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Organizational Project Management

What is Organizational Project Management (OPM) [1]
Organizational Project Management is the systematic coordination of structures, capabilities, and practices to achieve continuous improvement in the performance of temporary processes (Projects, Programs and Portfolios).

Based on this definition, the following six components are the building blocks of OPM (see figure below)


Organizational Project Management
source: PMI


  • Positioning: To date, the role of project management in strategy has been mostly posited as entirely supportive, that is, project management follows strategy (Milosevic & Patanakul, 2005). However, as organizations vary widely in their configurations of activities, industry, market, and country, project management’s relationship with strategy can exhibit similar diversity (Cooke-Davies, Crawford, & Lechler, 2009). In project-based organizations, project management is a strategic competency and acts as the driver for organizational activities and forms the basis of strategy formulation and execution (Thiry & Deguire, 2007). Through programs, project management can be an enabler or catalyst of strategy, facilitating the creation of competencies that organizations require to compete (Pellegrinelli & Garagna, 2009). This meso level position indicates two-way interaction between project management and strategy. Although the intent may have been formulated by top management, adjustments may be made in the realization process.
  • Architecture: Organizations range in their configurations, and individual PPPs within these settings may also vary on multiple dimensions. The architecture dimension examines the configuration of PPPs in an organization. Individual PPPs can vary on scale and complexity. PPPs can range from small, internal, local initiatives to activities that incorporate multiple firms and/or countries. PPPs also vary in complexity from relatively simple, routine projects to items that require the development of new technology or processes (van Marrewijk, Clegg, Pitsis, & Veenswijk, 2008). When firms are performing routine projects, the knowledge of delivery requirements is readily available, and successful realization requires the application of existing capabilities (Baumol, 1993) with predictable outcomes. However, when firms engage in projects with a high level of complexity, firms may be required to create capabilities to meet the delivery requirements.
  • Governance: Organizations need to create a structure that is appropriate to support delivery and internalize learning from projects. These structures may also be used indirectly to demonstrate effective management to external stakeholders (Rad, 2001). At the company-wide level, firms can be examined from the degree to which activities are controlled rather than owned. Organizations with more flexible structures, such as Performance Based Orgazniations tend to control rather than directly manage activities (Bresnen, Goussevskaia, & Swan, 2004). By contrast, firms that embrace ownership may have more fixed, permanent structures within which PPPs are realized. In small firms or those in which formal project management has been recently introduced, this may take the form of a single project manager or business owner/manager. As firms grow in both experience and size, more formal structures may be adopted. Larger, more experienced organizations may invest in PMOs or EPMOs, the role of which may vary with the organization’s architecture and positioning.
  • Interfaces: Organizations need to manage the connections between individual PPPs and between PPPs and their context. PPPs may share ownership and governance structures, requiring the management of information and resource interfaces (Windeler & Sydow, 2001). Depending on the organizational setting, PPPs may also interface with operations and other company activities (Waldron & Turner, 1995).
  • Practices: Based on the organization’s characteristics, it may engage in particular PPP practices. These practices may be derived from the adoption of a formal project methodology, such as Prince 2, P2M, Agile, or based on a body of knowledge such as A Guide to the Project Management Body of Knowledge (PMBOK® Guide) or APM (Bredillet, 2003). Practices may also be influenced by the industry setting. The government, military, and aerospace industries, for example have modified bodies of knowledge for their particular requirements (Crawford & Pollack, 2007). In addition to industry, individual firm adoption of frameworks, such as CMMI or Six Sigma can influence PPP practices (von Wangenheim, Silva, Buglione, Scheidt, & Prikladnicki, 2010).
  • Performance Measures: To evaluate PPP success, organizations adopt based evaluation approaches that measure particular aspects of performance. Outcome-based approaches tend to evaluate PPPs’ inputs versus outputs (Zqikael, Levin, & Rad, 2008). Organizations may take a financial approach, using metrics such as return on investment (ROI) to evaluate particular practices or PPPs as a whole. Firms may adopt measures that blend qualitative and quantitative metrics, such as a balanced scorecard approach. In benchmarking approaches, practices and competencies may also be compared within or across industries to determine the relative performance of the organization. The last two may be combined in organizations that adopt maturity models such as OPM3 or P3M3 (Pennypacker & Grant, 2003)


Background of OPM[2]
The term Organizational Project Management (OPM) was coined by John Schlichter in May 1998 in a meeting of the Standards Committee of the Project Management Institute. OPM was defined as the execution of an organization's strategies through projects by combining the systems of portfolio management, program management, and project management. This definition was approved by a team of hundreds of professionals from 35 countries and was published as part of PMI's Organizational Project Management Maturity Model standard in 2003 and updated later to a second edition in 2008 when it also became an ANSI standard. The standard was updated to a third edition in 2013. The term "Organizational Project Management" should be capitalized because the term is a conventional designation for exactly the systems of processes elaborated in ANSI/PMI 08-004-2008, because it is a proper name for that system and that system is definitive and regimented in its application, and because it does not denote generically any project management that is done in organizations.


Other Definitions of Organizational Project Management[3]

  • Project Management Institute (PMI): OPM3 is the systematic management of projects, programs and portfolios in alignment with the organization’s strategic goals (PMI, 2008 p. 24)
  • Japanese Project Management Association (P2M): P2M is “a framework that seeks to enhance capability of organizations to respond to external forces in order to achieve visions and missions” (Ohara, 2005 p. 16)
  • Aubry et al.: “Organisational project management is a new sphere of management where dynamic structures in the firm are articulated as means to implement corporate objectives through projects in order to maximize value”.(Aubry, Hobbs, & Thuillier, 2007 p. 4)

These existing definitions outline the three underlying paradigms of OPM:

  • OPM as Structure: Organizing by projects was seen as a response to dynamism in the external environment, creating new challenges for firms. Originally, hierarchical organizations were designed around long-term, repetitive processes. Firms were therefore configured into structures that supported these activities. As the environment became more competitive, firms began to initiate increasing numbers of projects. These projects began influencing the firms’ structures, because they were distinct social systems that spanned multiple departments, customers, and suppliers. Flexible, network-oriented structures began emerging and the concept of project management was applied to the organizational context in the form of “management by projects” (Gareis, 1989). In this paradigm, projects, not departments are the units of control, and the role of management is to manage the relationships between projects and their environments, both internal (within the company) and external (outside the company). Managing these project networks required two tasks: integration and differentiation. Integration is the responsibility of company administration and involves the incorporation of project inputs and outputs into a companywide framework. Differentiation is the responsibility of project teams and involves the creation of new projects to solve problems or access opportunities. In a related argument, OPM facilitates the development of organizational learning. Incremental change in a stable environment or a first-order change needs simple projects. More radical, second-order change or repositioning requires programs and portfolios. The characteristics of projects help enable change initiatives, because they can form a space for experimentation with new structures and processes. Researchers have argued that this area remains underdeveloped as existing research looks at projects from the perspective of operations. As temporary organizations, they can manage uncertainty in ways that traditional departments cannot (Thiry & Deguire, 2007); however, limited theoretical or empirical work has explored these avenues.
  • OPM as Practice: In addition to the structural perspective, OPM has also been viewed as a collection of practices. Using a maturity model, organizations access their current practices and identify their relative positions on a scale. Although the use of maturity models has been established in the operations field, they are relatively new to project management, only having emerged in the last 20 years (Andersen & Jessen, 2003). Exhibit 1 below provides a summary of the major project maturity models currently in use.
  • OPM as Integrating Capability: Finally, OPM has been proposed as an integrating competency or capability (Thomas & Mullaly, 2008). This perspective has its roots in the resource based view, a theory that views individual firms as a collection of resources (Mahoney & Pandian, 1992). These resources can then be coordinated, forming the basis of a firm’s ability to compete against rivals (Penrose, 1959). Particular resource characteristics have been suggested by researchers in the resource based view (RBV) from which competitive advantage can be derived (Barney, 1991): Valuable, Rare, Inimitable (difficult to imitate), and Non substitutable (difficult to replace), summarized with the acronym VRIN. In this view, maturity models in isolation cannot be considered strategic because they are resources available to all firms. Knowledge-based resources that are based in the culture and history of a firm, however, can exhibit VRIN characteristics (Wernerfelt, 1995) and support competitive advantage. Identifying such competencies can be difficult, however, as few standard measures exist (Priem & Butler, 2001).


OPM Value Proposition[4]
OPM offers the Organization an ability to analyze itself and its areas of improvements in a structured manner, and predictably drive improvements on the different Organizational Enablers. OPM assessment & adoption are exercises that every Organization should execute periodically, as it forms and refines its vision, mission and strategic objectives over the years.

  • Improve Visibility: Well thought-out (simple, measurable, assignable, integrated) processes can help make required information available to impacted functions and stakeholders as needed by the work tasks being executed. This helps all impacted stakeholders to operate from the same context, and thus deliver work task outcomes that are in alignment with one another. Take an example of different parts of a Project team working to different versions or to differing understanding of the same Requirements document – This is the kind of eventuality that we have to avoid at all costs.
  • Improve Clarity: Communication & education on Work task planning and execution processes across the organization leads to clarity into the “what”, the “why”, and the “how” of various work processes & procedures. All resources in an Organization should have clarity into what they are expected to deliver, by what schedule, what their activities are dependent upon, what activities are dependent upon their own assigned activities’ progress, and why they are doing what they have been asked to do. This clarity naturally drives improved & more predictable results – The entire organization owns their work and its results. It is to be noted that this benefit would also extend to external stakeholders such as Customers (who would have better insight into what is expected of them and what they can expect reasonably from the Company) as well as Third party Suppliers (who can be tracked with greater accuracy due to the improved understand between the Supplier & the Vendor).
  • Improve Control: A natural outcome of improved visibility (of work task context) and improved clarity (into what/why/how of the work task) is improved Control, as Managers are able to better predict outcomes of work tasks, and finesse their delivery actions to achieve optimal results for the organization. This predictability of outcomes & schedule is absolutely critical for success in today’s fast-paced business environment – Your customers would not be satisfied with any less.
  • Improve Efficiency: Well thought-out processes & procedures can help to drive out wastage as well as improve integration at various touchpoints, thus improving efficiency. For example, adoption of the Kanban method can help to reduce wait times for teams, and thus ensure that teams are optimally occupied without getting held up on other dependent work streams and tasks.
  • Improve Profitability: Improved visibility, clarity, control, predictability, and efficiency lead to better cost savings as we are able to cut down on unplanned activities as well as on wastage, leading to improved profitability for the Delivery organization. We can redirect unused resources (in waiting state) to more productive directions for the company.
  • Enable Growth: The achievement of benefit dimensions documented above can help us focus the Organization’s energies on organic growth, as the organization becomes more scaleable and with improved funding to invest in organic growth. Further, with the improved 360⁰ engagement of stakeholders (Customers, Delivery teams, Support functions, Third party Suppliers) as well as the delivery of more predictable outcomes, Customer satisfaction would improve, thus leading to business growth.


See Also

Project Management
Project Management Body of Knowledge (PMBOK®)
Project Management Maturity Model (PMMM)
Project Management Office (PMO)
Project Charter
Project Dependencies
Project Life Cycle
Project Planning Matrix
Project Portfolio Management (PPM)
Project Portfolio Rationalization
Project Scope
Organizational Absorption
Organizational Agility
Organizational Alignment
Organizational Architecture
Organizational Capability
Organizational Change
Organizational Change Management (OCM)
Organizational Commitment
Organizational Commitment Questionnaire (OCQ)
Organizational Configurations
Organizational Culture
Organizational DNA
Organizational Development
Organizational Effectiveness
Organizational Goals
Organizational Health Index (OHI)
Organizational Infrastructure
Organizational Learning
Organizational Memory
Organizational Performance
Organizational Readiness
Organizational Resilience
Organizational Structure
Organizational Theory


References

  1. Definition - What does Organizational Project Management Mean? PMI
  2. Background of OPM Wikipedia
  3. Other Definitions of Organizational Project Management pmi.org
  4. OPM Value Proposition PM Excell