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THE ROLE OF STRATEGIC PROJECT MANAGEMENT IN ACHIEVING

ORGANIZATIONAL SUCCESS

Conference Paper · December 2012

DOI: 10.13140/2.1.2674.3681

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Anja Tekic Sladjana Gajic

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 THE ROLE OF STRATEGIC PROJECT MANAGEMENT IN
ACHIEVING ORGANIZATIONAL SUCCESS
Anja Orčik (anjaorcik@gmail.com), Slađana Gajić (gajic.sladjana@uns.ac.rs)
University of Novi Sad, Faculty of Technical Sciences, Novi Sad, Republic of Serbia

Abstract: This article contributes to understanding of the role of strategic project management as
a pillar of organization success. Successful project management appears to be deliberate strategic
choice of organization's decision makers in order to survive in the fast changing external
environment. The general idea is that project management teams must consider other project
success criteria, as well as better support their organization's business strategy, rather than just
focus on meeting traditional time, budget, and performance goals.
This paper reviews the literature relevant to strategic project management, with emphasis
towards project strategy as a link between business strategy and project plan.
Keywords: Project Management, Strategy, KPIs, Project Success

1. INTRODUCTION
In the race to create business value, companies are turning to project management to help them
win competitive advantage. In a traditional project management the focus was on operational
performance and meeting time and budget goals, but today’s business challenges and fierce
global competition require new ways to improve competitiveness.
Strategic project management is widely recognized as an important project management practice
that systematically relates project definition and development to corporate goals and strategies.
Project management approaches are now being used by organizations at all stages of the project
life cycle with project strategy development, review and optimization occurring at specific points
(Morris & Ashley, 2005).
This paper provides the review of literature focused on strategic project management, systematic
approach to project strategy (pre-project), which is crucial for project execution, as well as the
definition of key performance indicators and project success dimensions (post-project).
2. THEORETICAL BACKGROUND
Basic terms in project management
In order to understand the importance of project management as a pillar of organization success,
creation of the theoretical background should be started by introducing some important general
terms.
PMI defines projects as ”temporary endeavor undertaken to create a unique product or service”.
Temporary means that every project has a definite beginning and a definite end. Unique means
that the product or service is different in some distinguishing way from all similar products or
services. Projects are undertaken at all levels of the organization.
Projects are often critical components of the performing organization’s business strategy. Cicmil
identifies four distinct categories of projects: (1) Engineering; (2) New product development; (3)
Systems development; (4) Organizational change projects (Cicmil, 1999).

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Project management is applied on projects to optimize efficiency and effectiveness. Efficiency
looks at maximizing output for a given level of input, and effectiveness means achieving the
goals or objectives; both are goal-oriented practices related to achieving success (Belout, 1998).
Colloquially, efficiency is widely known as doing things right, and effectiveness as doing the
right things (Jugdev & Muller, 2005).
Project-based management is the structured process by which we successfully deliver that future
state (Turner, 2008). Project management is a specialized form of management, similar to other
functional strategies, that is used to accomplish a series of business goals, strategies, and work
tasks within a well-defined schedule and budget. The essence of project management is to
support the execution of an organization's competitive strategy to deliver a desired outcome (i.e.
fast time-to-market, high quality, low-cost products) (Milosevic & Srivannaboon, 2006).
PMI’s “PMBoK” introduces nine body of knowledge areas. These are the management of
integration, scope, human resources, quality, cost, time, risk, communication, and procurement
(PMI, 2009).
Historical overview
The need to manage changes in working and social environment through projects touches all our
lives. As Turner says (Turner, 2008), only twenty years ago most managers were not directly
involved in the management of projects. Managing changes in the organizations was limited to
specialist in technical functions.
That has now changed. Change is widespread, brought on by an explosion in technology and
communications. Bureaucracies are now viewed as fetter to an organization’s ability to respond
to changes and maintain a competitive advantage.
The 1960s were a decade of mass production, and companies only goal was to increase output of
manufacture. High production rates were achieved, but at the expense of quality. In order to
differentiate themselves, companies strove for quality during 1970s. Products were uniformed
and the range was limited, so managers could achieve quality while maintaining high production.
In the 1980s, the importance was given to variety. Customers wanted their purchases to be
different, so the companies introduced flexible manufacturing systems to provide variety, while
maintaining quality and high production. In the 1990s, customers wanted novelty, so the time for
product development reduced, requiring new products to be introduced in a short time and
effectively.
Nowadays customers want functionality. They don’t just want their cell phones to make
telephone calls; they want to send text messages and e-mails, surf the Internet, take photographs,
and share them true social media. Managers must adopt flexible structures to respond to the
changing environment. It’s the time of mass customization, where customers are involved in
product development in different ways, true different channels of communication.
The project-oriented organization is now common; project-based management is the new general
management; 30 percent of the global economy is project-based (Gareis, 2005).
Strategic project management
Project management can have strategic value when a clear connection is made between how
efficiently and effectively a project is done and how the project’s products and services provide
business value. However, if project success is limited to the variables of time, cost, and scope -

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and the links to product/service value are missing - then project management is perceived as
providing tactical (operational) value and not strategic value (Jugdev & Muller, 2005).
Jugdev and Mueller developed a framework for evolving understanding of project success. It
involves four periods (Figure 1):
§ Period 1: Project implementation and handover (1960s – 1980s);
§ Period 2: CSF (Critical Success Factors) lists ( 1980s – 1990s);
§ Period 3: CSF frameworks (1990s – 2000s);
§ Period 4: Strategic project management (21st century).

Figure 1: The framework for evolving understanding of project success

Periods 1 and 2 focused primarily on the project life cycle. The product life cycle phases of
utilization and closedown did not emerge as components of the project management success
literature until Period 3, when more comprehensive CSF frameworks were developed. As Period
4, strategic project management appears.
The strategic approach to project management does not discard the traditional mindset that
emphasizes time, budget and quality goals. What it implies is that organizations, project teams,
project managers, and executives must better learn how to focus project execution on achieving
the business results of the organization – more profits, additional growth, and improved market
position (Patanakul, Shenhar, & D. Milosevic, 2012).
As the all-encompassing definition of strategic project management, the one given by Brown can
be represented: Strategic Project Management consists of selecting, managing and measuring
project outcomes to ensure optimal value for an organization. All projects undertaken by an
organization must meet a set of criteria setup by the organizations’ leadership to ensure
alignment with the strategic vision of the organization (Brown, 2007).
3. BUSINESS STRATEGY AND PROJECT STRATEGY (PRE-PROJECT PERIOD)
Strategic management is about “the direction of organizations” and deals with firm success,
failure, and competition (Rumelt, Schendel, & Teece, 1994). At the strategic level of the firm,
executives focus on creating the company’s strategy, vision, and mission. These concepts are
then put into practice at the operational level of the firm by those who implement the plans and
create the related products and services (Floyd & Woolridge, 1997).
Business strategy focuses on how to better deal with competition by means of creating
competitive advantages, advantages that provide organizations with the benefits that will sustain
them when attracting customers and defending themselves against competitive forces. When
organizations link their projects to their business strategy, they are better able to accomplish their
organizational goals (Milosevic & Srivannaboon, 2006).

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Typically, most projects would start with a project plan. The plan normally includes the project
goal, project scope, project deliveries, project milestones, project resources, and activities for
execution. While some projects do better than others, conceptually, there is a missing link
between the business strategy and the project plan – the project strategy (Shenhar, Poli, &
Lechler, 2001). It sets a unified, integrated set of expectations to improve project success. It is
an overarching set of guidelines to help the project make decisions and take action, and it insures
the alignment with corporate, business, marketing, and operations strategies and plan. Project
strategy means “thinking before-the-box” (Figure 2) (Poli, 2010). It has to be defined before the
project execution, if it is expected to be followed by the success.

Figure 2: Project strategy – Thinking before-the-box

Project strategy can be seen as external and internal (Figure 3). External project strategy is
related to “make money projects”, that are focused on the market and where marketing strategy
is involved, and internal project strategy is related to “save money projects”, that are focused on
operations and where operations strategy is involved. These external and internal strategies must
be coordinated (Poli, 2010).

Figure 3: External and internal project strategy (Poli, 2010)

According to the definition proposed by Patanakul, Shenhar and Milosevic (2012), the
components of project strategy include perspective, position, and plan (guidelines) (Patanakul,
Shenhar, & D. Milosevic, 2012):
§ Perspective: Project strategy must create a proper view and approach to the project to
help understand the project’s impact on its stakeholders;
§ Position: Project strategy should encourage a project team to realize the project’s
position, including the competitive advantages that can be accomplished from the project
outcomes;
§ Plan (Guidelines): Project strategy not only creates perspective and position, it also
defines the path that the project team should take to achieve project results. In other
words, project strategy directs the behavior of the team.
Table 1 summarizes the components of project strategy (Patanakul, Shenhar, & D. Milosevic,
2012).

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Table 1: Project strategy components
Project strategy components Description
Perspective
Business background The business motivation for implementing this project or producing
project products
Business objective The ultimate business goals of the project
Strategic concept The general strategic idea behind the project’s expected business and
how this idea is aligned with the company’s business strategy
Position
Product definition The description of project products, including their specifications
Competitive advantage/Value The reason why the project products are better than other products and
the value the products create
Success and failure criteria The perspective and expectations that the organization has for the
product/project
Plan (Guidelines)
Project definition The project boundaries, scope of work, project deliverables, and project
type
Strategic focus The mindset and guidelines for behavior to achieve the product’s
competitive advantage and value
Corporate strategy is not translated into project strategy by process alone. Moving strategy
through such processes and practices as we have just reviewed requires an extensive range of
personal competencies and a clear definition of roles, responsibilities and accountabilities
(Morris & Jamieson, 2005).
4. PROJECT SUCCESS DIMENSIONS AND METRICS (POST-PROJECT PERIOD)
Company success is widely defined as winning in the marketplace, and firms tend to measure
this with financial and economic indicators (i.e., return measures, market share measures, and
stock value measures) (Jugdev & Müller, 2005).
The project management literature agrees that there are two components of project success
(Müller & Turner, 2007):
§ project success factors, elements of a project that can be influenced to increase the likelihood
of success; these are independent variables that make success more likely;
§ project success criteria, the measures by which we judge the successful outcome of a project;
these are dependent variables which measure project success.
Improvements are not possible if something can’t be effectively identified and measured.
Without effective metrics, managers will not respond to situations correctly and will end up
reinforcing undesirable actions by the project team. Chaos Report has shown us over the past 15
years that only about 30 percent of the IT projects are completed successfully. There can be
indentified hundreds of causes why projects fail, but it is neglected perhaps the single most
important cause: a failure in metrics management. Metrics management should be addressed in
all of the areas of knowledge in the PMBOK Guide, especially Communications Management.
For decades was suggested that only information that needed to be passed on to the client and the
stakeholders was information related to time and cost. Today, it is obvious that the true project
status cannot be determined from time and cost alone. Each project may require its own unique
metrics and key performance indicators. The future of project management may very well be

5
metric-driven project management. Companies such as IBM, Microsoft, Siemens, Hewlett-
Packard, Computer Associates, and Deloitte, just to name a few, have come to the realization
that they must excel at project management. This requires additional tools and metrics to support
project management. Hewlett-Packard (HP) has more than 8000 project managers and 3500
Project Management Professionals (PMPs). HP desires 8000 project managers and 8000 PMPs.
These numbers are now much larger with HP’s acquisition of Electronic Data Systems (EDS)
(Kerzner, 2011).
The triple constraints can be defined as a triangle with the three sides representing time, cost, and
performance (which may include quality, scope, and technical performance). This was the basis
for defining success during the birth of project management. This definition was provided by the
customer, where cost was intended to mean within the contracted cost. The contractor’s
interpretation of cost was profit. Managing a project within the triple constraints is always a good
idea, but the customer must be satisfied with the end result. A contractor can complete a project
within the triple constraints and still find that the customer is unhappy with the end result. So, we
have now placed a circle around the triple constraints, entitled “customer satisfaction”.
There can be secondary success factors that, based upon the project, are more important than the
primary factors (Figure 4). These secondary factors include using the customer’s name as a
reference, corporate reputation and image, compliance with government regulations, strategic
alignment, technical superiority, ethical conduct, and other such factors. The secondary factors
may now end up being more important than the primary factors of the triple constraints.
There must be a business purpose for each project. Each project is expected to make a
contribution of business value to the company when the project is completed. The importance of
the components of success can change over the life of the project (Kerzner, 2011).

Figure 4: From triple to Competing Constraints (Kerzner, 2011)

Today, the triple constraints are still important, but they have taken a “back seat” to the business
and value components of success. In today’s definition, success is when the planned business
value is achieved within the imposed constraints and assumptions, and the customer receives the
desired value. According to Poli (2010), project success dimensions include efficiency, impact
on customer, impact on business and building for the future (Figure 5).

Figure 5: Project success dimensions (Poli, 2010)

6
Metrics keep stakeholders informed as to the status of the project. Stakeholders must be
confident that the correct metrics are used and that the measurement portrays a clear and truthful
representation of the status. The project manager and the appropriat
appropriatee stakeholders must come to
an agreement on which metrics to be use and how measurements will be made. KPIs are
specialized metrics.
Four broad categories of metrics
metrics: (1) business-based or financial metrics; (2) success-based
s
metrics; (3) project-based metrics
rics; (4) project
roject management process metrics.
metrics Project-based
metrics can be large in number. They might include: time, cost, scope
cope and the number of scope
changes, quality, customer
ustomer satisfaction with project performance
performance, safety
afety considerations,
considerations risk
mitigation. Project management process metrics might be related to: continuous
ontinuous improvements,
improvements
benchmarking, accuracy
ccuracy of the estimates
estimates, accuracy of the measurements, accuracy
ccuracy of the targets
for the metrics and the KPIs (Kerzner, 2011)
2011).
5. CONCLUSION
In today’s fast changing technological envi
environment, the technical, project-based
based organization
must define, execute, and evaluate a holistic project strategy that meets today's requirements
while building capabilities for the future (Kotnour, 2000). Project management is no longer
regarded as a part-time
time occupation or even a career path position. It is now viewed as a strategic
competency needed for the survival of the firm. The ultimate purpose of project management iis
to create a continuous stream of project successes (Kerzner, 2011).
Over the past 40 years, considerable progress regarding the understanding of project success is
made. Project success is gaining the holistic perspective, an
andd project management is getting
g high
strategic relevance, especially in aligning project strategy with business strategy.
6. AUTHORS

Anja Orc
Orcik, PhD student
Industrial Engineering and Engineering Management
Faculty of Technical Sciences
University of Novi Sad
Novi Sad, Serbia
anjaorcik@gmail.com

Sladjana Gajic, PhD student

Industrial Engineering and Engineering Management
Faculty of Technical Sciences
University of Novi Sad
Novi Sad, Serbia
gajic.sladjana@uns.ac.rs

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 7. REFERENCES
Brown, E. D. (2007). Strategic Project Management: Aligning Technology, Strategy, People &
Projects. Retrieved February 2, 2011, from http://ericbrown.com
Cicmil, S. (1999). An insight into management of organizational change projects. Journal of
Workplace Learning , 11(1), 5-15.
Cooke-Davies, T., Crawford, L., & Lechler, T. (2009). Project Management Systems: Moving
Project Management From an Operational to a Strategic Discipline. Project Management
Journal , Vol. 40, No. 1, 110–123.
Floyd, S. W., & Woolridge, B. (1997). Middle management’s strategic influence and
organizational performance. The Journal of Management Studies , 34(3), 465-485.
Gareis, R. (2005). Happy Projects. Vienna: Manz Verlag.
Jugdev, K., & Müller, R. (2005). A retrospective look at our evolving understanding of project
success. Project Management Journal , Vol. 36, No. 4, 19-31.
Kerzner, H. (2011). Project Management Metrics,KPIs,and Dashboards: A Guide to Measuring
and Monitoring Project Performance. Hoboken, New Jersey: John Wiley & Sons, Inc.
Kotnour, T. (2000). Organizational Learning Practices in the Project Management Environment.
International Journal for Quality and Reliability Management , No. 4/5, 393-406.
Milosevic, D., & Srivannaboon, S. (2006). Theoretical framework for aligning project
management with business strategy. Project Management Journal , Vol. 37, No, 3.98-110.
Morris, P., & Jamieson, A. (2005). Moving from corporate strategy to project strategy. Project
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