Milosevic

Close the Gap between Projects and Strategy

by Travis K. Anderson, MBA, PMP

broken-link1In the previous article, “A Theoretical Framework for Aligning Project Management with Business Strategy”, Milosevic and Srivannaboon implicate a framework for alignment to achieve a competitive advantage. The next review by Breakthrough Performance Management is an article about tying performance metrics to business strategy. Now we explore the gap between the organizational components and the project level components.

Johnson points to the research of Cathleen Benko and F. Warren McFarlan which established that $2.3 trillion are spent annually on projects by U.S. companies. A majority of companies are performing these projects without having a strategy that ties the project to the organizational needs. Benko and Mcfarlan conclude that companies must optimize their projects by using portfolio management that focuses on both the relationship of synergic projects and the alignment to corporate strategy.

The primary question that Johnson presents is, “How can companies surmount these obstacles so their projects collectively support the corporate strategy, achieve efficiencies, and position the company to adapt to the future?” The first approach is to view your projects through a “strategy lens” and the second approach is to build a project-portfolio “brain”. By keeping it simple and involving the right people, portfolio management systems allow executive management to look across their enterprise for duplicate efforts that chip away at the bottom line. The key for success is to have constant communication on multiple levels.

Consider the application of tying the project level structure and strategy of the resource loaded network (RLN) development activities to that of a contract procurement structure and strategy at the business unit level. The project lifecycle is 1) pre-award, 2) contract execution, and 3) contract close. During the pre-award phase, a request for proposal (RFP) follows a procurement timeline consisting of four sequential phases,1) receive draft RFP, 2) receive final RFP, 3) submit proposal, and 4) contract award. At the organizational level, procurement specialists are primarily concerned with capturing the contract and handing it off to the project. Project level stakeholders are also concerned with capturing the contract, but more focused on the implementation of the proposal strategy. The alignment of the organizational components to that of the project level components often determines the success of the project.

The business unit has a strategy to capture contracts that continue to grow the business in terms of revenue recognition and customer relations. Therefore, projects implement the contract proposal in a way that satisfies the customer requirements on schedule and on budget. Strategic managers can group projects into portfolios by taking into account some of these similarities relating to the customer such as, risk in terms of contract type, Integrated Master Plan/Integrated Master Schedule RLN development, Earned Value Management, and so on. Processes, procedures, methodologies, and other continuous improvement activities are captured at the portfolio tier with a direct relationship to the customer requirements. Portfolio management assists in closing the gap between projects and strategy by utilizing an enterprise project structure and strategy that links the hierarchy of the organization to that of the project. Strategic managers can use portfolio management to achieve their projects collectively as they support the corporate strategy, achieve efficiencies, and position the company to adapt to the future.

References

Johnson, L. (2004, June). Close the gap between projects and strategy. Harvard Management

9(6), 3-5. Retrieved October 12, 2008, from EBSCO MegaFILE database.

Project Management Strategy

  1. Linking Business Strategy to Project Strategy
  2. Moving from Corporate Strategy to Project Strategy
  3. A Theoretical Framework for Aligning Project Management with Business Strategy
  4. Close the Gap between Projects and Strategy
  5. Tying Performance Metrics to Business Strategy
Previous in series Next in series

{ 19 comments }

A Theoretical Framework for Aligning Project Management with Business Strategy

by Travis K. Anderson, MBA, PMP

In the previous article, “Moving from Corporate Strategy to Project Strategy”, Morris and Jamison expand on the idea of moving strategy from the corporate level to the project level. The next review analyzes an article authored by Milosevic and Srivannaboon who support this movement of strategy through their framework for alignment between these levels.

Business strategy is summarized as a means of creating competitive advantages to achieve sustainability while attracting customers and defending against competitive forces. A generic business strategy typology developed by Porter is used to establish the foundation for evaluating the alignment between project management and business strategy. Porter’s generic strategies are cost leadership, differentiation, and focus. Porter proclaims that firms can achieve a competitive advantage by choosing one of these strategies. However, firms are compelled to focus on a combination of strategies in reaction to global competition. This is termed as the best-cost strategy. Milosevic and Srivannaboon use cost leadership, differentiation, and best cost as the primary business strategies of the analysis. The authors also point to Shenhar’s strategic project leadership framework elements which consist of strategy, organization, process, tools, metrics, and culture.

The authors infer that the competitive attributes of the business strategy drive the focus and content of the project management elements. A pattern revealed through research indicates that organizations can align projects with business strategies into three levels: the strategic, the tactical, and the corrective emergent strategic feedback. Level 1 (the mediating process at the strategic level) is the beginning of the alignment process. At this level strategic managers derive the intended strategy and typically used portfolio management to determine the right projects that would contribute to the organization’s goals. Level 2 (the mediating process at the project level) involves delineating additional detail for the projects selected during Level 1 interactions as a means to ensure proper alignment with the project life cycle. The project life cycle is classified as the planning process and the monitoring process. At this level project managers develop a project management plan that ties back to the business goals and objectives. Level 3 (the mediating process at the emergent strategic feedback level) uses stage gates or milestone reviews to evaluate the project status on scope, schedule, and budget. As the project is executed, emergent actions occur that may change the intended strategy. This level ensures feedback from the project level as a means to allow the business strategy to adapt to its competitive attributes brought on by change. The authors therefore conclude that a combination of intended and emergent strategies is needed to align project management and business strategy.

One can infer that once strategic managers have selected a business strategy with the intention of sustaining the organization that portfolio management can assist in the decision making efforts of selecting the right projects that will contribute to the organizational needs. Also, a standard project lifecycle is needed for aligning the business strategy and the project management elements. Projects organized into portfolios that utilize best practices, common methodologies, and continuous improvement will determine the success of implementing the business strategy. The feedback loop, i.e. stage gates, will make sure that resources are funneled appropriately and non-performing projects are terminated efficiently and effectively. Emergent strategy often occurs as change on projects is inevitable. The strategic feedback provided from the project to the strategic business unit is critical for adapting the strategy transpiring through the mediating processes. Initially aligning the business strategy to the project is one thing, closing the gap between projects and strategy is a whole other story.

References

Milosevic, D., & Srivannaboon, S. (2006, August). A theoretical framework for aligning project

management with business strategy. Project Management Journal, 37(3), 98-110.

Retrieved October 12, 2008, from EBSCO MegaFILE database.

Project Management Strategy

  1. Linking Business Strategy to Project Strategy
  2. Moving from Corporate Strategy to Project Strategy
  3. A Theoretical Framework for Aligning Project Management with Business Strategy
  4. Close the Gap between Projects and Strategy
  5. Tying Performance Metrics to Business Strategy
Previous in series Next in series

{ 9 comments }