Strategic Project Management 1

Strategic Project Management

Eric D. Brown

Aligning Technology, Strategy, People & Projects

http://ericbrown.com

October 12, 2007

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About the Author

Eric D. Brown is a consultant, doctoral student and author in Dallas TX Mr. Brown is

also the founder of the Dallas / Fort Worth Entrepreneur Network, a networking group focused

on entrepreneurs in the Dallas / Fort Worth area. Mr. Brown also sits on the Workforce Advisory

Board of CompTIA and is on the Board of Directors for various volunteer organizations.

Prior to founding Brown Consulting Group, Mr. Brown served as Director of

Professional Services at Marconi Wireless were he was responsible for service delivery and

business development to the top-tier wireless telecommunications carriers in the U.S.. Mr.

Brown also served as Director of Technical Services for Marconi Wireless where he was

responsible for managing technical support, implementation, training and project management

for the software products developed by Marconi Wireless.

Mr. Brown is currently working on a Doctor of Science in Information Systems degree

from Dakota State University and has previously earned his MBA from the University of Texas

at Dallas with specializations in Strategy and Project Management, an MS in Electrical

Engineering from Oklahoma State University and a BS in Physics from Southwestern Oklahoma

State University.

Read more about Eric at http://ericbrown.com

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Strategic Project Management

Introduction

This paper introduces Project Management, with a focus on the use of Strategic Project

Management and Project Portfolio Management to create a competitive advantage for an

organization.

Project Management

The practice of project management can be traced back to the manufacturing, defense and

construction industries. According to Cleland (1994), formal project management got its start in

the late 1950’s as a means to manage the development and implementation of large scale military

systems (Cleland, 1994, p. 4). The field of project management began to grow and become

more mature with the emergence of project management societies such as the Project

Management Institute (PMI) and the interest of researchers in industry and academia. These

societies and research helped to broaden the field of project management and formalize the field

and bring the practice of project management to businesses worldwide.

The Project Management Institute (PMI), created in 1969 to establish project

management standards and provide formal education in project management, defines project

management as “the application of knowledge, skills, tools, and techniques to a broad range of

activities in order to meet the requirements of a particular project.” (Project Management

Institute [PMI], 2000). Kerzrner (1998) provides a much narrower definition of project

management when he defines project management as “ the planning, organizing, directing and

controlling of company resources for a relatively short-term objective that has been established

to complete specific goals and objectives” (Kerzner, 1998, p. 5).

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Regardless of how project management is formally defined, the focus of project

management within an organization is to achieve the goal of ‘getting things done’. Most of the

early literature and research on project management revolved around learning how to better

manage the execution of the project to ensure that a successful outcome is achieved (i.e., on time,

on budget, within scope).

Project Management Processes

There are various societies and project management ‘bodies of knowledge’ around the

world that have been responsible for the growth and formalization of the practice of project

management. PMI has arguably created the industry standard certification for practitioners of

project management with their Professional Project Manager (PMP) certification. Since the

PMP certification seems to be the key credential for a project manager to obtain, the PMP

guidelines published by PMI, known as the ‘Project Management Body of Knowledge

(PMBOK)’ has become widely used as the de facto standard for project management guidelines.

The PMBOK contains over 200 pages of formal definitions of project management

processes and procedures that the PMI believes should be used when managing projects. The

most critical aspects of the PMBOK (and project management) can be more easily stated using

five critical project management ‘phases’. These phases are described in detail in the PMBOK

and are briefly described below.

 Initiation – Defined as the “process of formally authorizing a new project or that

an existing project should continue into its next phase” (Project Management

Institute [PMI], 2000, p. 53).

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 Planning – The planning phase is arguably the most important phase because it is

during this phase that the project plan is created. The project plan is the document

used throughout the lifecycle of the project.

 Execution – As the name suggests, this phase is concerned with implementing the

project plan and ‘getting the work done’. The majority of time spent within the

project management framework is spent in this phase.

 Monitoring and Controlling – This phase deals with the aspect of ensuring the

project is being executed according to the project plan and is remaining within

budget, on time and remains within the scope of the plan.

 Closing – During this phase, a project plan is formally closed and all loose ends

(hopefully few) are wrapped up and the project is closed.

The five phases listed above are considered by PMI and many project managers

worldwide to be the necessary phases for starting, executing and completing projects. These

phases provide a very good framework for running projects, but the focus of the PMBOK is

strictly on the execution of projects. Morris (2003) describes the PMBOK as having

shortcomings when he writes:

Though widely accepted, many practitioners, academics and others however believe it

has serious shortcomings. It contains nothing detailed on project strategy, nothing on

project definition, little on value management, nothing on technology management, and

little on the linkage with programs and portfolios. All these shortcomings derive from its

intellectual perspective of project management essentially as an execution discipline: of

delivering a project ‘on time, in budget, to scope’ (Morris, 2003, p. 2).

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The shortcomings described above have led to a strict focus on the execution of projects,

which has created ‘tactical’ tunnel vision within organizations. This tunnel vision has led many

organizations to implement formal project management processes to create a tactical mindset at a

time when the strategic use of resources is vital to these organizations. This tactical thinking is

exactly what is needed for ensuring that ‘things get done’ within a project, but strategic thinking

is also needed to ensure the optimal use of time, resources and money to ensure that each project

undertaken is aligned with the business strategy of the organization.

Strategic Project Management (SPM)

Strategic Project Management (SPM) has been defined by Callahan & Brooks (2004) as

“the use of the appropriate project management knowledge, skills, tools and techniques in the

context of the companies goals and objectives so that the project deliverables will contribute to

company value in a way that can be measured” (Callahan & Brooks, 2004, p. 23). They further

describe SPM as a “process that takes into account a company’s way of doing business, allowing

for the possibility of a significant payoff with fewer risks” (Callahan & Brooks, p. 30).

The above definitions are good, but they do not convey the most important aspect of

SPM, which is the fact that senior leadership needs to be involved in selecting, defining and

prioritizing which projects are undertaken within the organization. Because of this, the

following definition does a much better job of accurately defining SPM:

Strategic Project Management consists of selecting, managing and measuring project

outcomes to ensure optimal value for an organization. All projects undertaken by an

organization must meet a set of criteria setup by the organizations’ leadership to ensure

alignment with the strategic vision of the organization.

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Strategic Project Management is really nothing more than the picking the right projects

for the organization to ensure optimal returns. This sounds very simple and straightforward, but

research shows that there are many organizations that have overlooked the important fact of

aligning projects with corporate strategy. The fact that SPM is often overlooked can be seen in

research performed by Stanleigh (2006) and report in the article titled “From Crisis to Control:

New Standards for Project Management”. Stanleigh reports that a fraction of projects

undertaken by organizations (roughly 2.5 percent) are 100% successful (Stanleigh, 2006, p. 1).

Stanleigh discusses the need for organizations to ensure that only those projects that are aligned

with the corporate strategic vision be undertaken and he describes four key strategies that assist

organizations in regaining control over their projects and ensuring strategic fit. These four key

strategies are:

 Ensure that all projects are strategically aligned – According to Stanleigh’s

research, “68 percent of organizations had no systematic approach for prioritizing

projects or linking them to corporate and strategic goals.” (Stanleigh, p. 2).

 Create a Project Management focused culture – Stanleigh describes the need for a

project management culture to permeate an organization from the executive

leadership teams down to the administrative assistance

 Implement Strategic Project Management best practices – Stanleigh’s research

showed that very few project management offices within organizations “didn't

consider lessons learned to be of great importance in their overall mandate”

(Stanleigh, p. 4).

 Create a strategic project measurement system – Stanleigh’s research shows a

very tactical view of project management measurements. The survey results showed
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that most organizations’ project management success measurement systems included

tactically driven measurements such as “projects on time, projects on budget,

achieved scope requirements, customer requirements met and achieved all milestone

deliverables” (Stanleigh, p. 5).

Stanleigh’s strategies described above seem to be common sense, but most organizations

have not taken the time to take the high-level view of their projects to ensure that the resources

that are being consumed (i.e., time, money, people, etc) are creating value and/or returns to the

organization.

Strategic Project Management Framework

Building on Stanleigh’s strategies, a basic framework for implementing Strategic Project

Management (SPM) methodologies within an organization can be created. This framework,

along with the basic project management methodologies, can assist an organization in

successfully selecting and implementing projects. The SPM framework is outlined below.

1. Strategic Alignment of Projects - An organization should ensure that any project

undertaken is aligned with the goals and objectives of the organization. In order to do

this, the executive leadership team needs to be intimately involved in the

prioritization and selection of projects as well as the definition of the project outcome.

This ‘frame’ within the SPM framework is described in more detail in a later section

of this paper.

2. Cultivate a Project Management Culture – An organization should initiate training

sessions to train personnel about the importance of project management and the tools

and methodologies used to manage projects. This project management culture helps
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to create a sense of teamwork, responsibility, understanding and accountability within

the organization.

3. Create Best Practices – Each organization needs to create a project management

‘best practices’ document to outline the methodologies used in selecting and

managing projects. This document should not only outline the procedures to be used

to manage projects but also the information to be gathered during and after the project

to ensure that knowledge gained during the project is passed along.

4. Track and Measure Projects and Outcomes – One of the more important aspects of

the PMBOK is the ‘controlling” of projects. The processes used to control a project

are very well defined as are the tracking and reporting mechanisms for projects.

There are areas that need to be improved though, such as measuring ROI, ROC and

other value based measurements that will help the organization to measure and report

on the value that the project has brought.

5. Create Open Channels of Communication – This is the key to successful

implementation and practice of SPM and project management. Without open and

honest communication throughout the organization, projects are doomed to not be as

successful as they could be and could quite possibly fail completely.

The framework above seems very straightforward but it is very powerful if an

organization were to implement it. By implementing this framework, along with a formal

project management methodology, an organization can ensure that the projects selected are

implemented successfully and bring most value to the organization.

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Strategic Alignment of Projects

This first ‘frame’ in the SPM framework is usually the most difficult to implement and

understand. Aligning projects with corporate strategy is not an easy topic to grasp for some

organizations, but it is necessary to ensure that all projects are aligned with the organizations’

goals and objectives. To accomplish this task, an organization must review the project and

assess what it is that they want to accomplish. In addition, the business value of the project must

be completely understood and defined. When paired with the PMBOK project management

phases, the strategic alignment of projects would assist in defining the project outcome and

success factors for the ‘initiation’ phase. This process of aligning projects with corporate

strategy helps to address the issue raised by Morris (2003) when he writes that project

management must be about “delivering business benefit through projects and this necessarily

involves managing the project definition as well as downstream implementation” (Morris, 2003,

pp. 2-3)

In recent years, Project Portfolio Management (PPM) has become a methodology for

selecting projects that are well-aligned and prioritized. Callahan & Brooks (2004) have defined

PPM as “the use of the appropriate management knowledge, skills, tools and techniques to

maximize the alignment of the company’s project portfolio” (Callahan & Brooks, 2004, p. 178).

Winters (2005) described PPM slightly different when he wrote “PPM is an approach to the

management of groups of projects that treats them as investments” (Winters, 2005, p. 1). As can

be seen from these definitions, PPM consists of selecting, balancing and prioritizing projects to

ensure optimal value for an organization. PPM is a valuable tool for any organization. Using the

principles of PPM, an organization can:

 Select the proper projects according to company strategy.

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 Balance all projects being undertaken by the company to ensure optimal resource

usage.

 Optimize projects to ensure maximum value to the company.

 Quantify the project benefits in financial terms (Winters, p. 1).

 Identify and manage risks (Winters, p. 1).

The benefits of PPM outlined above can provide tremendous value to an organization by

allowing the proper selection of strategically aligned projects, optimal resource allocation,

project utilization and maximized value to the organization.

While using PPM principles to select projects provides a lot of very good benefits, one of

the most important aspects of implementing PPM principles is that Return on Investment (ROI)

and other financial measurements can be used to track project status and determine if the

project(s) is/are creating value for the organization. Using financial measures such as ROI can

provide immediate insight into the status of a project, which allows better executive decisions

related to the optimal usage of resources within the company.

By using SPM and PPM principles, an organization will be able to ensure proper

selection, prioritization and management of projects and project portfolios to ensure that projects

are aligned with the business strategy and providing value to the company.

Strategic Project Management as a Competitive Advantage

Michael Porter described a firm’s competitive advantage in his classic book titled

Competitive Advantage when he wrote:

Competitive advantage cannot be understood by looking at a firm as a whole. It stems

from the many discrete activities a firm performs in designing, producing, marketing,

delivering, and supporting its product. Each of these activities can contribute to a firm’s
 Strategic Project Management 12

relative cost position and create the basis for differentiation … A firm gains competitive

advantage by performing these important activities more cheaply or better than its

competitors perform (Porter, 1985, p.33).

Many books and articles describe competitive advantage and methods to achieve it by

choosing one of Porter’s methods of Cost Leadership, Differentiation or Focus to achieve an

advantage over competitors. The purpose of this section is not to dive into a competitive

advantage discussion over these methods, but to try to describe the use of Strategic Project

Management as a method of achieving a competitive advantage.

Implementing project management methodologies by themselves will most likely not

provide any organization a competitive advantage, namely because their competitors have

implemented the same (or very similar) methodologies. Most modern organizations moved to a

project management methodology such as PMI’s PMBOK many years ago but have not

completely understood the concept of using a strategic vision for project selection nor have they

understood that strategic management of the PM function is necessary. There is ample evidence

to suggest that poor project management will hurt an organization’s ability to gain a competitive

advantage, but there is very little evidence to show that the best project management team in the

world could create a competitive advantage without proper project portfolio management and

project selection.

In order to gain an advantage in the marketplace, an organization must properly identify

and select the ‘right’ projects. The perfect summation to this argument of selection those

projects that add value to an organization is provide in the article by Naughton & Green (2006).

In the article, they write:

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The strategic imperative gives you a different way of prioritizing projects because it's

saying that some projects may not be as profitable as others, but if they add to our

competency relative to others, then that's going to be important. Therefore, if a

company's competitive advantage is introducing new products more quickly than others

… the projects that enable it to get the product more quickly to market are going to be the

most critical ones, even if in their own terms, they do not have higher profitability than

other sorts of projects (Naughton & Green, 2006, p. 1).

Strategic Project Management has recently become a more popular topic within the

project management industry. Many of the world’s project management societies have

recognized the need to educate organizations about SPM and its benefits according to Naughton

& Green. They write:

Recently, a number of the world's leading project management organizations have taken

major initiatives to enlighten executive management about the strategic importance and

benefits of project management. The focus is to move from individual project

management to organizational project management, which these organizations maintain

is a strategic advantage in a competitive economy (Naughton & Green, 2006, p. 1).

Conclusion

The purpose of this paper has been to provide an overview of Strategic Project

Management (SPM). The use of SPM and Project Portfolio Management (PPM) can provide a

great deal of advantage to an organization to allow them to identify and select those projects that

provide the greatest level of value to the organization. There are considerable advantages for an

organization to undertake a rethinking and/or retooling of the project management function to

include SPM methodologies and practices in the selection of projects that are undertaken.
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An additional topic of measuring and reporting project status using a Balanced Scorecard

has been covered as well. Current project management reporting mechanisms outlined in the

PMBOK are very good for reporting status within the project team but are found to be confusing

by project stakeholders that are not intimately involved in the project. The use of the Balanced

Scorecard as a project management reporting mechanism has been considered by some

researchers and implemented within organizations, but its use is not widespread. It is possible

that the Balanced Scorecard can improve reporting and measurement of key project metrics but

more research must be performed to determine the proper measurements to include in the

scorecard.
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References

Arveson, A. (1998). What is the balanced scorecard? Retrieved October 23, 2006, from

http://www.balancedscorecard.org/basics/bsc1.html

Callahan, K., & Brooks, L. (2004). Essentials of strategic project management. Hoboken, NJ:

John Wiley & Sons.

Cleland, D. I. (1994). Project management: strategic design & implementation (2nd ed.).

Boston, MA: McGraw-Hill.

Kerzner, H. (1998). Project management: A systems approach to planning, scheduling, and

controlling (6th ed.). New York: John Wiley & Sons.

Morris, P.W.G. (2003). The irrelevance of project management as a professional discipline.

Retrieved October 25, 2006 from

http://www.bartlett.ucl.ac.uk/research/management/Moscow2003.doc.pdf

Naughton, E. & Green, S. (2006, May 25). Strategic project management - A competitive

advantage. Retrieved from

http://www.webpronews.com/expertarticles/expertarticles/wpn-62-

20060525StrategicProjectManagementACompetitiveAdvantage.html

Porter, M. E. (1985). Competitive advantage. The Free Press. New York.

Project Management Institute (2000). A guide to the project management body of knowledge

(2000 ed.). Newtown Square, PA: Project Management Institute.

Stanleigh, M. (2006, March/April). From crisis to control: New standards for project

management. Ivey Business Journal, 1-4.

Winters, F. (2005, February 16). Project portfolio management: A primer (part 1). Retrieved

October 20, 2006, from http://www.gantthead.com/article.cfm?ID=222787

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Zagarow, H. W. (2003, November 17). Applying the balanced scorecard in project management.

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