Close the Gap between Projects and Strategy

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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.

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