Organizational Project Management

What is Organizational Project Management (OPM)
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)

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)

These existing definitions outline the three underlying paradigms of OPM:

1. OPM as Structure

2. OPM as Practice

3. OPM as Integrating Competency

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).