Applied Project Management Capability: See the Forest and the Trees Lori Lindbergh, PhD, PMP, Principal, LORIUS, LLC. Abstract.

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1 Applied Project Management Capability: See the Forest and the Trees Lori Lindbergh, PhD, PMP, Principal, LORIUS, LLC Abstract Can you apply your project management skills and knowledge in your organization to achieve project success? Do your project outcomes meet the expectations of your project sponsor and stakeholders? If you answered No to these questions, you are most likely not alone. Despite the increasing use of project management best practices and the implementation of project management training and development programs, a large percentage of projects still fail. This may be the result of implementing haphazard, anecdotal solutions, which focus solely on project manager training or project management systems and process improvement, but fail to take into account the overall organizational context in which project management is performed. This paper is based on a dissertation research study that identified a new construct, Applied Project Management Capability, which humanizes and transforms the abstract concept of organizational project management into an employee-level measure that is easier for leaders and manager to understand and use to focus their performance improvement programs. Background For some time, organizations have been investing in project management training and development to improve their project management performance. Managers, consultants, and trainers in project management have accepted two assumptions about organizations with good project management practices: (a) they have better project performance and (b) they have lower direct project costs (Ibbs & Reginato, 2002). However, even after significant investments, the latest Standish Group report indicated that 70% of projects still failed due to ineffective management of projects (Standish Group, 2009). In addition, questions remained about what contributes to ineffective management of projects: lack of project manager competence, inefficient project management processes, or an overall organizational culture that does not support project management practices. This paper goes beyond the traditional concept of Organizational Project Management and presents a structural model of Applied Project Management Capability (APMC) that highlights the interrelationships between organizational culture, project management culture, project manager capability, and the project outcomes achieved. The model moves beyond the one-dimensional approach that typical organizational project management maturity assessments and project manager competency assessments use, and examines the impact of the organizational system on the performance outcomes project managers achieve. The results of this study will help project managers better adapt to the organizational challenges they face to achieve greater project success, and the integrated improvement model may help managers establish more realistic expectations about the project outcomes they can achieve in their organizations and implement balanced project management improvement solutions that are specifically linked to improved performance in their organizations. Traditional Views of Organizational Project Management Provide Limited Value It is often easier for organizations to attribute their project failures to a lack of project manager competence or problem with the project management system, rather than to problems associated with the organization s applied project management capability. Even consultants and researchers have taken a similar view of project management performance and attributed unsuccessful projects to ineffective project managers, not poor applied project management capability (Crowe, 2006; Dainty, Cheng, & Moore, 2003). This limited perspective is no longer working. Organizations have received initial value from implementing project management training and best practices, but the value may have leveled off or 2010, Lori Lindbergh 1

2 may have decreased (Thomas & Mullaly, 2008). Consequently, a systems perspective is necessary to examine what contributes to effective project management in organizations. Project competent organizations exist when project managers have adequate experience and training, competent team members, and an environment that enables them to perform at their best (Frame, 1999; Lindbergh, 2009; Project Management Institute, 2007). Traditional views and concepts of organizational project management are not longer relevant because these views are focused on only one component of the applied project management capability (APMC) model and treat all components as nonintegrated silos. Although organizational project management is a critical element, to evaluate it effectively as a system, one must examine the competency of project managers within the project management culture in which they perform, as well as within the overall organizational culture in which project management practices are integrated. Exhibit 1 depicts the integration between the three key components of APMC: project manager capability, organizational culture, and project management culture (organizational project management). The center area of intersection is where an organization will exhibit its highest applied project management capability: maximum productivity from its project managers, working in well-integrated and supportive PM and organizational systems/cultures, and achievement of the greatest possible project success. In the center area, project managers possess the necessary skills and capabilities to manage projects and the organization promotes continuous professional development and improvement. Organizational project management practices are mature and support the effective selection, prioritization, and management of projects. The overall organization s culture and leadership climate support the cross-functional application of project management practices, encourage collaborative decision-making and communication, and achieve alignment of projects and programs with the organization s overall strategic objectives. Exhibit 1 Applied Project Management Capability (APMC) The other areas of intersection and the non-intersecting areas in Exhibit 1 represent an imbalance in APMC. This imbalance could manifest in a number of ways: low project manager capability, an organization with ineffective project management practices, or an organization with an overall culture that does not support effective project management. Organizations that fall into the imbalanced areas will achieve some success on their projects, but many projects will fall short of stakeholder expectations. This was supported by Thomas and Mullaly (2008) who found that many organizations are at an inflection point; they have implemented project management training and best practices, but their project performance improvement has leveled off, or they are experiencing a decrease in project performance. To experience further improvement, organizations must implement specific improvements that move them into the center area of intersection. The challenge, however, has been determining which improvements will have the greatest impact on project performance. 2010, Lori Lindbergh 2

3 Applied Project Management Capability (APMC) Humanizing Organizational Project Management The true end goal of implementing project management improvement is: Improving the performance outcomes of project managers and team members and helping them achieve project success. However, most organizational project management improvements are more focused solely on the means to the end Implementing training programs or new processes, systems, and technologies. Focusing on the means and not the true end goal may not always support project managers and teams as intended. Failing to understanding the relationships between the three components of APMC in their organization and implementing insignificant solutions in each component could limit the improvement organizations will experience. Furthermore, an anecdotal improvement that worked in one organization may not always achieve the same results in another because of different interrelationships between the components of APMC. APMC shifts the focus of project management improvement back to the end goal and evaluates the impact of implementing improvements at to the Human Level: How they affect project manager and team member performance. It clearly illustrates the systems perspective in which, Small, well-focused actions can sometimes produce significant, enduring improvements. If the improvements are in the right place [they] can produce big results, but the areas of highest leverage are often the least obvious (Senge, 1990, p ). Theoretically then, implementing the right solutions in all the component(s) of APMC model could impact project manager performance and project outcomes in a significantly positive direction. The Model of APMC The diagram of APMC in Exhibit 1 presents a systems perspective of project manager performance by considering the competency and motivation of project managers, as well as the situational factors that affect project manager performance (organizational project management culture and overall organizational culture). This diagram was translated into the structural model of APMC for the research study, which is presented in the upcoming Study Results section. The structural model includes five key constructs. Project Management Potential Capability (PMPC): the perception of what project managers think they can do; this equates to PM competency and confidence in performing project management activities. Project Management Culture: the systems, processes, tools that support organizational project management. Organizational Culture: the conditions in the overall organization that are related to how project managers apply their project management skills and competencies (e.g., flexibility and innovation, leadership climate, cross-functional collaboration, organizational decision making, etc.). Applied Project Management Capability (APMC): the performance level of project managers, accounting for conditions in the project management culture and overall organizational culture. Project Outcomes: the level of achievement for budget, schedule, scope, quality, and business success. An organization s project management culture provides project managers with the tools, processes, structure, and support to achieve the aims of the organization through projects (Project Management Institute, 2003, p. 8). However, evidence now exists that there is also a supportive organizational culture for project management. Thomas and Mullaly (2008) found that organizational culture affects an organization s perspective of the value of project management, whereas value decreases due to personnel 2010, Lori Lindbergh 3

4 changes, lack of focus, over-implementation or over-bureaucratization, and inconsistent alignment of project management with the organization s strategy. This supports the premise of the structural model or APMC: Project managers operate within the context of the overall organization and conditions within the organizational context influence performance outcomes, which can enhance or detract from even the most experienced project manager s performance outcomes. Research Methodology The research methodology used for this study was a non-experimental, descriptive, correlational design using single observation, self-reported information to examine the relationships between key variables in this study and evaluate the fit of the integrated, structural model of APMC. Study entry criteria included: (a) PMP certified, (b) at least five years of experience in project management, (c) currently working as a project manager directly managing projects, and (d) had closed out a project within the past year of at least six months duration. Data was collected online using a new instrument developed for this study. A pilot study evaluated the psychometric properties of the instrument prior to the start of the main study. Description of the Sample Participants were recruited from several PMI chapters, SIGs, Listservs, and PMI s survey website. The final dataset included 173 project managers. The mean years of project management experience was 14.8 years with the greatest percentage of participants (39%) having 5-10 years of experience. The largest industry groups represented included IT and telecommunications (24%), information systems (22%), and financial services (21%). Sixty-seven percent of participants held a project management certificate or project management university degree. The most common past project types examined were new product development (35%), product or system enhancement (27%), and application development (18%) projects. Participants rated the complexity of their projects using four indicators: project impact, requirements stability, team size, and strategic importance (rating scale of 1-4). Mean project complexity was 2.1, with higher complexity noted for projects in the financial services, insurance, government, and utilities industries. Participants with years of experience indicated they were managing projects of higher complexity. Study Results Applied Project Management Capability: How to See the Organizational Forest AND the People Trees. The study results suggest that assessing one or multiple components of project management in isolation provides limited value. The structural model testing revealed the need for an integrated, systems perspective to understand how to improve applied project management capability in organizations. Exhibit 2 transforms the diagram in Exhibit 1 into the structural model used in the study. The structural model represented a theoretical mechanism describing how the unobservable system functioned, typically yielding predictions for the behavior that can be observed (Hancock, 2009). The data-model fit was evaluated using structural equation modeling (SEM) with latent variables (latent variable path analysis). The ovals in the exhibit represented latent variables, which are underlying constructs that cannot be measured directly and are measured using a set of indicator variables. The presence of the underlying latent constructs influenced how project managers responded to the associated indicator variables. For example, organizational culture cannot be measured directly; however, some level of organizational culture exists based on how the project managers respond to questions designed to measure components consistent with characteristics of organizational culture. 2010, Lori Lindbergh 4

5 Single headed arrows represented the hypothesized structural/direct effect one latent variable had on another, and double headed arrows represented noncausal covariation between two latent variables (one does not cause another, but they are interrelated). All three variables on the left had a direct effect on Applied Project Management Capability, which had a direct effect on the Project Outcomes achieved. Organizational Culture and Project Management Culture were co-related and may have influenced how each construct manifested in an organization. Exhibit 2: Structural Model of APMC The model exhibited moderate fit to the data. All relationships between the latent constructs were statistically significant, except for the relationship between Project Management Culture and Project Manager Applied Capability. This indicated that Organizational Culture and Project Management Potential Capability had a greater direct effect on Applied Project Management Capability than Project Management Culture, and Applied Project Management Capability had a direct effect on Project Outcomes. Interesting, this finding is somewhat counterintuitive to what organizations typically do when implementing project management improvements: They implement individual improvements, such as training and professional development, but focus their remaining efforts on the project management system, without considering improvements in the organizational culture that are necessary to support project management and integrate project management improvements across the organization. Therefore, organizational project management improvement should be implemented and managed as a complex, enterprise change effort that targets key improvements in all three areas. What Project Managers Think They Can Do and What They Achieve Training and Experience Aren t Enough The findings indicated that Project Management Potential Capability (PMPC) had the strongest direct effect on Applied Project Management Capability (APMC). Mean PMPC was 3.93 (based on a 5-point rating scale), which reflected a composite of self-rated competence with key project management activities and confidence in performing those activities (self-efficacy). Further analyses indicated there were statistically significant, positive correlations between experience and training and improved PMPC, but not with APMC. Training may have helped improve a project 2010, Lori Lindbergh 5

6 manager s competence and confidence initially; however, to improve APMC further and achieve better performance outcomes, organizations must provide an environment in which project managers can adapt and control the conditions in the organizational culture that are related to improvement in project manager performance and project outcomes. Not surprisingly, project management experience exhibited a significant positive correlation with a project manager s competence and confidence, which may help facilitate the development of skills to more effectively manage and adapt to challenges in the organization. Project Management is an Enterprise-Wide Construct Organizational Culture Enhancers and Detractors Overall organizational culture had a statistically significant, positive direct effect on applied project management capability (APMC), but project management culture did not. Further analyses revealed that four organizational culture components: Supportive Leadership Orientation, Open Communications and Information Exchange, Decentralized and Rational Decision-Making, and Clear Strategic Direction, Mission, and Objectives and two project management cultural components: Project Sponsorship and PMO Support and Leadership were significantly correlated with APMC and project outcomes. The relationships between project management and organizational cultural conditions differed across the project lifecycle with organizational culture exhibiting the strongest correlation, especially with executing process and monitoring and controlling process activities. Not surprisingly, a supportive leadership climate at both the project level and the overall organizational level had a strong positive relationship with project management success. The overall organizational system must be ready to accept, support, and leverage the improvements in project management practices to drive overall organizational success and achieve the organization s mission and objectives. Project Outcomes Depend on Applied Project Management Capability, not Organizational Project Management (OPM) The key composite variable measured in this study was applied project management capability (APMC), or the performance outcomes project managers achieved and the level of control project managers felt in achieving the performance outcomes within the context of the organization. This composite variable reflects how conditions in the organizational culture enhance or detract from performance. Exhibit 3 depicts the overall group mean and mean for the top three industry groups in the study for OPM, APMC and project outcomes achieved. Ratings for OPM were Variable Group IT/ Mean Telecom IS FS OPM APMC Mean Schedule 13 mos mos mos mos. Mean Budget $1.2 M $1.3 M $987 K $1.7 M Schedule index Budget index Scope index Quality index Business success index Exhibit 3: Mean Overall Group OPM, APMC and Industry Project Outcomes consistently higher than APMC because OPM does not account for the interrelationship between the three components of APMC. OPM reflects a more optimistic judgment of an organization s project management capability. 2010, Lori Lindbergh 6

7 Better project outcomes for budget, scope, quality, and business success were achieved in more supportive organizational cultures; however, organizations often establish unrealistic expectations about what project outcomes they want to achieve based on an optimistic perception of project management performance. Overall, participants indicated they were on average 35% over schedule and 15% over budget, and participants indicated they achieved scope, quality, and business success 67-80% of the time. Even though the relationship between APMC and project outcomes was found to be statistically significant, APMC accounted for only 18% of the variance in project outcomes. This was expected because of the complex nature of projects and the organizational environment; however, even this small of an improvement could translate into a substantial improvement on larger projects. What s Next? Organizations that have invested in project management training and other improvements have most likely experienced some degree of success on their projects. However, to continue to see an increase in the value of project management, they must focus on the right project management improvements and review, refine, and learn from their efforts (Thomas & Mullaly, 2008). What are the right project management improvements? Will implementing more training, project management best practices, and anecdotal improvements lead to further improvement? Will this hit-or-miss strategy continue to work? This research study tested a project management improvement framework for achieving optimal applied project management capability by treating the three key components project manager capability, project management culture, and overall organizational culture as a system of interrelated parts. Changes or improvements in one part of the system can significantly affect the other parts of the system (positively, negatively, or no impact at all), highlighting the need for organizations to understand which improvements will lead to the most improvement in the overall system, not just in one component. For the Organization This study suggests that organizations could potentially experience greater improvement in project performance if they managed project management improvement as an overall organizational change initiative and integrated organizational cultural changes with project management subsystem changes. The project management system must fit with the strategic drivers of value in the organization (Cooke- Davies, et al., 2009). Forcing project management on an unwilling culture or implementing it in a way that collides with the organization s culture will not usually work. Typically, an organization s efforts to improve performance begin with implementing employee training programs, developing processes and standards, and implementing technologies. Although these are important components of a comprehensive performance improvement program, without consideration for other conditions in the organizational environment that impact performance, these alone will not achieve the organization s desired level of performance improvement. If employees are trained and know what to do, but are not performing up to standards, more training and process will not likely solve the problem. Performance gaps may be caused not by a lack of technical job knowledge, but by a lack of contextual knowledge knowledge of how to adapt and manage within the constraints of the integrated project management and organizational system. Leaders and managers must encourage employee adaptability by developing a climate that is supportive of continuous learning and the associated project management behavioral changes. Therefore, managers and leaders should develop an approach to organizational improvement that addresses employee job knowledge and competencies, and includes strategies to create a supportive environment that fosters the application of these competencies so employees can adapt and fit within the work environment. This would involve bringing together PM performance improvement practitioners, organizational development 2010, Lori Lindbergh 7

8 practitioners, and change management experts to develop holistic, enterprise solutions to ensure improvements reach the systems-level in the organization. For the Project Manager In spite of the organization, project managers must continue to build personal effectiveness and capability. This study suggests that project managers should evaluate their performance outcomes against the two levels of capability potential capability and applied capability. If decreased outcomes are related to a gap in potential capability, project managers should identify how to eliminate the gap by improving knowledge, skills, and competency through training, mentoring, or other development activities. If the gap is more related to applied capability, project managers should determine the conditions in the project management culture and organizational culture that are related to their reduced applied capability. Project managers should take actions to navigate the organizational environment more effectively, such as improving skills, such as influence and negotiation, critical thinking, team management, and decisionmaking. Furthermore, project managers should build project management communities of practice within the organization, build team efficacy, and develop collaborative relationships between peers, managers, and other functional groups involved in projects. Informally educating sponsors, middle managers and senior managers on effective project management can help begin integrating project management best practices into the overall organizational culture using a bottom-up approach. Providing managers with information and viable options to make critical projectrelated decisions and helping managers establish realistic deadlines and performance expectations can help improve the control project managers have over their performance and project outcomes. However, project managers can only do so much on their own. To achieve greater success, they need the support of the leaders and managers in their organizations to help create an overall organizational culture that supports effective project management For Performance Improvement Practitioners This study challenges project management performance improvement practitioners to step out of their one-dimensional thinking patterns and take an organizational development approach to performance improvement. To achieve true organizational improvement, improvements must roll up to the systemslevel in the organization. Changes in one subsystem without considering the impacts on or from other system components could reduce the effectiveness and return on investment achieved from the improvements. Training and development budgets have been cut, making it more important than ever to get improvement solutions right the first time and to maximize the value of the solutions to the organization. Performance improvement practitioners can use the results of this study to incorporate appropriate assessments and evaluations to help their organizations identify and implement the improvements that will achieve maximum value. Traditional competency assessments, performance evaluations, and organizational maturity assessments provide one-dimensional information about potential capability in isolation. The results of this study suggest that this information important, but it does not necessarily get to the heart of what is linked to greater applied project management capability or the real reasons why performance gaps exist. Without information on applied project management capability, individual and organizational improvements will continue to focus on improving potential capability, which will have some effect on outcomes, but establishing a more integrated and supportive organizational culture will achieve maximum improvement in performance outcomes. 2010, Lori Lindbergh 8

9 Conclusion We have known for a long time that a supportive organizational culture and effective PM processes and tools, along with a competent workforce, lead to project and organizational success. The results of this study suggest that the project management subsystem is clearly interrelated with the overall organizational culture and to improve one, the other must be addressed, as well. Shifting organizational project management and organizational culture from an abstract, high-level concept to an employee-level concept will make organizational culture more tangible to leaders and managers so they can better understand how their respective organizational cultures and subcultures enhance or detract from project manager performance. This study provides a way for managers and leaders to prioritize and implement the improvements that will target the critical gaps in their organizations versus haphazard implementation of a generic set of best practices based on speculation and anecdotal experience. Instead, leaders will be able to consider the uniqueness of their organization s project management workforce, project management system, and overall organizational culture in choosing the right improvements. References Bandura, A. (1997). Self-efficacy: The exercise of control. New York: W. H. Freeman and Company. Cooke-Davies, T., Crawford, L., & Lechler, T. (2009). Project management systems: Moving project management from an operational to a strategic discipline. Project Management Journal, 40(1), Crow, A. (2006). Alpha project managers: What the top 2% know that everyone else does not. Kennesaw, GA: Velociteach. Dainty, Cheng, & Moore (2005). Competency-based model for predicting construction project managers performance [Electronic version]. Journal of Management in Engineering, 21, 2-9. Frame, J. D. (1999). Project manager competence: Building key skills for individuals, teams, and organizations. San Francisco: Jossey-Bass. Hancock, G. (2009). Introduction to structural equation modeling course. University of Maryland: Department of Measurement, Statistics, and Evaluation: College Park, MD. Ibbs, W., & Reginato, J. (2002). Quantifying the value of project management. Newtown Square, PA: Project Management Institute. Lindbergh, L. (2009). The relationship between project manager perceived capability, organizational culture, and project outcomes. Capella University Dissertation. Project Management Institute. (2003). Organizational project management maturity model knowledge foundation. Newtown Square, PA: Project Management Institute. Project Management Institute. (2007). Project manager competency development framework (2 nd ed.). Newtown Square, PA: Project Management Institute. Senge, P. M. (1990). The fifth discipline: The art & practice of the learning organization. New York: Currency Doubleday. Standish Group International, Inc. (2009). Extreme Chaos West Yarmouth, MA: The Standish Group. Thomas, J. & Mullaly, M (2008) Researching the Value of Project Management. Newtown Square, PA: Project Management Institute. 2010, Lori Lindbergh 9

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