Project Management Competences in the Project-oriented Organisation

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1 Project Management Competences in the Project-oriented Organisation Roland Gareis, Martina Huemann University of Economics and Business Administration Vienna PROJEKTMANAGEMENT GROUP, Franz Klein-Gasse 1, A-1190 Vienna, Austria Tel: (+43-1) 4277/29401, Fax (+43-1) , published in: The Gower Handbook of Project Management, JR Turner and SJ Simister (ed), Gower, Aldershot, 2000 pp Abstract In the Project-oriented Company (POC) project management (pm-)competences are not just required by individuals, but also by project teams and by the organisation overall. These competences have to correlate. The pm-competences e.g. of individuals performing project roles, such as project owner, project manager, or project team member, have to be in accordance with the organisational pm-competences of a company. The pm-competences of individuals, project teams, and organisations can be described, measured, and further developed. As project management has to be considered as a core competence of the POC, in the further development of this competence has to be explicitly invested. 1. Strategy, Structure and Culture of the Project-oriented Organization A Project-oriented Organisation is an organisation, which defines Management by Projects as an organisational strategy, applies temporary organisations for the performance of complex processes, manages a project portfolio of different project types, has specific permanent organisations to provide integrative functions, applies a New Management Paradigm, has an explicit project management culture, and perceives itself as project-oriented. POOs consider projects not only as tools to perform complex processes, but as a strategic option for the organisational design of the company. Management by Projects is the organisational strategy of companies dealing with an increasingly complex business environment. By applying Management by Projects the following organisational objectives are pursued: organisational differentiation and decentralisation of management responsibility, quality assurance by project team work and holistic project definitions, goal orientation and personnel development, and organisational learning by projects. POOs perceive projects and programmes as temporary organisations for the performance of complex processes, such as contracts for external clients as well as product developments, marketing campaigns or reengineering activities for internal clients. PROJEKT MANAGEMENT AUSTRIA page 1

2 The more projects of different types a company holds in its project portfolio, the more differentiated it becomes and the higher becomes its management complexity. In order to support the successful performance of the single projects as well as to ensure the compliance of the objectives of the different projects with the overall company strategies, specific integrative structures, such as a strategic center, expert pools, a pm-center of competence, and a project portfolio steering committee are required. Some of these permanent organisations might be virtual. The POC is characterised by the existence of an explicit pm-culture, i.e. by a set of pm-related values and norms. In the POC project management is considered as a business process, for which there exist specific procedures and a common understanding of the performance of this process. Further, in a POC the application of a New Management Paradigm is required.traditional management approaches are emphasising detailed planning methods, focusing on the assignment of clear defined work packages to individuals, relying on contractual agreements with clients and suppliers and using the hierarchy as central integration instrument. Compared with this traditional management approach the major concepts common to new management approaches such as organisation as competitive advantage, empowerment of employees, process-orientation, team work in flat organisations, continuous organisational change, customer-orientation, and networking with clients and suppliers, can be perceived as a New Management Paradigm. Strategy: Management by Projects Projectoriented Organisation Structure: Temporary and Permanent Organizations Culture: Project Management and New Management Paradigm Figure 1: Strategy, of the Project-oriented Organisation structure, and culture 2. Project Management is a Business Process of the POC By perceiving project management as business process of the POC the methods of process management can be applied to design the pm-process. By describing the pm-process, by defining its objectives and its deliverables, it is possible to measure the quality of the pm-process. The pm-process consists of the sub-processes project start, project controlling, project co-ordination, management of project discontinuities and project close-down. Objects of consideration in the pmprocess are the project objectives, the scope of work, the project schedule and the project costs, as well as the project organization, the project culture, and the project context. PROJEKT MANAGEMENT AUSTRIA page 2

3 Deliverables for each pm-subprocess, such as different project plans, project culture, defined strategies to manage project environment relationships, project progress reports, minutes of project meetings, etc, can be defined and their quality can be measured. 3. PM-Competences of Individuals Project management competence can be defined as the capability, to perform the project management process professionally. Pm-competence requires pm-knowledge as well as pmexperience. In the POC pm-competences are required by individuals, by project teams, and by the organization overall. The pm-competences required by individuals differ according to the different project roles to be fulfilled. The following project roles can be performed by individuals: project owner, project manager, project management assistant, project team member, and project contributor. The specific project management functions to be performed e.g. by a project manager can be described in a role description Project Manager. Role description: Project Manager Objectives Representation of the project interests Ensurance of the realisation of the project objectives Coordination of the project team and of project contributors Representation of the project to the relevant environments Organisational position Reports to the project owner Is a member of the project team Functions in the project assignment process Formulation of the project assignment together with the project owner Definition of the core team members together with the project owner Functions in the project start process Organisation of the project start process (together with the core team members) Know-how transfer from the pre-project phase into the project together with the project team members Agreement on project objectives together with the project team members Development of adequate project plans together with the project team members Design of an adequate project organisation together with the project team members Development of a project culture, establishment of the project as a social system together with project team members Performance of risk management and discontinuity management together with the project team members Design of project-context-relations together with project team members Implementation project marketing together with project team members Functions in the project coordination process Disposition of resources for the performance of work packages Controlling the results of work packages, ensurance of quality of work packages Approval of work package results Communication with members of the project organisation Communication with representatives of relevant environments Continuous project marketing Functions in the project controlling process Organisation of the project controlling process (together with the core team members) Determination of the project status together with the project team members Agreement on or planning of corrective actions together with the project team members Further development of the project organisation and the project culture together with the project team members Re-definition of project objectives together with the project team members Redesign of project-context-relations together with the project team members PROJEKT MANAGEMENT AUSTRIA page 3

4 Project marketing together with the project team members Preparation of progress reports together with the project team members Functions in the project discontinuity management process Organisation of the discontinuity management process (crisis or chance management) together with the project owner Contributions regarding the crisis resolution or the chance together with the project team members Functions in the project close-down process Organisation of project close down-process together with the project core team Emotional close-down of the project and regarding the contents together with the project team members Transfer of know-how into the line organisation together with project team members and representatives of the line organisation Final project marketing together with the project team members Figure 2: Role description Project Manager From the role description it is obvious, that the project manager requires knowledge and experience not just to apply pm-methods but also to creatively design the pm-process. The ability to design the pm-process relates to the selection of the pm-methods appropriate for a given project, the selection of the appropriate communication structures, the facilitation of the different workshops and meetings, the selection of the participants for the different workshops and meetings, the decision, to involve a project coach, the definition of the appropriate form for the pm-documentations (project handbook, project progress reports, project close-down report), and the definition of a project marketing strategy. The pm-competence of a project manager, is the capability to fulfil all functions specified in the role description. The pm-knowledge and experience required by the project manager depends on the pmapproach applied by the POC. Besides the pm-knowledge and the appropriate pm-experience for a given project type, a project manager needs, product-, company and industry knowledge. In international projects cultural awareness and language knowledge are prerequisites, too. 4. PM-Competences of Project Teams In order to perform a project successfully, a project team requires a specific team competence, in addition to the pm-competences of the single project team members. The pm-competence of a project team is the ability, to commonly create the Big Project Picture, to solve conflicts in the team, and to agree on common project objectives. A project team needs the ability to cooperate in workshops and meetings. The common development and the application of project plans, such as a work breakdown structure, a schedule, a project environment analysis, etc, have to be understood as tools, to support the communication in the project team. 5. PM-Competences of Organizations Not just individuals but also organisations have the capability to gather knowledge and experience and to store it in a collective mind (Senge 1994, Weik/Roberts 1993). Willke (1998) describes organisational knowledge as hidden in the systems of organisational principles, which are anonymous and autonomous and define the way organisations work. PROJEKT MANAGEMENT AUSTRIA page 4

5 It is hard to imagine, that organisations possess a collective brain, but one could find the organisations knowledge and experience in operation procedures, description of work processes, role descriptions, recipes, routines, and databases of product-and project knowledge. In order to describe and to measure organisational competence, models of organisational maturity can be applied. The first model relating to the measurement of the quality of the software development process, the SEI Capability Maturity Model, was developed by the Software Engineering Institute (SEI) (Humphrey, 1989; Paulk et al. 1991). During the last years several specific maturity models, to describe and to measure the organizational pm-competence, have been developed. Most of them are based (Fincher/Levin, 1997; Goldsmith, 1997; Ibbs/Kwark, 199;, Hartman 1998) on the PMI s Guide to the Project Management Body of Knowledge (Duncan, 1996). Traditional maturity models use four to five steps to describe and to measure the competence to perform a specific process in an organization. The scale usually used is initial, repeatable, defined, managed and optimized, according to the SEI Capability Maturity Model (Paulk et al., 1991). Maturity Level Description of the Level 5 = optimized continuous improvement of the process continuous collection of data to identify analysis of defects for prevention 4 = managed process is quantitatively measured minimum of metrics for quality and productivity exist collection of process experiences 3 = defined Process defined and institutionalized Process groups defined 2 = repeatable Process depends on individuals Minimum of process controlling/guidance exists Highly risky in case of new challenges 1 = initial Ad-hoc process, not formalized No adequate guidance No consistency in product delivery THE pm-competence -MODEL Figure 3: Maturity levels of the SEI Capability Maturity Model An instrument for self-assessing and for benchmarking the pm-competences of organizations is the pm-competence model (Gareis/Huemann, 1998). Basis for pm-competence is the above described pm-process, with its sub-processes. For the description and the measurement of the pm-competence a spider web, with the axis project start, project controlling, project coordination, management of project discontinuities, project close down and design of pm-process is used. PROJEKT MANAGEMENT AUSTRIA page 5

6 Figure 4: Spider web presentation of the organizational pm-competence The spider web presentation has the advantage, that it is a multidimensional presentation of the pmcompetence, allowing the different maturities of different pm-sub processes to be visualized. The overall pm-competence of a company or a business unit is presented by the area, resulting of the connection of the pm-competence points at the scale of the spider web axes. For the pm-subprocesses of the spider web the scale not defined, partly defined, defined, and standardised is used. A global description of the different competence levels at this scale is shown in Figure 5. Competence Level Description of the Competence Level 3 = standardized All required methods applied for all defined project types 2 = defined Many methods applied for all defined project types 1 = partly defined Few methods applied for many projects 0 = not defined Few methods applied for a few projects Figure 5: Competence levels of the pm-sub processes In traditional maturity models the maturity level optimised is usually considered, too. pm competence is not considering the optimisation, because it can not be observed at the level of the single project and it does not apply to the pm-sub processes, but to the pm-process overall. So the further development and optimisation of project management is not part of the pm-process but has to be considered as a specific business process of the POC. The grey shaded area in Figure 4 visualises the current pm-competence of a Project-oriented Company, that has a lot of competence in project controlling, as it has a standardised controlling process, where it applies all required pm methods for all project types defined in this organisation. The project coordination, the project start, and the design of the pm-process are scored defined. Further improvement is primarily necessary regarding the project close down and the management of PROJEKT MANAGEMENT AUSTRIA page 6

7 discontinuities, where the pm-competence is partly defined, i.e. only a few methods are applied for a few project types only. The assessment of the pm-competence of an organisation is based on an IT-supported questionnaire, with about 80 questions. The questions, e.g. relating to the project start process, are grouped in questions regarding pm-methods for the planning of project objectives, project risk, project context relationships, project organisation and project culture. For the single questions the current pmcompetence level is assessed according to the answering possibilities always, sometimes, seldom or never. As it can bee seen in the following sample question, in the questionnaire it is not asked for the application of a given pm-method, but for the resulting pm-documents. B 4.1) Which documents of project organization result from the project start-process? always=1, sometimes=2, seldom or never=3 Internal project assignment Project organization chart Project role descriptions Project responsibility matrix Project communication structures Project specific organizational rules Project related incentive systems Others (please state:...) Figure 6: Sample question of the pm-competence -questionnaire In order to relate the answers to the questions to the competence points on the scales of the spider web a weighting system is used. As the single pm-documents have different impacts on the project performance, different weights are assigned to the questions. 6. Benchmarking the Organizational PM-Competence In a pm-benchmarking research project with companies of different industries pm-competence was applied. Figure 7 visualises the practice of nine companies regarding the design of the project organisation in the project start process. Partners 1, 2, 3 are from the engineering industry, partners 4, 5, 6 are from the IT-industry, while partners 7, 8 and 9 are from the service industry. The engineering- and ITcompanies perform primarily external projects, while the companies of the service industry are mainly performing internal projects. The column Best Theory shows the required pm-competence, as defined by the PROJEKTMANAGEMENT GROUP. The dark grey symbol indicates a MUST competence, the grey symbol indicates a CAN competence. B 4.1) Which documents of project organization result from the project start-process? PROJEKT MANAGEMENT AUSTRIA page 7

8 always sometimes seldom or never Partner 1 Partner 2 Partner 3 Partner 4 Partner 5 Partner 6 Partner 7 Partner 8 Partner 9 Best Theory Internal project assignment Project organization chart Project role descriptions Project responsibility matrix Project communication structures Project organization rules Project related incentive systems Figure 7: PM-Benchmarking Results regarding the Design of Project Organizations Generally, differences in the pm-competences for the performance of internal and external projects as well as differences in the pm-competences of different industries could be observed. As can be seen from Figure 7 in a comparison of the engineering and the IT-industry no major differences regarding the design of the project organization could be observed. In the Benchmarking-Workshop it turned out that the IT-industry more frequently applies integrated project organizations, involving representatives of the client and of subcontractors in the project team and in the project steering committee than the engineering industry. From Figure 7 a difference regarding project related incentive systems can be seen, which are used in engineering companies only. 7. Further Development of the PM-Competences in the POC Core competences, as defined by Prahalad and Hamel (Prahalad/Hamel 1990; Hamel, 1994) are an organization s fundamental capabilities and are an integration of skills, which are competitively unique. This means that these capabilities are difficult to imitate. The core competences enable the company to deliver a fundamental customer benefit and therefore contribute to the long term survival of a company. Project management can be perceived as a core competence of a POC, as it creates a competitive advantage. If a company has pm-knowledge and experience, projects can be performed more efficiently than from companies without pm-competence. Project management adds value to the customer. To ensure this competitiveness permanent further development of the pm-competence is necessary. Pm-competences have to be described, assessed and further developed for organizations, teams and individuals. The above described pm competence model can be applied to assess the status of the organizational pm-competence of a POC and to identify potentials for the further development of this competence in an organizational learning process. Similarly, individual- and team learning have to be organized. PROJEKT MANAGEMENT AUSTRIA page 8

9 Organizational Learning Team Individual Organization Individual Learning Team Learning Figure 4: Relationships between individual-, team-,and organizational learning Instruments for the further development of the pm-competences have to be differentiated for individuals, teams and organisations. Instruments to develop the pm-competence of individuals are e.g. self assessments and training (class room, on the job). Instruments to develop the pmcompetences of teams are e.g. workshops, reflections, supervisions. Instruments to develop the pmcompetences of the project-oriented company at an organisational level are e.g. pm-benchmarking and organisational development projects. 8. Specific Management Competences in the POC Even project management is an important process of the POC additional competences for the management of further specific processes are required in the POC. These additional processes are: programme management, project assignment and project evaluation, project- and programme auditing and coaching, and project portfolio management. PROJEKT MANAGEMENT AUSTRIA page 9

10 References Duncan, W.R. (ed), The guide to the project management body of knowledge, Project Management Institute, Fincher, A. and Levin, G., Project management maturity model,, Project Management Institute 28 th Annual Seminar/Symposium, Chicago, III 1997, pp Gareis, R. and Huemann, M., A process-oriented pm-approach, IRNOP III Conference of the International Research Network on Organizing by Projects, University of Calgary, 6-8 July 1998, pp Goldsmith, L., Approaches towards effective project management, project management maturity model, Project Management Institute 28 th Annual Seminar/Symposium, Chicago, III 1997, pp Hamel, G., The concept of core competence, Hamel, G. and Heene, A. (ed) Competence-Based Competition, New York,: Wiley and Sons, 1994, pp Hartman F., Project management competence, IRNOP III Conference of the International Research Network on Organizing by Projects, University of Calgary, 6-8 July 1998, pp 1-9. Humphrey, W., Managing the software process, Addison-Wesley, Ibbs, W. and Kwak, Y. H.; The benefits of project management: financial and organizational rewards to corparations, Project Management Institute, Sylvia, N.C., Paulk, M.C., Curtis, B., and Chrissis, M.B., Capability maturity models for software. Carnegie Mellon University, Pittsburg, Prahalad, C.K. and Hamel, G., The core competence of the corporate, Harvard Business Review, May/June 1990, pp Senge, P., The fifth discipline fieldbook: strategies and tools for building a learning organization, Doubleday, Weik, A. and Roberts, K., Collective mind in organizations heedful interrelating on flight decks, Administrative Quaterly, 38, 1993, pp Willke, H., Systemisches Wissensmanagement (Systemic knowledge management), Lucius & Lucius, Stuttgart, PROJEKT MANAGEMENT AUSTRIA page 10