THE FUTURE OF PROJECT

MANAGEMENT
By Harold Kerzner, Ph.D. and J. LeRoy Ward
International Institute for Learning (IIL)

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TABLE OF CONTENTS

3 THE WORLD IS CHANGING

4 THE EARLY LANDSCAPE FOR PROJECT MANAGEMENT

7 PMI® TO THE RESCUE

7 THE LANDSCAPE FOR PROJECT MANAGEMENT: FOUR NEW PRINCIPLES

9 THE NEED FOR NEW SKILLS

15 ARE YOU PREPARED TO BE A NEXT GENERATION PROJECT MANAGER?

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THE WORLD IS CHANGING

Every year, new business models appear in the marketplace. Some of the new
models change the way that an entire industry does business. Organizations that
are successful have an unobstructed vision of the future. They see the light at
the end of the tunnel and are willing to take the necessary steps to get there.

Some companies either never see the light or erroneously believe that they have
sufficient time to adapt to challenging market pressures. A prime example is
Blockbuster. Netflix, which was founded in 1997, developed a business model based
upon streaming and slowly attacked Blockbuster’s market. In 2008, Jim Keyes, CEO
of Blockbuster, commented, “Neither Redbox or Netflix are even on the radar screen
in terms of competition.” Three years later, in 2011, Blockbuster went bankrupt thanks
largely to Netflix.

Many of the companies that were hurt by their competitors’ new business models
were well-managed, had a talented labor force and were responsive to their
customers’ needs. Their mistake was spending more time worrying about near-term
profits and less time focusing on their long-term success. Simply because there are
no apparent competitive threats currently forecasted in your industry, doesn’t mean
that they aren’t lurking in the bushes.

Exhibit 1 shows some examples of winners and losers resulting from new
business models.

Winner Loser
Apple Record companies (e.g. Tower records)
Amazon Bookstores (e.g. Borders)
Google Encyclopedias and libraries
Craigslist Local newspapers
Online training Colleges and universities
E-mail United States Postal Service

There are always early warning signs of potential changes in an industry.

Well-managed companies react rapidly to the changes whereas other companies
rest on their laurels. Successful companies are proactive rather than reactive.
As stated by Mark Parker, CEO of Nike, “Companies fall apart when their [business]
model is so successful that it stifles thinking that challenges it.” This is often
referred to as the failure of success.

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When companies are successful and reluctant to change, we often hear the
following arguments:

• “This is how we do business.”

• “Our shareholders and other stakeholders are pleased with the way we
perform.”
• “We see no reason to change at present.”
• “We are pretty happy with our command and control system.”

If these comments above are representative

of your organization, then read no further.
Just trash this white paper and watch the
competition pass you by.

THE EARLY LANDSCAPE FOR PROJECT

MANAGEMENT

Now, I have your attention. Modern day project management had its roots in the
Department of Defense (DoD) and NASA. For years, most of the project management
training programs focused heavily on the Earned Value Measurement System
(EVMS) which was used for the “command and control” of projects. While other
project management-related topics were often included, emphasis was on
command and control using EVMS. Project management was rarely considered as a
business model component.

Project management was a means to coordinate the creation of a deliverable or

outcome. Project managers were assigned to operational projects rather than
strategic ones. Strategic projects were managed by functional managers because
executives trusted them more than the project managers. There was also an
inherent fear by executives that project managers might start making decisions that
were reserved for the senior-most levels of management.

Simply stated, the mistrust and fear of project managers led executives to create
the position of a project sponsor. Project managers made predominantly technical

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and operational decisions. Business and/or strategic decisions were made by the
senior levels of management or the project sponsors. Business-related information
was often withheld from project teams. Information was a source of power which is
one of the reasons why executives were reluctant to share such information. Even on
multi-million-dollar projects, the PMs were often treated as just puppets.

Companies that tend to thrive on this type of culture usually have the following
characteristics as to how they execute projects:

• Projects are identified, evaluated, and approved by senior management,

marketing and/or sales, without any involvement by project managers. The
project manager is then assigned and directed to “execute this.”
• Executives continue to add projects to the portfolio and establish new
priorities, but refuse to ask the PMs what resources and skills are required to
deliver them.
• The PMs may have no say in the establishment of the budget, schedule or
major milestones, but must live with decisions made by others who probably
have never served as a project manager. In some companies, project planning
is done by a centralized planning group, which may or may not include any
personnel experienced in project management.
• Even though the planners may not fully understand the complexities of the
project, given their lack of PM experience, the assumption is made that the
planners can develop the correct baselines and plans which would remain
unchanged for the project’s duration.
• Team members are assigned to the project and are expected to perform
according to a plan in which they may have had little input. PMs have no
authority to hire, fire, have people removed from the project, and/or participate
in wage and salary administration activities for project team members.
• Rigid baselines, often approved by senior management, are established
without any input from the project team.
• Project success is defined as meeting the planned baselines.
• Scope changes are approved only if the existing baselines will not change very
much.
• Project success is defined as meeting the triple constraints and producing
deliverables, notwithstanding the fact that there may be no market for what
was created and no business value was achieved. All that was accomplished
was a waste of precious resources.

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Companies that behave in the ways expressed above generally have one, and only
one, project management methodology. They believe that one size fits all. The
organization may perform continuous improvement activities, but they are
restricted to updates of the forms, guidelines, templates and checklists used for the
command and control of projects. PMs are evaluated on their adherence
to the methodology and free thinking is often discouraged.

If any type of continuous training is provided for the project managers, it must
support the use of the existing methodology. Once again, the focus is on operational
or tactical project management activities rather than strategic or innovative project
management. Pressure is imposed on the employees to become more efficient and
effective at what they are currently doing rather than preparing them for tomorrow.
These companies still haven’t recognized the value of project management and the
training needed to establish a competent, professional workforce.

One of the reasons why companies were reluctant to continuously train and
educate project managers was rooted in their misguided belief that project
management was a fad that would soon disappear. Some training institutions such
as The George Washington University and Western Carolina University established
degrees in project management, but there were still many companies that viewed
project management as just a trend that might disappear and were reluctant to
provide additional education.

If the information presented

above is representative of your
organization, then perhaps you
should read no further. This is
your second chance to just trash
this white paper and watch the
competition pass you by.

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PMI® TO THE RESCUE

In the mid-1980s, the Project Management Institute (PMI)® set the standard for
professionalism in project management with the establishment of the Project
Management Professional (PMP)® certification exam. In addition, PMI® mandated
that each PMP® acquire 60 Professional Development Units (PDUs) every three years
to remain certified.

While the intentions were laudable, a large number of training programs and
seminars appeared on the marketplace to make it easy for people to get recertified.
Unfortunately, many of these programs simply reiterated the principles that the
certified PMs had already learned and only focused on operational/tactical rather
than strategic project management endeavors. These types of programs trained
people for the here-and-now and focused almost exclusively on the waterfall
approach to project management. While there is certainly a need for these
programs, they did not properly prepare project managers for what their job might
look like in the future.

When students would ask me what companies they should work for to become
proficient at project management, I would tell them to focus on those companies
that provide continuous training opportunities for their employees; and especially
companies that have a vision of the future and some plan for how to get there.

THE LANDSCAPE FOR PROJECT MANAGEMENT:

FOUR NEW PRINCIPLES

I started this white paper discussing business models. What type of project
management training opportunities do you believe are available to project
managers in most of the companies that today have successful business models?
Now, we will put several of the pieces of the puzzle together by discussing four new
principles.

First, and probably most important, project management is now seen as a busi-
ness process where project managers are expected to make business decisions
as well as project-based decisions. Where are project managers obtaining the
training to make business-type decisions?

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IBM, for example, has found a solution by asking their project managers (and they
have 46,000 PMs) to earn their PMP® certification and complete IBM’s internal certi-
fication program. Most PM methodologies today contain an abundance of business
processes as well as information related to the EVMS. The purpose of IBM’s internal
certification program is to educate their PMs on the use of their business processes,
many of which are part of IBM’s approach to project management, including Agile
and Scrum. PMs are now expected to make project- and business-related decisions,
including the selection of which project management approach (waterfall, Scrum,
Agile, hybrid, etc.) is the most appropriate for their projects.

Second, project management is no longer seen as merely a set of operational

or tactical activities to create a deliverable or outcome. It is now treated as
“strategic project management” which is designed to meet strategic business
objectives. Project managers are now managing strategic projects and are allowed
to make, or participate in, strategic business decisions.

Third, project management is now seen as the delivery system to create the
desired business benefits and business value. Today, the project selection and
prioritization system for projects is heavily oriented toward those projects that will
produce the greatest business benefits and business value over the long term. The
focus is on long-term strategic thinking rather than short-term thinking. Project
managers are now expected to manage strategic projects that can result in a
sustainable competitive advantage for the company.

Fourth, project management is no longer just another career path in an

organization. Because of the three principles above, project management is now
a strategic competency. Every year or two, well-managed companies complete a
study to identify the four or five strategic competencies that the firm must cultivate
for the future. Project management almost always makes the list.

If the information presented above is not the way

that your organization envisions the future of project
management, then once again you should read no
further. This is your third chance to just trash this white
paper while you watch your colleagues pass you by
with better career path opportunities.

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THE NEED FOR NEW SKILLS

To understand the importance of project management, we must recognize that it

is today, and most likely will continue to be in the future, a critical component of a
firm’s business model because it is the delivery system for long-term sustainable
business value.

As such, many project managers today (employed by firms that abide by the four
principles we just defined) are required to deliver presentations to corporate
executives rather than to lower levels of management. Therefore, given this
importance, what key information and skills are needed?

First and foremost, presentations to corporate executives must provide critical

performance information that often requires more metrics than just time, cost and
scope. This is based upon the organization’s maturity level as seen in Exhibit 2 (page
10).

If an organization is still conducting business at Level 1, which we shall refer to as PM

1.0, they may be using the metrics shown in Exhibit 3 (page 10).

As stated previously, project managers are now expected to be more actively

involved in making business decisions. Therefore, project managers must
understand, measure and track other metrics as shown in Exhibit 4 (page 11).

However, there are other metrics that could also be included such as reporting
alignment to strategic business objectives, tracking changes to the assumptions in
the business case, and reporting the creation of business value. For simplicity’s sake,
I refer to this as PM 2.0, as shown in Exhibit 2.

Not all projects will require the tracking of business and/or financial metrics.
Innovation projects will require such tracking and project managers may work
closely with marketing personnel in obtaining information to support the tracking
of these metrics.

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EXHIBIT 2. LEVELS OF PROJECT MANAGEMENT MATURITY BY METRICS

EXHIBIT 3. TYPICAL TRADITIONAL PROJECT MANAGEMENT METRICS

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 EXHIBIT 4. BUSINESS/FINANCIAL VALUE METRICS

In Exhibit 2, we defined Level 3 as PM 3.0 and used the word “value.” Value applies
to all levels because we realize that the purpose of working on projects is to create
long-term business value. Therefore, all the metrics identified for all the levels must
focus upon some form of value measurement.

In the future, we can expect the definition of a project to be “a collection of sustainable

business value scheduled for realization.” The definition of project success will be
“achieving the desired business value within the competing constraints.”

This is where employing an Agile framework, such as Scrum, can be beneficial,

because Scrum is all about delivering business value continuously throughout the
project’s life-cycle, not just at the end. Through the execution of planned Sprints that
last about a month, the Development Team, working on items from the Product
Backlog prioritized by the Product Owner (who is responsible for maximizing the
value of the product), delivers a potentially releasable increment of product
functionality. This functionality represents business value to the organization.
Accordingly, the Scrum Team (Scrum Master, Product Owner, Developers) has a
laser-like focus on creating business and financial value on an incremental as well as
a long-term basis.

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Value may very well become the most important word in the project manager’s
vocabulary. It certainly is a word and concept inherent in Agile and Scrum. After all, a
Sprint is executed to deliver value and not just to get work done. Value is
determined by the Product Owner based on the items placed in the Product
Backlog.

Value can appear in many forms and can be measured. In Scrum, as each backlog
item is completed, the Product Owner and others are able to measure, at some level
of accuracy, what value has accrued to the organization. Employing burn-up and
burn-down charts, the Scrum Master, Product Owner and Development Team can
readily see how much value has been created, and how much more is left to realize.
But there are other examples of value measurement as well.

For example, as project management becomes critical for the delivery of business
value, companies are measuring the organization’s leadership value elements as
shown in Exhibit 5.

Another example, which is related to leadership value, is how the firm manages their
social responsibility projects such as sustainability. Typical value attributes are shown
in Exhibit 6 (page 13). Exhibits 5 and 6 illustrate the beginning stages of strategic
project management.

EXHIBIT 5. TYPICAL LEADERSHIP VALUE METRICS

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 EXHIBIT 6. TYPICAL SOCIAL RESPONSIBILITY VALUE METRICS

Level 4, which we shall refer to as PM 4.0, focuses on the measurement of the value
of business intangibles such as patents and intellectual property. For decades, we
avoided measuring intangibles because we simply did not know how to measure
them. Today, we believe we can measure anything.

For decades, we had questions about intangibles, specifically related to project

management, that were difficult to answer:

• Are corporate project management assets tangible, intangible or both?

• Can we define intangible project management assets?
• Can the intangible project management assets be expressed in financial terms
and impact the corporate balance sheet?
• Can intangible project management assets be measured?
• Are they value-added and can we establish intangible project management
metrics?
• Do they impact the performance of the organization in the future?

Today, we can measure intangible as well as tangible factors that impact project
performance. Intangible benefits and value are now seen as intangible assets and
can be evaluated by accounting personnel. An intangible asset is non-monetary and
without physical substance. Intangibles may be hard to measure, but they are not
immeasurable. As an example, what are the long-term benefits of owning patents?

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There are many forms of intangible assets in an organization. The following are often
regarded as intangible project management assets and can be measured:
governance, leadership, commitment, lessons learned and best practice, knowledge
management, intellectual property rights, working conditions, teamwork and trust.

Intangible assets are more than just goodwill or intellectual property. They also
include maximizing human performance. Understanding and measuring intangible
asset value improves performance. Intangibles are now seen as long-term
measurements and most companies no longer focus on just the short-term results.
Companies now recognize that intangibles impact their long-term bottom line, they
are not fearful of what the results will show and do not argue that they lack the
capability to measure intangibles.

Project management is now being applied to innovation activities. We are now

training people to perform as innovation project managers. The output of innovation
can be intellectual property rather than just products or services as shown in
Exhibit 7. Some people believe that the valuation of intangible assets can have a
greater impact on long-term performance than the tangible assets.

EXHIBIT 7. TYPICAL INNOVATION VALUE METRICS

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As stated previously, project management is now at the core of many business
models. As such, project managers are now working closely, for example, with
marketing to understand consumer behavior. This is critical for those project
managers that are actively involved in managing innovation projects.
PMs must now assist marketing personnel with the metrics shown in Exhibit 8
which is representative of PM 5.0, strategic project management. Even though we
tend to label these metrics as marketing metrics, they have a direct bearing on the
organization’s strategic competitiveness and long-term sustainability.

EXHIBIT 8. TYPICAL STRATEGIC METRICS

ARE YOU PREPARED TO BE A NEXT GENERATION

PROJECT MANAGER?

Companies must take a hard look at the expectations they will have of their project
managers over the next decade or longer, and what type of additional training is
required. In this white paper, I just scratched the surface on a few topics and
provided you with some ideas as to what the future might look like. I believe that
investing in project management training should be a strategic necessity if there is
an effective tangible or intangible ROI expected from the training.

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In the previous paragraphs I introduced you to five important topics that I believe
should be mandatory for preparing the next generation of project managers. The
topics appear in Exhibit 9.

EXHIBIT 9. RELATED TRAINING TOPICS

TRAINING TOPICS STRATEGIC BENEFITS

An understanding of what changes are
appearing in the marketplace and how project
PM 2.0 – PM 5.0
management will contribute to long-term
sustainable competitiveness

An understanding of how real-time dashboard

Project Management Metrics, KPIs
reporting systems are replacing written reports to
and Dashboards
improve fact-based decision making

An understanding that we manage projects for

Benefits Realization and Value
the expected benefits and value rather than to
Management
just focus on budgets and schedules

To understand the process that companies go

Best Practices in Project Management through to capture best practices and provide the
information throughout the organization

An understanding of how innovation project

management will differ from traditional project
Innovation Project Management
management practices, including business
model innovation activities

There are certainly more topics than the five mentioned above. Some topics are
industry specific and others may be organization specific. But in all cases, with the
growth expected in the responsibilities of the project managers, we must begin
thinking now as to how they will be educated.

Now that you have read through the entire

white paper, aren’t you glad you will not see
any more of these boxes…until perhaps my next
white paper?

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ABOUT THE AUTHORS

Harold Kerzner (M.S., Ph.D., Engineering, and M.B.A) is IIL’s Senior Executive Director for
Project Management. He is a globally recognized expert on project management and
strategic planning, and the author of many best-selling textbooks including Project
Management: A Systems Approach to Planning, Scheduling, and Controlling.

J. LeRoy Ward (PMP, PgMP, PfMP, CSM, CSPO) is IIL’s Executive Vice President of
Enterprise Solutions and a recognized thought leader, consultant and adviser in project,
program and portfolio management. With more than 39 years of experience in the field, his
insights, perspectives and advice have been sought by hundreds of companies and
government agencies around the world

ABOUT IIL
A global leader in training, consulting, coaching and customized course development, IIL has
been a trusted learning partner to clients in over 150 countries, for more than 25 years. We
are committed to improving individual, team and organizational performance with Intelligence,
Integrity and Innovation.

Contact us at +1-212-758-0177 or [email protected]

Request a free consultation at https://www.iil.com/onsite

Project Management Institute, PMI, Project Management Professional, and PMP are registered marks of the Project Management Institute,

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