Project Management Has Become Very Important

Published Date: 02 Nov 2017

Abstract:

Project management has become very important topic all over the world. Literature shows that more than 30% companies fail to accomplish its project with success due to misalignment between business strategies and project management. Many companies face this problem of missing link of business strategies and project management. Alignment is necessary for getting competitive advantage and goals of its business. Top management also play important role in alignment of business strategies and Project management.

Keywords: Business strategies, project management, alignment, project portfolio management

Introduction:

Project management has become very important and also serves as core function in many organizations. Projects are any temporary activities that have starting and finish point, it has performance parameters. Projects face triple constrains (1) time (2) budget and (3) performance. It was assumed that for attainment of organizational goals one has to meet triple constraints of time, budget and performance. Project management plays a vital role in achieving organizational goals and considered as backbone of organization. Project management is knowledge that meets the requirements of projects. Project management plays important role in accomplishing strategies, business goals and desired outcomes. Organizations link their projects with business strategies to achieve the goals and objectives. Strategies are activities that guide and direct the use of the resources to accomplish the organization’s vision and goals and sustainable competitive advantage. Mostly these components comprising the strategies of the business like internal analysis, organizational structures, control systems have strong links to project management processes and activities.

Project management includes project portfolio management (PPM). PPM is about how organizations controls its projects and align them with business strategies. Many organizations are working on numerous projects and they are conscious to get maximum return of their business. PPM also includes the maximization profit which is main objective of all organization. Basically projects are bases of any organization to build up business strategy and project management relation. When organizations link their projects to their business strategy, they are better able to accomplish their organizational goals. Companies should align their business strategy with the project management action to implement the strategies in the projects. Such alignments are difficult because the objectives of business strategy are sometime not clear and well-communicated with project management. Misalignment may cause an organization to missing goals, communication gap and missing link of business strategy and project management. The lack of alignment of business strategy to the project management leads to the project failure and has adverse effects on organization performance as well. . There is need of systemic approach to align the projects with business strategy. So important in managerial challenges involved that aligning project management and business strategy and encouraging individuals to participate in using emerging strategies to create new ideas and renew existing strategies.

Literature indicates that some factors that helps in creating link between business strategy and project management if there is any gap between the bridge of business strategy and project management that should be filled to achieve high returns and competitive advantages. As literature shows that SPL elements such as spirit, strategy, organization, tools and processes that elements should be align between business strategies and project management and in depth understanding of factors that are missing and relationship of these factors with business strategies and project management. Portfolio management play important role in project management and business strategy linking. Implementation of strategies with formulation, receive less attention than formulation so there should be proper emphasis on the implementation as well as.

Therefore, this paper examines the linkage between business strategy, project portfolio management, and business success to finish the gap between strategy formulation and implementation and linking them in a bridge. There is seen a lot of importance of project portfolio management in evaluating, prioritizing and selecting projects in line with business strategy. It is choosing the "right projects" and important part of strategic management in organizations. So there are a few studies exploring single aspects of the linkage between strategies, project portfolio management. Business strategy describes the way in which a firm decides to compete in the market compared to its competitors and close the gap of these strategies with project management.

Project Management:

Project management has become an important issue for many corporations worldwide. Many implementations of project management have been successful, while others have been considered as failure. Projects in any organization have clearly became a central activity in many companies and considered as a backbone of organization and its success means a lot for an organization to prevail in the competitive arena. A project can be defined as a planned set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations. Project management is often termed as the science and art of organizing the different project phases which may be launch of new service, a marketing campaign, building a an entire new floor of a building or a wedding.

According to Milosevic and Srivannaboon (2006), "the essence of project management is to support the execution of an organization’s competitive strategy to deliver a desired outcome". "Project management" is defined as "management that supports the execution of an organization’s competitive strategy to deliver a desired outcome. Six-step approach can be helpful course that avoids the worst storms:

Step 1: Identify the project

Step 2: Determine the desired outcome

Step 3: Describe each of the project’s component tasks

Step 4: Identify the key players.

Step 5: Determine a time lines for each project component.

Step 6: Review, revise and reallocate.

Successful initiation of projects and its execution mostly depends upon strategy. Many companies are suffering from misaligned projects and a lack of a systematic approach to align project management with the business strategy. When organizations link their projects to their business strategy, they are better able to accomplish their organizational goals. Project strategy should be related to the projects goals and objectives in order to attain the preferred position in its competitive environment.

Business Strategy:

Strategy is defined by Patton & White (2002) as a comprehensive set of actions or activities, which guide and direct the use of the firm’s resources to accomplish the organization’s vision and goals and enable sustainable competitive advantage. Turning strategy into action to operationalize strategic objectives to achieve competitive advantage includes in the strategic management. Several scholars suggest that the success of project should be considered in the context of the achievement of the strategic goals of the organization (Dietrich & Lehtonen, 2005; Kenny, 2006) and that organizations are better able to accomplish their goals when they link their projects to their business strategy.

To ensure strategies are translated into actions they should be operational and includes some of the characteristics like structuring an organization to support successful performance and enabling success through the way in which the various resource areas like people, information, Finance, IT, etc. of an organization. Better implementation of strategic plans results in the better performance of sales growth, earnings growth, deposits growth, return on assets, return on equity, return on sales and return on total invested capital than those companies that do not implement their strategic plans.

However, in any organization there are different levels of strategies presented by different level of a business which includes Corporate Strategy: It involves high level of strategic decision making and purpose of this strategy is to achieve the expectations of the stakeholders. Business Unit Strategy: The purpose of this strategy is to achieve the competitive advantage for the services and products which are produced and the decisions in this level is concerned with the choice of products, gaining competitive advantage, to meet the needs of the customers and create new opportunities. Operational Strategy: It’s concerned with the coordination and improvement of resources which results in the effective and efficient implementation of the business unit level strategy. Implementation of strategies requires actions and completing tasks, and should focus on how to realize these strategies. Implementation must include attention to the following key points:

Executing the work requires allocation of resources such as funds, people, and equipment. Organizational resources are limited.

Implementation requires an organizational structure that supports projects.

Project management processes for planning, executing, and controlling are essential to ensure that we are able to implement strategies effectively and efficiently.

We need a project selection and priority system to ensure strong linkages between projects and the strategic plan.

Managerial challenges involves aligning project management and business strategy which encourages individuals to participate in using emerging strategies to create new ideas and renew existing strategies. There is no such research regarding the framework for aligning project management and business strategy comprehensively. The literature has highlighted that there are many projects which have been executed without implementing the strategies as it has been formulated by executives in the corporation’s level without the involvement of the project manager.

Aligning Business Strategy and Projects:

Aligning the company's projects to maximize their contributions to strategic objectives takes a highly coordinated effort. Integration requires a process for prioritizing projects by their contribution to the strategic plan. The organizations to become more competitive, efficient and profitable they will need a business and project management experts working together to attain the business goals. Both, business and project management experts will work towards aligning projects with business strategy. Alignment of business strategy and project management is a major concern for any organization. Such alignments are challenging because the objectives of business strategy are not always clear or well-communicated or consistent with project management actions. Misalignment may cause an organization to miss goals and objectives. Understanding the alignment may be one of the major challenges to effective project management process.

Problems of Alignment:

Often projects fail to support business strategies and business goals it is due to the missing link, so that it should be align. Some processes factors that affect the business strategies and projects linking such as communication, top management support, competency of project manager are some of the major factors are the necessary ones to consider which solves or even creates hurdles in the alignment process. Business directors and top management are responsible for the three processes such as business planning, portfolio management and prioritizing projects while the project managers are responsible for the process of planning and executing the projects.

Prioritizing projects

Portfolio management

Business planning

Project

Project portfolio management, business planning and support of business manager to the project manager while project manager is responsible to handling the projects. Choosing project from the AMC’s projects and aligning that project with the business plans and top manager’s suggestions. When these processes are aligned the strategic elements like goals, objectives, vision, mission, values and norms feeds the portfolio element, the portfolio element feeds the project management element like strategies, organization processes, culture, and the project management element feeds projects and the team's execution of project.

But in many cases, these processes are not aligned; as a result, organizations may fail to tie their projects either to their business strategy or to their portfolio, which may cause them to terminate the project or to continue executing projects that do not contribute to the organization's goals, thus wasting important organizational resources.

Ten Reasons why Strategy Implementation Efforts Can Fail (Heracleous, 2003)

1. The so-called "strategic plan" is nothing more than a collection of budgets and vague directions that do not provide clear guidelines for action.

2. The strategy does not correspond to market realities because it has been developed by strategic planners with no grass roots input.

3. The strategy does not enjoy support from and commitment by the majority of employees and middle management because they do not feel consulted in the development of the strategy.

4. Middle management does not think the strategy is the right one, or does not feel it has the requisite skills to implement it, so it sabotages the implementation.

5. Insufficient top management time is spent on communicating about, selling the new strategic direction, and managing the organizational changes involved.

6. No provision is made for developing the new skills and competencies required by the employees successfully to make the transition and operate within the new strategic direction.

7. No provision is made for instituting the appropriate organizational systems for the selection, motivation and reward of people in accordance with the new strategy.

8. No provision is made for creating a close fit or coherence between the business-level strategy and the various functional-level strategies that can operationalize it.

9. There are factions in the organization which disagree with the strategy because if implemented it would reduce their power and influence, so they sabotage it by deliberate actions or inactions.

10. No attempt is made to analyze the culture of the organization and identify

Literature review examines four selected models that assist organizations in bridging the gap between organizational strategic objectives and project management

Model #1: Heerkens (2007) model of strategic project management is comprised of four main aspects of higher-level project management practices:

1. Strategic alignment of projects. This practice refers to the extent to which an organization ensures that the projects it pursues are directly tied to the organizational strategy.

2. Project portfolio management. This practice refers to the identification of a project investment categorization scheme to assist the organization with prioritizing projects.

According to Rao (2007), project portfolio management forms one of the building blocks in relating projects to strategy and can be considered as a key driver for aligning projects or programs to organizational objectives

3. Program management. The Project Management Institute (2004) defines the concept of "program management" as "the centralized coordinated management of groups of projects to achieve the program’s strategic objectives and benefits" (p. 16). Heerkens (2007) states that program management practices are inherent within the pursuit of strategic project management and are demonstrated as the management of groups of projects and the management of interactions between projects (portfolio coordination).

4. The business results of projects. Since projects are financial investments, organizations should estimate and measure project impacts on organizations from a business results perspective.

Model #2: Green (2005)

According to Green, project managers contribute to competitive advantage due to their skills in managing relationships and an organizational willingness to foster these skills and leverage them throughout the organization, and learn from them how to manage people and relationships across organizational functions and boundaries. Green’s model of strategic project management is based on the constructs of competitive advantage, strategic capabilities and tacit knowledge management

Model #3: Wessels (2007)

He suggests that adopting strategic project management to select, manage and support multiple projects gives companies the best chance of moving the organization forward by keeping the company vibrant in the marketplace and returning maximum value for shareholders. Further, he identifies the following key characteristics of strategic project management:

1. Alignment of the following key business processes: strategic planning, strategic goal setting, and enterprise project management;

2. Functions as a well-managed portfolio of investments as it: (a) allows for the most effective use of constrained resources; (b) ensures a high return on investment since projects are managed collectively; (c) it maintains alignment between the projects and the organization’s short, medium and long term goals (p. 6); and

3. A new management process embedded between strategic planning and project execution that manages project investments strategically and combines business planning and management with project management best practices

Model #4: Naughton (2006)

Naughton (2006) defines the term "strategic project management" as "the management of those projects which are of critical importance to enable the organization as a whole to have competitive advantage"

According to Naughton, there is a gap between aligning project management competencies to the selection of projects that will give organizations a competitive edge. Specifically, strategy is formulated at the senior management level and for it to be implemented; it should be broken down into discrete projects. Project management becomes a source of competitive advantage when an organization outperforms other companies through the experience and knowledge built up over time through managing projects. Also, project management yields competitive advantage through the actual selection and prioritization of projects that organizations engage in and secondly, through implementation and execution of the projects. Furthermore, according to Naughton, project portfolio management is essential and the prioritization of projects should be based on competency building (rather than traditional financial analysis). Project portfolio selection depends on being able to link and prioritize projects according to an understanding of what the capability of an organization is relative to other firms.

Conclusion

From the research work demonstrated in this paper. It is worth to mention the main issues of this study are the misalignment between project management and business strategy is existed. These issues could include communication, project manager and project team competence, involving PM and the project team in the strategy development, executive’s commitment, training and motivation, and personal culture and many others which lead to tie the project to the strategy. The newest research findings from Business Improvement Architects research with more than 750 organizations worldwide showed that major reason for project failure is that most organizations do not ensure that all projects they implement align with their organization's core strategies. In fact, 80 percent of organizations in the research study had no formal business case for the development of their Project Management Offices

If organizations were to implement only those projects that were in alignment with their strategic goals, their success rate would increase dramatically because executive sponsorship would not be an issue. However, Business Improvement Architects’ recent findings show that the majority of projects on the go are not associated with corporate and/or departmental strategic plans. Only 32 percent of respondents said they had a process for prioritizing projects. Therefore, it is not surprising that failure is rampant because senior executives are not at the helm to provide guidance, direction and support to projects within their organization. As well, 68 percent of organizations had no systematic approach in place to prioritize projects or link them to corporate and strategic goals.