2. Literature survey
2.4. Project portfolio success
2.4.1. The role of projects in strategy execution
The strategic planning and execution process are key to enabling an organisation to achieve its vision and mission. Longman & Mullins (2004) say that any strategy formulation session ultimately distil vision into critical business issues, and if the organisation is serious, these issues then are translated into projects, with discrete deliverables and back-up plans. They add that an organisation’s strategy should provide the boundaries for projects including goals, and results must flow from an organisation’s future direction. They further clarify that the best project management organisations have a clear, well-communicated strategy and know how each project supports it.
The need to understand the heartbeat and pulse of the organisation does not direct that executives must be fully imbedded into the day-to-day operations of the business.
However, the requirement is that they must provide mechanisms to enable managers to execute the strategy and where necessary provide the required resources for the achievement of the set targets. Maddalena (2012) says that leaders can increase the effectiveness of their organisation’s strategic planning processes and improve accountability by incorporating basic project management principles during the implementation phase of strategic planning. He adds that strategic planning is a process that establishes key priorities to advance the mission including the aims of the organisation, and clarifies that the ability of an organisation to successfully achieve its organisational mission and promote accountability for its actions is dependent on its ability to strategically plan its future.
In an attempt to clarify organisational concepts, Serra & Kunc (2015) say that business strategy, which implies organisational change, usually requires the development of projects, however organisations fail in implementing strategies even though they employ project, programme and portfolio management techniques. They propose benefits realisation management (BRM) as a set of processes structured to close the gap between strategy planning and execution by ensuring the implementation of the most valuable initiatives. They highlight that there is no empirical evidence of the
Chapter 2: Literature survey
effectiveness of BRM, however their study shows BRM practices being positive predictors to project success on the creation of strategic value for the business. They concluded from the study that BRM practices could be effective to support the successful execution of business strategies.
Organisational project management comprises the governance mechanisms put in place to manage projects and Aubry, Sicotte, Drouin, Vidot-Delerue, and Besner (2012) caution that the concept of organisational project management is uneasy to identify with precision, which then challenges the concept’s own existence. They clarify this mystery by stating that the one promising approach is to re-conceptualise organisational project management as a function within the organisation with a focus on what is achieved in practice through the organisation’s activities.
Project Management is a structured field which aims to take a defined expectation and apply a systematic approach to drive its realisation. Project Management also includes process such as risk, change and quality management to ensure that the end goal is managed to achieve the desired outcome. It is therefore expected by the author that project management could be applied not only in strategy execution (converting input into outputs) but to also drive strategy realisation (managing the achievement of the desired outputs). One of the ways in which executives are using project management to drive the realisation of strategic objectives is through the establishment of a Project Management Office (PMO). The PMO is proving to be useful due to the structured manner in which processes are put in place to enable the successful delivery of projects.
Project management enables the visibility of what is done in the organisation and the impact of the actions taken. The information obtained from the execution of projects equip management to also make effective decisions that are based on tangible outcomes. Furthermore, where the project management function is mature and works effectively, executives are kept informed through performance information that is presented in a form of a dashboard. The simplicity and effectiveness of the performance report allows executives to identify issues quickly in order to implement corrective action to address problems. Furthermore they are able to consider preventative and predictive measures to prevent risks from materialising into issues.
The PMO model has been designed and adopted as a mechanism to enable the execution and reporting on the realisation of strategic initiatives.
In addition, literature indicates some of the value which project management could bring to business management and strategy execution. Aubry et al. (2012) state that fit between organisational context and project management implementation may lead to the creation of value for the organisation. They further clarify that components related to the management of multiple projects within an organisation should be considered globally in an integrated concept. Good operational integration of the three basic levels of project management within an organisation (i.e. projects, programmes and portfolios) is achieved through the use of Organisation Project Management
Chapter 2: Literature survey
Maturity Model (OPM3) and the Portfolio, Programme and Project Offices (P3O) (Aubry et al., 2012).
In theory, Aubry et al. (2012) convey that one aspect of organisational project management is that its components are network-based and spread out through the organisation and further state that this situation poses a difficult problem of alignment or fit between the components themselves, such as governance mechanisms, portfolios, programmes and projects. They clarify that most of these components are temporary arrangements and form multiple layers of networks, which could be resolved through the establishment of the organisational project management function.
Strategy is normally managed through roadmaps which are pictorial depictions of the change journey which the organisation is about to embark on. It is therefore important to break the journey into components that will determine what must be done at operational level. Jerbrant (2013) states that the great need is to deliver what is requested today, while adapting to future business characterises the management, governance and execution of project based organisations (PBO). She states that the most common way to initiate and emphasise structure and planning in a PBO is initiating a project management office (PMO) and further states that the primary goal of creating a PMO is usually to increase the number of successful projects and to standardise the performance of the individual projects as much as possible. If work today is done through projects, as is surely the case, then working smarter on projects will undoubtedly enable an organisation to meet head-on, whatever strategic and operational challenges may come its way (Longman & Mullins, 2004).
Literature also shows contribution from authors that question whether strategy can be executed through project management. Srivannaboon & Milosevic (2006) found traditional literature on aligning project management with business strategy vague, as the interactions between project management and strategy were not explained. They found that although research studies were conducted on the strong links between project management and strategy, none explicitly talked about the relationship between business strategy and project management in a cohesive and comprehensive way. They concluded their study by highlighting that the journey of studying the project management / business strategy alignment is still at its infancy, the relationship between the two is obscure and that there is a need for the alignment to be quantified.
In addition, Young et al. (2012) reported on the effectiveness of the project management and investment frameworks in the State of Victoria where they found that the way projects are selected and managed limit the capability to realise strategic goals. They recommended future research to develop programme management, portfolio management and project governance to increase the likelihood that strategy will be implemented. It is the aim of this study to further improve understanding in this area.
Chapter 2: Literature survey
The contribution from researchers on the link between strategy and project management (operational mechanism for driving the realisation of components of programmes) may be valid. The gap could have been due to a clear link between strategy and what is actually happening at operational level. Furthermore, the review of the literature demonstrates that when it is not clear what the strategy is, people at operational level do what they believe to be important. It is the belief of the author that benefits must also be clearly defined so that every member of the organisation do not only take responsibility for their realisation but that their actions are driven by the expected outcome. Therefore, the link between strategy planning (priority actions that must be done) and execution (actions that are implemented) is crucial. This has been explained in the sections above that the strategic management process must be integrated and iterative in order to ensure alignment and control.
The primary question to consider is why project management is important in strategy execution? Should project management be a visible mechanism used to manage the strategic management process or must it be imbedded into the strategic management process (integrated approach) to influence how the process is managed? The strategic management process has been improved through research over the years. However, strategy execution has remained a challenge and is at times inefficient. Project Management is seen as a way of improving the efficiency of implementing objectives.
Therefore, in the context of strategy, it could drive the effectiveness of strategy execution because of the structured approach used to deliver projects. Another consideration could be that the structured approach could lead to efficient (quicker) execution of projects and thus faster realisations of strategic goals. It could also be expected that the improved governance and control of changes in projects would enhance the control of the strategic management process.
In conclusion
Project portfolios are key to strategy execution since they involve the screening, selection and prioritisation of project proposals including the allocation of resources to projects according to priorities as defined in strategic objectives. Researchers found that fit between organisational context and project management implementation may lead to the creation of value for the organisation. It also emerged from the review of the literature that project portfolio management is a commonly employed technique to align a project portfolio with strategic goals. The selection criteria is informed by the strategic objectives and inform the structuring of project portfolios in order to achieve these strategic objectives. It is thus crucial to note that effective project evaluation and selection strategies can directly affect organisational productivity and profitability.
Literature clarifies that the purpose of portfolio management is for doing the right things while the purpose of project management is to do things right. It was also pointed out
Chapter 2: Literature survey
that project management offices (PMOs) play a critical role in that they are used to govern the execution of projects to realise the strategic objectives. However, there were contrasting views on the contribution of projects in the implementation of a corporate strategy. It emerged in the review of the literature that the way projects are selected and managed may limit the capability to realise strategic goals. This points out to why it is important to manage project portfolios to realise the expected benefits, which is the aim of the first research questions on enablers of effective strategy execution through project portfolios. In addition it was reported that traditional project selection methods often fail to consider both the uncertainties in projects and the interaction among projects thus limiting their use in realising the corporate strategy.
Furthermore it was noted that although business strategy usually requires the development of projects, however organisations fail in implementing strategies even though they employ project, programme and portfolio management techniques.