop the partnerships necessary to achieve project-level communications and collaboration, but it is not a part of the organizational culture. In a strategic project management organization, the project manager becomes the conduit for the partnership culture, but is not alone in developing and enforcing it. In a true partnership culture, collaboration is inherent in the organization and there is a commitment to the culture at all levels of the organization. In these types of organizations, project management focuses on leveraging the appropriate resources and realizing the business goals and objectives, rather than resolving communication challenges and priority conflicts.

DEVELOPING A PROJECT MANAGEMENT ORGANIZATION (PMO)
Gartner defines a PMO as “a center of expertise that provides organizational focus on improving the management of projects, programs and portfolios”. The key to this definition is that it does not specify what a PMO looks like, but rather highlights the function it serves. Many businesses equate the PMO term to a formal project management team with dedicated resources. In some cases, that may be accurate. In other cases, a formal PMO may not be necessary or beneficial. However, in all cases there is a clear benefit to standardizing processes and tools, leveraging project assets, and striving for continuous improvement. Those are the critical elements of a PMO, regardless of the size of the organization or maturity of its project management discipline. However, the development of a comprehensive, formalized PMO is clearly an evolutionary process. Typical activities of the PMO consist of: creating standard tools, templates, processes, and mechanisms to monitor the overall health of project and process performance; managing resource allocations; developing tracking and reporting mechanisms for business and project metrics; and incorporating continuous improvement into the project prioritization and project management processes by leveraging historical metrics and lessons learned. This approach looks beyond the individual projects, focusing on the big picture, while identifying and addressing systemic issues. Standardized processes, templates, project tools, and well-trained project management resources combine to create the required core competencies that an organization needs to achieve a strategic advantage through project management.

ESTABLISHING A PORTFOLIO VIEW OF PROJECTS
An organization utilizing strategic project management techniques enhances the traditional project management approach by leveraging portfolio management. Portfolio management involves weighting project prioritization and resource allocation by standard factors such as business area budget and priorities, and then pulls in the larger picture by incorporating weightings for overall business strategy, long-term competitive advantages, and the value of integrating similar initiatives across business units. This requires that the organization define the prioritization criteria, in addition to having a clear understanding of the organization’s resource capacity and capabilities. Another function of portfolio management is to communicate portfolio status throughout the business, utilizing tools such as dashboards and standardized metrics. As a result, the business, as a whole, understands the business priorities and resource allocations, has a framework to measure success, and feels confident that project initiatives and resources are focused in the areas that will deliver business success.

EMPOWERING AND DEVELOPING PROJECT MANAGERS
Despite the advances in project management disciplines within an organization, project managers will forever remain a key factor in project success. In a strategic project management organization, the project manager’s role has increased responsibilities. From an organizational standpoint, the project manager’s role has shifted to one of a partner and liaison providing their insights and acting as a consultant to all stakeholders. Organizations need to empower their project managers by ensuring they are equipped with the skill sets necessary to succeed in such an enhanced role. Traditional project managers who manage standard, repeatable projects with low risk and few unknowns need basic project management skills such as budgeting, resource management, and scheduling. As project managers lead projects that involve complex risk and priority components, organizational change, or business process re-engineering, additional management skill sets and business acumen become more important. Skills such as conflict resolution, improved communications, political awareness, and adaptability become crucial to the success of the project. It is important to recognize what types of project managers are required for each project, as well as, the types of project managers that the business has available. Equally important is a development plan for the role to aid in the growth of project managers in the organization. This includes identification of relevant training and certifications, as well as, setting up mentoring programs. Improving business acumen and understanding (what drives priorities and decision making, organizational structure, and business line responsibilities) is crucial to developing agile project managers that are ready to handle a constantly changing environment.

MANAGING ORGANIZATIONAL CHANGE
Organizational Change Management (OCM) is a discipline that can be applied to all types of change including the shift towards a strategic project management organization. OCM takes a methodical approach to identifying and managing the impacts of change before, during, and after the change event occurs; it can be applied whether the change is an organizational change, business process change, or technical solution implementation. These events have the potential to fundamentally alter the way people perform their tasks from day to day. Resistance and uncertainty can run rampant in organizations that have not thought of and addressed the change resulting from these events. OCM addresses vision creation, stakeholder analysis, readiness assessment, metrics and rewards creation, and communication planning for each change. These activities, combined with strategic project management activities, help to minimize chaos and maximize adoption. In the next edition of our SEI Quarterly Communication, we will discuss how strategic project management and (OCM) work hand-in-hand to improve the chances of delivering a successful project.

In summary…
Project Management, and the role it plays in modern business, has changed. Project management is no longer just about ensuring successful project execution. Instead, it ensures organizations are aligning their project initiatives and business resources with the business objectives. It focuses on partnerships, collaboration, and continuous improvements. It is important that each organization define the appropriate project management culture based on their business environment. Strategic project management provides the ability to adapt within evolving organizations, to address business critical project initiatives, and to handle the increasing complexity of technology and business process integration. At the end of the day, strategic project management is the means to ensure repeatable, successful implementation of projects across the enterprise that deliver superior business results.