Best Industry Outcomes

Project Management Institute

Best Industry Outcomes

Lynn Crawford, DBA

Bond University, Australia

Terry Cooke-Davies, PhD

Human Systems International Limited

Library of Congress Cataloging-in-Publication Data

Crawford, Lynn.

Best industry outcomes / Lynn Crawford, Terry Cooke-Davies.

p. cm.

Includes bibliographical references.

ISBN 978-1-935589-47-1 (alk. paper)

1. Project management—Research. I. Cooke-Davies, Terry, 1941- II. Title.

HD69.P75C7493 2012

658.4'04—dc23

2012003948

ISBN: 978-1-935589-

©2012 Project Management Institute, Inc. All rights reserved.

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Table of Contents

List of Figures

Executive Summary

Acknowledgments

Chapter 1 Introduction

Chapter 2 Literature Review

Context

The Relationship between Projects, Programs, and Operations

Core Competence or Dynamic Capability

Responding to Context

Summary

Strategy

The Project View of Strategy

Strategy Implementation

Strategic Perspectives in Project Management Research

Strategic Drivers

Success Criteria and Factors

Success Criteria

Success Factors

Project Types and Challenges

Characteristics of Projects

Project Management Systems

Organizational Project Management Capabilities

Organizational Project Outcomes

Chapter 3 Methodology

Research Design

Research Methodology: Phase One

Demographic Information

Strategic Drivers, Success Criteria, and Factors

Nature and Characteristics of Projects

Organizational Project Management Systems in Place

Organizational Project Management Capability

Organizational Project Management Outcomes

Research Ethics

Conclusion

Chapter 4 Analysis: Phase One

Analysis and Presentation of Results

Overall Results

Execution Performance (All Sectors)

Financial Performance (All Sectors)

The Analyst's View

Key Strategic Drivers by Sector

Aerospace and Defense

Automotive

Engineering and Construction

Financial Services

Government

IT and Telecommunications

Petrochemical

Pharmaceutical

Utilities

Conclusion

Chapter 5 Analysis: Phase Two

Univariate Analysis

Bivariate Analysis

Strategic Drivers Associated with Specific Industries

Project Types and Challenges Associated with Specific Industries

Project Management Systems in Specific Industries and What They Are Used For

Organizational Project Management Capabilities

Discussion

Chapter 6 Conclusions

Summary of Key Results

Summary of Results by Industry Sector

Aerospace and Defense

Automotive

Engineering and Construction

Fast Moving Consumer Goods (FMCG)

Financial and Business Services

Government

IT and Telecommunications

Pharmaceutical

Utilities

Concluding Remarks, Limitations, and Future Research

References

Appendices

Appendix A: Phase One Interview Protocols

Appendix B: Research Ethics—Consent Forms

Appendix C: Abbreviated Questions for Tables and Charts

Appendix D: Bivariate Analysis

Appendix E: Categorization and Regression Trees for Each OPM Outcome

List of Figures

Figure 1.Two Classes of Activity Necessary to Implement Strategy

Figure 2.Standish Project Benchmarks from 1994 to 2009

Figure 3.Systemigram of Phase Two Variables

Figure 4.Phase One Interviews by Sector

Figure 5.Systemigram of Phase Two Variables (Repeated for Convenience of the Reader)

Figure 6.Primary Focus of Current Role of Survey Respondents

Figure 7.Industry Distribution of Total Sample

Figure 8.Public or Private Sector

Figure 9.Regional Distribution of the Sample

Figure 10.Projects for Internal or External Customers

Figure 11.Tangible or Intangible Project Outcomes

Figure 12.Strategic Drivers

Figure 13.Strategic Success Criteria

Figure 14.Strategic Execution Factors

Figure 15.Strategic Importance of Project Types

Figure 16.Strategic Project Challenges

Figure 17.Project Related Processes and Tools in Place in the Organization

Figure 18.Quality of Use of Project-Related Processes and Tools

Figure 19.Frequency of Use of Project Related Processes and Tools

Figure 20.Portfolio Management

Figure 21.Program Management

Figure 22.Resource Management

Figure 23.Management Information and Metrics

Figure 24.Continual Improvement of All Project-Related Processes

Figure 25.Benefits Realization

Figure 26.Cost and Schedule Performance Outcomes

Figure 27.Scope and Quality Performance

Figure 28.Resource Productivity

Figure 29.Project Contribution to Strategy Implementation

Figure 30.Key Strategic Drivers, Criteria, and Factors (All Sectors)

Figure 31.Execution Performance (All Sectors)

Figure 32.Financial Performance (All Sectors)

Figure 33.Strategic Drivers, Criteria, and Factors According to Market Analysts

Figure 34.Strategic Drivers—Aerospace and Defense

Figure 35.Strategic Drivers—Automotive

Figure 36.Strategic Drivers—Engineering and Construction

Figure 37.Strategic Drivers—Finance

Figure 38.Strategic Drivers—Government

Figure 39.Strategic Drivers—IT and Telecommunications

Figure 40.Strategic Drivers—Petrochemical

Figure 41.Strategic Drivers—Pharmaceutical

Figure 42.Strategic Drivers—Utilities

Figure 43.Summary of Key Strategic Drivers, Criteria, and Factors by Sector

Figure 44.Strategic Drivers

Figure 45.Success Criteria

Figure 46.Execution Factors

Figure 47.Nature of Projects Undertaken

Figure 48.Nature of Challenges Faced

Figure 49.Existence of Project Management Systems

Figure 50.Frequency and Quality of Use of Project Management Systems

Figure 51.Portfolio Management Capabilities

Figure 52.Program Management Capabilities

Figure 53.Resource Management Capabilities

Figure 54.Management Information and Metrics Capabilities

Figure 55.Continual Process Improvement Capabilities

Figure 56.Organizational Project Management Outcomes: Benefits, Cost, and Schedule

Figure 57.Organizational Project Management Outcomes: Scope Quality, Resource Productivity, and Strategy Implementation

Figure 58.Variation of Strategic Drivers by Industry

Figure 59.ANOVA Showing Significance of Variation in Strategic Drivers

Figure 60.Variation in Success Criteria Across Different Industries

Figure 61.Variation in Execution Factors by Industry

Figure 62.Variation in Type of Project by Industry

Figure 63.Variation in Challenges Faced by Projects in Specific Industries

Figure 64.Variation in Presence of Project Management Systems in Specific Industries

Figure 65.Pearson Correlations at P <0.01 Between the Presence of Project Management Systems and the Strength of Challenges

Figure 66.Use of Program Management to Deal with Increasing Technological Complexity: An Illustration of What a Positive Correlation in Figure 64 Means in Practice

Figure 67.Variations in OPM Capabilities in Specific Industries

Figure 68.Visual Comparison of the Application of OPM Capabilities in Different Industries

Figure 69.Variation in OPM Outcomes by Specific Industries

Figure 70.Comparative Performance of Specific Industries, Measured by a Crude Index of OPM Outcome Performance

Figure 71.Relationship Between Success Criteria and OPM Outcomes

Figure 72.Correlation Between Growth, a Success Criterion, and Improving Trend in Productivity, an OPM Outcome

Figure 73.Correlation Between Competence of Personnel, a Success Criterion, and Total Benefits Realized, an OPM Outcome

Figure 74.Areas of Correlation Between OPM Capabilities and OPM Outcomes for Engineering and Construction—the Number of + Signs Indicates the Confidence Level

Figure 75.Areas of Correlation Between OPM Capabilities and OPM Outcomes for Government—the Number of + Signs Indicates the Confidence Level

Figure 76.Overall Percentage of Project Management Systems in Place

Figure 77.Combined Mean Scores for Frequency and Quality of Use of Project Management Systems

Figure 78.Average of Mean Scores for All 22 Capabilities

Figure 79.Average of Mean Scores for Benefits, Costs, Schedule and Quality, Productivity, and Strategy Implemented

Figure 80.Nature of Projects—Engineering and Construction Sector

Executive Summary

Project Management Institute, through its research program, called for proposals to explore and find the best practices common, not to specific companies (organizations), but to a particular industry or project type. Most importantly, the research was required to delineate the best outcomes that are expected for organizational success in different industries.

In response to this request, and with the aim of providing a basis for informed and contextually sensitive development of organizational project management capability in alignment with business strategy, research was designed and undertaken to answer the following questions:

What strategic drivers are characteristic of specific industries and project types?

Are there project outcomes that are typically most valued relative to specific strategic drivers, industries, and project types?

Are there characteristics or patterns of project management systems and practices that are associated with particular strategic drivers and goals, industries, and project types?

The research adopted a mixed method approach and was conducted in two phases. The first phase was a qualitative study, involving interviews with senior managers across nine industry sectors in order to gain insight into the nature of context in each of these industry sectors and to identify strategic drivers. Results from this phase were utilized in the design of a web-based questionnaire, which resulted in more than 400 responses, the majority from senior managers. Respondents for both phases of the research were specifically sought from general management, rather than from project management, so that the perspective represented in this study is not necessarily that of the project management community but of the organizations within which projects are managed.

Answers to the three research questions have been provided. Strategic drivers characteristic of specific industries and project types have been identified and the presence of patterns between industries has been demonstrated both qualitatively and quantitatively. The results presented in this report provide a rich resource and a sound starting point for:

Developing approaches to project management development in organizations that is sensitive to context and strategic intent; and

Assisting organizations in making decisions about cost-effective investment in development of their corporate project management capability.

Acknowledgments

The authors wish to thank the organizations that participated in this research for their time and effort. However, these organizations will remain anonymous. The project was partially funded by the PMI Research Department, and supported by the authors’ employers: Human Systems International Limited and Bond University, Australia.

Chapter 1

Introduction

Projects are a means to an end. They are undertaken by organizations for many reasons. For some organizations, projects are their business. They carry out projects on behalf of customers or to deliver products to them. For others, projects are the ways in which they change and improve the organization. Undertaking projects may be the organizational strategy or it may be the way in which organizational strategy is implemented. In either case, organizational capability to manage projects is either a core or enabling competence.

It is therefore not surprising that there is considerable interest in what good project management looks like, giving rise to a plethora of generic models of best practices. This is in itself a problematic concept: best practices for whom and under what circumstances? The concept that one-size-fits-all is contradicted by recent research into the value of project management (Thomas & Mullaly, 2008), which highlights the importance of fit—whereby the internal and external context of an organization would determine the configuration of project management that would add value. The specific set of processes and routines used in the management of projects can be expected to vary not only from firm to firm but according to the nature of the market and the positioning or strategy of the firm in that market.

Generic standards for management of individual projects, and maturity or excellence models to assess and guide development of organizational project management, can both provide a useful starting point. However, it makes little sense for an organization to invest in project management systems that are not directly suited to the nature of its business. Maturity models, in particular, have been criticized for lacking an appreciation of context, and it has been recommended that introducing principles of fit and contingency theory into the exploration of maturity (Mullaly & Thomas, 2010, p. 7) could make them more effective and relevant.

One aspect of fit, proposed by Cooke-Davies, Crawford, and Lechler (2009) is that if an organization's project management capability fits with its strategy, then it will contribute strategic value to the organization. In other words, for each organization there will be specific strategic drivers, which will influence the configuration of its structure and systems (Donaldson, 1987) and the outcomes it will value. These strategic drivers will also influence and be influenced by the market or industry sector in which the firm operates.

A number of studies (Besner & Hobbs, 2008b; Cooke-Davies