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Key Parameters of the Enterprise (1)

Mission

Objectives

Vision

Goals

Strategies

Programmes

Projects

Operational Plans

Organizational Design

Facilitative Services
Policies Procedures

Protocolls

Systems

David I. Cleland / Lewis R. Ireland, Project Management: Strategic Design and Implementation, 4th ed., p. 8
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Key Parameters of the Enterprise: Vision

A Vision is a short, succinct, and inspiring statement of what the organization intends to become and to achieve at some point in the future, often stated in competitive terms. It refers to the category of intentions that are broad, all-intrusive and forward-thinking. It is the image that a business must have of its goals before it sets out to reach them. It describes aspirations for the future, without specifying the means that will be used to achieve those desired ends
Corporate success depends on the vision articulated by the chief executive or the top management. For a vision to have any impact of the employees of an organization it has to be conveyed in a dramatic and enduring way. The most effective visions are those that inspire, usually asking employees for the best, the most or the greatest.

Key Parameters of the Enterprise: Examples of Visions

General Electric: We Bring Good Things to Life The Ford Motor Company: to become the world's leading consumer company for automotive products and services Boehringer Ingelheim: Value Through Innovation

Key Parameters of the Enterprise: Mission Statement

A Mission Statement is an organization's vision translated into written form. It indicates the type of business, direction and purpose of the organization. For many corporate leaders, the mission statement is a vital element in any attempt to motivate employees and to give them a sense of priorities A mission statement should be a short and concise statement of fundamental objectives and priorities.

Example of a mission statement:

- Boeing Corporation: to be the number one aerospace company in the world, and among the premier industrial firms, as measured by quality, profitability and growth

Key Parameters of the Enterprise: Objectives and Goals

An Objective is a statement about the on-going purposes in the enterprise that must be carried out to support the organizational mission. It relates to a desired future state of the organization expressed in quantitative (e.g. attainment of a specified market share percentage) and/or qualitative (becoming a market leader in the development and marketing of Products X,Y and Z) terms. Failure to maintain an organzational objective can jeopardise the accomplishment of the enterprises mission A Goal is a specific achievement in the satisfaction of enterprise objectives. Whereas an objective is an aspiration to be pursued on a continuous basis, is broadly formulated and more outward-focussed i.e. usually stated in terms of some ongoing achievement in a relevant external environment - a goal is an achievement which is to be realized at some future, often prespecified point in time. Moreover, goals are comparatively more specific and inward-focussed

Key Parameters of the Enterprise: Strategy

Strategy is the design of the means, through the use of resources (organizational capacity, capital, manpower, managerial and technological know-how etc.), to pursue and accomplish end purposes (enterprise goals, objectives and the mission) in an effective and efficient manner Strategic Management entails the review and definition of the enterprises mission, setting its long-term goals and objectives, analysing and formulating strategies with a view to achieving goals and objectives and implementing strategies through projects. Projects are thus an essential element in helping the enterprise towards accomplishment of its goals, objectives and mission

Projects as the Building Blocks of an Organizations Strategy

Environmental Opportunities And Threats

Organizations Strengths and Weaknesses

Select Strategy

Gather Information

Evaluate Feasible Strategies

Implement Strategy

Evaluate Information

Project Portfolio
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Core Truths About Projects And Project Management

Major projects are considered the building blocks in the design And implementation of an organizations strategy Project Management helps organizations successfully tackle change in an environment economic, social, political, legal technological, competitive, international and others which is characterized by a high degree of complexity, dynamism and uncertainty

Project Management allows a focused, integrated and processdriven application of an organizations scarce resources for effective and efficient realization of the organizations goals and objectives, and its mission

Project Management is an important means for ensuring the survival and growth of an organization
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Factors Favouring Project Management (1)

Compression of the Product Life-Cycle - Goods and services are being inceasingly expected to become available on the market within comparatively much shorter periods of time than was the case years / decades ago. Project delays mean loss in revenue and market share. Speed has thus become synomynous with competitive advantage and project teams are an appropriate means of achieving this goal

Global Competition - Intense global competition has resulted in a demand not only cheaper but also better products and service: high-quality at low price is now international standard. Quality Management, for its part, is an important aspect of Project Management, where emphasis lies on cost, time and performance.

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Factors Favouring Project Management (2)

Knowledge Explosion - The rapid and vast expansion in knowledge has given rise to demand for highly-complex products, such as in the electronics industry. Rising product complexity in turn requires a correspondingly large pool of diverse specialist expertise and input, for which Project Management, with its cross-functional character, is well suited

Corporate Downsizing - Significant organization restructuring, as witnessed over the past several years in many enterprises, have upgraded both the status of, and demand for, Project Management at the expense of Middle Management (Lean Management)

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Factors Favouring Project Management (3)

Developing and Transforming Economies - Economic liberalization and deregulation programmes being pursued by developing and transformation states over the past several years, and notably since the end of the cold war, have given rise to a huge demand for consumer products and services as well as for creating new, or massively overhauling existing, physical infrastructure. Project Management has and is being used extensively in this context

Multi-Project Environment - Many enterprises and organizations may have several projects running concurrently in order to remain competitive. A large number of projects may in turn pose a considerable managerial challenge given that they have varying degrees of duration, complexity, resource requirement, risk and so forth. Management shortcomings vis-a-vis projects may add up collectively to huge losses

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Intra-organizational Considerations in Project Management (1)

Organizational Reputation

Importance of the Project

Size of the Undertaking

Project Management
Resource Sharing Unfamiliarity

Interdependence

Market Change

David I. Cleland / Lewis R. Ireland, Project Management: Strategic Design and Implementation, 4th ed., p. 69
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Intra-organizational Considerations in Project Management (2)

Organizational Reputation PM helps here because failure to perform a project successfully could be damaging to an organizations public image
Size of the Undertaking The size of a task may overwhelm a department but still be manageable as a project Unfamiliarity Unfamiliar tasks can be performed more effectively and efficiently by using PM techniques Market Change Rapid changes in market trends, demands for products and services, competitor responses and technological change, necessitate innovation, flexibility and a correspondingly rapid response by the organization, which is better achieved with PM techniques

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Intra-organizational Considerations in Project Management (3)

Interdependence PM techniques are better suited in case of tasks where several functional units of an organization are involved and close coordination is required

Resource Sharing PM is useful where skilled human resources in an organization are scarce and should be efficiently utilized with a view to minimizing direct and indirect costs and achieving needed results
Importance of the Project A major project which is necessary to execute in order to realize the strategic objective the organization or which entails high cost and risk should be handled with PM techniques

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Project Management: Major Advantages (1)

Project Management can result in numerous significant benefits for the enterprise: Timely development of complex products and services Notable improvements in organizational processes

Cost reduction
Accomplishment of more work in less time and with less resources without compromising quality Enhancement in the quality of goods and services

More customer influence on product or service design, cost, schedule and project plan, and customer satisfaction
Higher project schedule and cost estimating accuracy Better cooperation, communication and coordination across functional-organizational delineations
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Project Management: Major Advantages (2)

Better suited for highly complex and interdependent tasks increased employee motivation and productivity Increased profitabilty for, along with a new spirit of dynamism in the

enterprise

Project managements focussed, flexible and systematic nature makes the organization more likely to realize its goals, objectives and mission in an effective and efficient manner Project management is solutions-driven and offers a structured process for effectively tackling problems Enhancement in the organizations reputation and business prospects

Increase in shareholder value

Virtually all industries can benefit from project management
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Project Management: Implications of Failure

Project Management can, if improperly implemented or applied in the
wrong context, can have a detrimental impact on the organization:
x x x x x

Loss of reputation for the organization

Higher cost and lower profit

Marginal or no improvement in the quality of goods and services Decreased customer satisfaction Confusion in the patterns of cooperation, communication and coordination across functional-organizational delineations Decreased employee motivation and productivity

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Convincing Senior Management to Adopt Project Management

How will business Improve? How do competitors Use PM? Impact on Customers?

SENIOR MANAGEMENT
How long will it take to adopt PM culture? Immediate benefits Of PM?

Cost of Adopting PM?

Cost-Benefit Analysis of PM
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Strategic Challenges of Projects for the Enterprise

A fundamental challenge for senior management is to identify and implement those projects which contribute towards the most effective and efficient realization of the enterprises objectives and goals. In doing so, senior managers must ideally take into account all factors which are relevant for the successful realization of the project(s) in question and, in particular, they must pay special attention to those factors which may impede or prevent the project(s) from attaining successful completion As the number, scope, complexity and resource requirement of projects being executed and/or planned in an organization increases, the responsibility lies with senior management to increasingly ensure a very careful periodic assessment and review of all projects and notably those having strategic character - to avert potentially serious destabilising consequences for the organization
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Quantity and Quality of Projects: An Observation

It is reasonable to assume that an organization which undertakes a larger number of projects than another enterprise, is more dynamic and probably more likely to survive and grow in a competitive and dynamic corporate environment

but
the quantity of projects under execution and/or in planning in an organization is no substitute the quality of projects: An organization, which has a comparatively small portfolio of carefully conceived, well-planned and properly implemented projects, which are wholly consistent with its mission, objectives, goals and strategy, is more likely to survive and flourish in a competitive, dynamic and uncertain corporate environment than a similar organization which maintains a large portfolio of not so well-conceived, well-planned and implemented projects
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Project Portfolios: A General Observation

A typical medium-sized or large-sized enterprise and any other public-sector and non-governmental organization - would probably have a portfolio of projects at any given point in time. The projects therein would normally vary individually, inter alia, in terms of their: - Inherent complexity goals (e.g. production of new and or modification/refinement of existing goods, services as well as organizational processes) underlying character (strategic or operational) resource requirements (amount of capital, manpower and organizational capacity) time-frames (short, medium and long-term) risk levels (low, medium and high) and they would each have a varying impact on the enterprise

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Challenges for Senior Management in the Project Environment

SENIOR MANAGEMENT (Interest, Conceptual Input, Selection, Guidance, Insight, Evaluation & Control, Intervention (if and where necessary) Mission, Objectives & Goals of the Enterprise Information Consumers Financial and Human Resources Time Return on Investment

A
Risks Organizational Capacity Other Projects in the execution and/or planning phase

Enterprise Project Portfolio B C D E

Competition

F
Stakeholders

Strategic Issues

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Reluctance of Senior Management To Adopt Project Management

Failure to see project management as an effective and efficient vehicle of bringing about change in the organization and as an essential element in in implementing the organizations strategy No visble committment to project management

Interest in maintaining the status quo and putting self-interest over the interest of the organization Overinvolvement with traditional management functions and processes Apprehension that if project management is treated as a core competency, it would require decentralization of authority and delegating decision-making to project managers resulting in a decline of executives power and authority base Problem in communicating the benefits of project management to senior management and other internal stakeholders Non-familiarity with project management

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Some Typical Errors of Senior Managements in Regard to Project Management (1)

A lack of visible committment to project management and to continuously improving project management methodology with time and project experience Attitudes, behaviours, communication patterns and leadership styles are inconducive to project management Organizational culture conducive for project management is not encouraged Selection of projects and project managers which may not be most appropriate for realizing the organizations goals and objectives Failure to create appropriate delineation of formal authority, responsibility and accountability of senior managers, functional managers, project managers and work package managers
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Some Typical Errors of Senior Managements in Regard to Project Management (2)

Inadequacies in on-going monitoring, control and evaluation in relation to project resources Failure to adequately review key project decisions, project plans, schedule, risks, costs, technical performance considerations, implementation and utilization of funds Lack of interaction with the project leader and key project team members, project contracters and project stakeholders Failure to forsee the obstructive influence of the projects secondary stakeholders and strategic issues on the project Failure to assess the project in question in a broader, strategic context

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The Stakeholders (Primary Stakeholders (1))

Stakeholders are individuals and organizational entities who, broadly speaking, have or who believe they have a stake (interest) in the project or projects in question which are being undertaken - or which may - be undertaken.

Stakeholders should be involved in a project as early as possible so that:

Their concerns and ideas are taken into consideration They can contribute towards the outcome of the project They understand the project decisions made and accept them more readily They will be project advocates instead of project opponents

Project Managers who ignore Stakeholders can expect a potentially damaging impact on their project outcome!
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The Stakeholders (Primary Stakeholders (1))

Primary Stakeholders are those persons or groups who have a contractual or legal obligation to the project team and have the responsibility and authority to manage and commit resources according to schedule, cost and technical performance objectives They have direct and operational roles through their participation in the design, engineering, development and production, and after-sales logistical support of the project outcomes Primary stakeholders belong to the project team and its supporting oganizational infrastructure and typically include functional or resource managers, general managers, senior managers, customers etc.

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The Stakeholders (Primary Stakeholders (2)) Primary stakeholders are typically entrusted with: Providing leadership to the project team Allocating resources to be used in the design, development and production of project results Building and maintaining relationships with all stakeholders Managing the decision context in the design and execution of strategies to commit project resources Motivating the project team members Assessing the projects progress and initiate corrective measures, if and when necessary Periodically assessing the project teams effectiveness and efficiency

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The Stakeholders (Secondary Stakeholders (1)) Secondary Stakeholders are those persons and organizational entities who have no formal contractual relationship to the project in question, but which can have a strong interest in it Secondary Stakeholders can, depending on the nature and circumstances of the project, be comparatively harder to identify, and their influence on the outcome of a project can be both considerable and favourable or unfavourable Caution needs to be excercised in dealing with secondary stakeholders, particularly since they operate independently and outside the control of project managers

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The Stakeholders (Secondary Stakeholders (2))

Typical attributes of secondary stakeholders include:

An unrestrained ability to try to influence the project That their interests may be genuine or simply perceived Involvement which is conditioned by the perception of gaining some advantage Teaming up with other stakeholders to campaign for or against the project Availability of a number of options to infuence the project

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The Project Stakeholders: A Schematic Illustration

Secondary Stakeholders
Social Organizations Political Organizations Environmentalists Competitors Local Communities General Public Consumer Groups Anyone else who believes he/she/it has a stake in the project Families
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Primary Stakeholders
Senior Organizational Managers General Managers Functional Managers Project Managers Employees Local, State and Federal Agencies, Commissions, and Judicial, Legislative and Executive Project Organizations Strategies Shareholders Creditors Unions

Intervenor Groups Private Citizens

Tourists

Professional Organizations

Various Institutions

Suppliers Work Package Contractors Managers Sub-Contractors

Media Customers

Managing Stakeholders: A Challenge for Project Managers (1)

Stakeholders may, under certain circumstances, obstruct the project or projects in question, causing project cost overruns, completion delays, unforseen modifications or in the extreme case even bring about the abandonment of projects through, for e.g.: Non-cooperation Sustained campaign of public opposition and negative information dissemination Boycotts Media support Lobbying politicians and legislators Petitioning and Litigation Verbal and/or physical abuse and threats against project personnel Blockage of project construction sites, facilities, logistics Demonstrations, rioting, violence, acts of targeted sabotage and other scare tactics

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Managing Stakeholders: A Challenge for Project Managers (2)

Because secondary stakeholders may exert obstructive influence, the project manager and other primary stakeholders have to pursue a course of action which minimizes the risks for the project/projects in question, for instance by: Identifying all or as many of the projects secondary stakeholders as possible based on the projects underlying strategic issue(s) and their respective underlying factors (context assessment, brainstorming, consultants, surveys, public appeals, experience with similar projects undertaken in the past and so forth) Gathering and carefully analysing information from various sources on the stakeholders and maintaining a Project Stakeholder Management Information System

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Managing Stakeholders: A Challenge for Project Managers (3)

Determining the stakeholders mission and intent (neutral, supportive, adversarial) Determining the stakeholders strengths and weaknesses and identifying their strategy. An insight here may give an indication of what corresponding action on the part of the project manager may be required to reduce risks to the project Predicting stakeholder behaviour through a careful analysis and, if and when necessary, modifying the project strategy to accommodate or counter the stakeholders actions through a stakeholder management strategy

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Strategic Issues Effecting a Project

Strategic Issues are conditions of pressure which will have a significant effect on one or more factors relating to the project such as its financing, design, engineering, construction and operation
Strategic Issues are context-dependent - they are determined primarily by the nature of the project in question. For instance, the strategic Issues relating to the construction and operation of a large industrial manufacturing facility by a transnational corporation with a view to catering to consumer demand in the domestic market of a developing country would be expected to differ considerably from those strategic issues concerning say a small, family-owned textile enterprise which is developing of a new garment destined solely for overseas export markets

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Examples of Strategic Issues Effecting a Project

Environmental Conservation Global Competition Technological Advancements

Resistance to Change by Employees Changing Public Attitudes Future Legislation Political Developments Cultural Sensitivities

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Strategic Issues Effecting a Project

It is imperative to identify all existing and potentially strategic issues concerning a project as early as possible as these may effect the project in varying degrees possibly adversely during its execution phase or thereafter. Once identified, the potential impact of these strategic issues must be carefully and continuously analysed and if and when possible corresponding action taken

Identification Phase (which issues can be identified?)

Assessment Phase (are the issues strategically relevant?)

Analysis Phase (what action is required?)

Implementation Phase (of the action deemed necessary)
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Strategic Issues in Pactice: The Nuclear Construction Industry Example

Strategic Issues in the nuclear industry may, for e.g., typically include: Licensability Passive Safety Power Costs Reliability of Generating System Nuclear Fuel Reprocessing Waste Management Capital Investment Public Perception Advocacy Environment Safeguards

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