Professional Documents
Culture Documents
Project - Perspectives 1 2005
Project - Perspectives 1 2005
Project - Perspectives 1 2005
Analyse your
portfolio
against multiple
criteria.
A single source of
information for all
your investments,
programs, and
projects.
Artemis Finland Oy
– a Proha Company –
Maapallonkuja 1 A Tools for project
management
02210 Espoo and resource
Tel +358 20 4362 000 allocation.
Fax +358 20 4362 500
takojankatu 15 B
33540 Tampere
Tel +358 20 4362 700
Fax +358 20 4362 777 Investment Planning and Control
www.aisc.com
Editorial
Table of Contents
4 Association of Reported Project
Published by
The Project Management
Association Finland (PMAF)
PMAF is:
- Forum and a meeting place for
project professionals
Dr. Kalle Kähkönen - Developer of project thinking and
knowledge
Chief Research Scientist - Active partner within the
VTT - Technical Research Centre of Finland international project community
PMAF serves with
- Two project management journals
(Finnish & English)
- Yearly Project Day conference and
frequent theme events
- Project management certification
http://www.pry.fi/index_eng.htm
Editorial Board
Kalle Kähkönen, Editor in chief
Aki Latvanne
Printed by
Loimaan Kirjapaino Oy
ISSN 1455-4178
Results from Research and Development
4 www.pry.fi
tively), working in projects in the industrialized Yes, risk management
world. Nearly all respondents had a university Perceived Senior Management Support
for Project Risk Management does make a
degree and had gained some project risk manage- difference and
ment experience within the 12 months previous organizations that
to their responses; the sample had a median of employ formal risk
greater than 12 years of project management management practices
experience. Finally, more than 75% of the respon- Reported Project Risk Management
dents were employed in organizations that had
do outperform those
Planning Practice
annual revenues or an annual budget in excess that do not employ
of US $100 million. such practices.
Summary of Results
Chi-squared analysis tested the statistical signifi- Reported Project Risk Response Planning and
Risk Event Monitoring and Handling Practices
cance of the relationship between any two-paired
variable combinations. As most social scientists
use 5% to balance the likelihood of Type I and
Type II errors (Garson, 2002), the decision rule was
set at the 95% confidence level to test the null
Reported Project success
hypotheses, i.e., any chi-squared probability <.05
led to rejection of the null hypothesis.
In general, this analysis enabled rejection of
all null hypotheses and acceptance of the cor-
Figure 1. Research Construct Dynamic
responding alternate hypotheses at a 95% level
of confidence, supporting the research model
explored in this paper: senior management support handling) and the reported project success rate
and resource allocation are associated with the use of an organization as suggested by the triple con-
of formal project risk management practices; the straint (time, cost, and performance), and reported
use of formal project risk management practices customer satisfaction.
are associated with the use of formal risk response In particular, organizations reporting frequent
planning and better risk event monitoring and implementation of formal risk planning efforts also
handling; and reported project results are more reported more frequent project success. Similarly,
likely in compliance with the project management organizations reporting frequent implementation
triple constraint when senior management sup- of formal risk event monitoring and handling prac-
ports the use of formal project risk management tices also reported more frequent project success,
practices throughout a project’s life. We report as did those reporting strong senior management
some details of these analyses below. support for project risk management.
6 www.pry.fi
References Kerzner H., 2003.
Bosler C. W., 1999. Project Management: A systems approach to Planning,
“Risk Management the Corporate “Board Game,”” Scheduling, and Controlling, 8th Edition, John Wiley &
Proceedings of the 30th Annual Project Management Sons, New York.
Institute 1999 Seminars and Symposium, Philadelphia, Murray K., 1998.
PA, October 10–16. “Risk Management: Beyond the Textbooks,” PM Network,
British standard BS 6079-3, 2000. British Standard Institute, June, pp. 53–54.
London. Osborne A. F., 1996.
Chapman C. and Ward S., 1997. Acquisition and Program Risk Management Guidance
Project Risk Management: Processes, Techniques and Volume 1, FAA-P-1810 AIT-1-0494, (Revision 2), Federal
Insights, John Wiley & Sons, Chichester, UK, pp. 50–51. Aviation Administration, Department of Transportation,
Washington, DC.
Cleland D., 1994.
Project Management: Strategic Design and Implementa- Pinto J. K. and Kharbanda O. P., 1995.
tion, 2nd Edition, McGraw-Hill, Inc. New York, p. 35. ”Lessons for an Accidental Profession,” reprinted with
permission from Business Horizons, March–April 1995.
Cooke-Davies T., 2002. Copyright © 1995 by Indiana University Kelly School of
“The “real” success factors on projects,” International Business, in Meredith J. R. and Mantel, Jr., S. J., Project
Journal of Project Management, Vol. 20, No. 3, pp. Management: A Managerial Approach, 4th Edition
185–190. (2000), John Wiley & Sons: New York, pp. 25-35.
Dai C. X., 2002. Pinto J. K. and Slevin D. P., 1988.
The Role of the Project Management Office in Achieving “Critical Success Factors Across The Project Life Cycle,”
Project Success, Doctoral Dissertation, The George Wash- Project Management Journal, Vol. XIX, No. 3, pp. 67–75.
ington University, Washington, DC, pp. 35–37.
Price Waterhouse Coopers, 2001
Dai C. X. and Wells, W. G., 2004. “Survey of Business Risk Management in Canada (2001),”
“An exploration of project management office features retrieved from: http://www.pwc.com/extweb/ncsurvres.
and their relationship to project performance,” Interna- nsf/docid/85E390CC5C6AD2E685256A23005E3059
tional Journal of Project Management. Vol. 22, No. 7, pp.
423–532 Project Management Institute, 2004.
A Guide to the Project Management Body of Knowledge,
De Wit A., 1988. Third Edition, Project Management Institute, Newtown
“Measurement of project success,” International Journal Square, Pennsylvania.
of Project Management, Vol. 6, No. 3, pp. 164–170.
PMI® Risk SIG, INCOSE Risk Management Working Group,
Dorofee A., Walker J. A., Alberts C. J., Higuera R. P., Murphy and the United Kingdom Association for Project Man-
R. L. and Williams R. C., 1996. Continuous Risk Man- agement Risk Specific Interest Group, Risk Management
agement Guidebook, Software Engineering Institute, Maturity Level Development, April 2002: Appendix 1.
Carnegie Mellon University, Hanscom Air Force Base, MA, Risk Management Research and Development Program
pp. 221–222. Collaboration, Risk Management Maturity Level Develop-
ment: p. 1.
Frame J. D., 1995.
Managing Projects in Organization: How to Make the Institution of Civil Engineers & Institute and Faculty of
Best Use of Time, Techniques, and People, Jossey-Bass Actuaries, 2002. Risk Analysis and Management for
Publishers, San Francisco, CA, p. 19. Projects (RAMP), Thomas Telford, London.
Freeman M. and Beale P., 1992. Shenhar A. J., Levy O. and Dvir D., 1997.
“Measuring Project Success,” Project Management Jour- “Mapping the Dimensions of Project Success,” Project
nal. Vol. XXIII, No. 1, p. 10. Management Journal, Vol. 28, No. 2, pp. 5–13.
Garson G. D., 2003. Tarnow T. J. and Frame J. D., 2003.
Syllabus for PA 765: Quantitative Research in Public Determinants of Success and Failure on Information
Administration, North Carolina State University Raleigh, Technology Projects, The University of Management and
North Carolina, retrieved from: http://www2.chass.ncsu. Technology, Arlington, VA, pp. 9–10.
edu/garson/pa765/pa765syl.htm
United States Department of Defense, 1999.
Hulett D. T., 2001. Appendix B Generic Risk Management Plan, retrieved
“Key Characteristics of a Mature Risk management from: http://www.acq.osd.mil/io/se/Old%20Files/risk_
Process,” Paper presented at the Fourth European Project management/papers_speeches_briefs/index.htm
Management Conference, PMI® Europe, London, UK, 6–7
June, page 6. United States Environmental Protection Agency, 1999.
EPA Review of the SAB Report “Integrated Environmental
International Organization for Standardization, 2003. Decision-Making in the Twenty-First Century,” retrieved
ISO 10006: 2003–Quality management systems - from: http://www.epa.gov/sab/pdf/ec99018.pdf
- Guidelines for quality management in projects, 2nd
Edition, Geneva, Switzerland. Voetsch, R. J., Cioffi, D. F. and Anbari, F. T., 2004.
“Project Risk Management Practices and their As-
Joint Technical Committee OB/7 – Risk Management, 1999. sociation with Reported Project Success,” Proceedings
Risk Management A/NZS 4360 (Revised): The Australia/ of IRNOP VI Project Research Conference, edited by
New Zealand Joint Risk Management Standard (AS/NZ Wikstrom, K. and Artto, K., pp. 680–697, Turku, Finland,
4360:1999), pages 5–8. August. International Research Network on Organizing
by Projects (IRNOP).
Kahkonen, K. and Huovila, P., 1996.
Systematic Risk Management in Construction Projects,
VTT Building Technology, retrieved from: http://web.
bham.ac.uk/d.j.crook.lean/iglc4/huovila/risk2.htm
Kerzner H., 1998.
In Search of Excellence in Project Management: Success-
ful Practices in High Performance Organizations, Van
Nostrand Reinhold, New York, pp. 30–39.
A call for help came on an October afternoon. A project team stuck with a communication chal-
lenge was looking for a fresh, effective way to get the customer to understand the solution and
its value. This call launched the authors to combine the arts of story telling and visual represen-
tation into a powerful process which
- engages the whole project team in the communication creation
- provides a way to identify early major risks and issues to be addressed
- establishes a shared vision within the team
- produces easy-to-understand communication material to be shared with project sponsor,
Annika Varjonen client and stakeholders.
Visual Impact This paper makes the case for the value of a creative, more holistic way of communicating project
vision, goals and roadmap. We do this by using a real world practical example from a large UK
government programme, where a large team of seasoned business and IT veterans came together
to work on an innovative solution.
Introduction: Communication Is a Critical and the solution roadmap, new members require
Success Factor “bringing up to speed” very quickly.
“They just don’t get it!” said a close friend of All along, the customer or problem owner has
ours who was the director of a large programme. to have the confidence that the right problem is
“Who doesn’t get what, exactly?”, we queried. being addressed by the correct solution.
“Our customer doesn’t get our solution. We have
Tony Mobbs given them a whole series of presentations and More Communication Is Not The Answer
IBM Business Consulting they have voluminous documentation, but still Just like the customers of our friendly Project Di-
Services, U.K. they don’t get it. Can you think of some innovative rector, most projects have had enough of commu-
way of helping us?” nication in its traditional business guise. We knew
that regurgitating more PowerPoint presentations
Why Projects Fail
Projects are becoming increasingly complex,
cross-disciplinary affairs with large and fluctuat-
ing numbers of participants. There are a growing
number of relationships between the various
stakeholders involved in a project. Therefore, the
role of communication is becoming increasingly
critical to the success of any project.
The problem owners have to articulate their
problem in a way that is understandable to the
solution providers. Project team members from
different disciplines must find a way of speaking
each others’ language. New people will be joining
the project team as it expands, some may be from
third party suppliers. Within large project teams,
communication between the senior management
team and the various team leaders may decide
the fate of the project. Where all team members
must have an understanding of the project goals
8 www.pry.fi
and Word documents was not going to provide the allows for efficient data compression: alongside a Storytelling
answer. Instead, we turned to the sense-making comprehensive answer to “what”, a good picture and images are
tools that are as old as the humankind: stories can also answer to “how”, describing the style and inseparable: images
and images. attitude of the action. always contain a story
Storytelling and images are inseparable: images and images are the
An Ancient Skill To The Rescue: Storytelling always contain a story and images are the best way
Please, do not be alarmed by the term story telling. to make a story visible.
best way to make a
We also plead with you not to put stories down story visible.
as yet another fad in consulting. Stories have Results: A Process That Helps Both the
been around for much longer than consultants Team and the Customer “Get It”
and stories will go on long after consultants have We used storytelling and images in a seven step
disappeared. process, working through a number of facilitated
Storytelling is a uniting and defining compo- workshops with the project team. In all its simplic-
nent in all communities. Ever since human beings ity, here’s the outline of the process:
developed the ability to speak, storytelling has
been a way of bringing communities together, Step 1: Create a Shared Vision
creating history and shaping the future. Cultural We agreed with our friendly—and smart—Project
norms, in the form of values and beliefs, are taught Director: to change the customer communica-
through the medium of telling stories. Stories tion, the core team first had to agree on a shared
are a natural way for us to learn and grasp new vision. We wanted to make the Big Picture vis-
ideas and concepts. All the world’s religions use ible, showing unequivocally what and where the
stories or parables to communicate—as do today’s key milestones and critical turning points of the
advertisers. project were.
Though we may not realise it, we do exchange The Big Picture found a natural shape as a jour-
stories in our everyday work. Stories take on the ney. Like a project, it has a beginning, middle and
guise of anecdotes; rumours and gossip. Equally, end; everyone has experience of a journey. As a
we tell stories to share experiences with col- metaphor, a journey has almost a physical impact.
leagues, in a way that informally imparts knowl- A journey also conveys issues to do with attitude
edge or understanding. These stories often hold and emotions that, when spelled out, sound cli-
valuable truths and insights about your working chéd and meaningless but develop wings and fly
environment, project, or the people with whom when clad in a story. Effectively, the journey also
you work. created a clear timeline for the project.
Managed and purposeful storytelling provides To get the ball rolling, we created the first visual
a powerful mechanism for the communication of the journey, hung it up on the wall and invited
of key components about a project. It can also the project core team to place post-it notes on
provide a non-intrusive, organic means of pro- the timeline, describing the project actions. In
ducing sustainable cultural change, of conveying the beginning, what came up was a complete
brands and values and transferring complex tacit hotchpotch of actions, small and large. This ex-
knowledge. ercise sparked the first debates between people
In this paper, we also talk about metaphors. who were looking at the project from the narrow
Metaphor is a general term used to imply a com- perspective of their personal area of expertise to
parison in either speech or written text. Simple the exclusion of the whole. Another key finding
similies such as “white as a sheet” or longer stories, for the team was that the majority of the actions
allegories and parables can be metaphorical. placed on the timeline were within one company
To create a successful metaphor—one that will only, excluding both the partner and the customer
help resolve a problem—the relationships between view almost completely.
the elements within the story need to be the same Throughout the whole process, we used large
as the relationships between the elements in the sheets (3m by 1.5m) of paper on the wall, allowing
problem. This makes the metaphor resonate within plenty of space for everyone to get involved in
the community and allows for the insight that’s building the project skeleton, work on it dynami-
necessary to make changes happen. First and cally and gather around to discuss it together. Just
foremost, a good story engages the listener and changing the way of working freed up the team
matches with the listener’s own experiences. thinking.
10 www.pry.fi
showed the Bold Steps one by one, with detailed what the story tells about your project. Another
images and a short description, with key promises factor to be aware of when you’re working with
outlined in bullet points. stories is the counter story. This is a story which
Sharing a project through a visual journey is can be told against your story, often in the shape
easy. It allows for an instant understanding of of rumours or a jokey version of your story. It’s
the progress of the project and the relationships better to be prepared for the inevitable: consider
between issues. (And dare we mention that it’s the different perspectives counter stories may take
more fun than showing slides?) and what your response to each may be.
Conclusions: If Something Does Not Stories and images are not a cookie-cutter
Work—Try Something Different solution
A final word of caution: this is but one approach
Engagement will happen if you make room for it to using stories and images in the business envi-
If you want people to participate in something ronment. Do not mistake this for a recipe that will
fully, you need to make it meaningful and alive. always produce the same successful end result.
More and more projects deliver intangible out- Where we manage a multitude of tasks at work
comes which an individual in the project team may by rote, using stories and images always involves
never get to actually see or experience. By making a certain level of grope. Iteration, testing, sound-
your project vision and goals visual and tangible, ing out and feeding back are integral to a story
you make them memorable, understandable and process, as is the attitude of an explorer.
more easily shared. By engaging your team, you
give them a chance to contribute and become Fluffy approach? Maybe. But it produces clear
motivated to becoming involved. results.
Obviously, our approach will not appeal to all
Shared vision is worth all the work you put project managers; it may appear to be too “fluffy
into building it bunnyish” and too “new age”. That’s ok. However,
The invisible but priceless outcome of engagement we are reminded of a traditional project manager
is a shared vision of the project future within who sat through the first set of workshops, not
the team. Only a team with a shared vision can really contributing and sitting there with his arms
communicate effectively and clearly, inside and folded. Suddenly, in the final workshop, he became
outside. very animated “I’ve got it”, he said, “it is all very
clear to me now – I can now see what I need to do
There will always be a story about your project to manage this project! I need to manage at the
A project team will create a story of the project Bold Step level, not at the detail level.”
whether you want them to or not. As a project It’s not just what you do, it’s also how you
manager, you’d want to get a word in what the do it that may decide just how successful your
story says, or at the very least, be conscious of project is.
Bio summaries
Author: Annika Varjonen
Affiliation: Proprietor, Visual Impact
Degrees: Visualiser
Professional activities: Consulting and coaching on how to use visual methods and storytelling
to create shared meaning in a corporate setting.
Besides having acted as a visualiser and strategy communication consultant since 1996, Annika
Varjonen has speaker/presenter experience in both the United States of America and in Finland.
In the U.S., her speaker experience includes National Speakers Association (NSA) 1997 Con-
vention, American Society for Quality Annual Conference in 1999 and American Society for
Quality/Quality Management Division Conference in 2000. She has also worked at Accenture as
a change management consultant.
Contact information:
annika.varjonen@clinet.fi
Author: Dr. Tony Mobbs
Affiliation: World Wide Cynefin Practice Leader, Cynefin Centre for Organisational Complexity,
IBM Business Consulting Services
Degrees: BSc, PGCE, PhD
Professional activities: Business Change Management Consulting and Mentoring on how to use
Complexity and Story Telling Techniques to facilitate change. Tony Mobbs is an international
trainer in complexity techniques within business. He is a recognised creative thinker and leads
workshops on Innovation within Organisations. Tony also runs courses on the use of Spiral
Dynamics and Integral Psychology for business change. He is an accredited NLP Trainer.
Societies: Institute of Management Consultants
This paper focuses on the valuation of projects Real Option Analysis (ROA)
and in particular the value of flexibility. The Net
Present Value (NPV) method is inadequate when What is a real option ?
flexibility is prominent. In these circumstances Suppose a company wants to invest in production
an option approach is needed - Real Option facilities for a new product. There is high uncer-
Analysis (ROA). Terramar has carried out several tainty about the market and hence a moderate
Real Option Analyses (ROA) in different indus- production capacity is chosen. However, the com-
tries. Three cases will be presented: pany makes sure that it has the physical, financial
- A staged-investment-option from the and organizational possibilities to expand produc-
Jan Rune Baugstø tion if the market turns out to be far better than
pharmaceutical industry.
Terramar expected. This is a real option and the option adds
- A combined option evaluation of a prop-
initial value to the project. The ROA approach aims
erty development project.
at valuing this option in real figures, and thereby
- A reservoir development option within make the approach an operational decision tool.
the offshore oil industry. Suppose for example that the company above has
Finally, the paper discusses the way ahead: The to make an initial, additional investment (e.g. extra
ROA approach is relatively new and it should be land) to be able to execute the option at a later
demystified. To effectively implement ROA as a stage. Is the option value large enough to justify
decision tool, a portfolio perspective is needed. this investment ?
By definition, a real option is a right, but not an
obligation, to take an action at a cost for a period
Introduction of time - the life of the option. This will either help
Over time Net Present Value (NPV) has emerged as maximize the upside or limit the downside of a
the main criterion when evaluating project value. capital investment.
A simple NPV analysis may go like this: The project
takes one year to establish at an expected cost. In When are Real Option values most significant?
the next 9 years, the project generates expected Obviously, for some projects flexibility is of great
net cash flows of 50 MNOK each year. The appropi- value while to others flexibility is of minor inter-
ate risk-adjusted discount rate is 15 % and hence est. Which factors are important to increase the
the present value of these cash flows is 239 MNOK. Real Option value ?
The NPV decision states that if the initial cost is Uncertainty: There must be high uncertainty
less than 239 MNOK the project may be accepted, about the future. In fact, the option value in-
otherwise the project is rejected. creases with increasing uncertainty. This is in
However, it is often unlikely that the project his- contrast to most traditional thinking; instead of
tory will be as assumed in the NPV calculation. The fearing the uncertainty (risk), option thinking is
project may be deferred, the investment could be actively taking advantage of uncertainty.
implemented in stages, the project may be scaled New information: It must be very likely to
up or down during operations, the project may be receive new information (decreased uncertainty)
abandoned and so on. In addition, one project may over time.
justify another project which is dependent on the Managerial flexibility: If there is high un-
first one. In short, the management flexibility ex- certainty and new information decreases this
ercised during most projects is effectively assumed uncertainty, there is no option value unless man-
away in the NPV approach and consequently it agement is able to respond appropriately to this
systematically undervalues projects. new information.
Due to these inadequacies with the NPV meth-
od, many efforts have been made to come up with Main Types of Real Options
alternative methods to effectively implement flex- In the ROA litterature, there are several classifica-
ibility in the analyses. These new ideas have been tions or groupings of real options. We prefer the
strongly influenced by the option theory from the following.
12 www.pry.fi
The option to defer of flexibility. And unfortunately, the math is not Sometimes a project
A frequent and well-known decision situation: neccesarily simple. should be abandoned
Should the project be started now or deferred as resolved uncertainty
until some uncertainty is resolved. Sometimes Traditional tools makes it non-profitable.
this problem is analysed with several mutually One may ask if some well-known decision analysis
exclusive project startup dates. The ROA, on the tools may be used, in particular decision trees
other hand, incorporates the entire time frame which in fact appear to address the option situ-
with a decision rule on when to start the project ation. Unfortunately, the answer is ‘no’ and that
and the ROA value will be greater than any of the is presented in every introduction text to ROA. In
single NPV models. short, the main problem with the decision trees is
they assume a constant risk level (discount rate)
The option to change scale throughout the analysis period, and thereby close
If a company starts to produce something and is in on a wrong option value. See [Trigeorgis, 1996]
unsure about the market, the option to scale the for a simple, demonstrative example.
production capacity up (increasing market) or
down (decreasing market) may be of substantial Financial options
value. The answer is found in the area of finance. Al-
though financial options have existed a long
The option to abandon time, the financial analysts did not have a proper
Sometimes a project should be abandoned as valuation tool for options until the pioneer work
resolved uncertainty makes it non-profitable. by Black, Merton and Scholes who solved the
IT-projects are obvious examples. Arguably, this problem in 1973 [Black & Scholes, 1973], and
option is exercised too seldom, in part due to the were awarded the 1997 Nobel Prize in Econom-
lack of understanding of the sunk cost principle. ics. It is in fact a complex, analytical solution to a
Although this is not intuitive, this option has an partial differential equation (pde), but the input
initial value. parameters are easier to understand: current value
of stock, exercise price, time to expiration, stock
The option to switch value uncertainty and risk-free interest rate. The
The gold price is rather volatile, and there are gold financial solutions are to a great extent relevant
mines, which are out of production but still have for real options, but some of the input parameters
significant values. This is because of the inherent must be redefined:
option to open the mine (at a cost) when the gold
price rises above a certain level, which is decided Stock option Real option
based on an option approach. Similarly, an open Current value of stock Present value of expected cash flows
mine may be closed when the gold price falls below
Exercise price Investment cost
a certain level.
Time to expiration Time until opportunity disappears
The option for staged investments (compound Stock value uncertainty Project uncertainty
options) Risk-free interest rate Risk-free interest rate
This is an option on an option. A typical example
is a phased investment with design, engineering While the analytical solutions are rather com-
and construction. After each phase, there is an plex, numerical alternatives which are much easier
option to defer, abandon or go on depending to understand and use have been developed. There
on whether the prior options have been realised. are three main methods for ROA.
Another typical area is R&D projects.
Analytic solutions
The option to grow These solutions have been briefly mentioned
Suppose a company wants to enter the Chinese above. As they involve formulating and solving
market. They evaluate the first project and reject pdes, they call for rather advanced mathemati-
it as non-profitable. However, this project may be cal skills if a certain problem is to be solved from
an admission ticket to further development in a scratch. However, when readily available solutions
promising market and this option value should be exist (e.g. Black-Scholes), they may be useful. This
included in valuing the project. is especially true at initial, rough option valua-
Many projects hold several options and they tions.
may interact. The value of such interacting op-
tions may be different from the single options Binomial models
added together. These methods are the most frequently used for
ROA. This is partly because they are quite easy to
Calculation Methods and Tools grasp and cover a wide spectrum of option types
Intuitively, everyone will agree that flexibility is and decision structures.
of value: Under otherwise equal conditions, a The method comes under the more general
flexible solution is preferred to a solution with heading of dynamic programming:
no flexibility. However, the flexibilty may require 1. Roll out possible values of the underlying asset
additional investments; could the option value during the life of the option(s) in a discrete tree
defend this investment ? And in a bidding context structure.
we want to know the option value to be highly 2. Roll back the values of the optimal future deci-
competitive. That is, to effectively implement ROA sions (options) and calculate the final option
as a decision tool, we need to calculate the value value.
14 www.pry.fi
two alternative options; to expand the garage or Mean NPV as function of threshold value (Max NPV at 1.40)
turn remaining areas into other businesses (with
less uncertainty). Obviously, the different options 1.50
interacted, as did the different businesses.
A Monte Carlo model was established to cover
1.20
up for the uncertainty in all of the businesses.
With some reasonable, conservative restrictions
on the timing of future decisions, the model was 0.90
expanded to include the different options.
The ROA value turned out to be positive with
the deferral option being the key reason. 0.60
Critics
ROA is a relatively new approach and therefore Bio summary
naturally met with criticism. The critics have been
Author: Jan Rune Baugstø
focusing on the complexity (“black box”), the valu-
ing of the underlying project and problems with Affiliation: Partner, Terramar AS
the execution of real options. However, all authors Degrees: Master of Science
admit the option picture and the NPV limitations,
and no one have presented clear, fully-developed Contact information:
alternatives. The problem may be condensed to jan.rune.baugsto@terramar.no
the following: Should we continue to use methods Mr. Baugstø has a broad educational
with commonly agreed limitations (under certain background within science, finance and
conditions) only because they are simple to use history, and has 20 years of experience
and well understood? from offshore and landbased industry and
insurance. He is responsible for the field of
Conclusions and The Way Ahead Analysis in Terramar and has been involved
At present, ROA is not well-known within the in a large number of projects within Deci-
project management area. However, there is a sion and Risk Analysis. The last few years
general, increasing interest in flexibility and how he has been focused on extending Project
to benefit from it. The exercise of future, proactive Risk Analysis to Project Portfolio and Real
project management will have to uncover inherent Option Analysis.
options, create new options and apply relevant
The results presented in this paper his paper are based on a study that included project teams with
three cultural combinations. Under the leadership of Finnish project leader were Finnish-North
European, Finnish-Chinese and Finnish-American project teams.
Synergistic +
Leadership Style
Personal human relationships
+
Ethnocentric
Leadership Style Internal negotiation
in these value groups. Finland and other North- open working environment everybody tends to
European countries rank high in autonomy and make decisions and be autonomous. As a result
egalitarian commitment value groups. China ranks project coordination may sometimes be lost.
high in mastery and hierarchy. The USA ranks These problems were solved by improved intra
high in mastery. The mastery tends to translate team relationships and improved communication,
into decision centralization and other forms of i.e. orientation to people. Improved relationships
power centralization. The hierarchy often means tend also to improve communication and may give
formality and rigidity in the organizations. The better knowledge about problems at the level of
autonomy and egalitarian commitment tend to individual team members. That information can be
mean independence, autonomy, flexibility, and used to solve issues in various situation depended
very equal organizations. ways, for example increasing or reducing supervi-
sion. Other method to improve communication was
Research Method frequent meetings. The project plan played more
The research was carried out using the grounded the role of a starting point and evolved though
theory method. Data were collected by inter- interaction throughout the project. More notable
viewing project managers and project team key cultural problems were observed between Swedes
personnel. The cultural issues were separated from and Finns than other North-European project
company specific issues by collecting data from teams. Sweden, with the very high egalitarian
several different companies and industrial fields. commitment, apparently sets very high demands
The study included project teams with three cul- for personal relationships. Finns had little patience
tural combinations. Under the leadership of Finn- for such relationships building.
ish project leader were Finnish-North European,
Finnish-Chinese and Finnish-American project Leadership of Finnish - Chinese Teams
teams. The study included forty-seven (47) project Cultural borne problems included confusion about
leaders and project key-personnel. style of communication, degree of autonomy, so-
cial hierarchy, patience, and decision-making. The
Results cultural background for the project team problems
may be the Confucianism rather than the cultural
Leadership of Finnish - North European Teams value groups alone. Typical Chinese, circuitous,
Although the cultural orientation among the communication needs patience and attention to
North-European nations is roughly equal, there are preserve other peoples’ self-esteem (face). Many
still problems. Cultural borne problems included leaders and Finnish team members had difficulties
confusion about decision-making, and degree of in finding the patience. Confucianism control also
autonomy. Cultural background for the project the social hierarchy and as a result the decision-
team problems may be the shared high egalitarian making and autonomy preferences.
orientation and the low mastery orientation. The These problems were solved by improved intra
orientations tend to result into open and relatively team relationships, circuitous communication, and
low organizations, project teams with high degree hierarchical power centralization. Set-up of the
of autonomy, and open communication. In this multicultural project team may agree with Chinese
18 www.pry.fi
needing both the relationships and task orienta- Thite M. 1999. When projects are
tions or the transformal leadership may be cultur- Leadership Styles in Information Technology Projects. In-
ternational Journal of Project Management, 18: 235-241.
mostly about change,
ally biased. The roots for this assumption are in the project work seems
research that was conducted in the USA. Cultural Cleland D.I. 1995.
leadership considerations seem to indicate that Leadership and the Project Management Body of Knowl- to need leadership
this assumption is valid in the USA but possibly not edge. International Journal of Project Management, maybe more than
13(2): 83-88. anything else.
in other cultures or in multicultural leadership. The
studied multicultural teams of North-Europeans Lee-Kelley L. and Loong K.L. 2003.
and Finnish-Chinese required orientation to people Turner’s Five Functions of Project-Based Management
rather than the task or transformal orientation. and Situational Leadership in IT Services Projects, Inter-
national Journal of Project Management 21: 583-591.
This study has implications for multicultural
companies. It is important to note that tolerance Kloppenborg, T.J. and Petrick, J.A. 1999.
and open discussion, as leadership strategies, may Leadership in Project Life Cycle and Team Character
work only in North European multicultural project Development, Project Management Journal, 30(2): 8-13.
teams. This improves relationships and commu- Mäkilouko M.I. 2004.
nication. Other multicultural project teams may Coping with Multicultural Projects: the Leadership Styles
need more hierarchical power distribution and of Finnish Project Managers, International Journal of
more rigid organization. These project teams may Project Management, 22(5): 387-396.
also need “softeners” such as good relationships, Cheung S.O. at al. 2001.
rewards, and feedback. A Satisfying Leadership Behaviour Model for Design Con-
The culture depended leadership style requires sultants, International Journal of Project Management,
skills and organizational support. For example, the 19: 421-429.
hierarchical power distribution within the project Schwartz, S.H. 1994.
team becomes possible only when the project The Universal Content and Structure of Values: Towards
leader has considerably more formal power than an Understanding of National Differences. In Kim, U., et
what is usual in the project industry. The leader al. (eds.) Individualism and Collectivism: Theory, Method,
and Applications. London: Sage Publications.
must not be set in competition with line managers
with regards the influence on the project team
members. Bio summary
Author: Marko Mäkilouko, Dr.
References Affiliation: Program Manager,
Slevin D.P., and Pinto J.K. 1991.
Project Leadership: Understanding and Consciously Tampere Polytechnic
Choosing Your Style. Project Management Journal, Contact information:
22(1):29-47. marko.makilouko@tpu.fi
Industrial Humanities
Tales from the Field
The industrial world often seems distant and frightening for a re- via the port in Chennai, to be pulled into the hall
searcher from the humanities. But could it not instead be seen as yet through this opening.
another one of the “foreign cultures” that have been the key concern Inside the engine hall, some of the supervisors
of the humanities for so long? from the local sub-contractor are engaged in
planning for and discussing this critical installa-
tion. It is not an easy task: we are talking about
seven so-called 46: s, i.e. v-shaped engines with 18
Existence of humanities in the industrial cylinders measuring 46 cm in diameter. They weigh
world? 270 tons each, and together they will produce
Is there room for humanities in the industrial
106 MW. (Getting the engines all the way to the
world: both in a concrete sense and on a more
building site is of course also a real thriller, but let
idealistic level? If so: what, then, does that room
us leave that story aside this time.)
look like? And above all: can it be of interest for a
But in this picture, a paler figure is posing: with
researcher from the humanities to look at facto-
a helmet on her head, happily smiling against a
ries, steel and machines? Can you create human-
background of oil tanks, big cranes, metal waste
istic knowledge on a building site, with your shoes
Ruth Illman and other inventories belonging to a building
in the mud and a helmet on your head?
Dr.Phil. researcher, site. This figure does not look misplaced or lost
We can also pose the opposite question: what
comparative religion at all; she looks like she is just in the right place.
can the industrial world gain from having “wishy-
Åbo Akademi University This, at least, is my opinion, as it is me you see:
washy humanists” mixing up their processes? Can
ruth.illman@abo.fi the humanistic researcher in the drama. This is
you speed up the production processes, increase
the traditional portrait of the researcher in the
the gain or the competitiveness, or present new
field: proudly posing amongst the savages, bravely
technological solutions with a humanist in your
investigating the exotic field in order to document
team? Or are there other kinds of advantages to
strange habits and traditions a long way from
be gained if the industry decides to have dealings
home. It is a humanist in the field.
with the humanities?
How did I end up there? As I was about to start
My experience convinces me that the answer
the work with my Master’s thesis in comparative
to the questions posed above should be in the
religion – the year was 1999 – I by chance came
affirmative: There is room for the humanities in
in contact with a research group at Åbo Akademi
the industrial world – a room that is interesting,
University called PBI: The Research Group for
important and fruitful for both parties to be in-
Project Based Industry. Today, this group is an au-
volved in. Industrial humanities exist.
tonomous research institute in close co-operation
with the university.
Individual in a heavy The researchers connected to this institute are
industry interested in international project industry from
Let me start by describ-
several different points of view: they analyse the
ing how I myself, much
money, the time, the technique, the deliveries, the
by chance, landed in this
competition, but also the human beings involved
field so distant from the
in carrying out these projects, and the fact that the
traditional humanistic
projects are international, multicultural and multi-
surroundings. The picture
religious. Thus, there was room in this institute for
above is taken in Septem-
researchers from the humanities, alongside the
ber 2000 at a building site
business researchers and the engineers.
in Tamil Nadu, southern
India. A Finnish company
Recording experiences on site
is engaged in building a
In co-operation with Finnish companies in the
power plant which will provide the growing region
field, PBI organised a trainee programme giving
with electricity. The plant itself is being built in
students in the final stages of their studies a pos-
the middle of the desert: the closest city is called
sibility to gain practical experience of the work
Tirupattur and it is situated an hour’s car ride
in the international project industry. The students
from here. The picture is taken on the roof of the
stayed at such building sites around the world
future engine hall – the heart of this vast plant.
and worked there as trainees for approximately
One of the walls is still missing, and the engines
half a year. On the one hand, they performed
are due to arrive any day now from Turku, Finland,
some concrete task for the company (e.g. keeping
20 www.pry.fi
books, co-ordinating logistics), on the other, they interesting milieu these sites can be, also for some-
collected material for their own Master’s thesis. one from the humanities. In India, in fact, I literally
In addition, they collected and created empirical tripped over the basic ingredients of comparative
material for the larger research on projects per- religion: myths and rituals.
formed by the research group PBI, e.g. by keeping
field diaries. Observations besides technology
These field diaries became my research material. On another site in India, located near the big city
The trainees were asked to write about what hap- of Belgaum in Karnataka on the east coast, I made
pened at the site on a daily basis – in their own an interesting discovery: inside a vertical pipe
words, choosing the emphasised areas themselves. leading to what would become the smokestack
Thus, we received fairly varied texts from the sites. of the engine hall I found a geometrical figure,
Some wrote a short and concise summary of the painted by someone in chalk directly on the steel
happenings of the day at the site: which tasks had pipe. The symbol resembled an eight-pointed
been performed, which reports had been written, star, or two rectangles with loops in the corners
which problems had been solved. Other trainees placed on top of each other. In the centre, there
put their heart and soul into describing all the was another five-pointed star. With my religion-
persons that the work brought them in contact researcher’s heart wildly beating, I crawled into
with, what was discussed, how they felt and what the pipe, photographed the symbol and ran down
they did in their spare time. to the office to ask the English-speaking secretary
Several trainees also described the milieu they what it was.
lived in: the site culture as well as the culture The symbol turned out to be a so called rangooli,
and religion of the country they were staying a geometrical religious symbol of a kind common
in. All these tales from the field were naturally in Hinduism. In the folk belief, they bring good
highly personal depictions and interpretations of luck and protection. After a more thorough inves-
experiences put down in words with greater or tigation, I found rangoolis here and there on the
smaller portions of care, humour, emotions and whole site, mostly drawn in chalk or rice powder
vocabulary. and hidden away from direct view.
Sometimes we, the researchers, also had the Furthermore, there were several kinds of rituals
chance to go and visit the trainees to see how they to be observed at the sites. Another interesting
were doing at these sites that we were reading so event that I experienced at this site was a so
much about. Thus, I ended up walking around the called puja – a more or less comprehensive Hindu
site in Tamil Nadu a beautiful autumn day in 2000. ceremony accompanying every new phase in the
Well, you may think, it is one thing to look like work at the site. I myself took part in a small cer-
you have something to do there, but did she really emony connected to the erection of a new, large
accomplish anything of worth by digging herself crane. Another, larger ritual had, nevertheless,
down in these stories? Did it amount to industrial been performed a few weeks earlier, when the
humanities, or was it just a lot of posing for the foundation of the stack had been finished and the
camera, as in the picture? building of the stack itself was to begin. This puja
was documented by the PBI-trainee at the site.
Any fun with engineering
I myself had my doubts in the beginning. The
field diaries became my doorway to the industrial
world, but as I discretely peeked through the key
hole I was quite certain that I was seriously lost.
Could their really be anything for a researcher of
comparative religion to do here? And even worse:
did they really think that I could contribute with
some relevant knowledge in the field? I understood
absolutely nothing!
My first reading of the diaries made me some- As you can see, a priest had been sent for from
times bored, sometimes desperate. Are s-charts, the nearby temple, and as he is preparing a small
booster units, HFO and LFO, turbo chargers and altar on the stack foundation, the local supervisors
such things really part of common knowledge, I are discussing how the ceremony actually should
wondered as I made my way through the piles of be performed. On the altar, there are different
technical terminology and engineers’ slang. What kinds of fruits (coconuts, bananas and so on), flow-
really frightened me was nevertheless the fact ers, leaves, candles, incense and colourful powders
that I was supposed to be interested in all this in red and yellow to be used during the act. On the
talk about machines and calculations and deliver- sites, the god addressed was almost exclusively the
ies. With envy I thought about my colleagues in popular elephant-headed god Ganesh, who opens
comparative religion who got to work with exotic every door and takes away every obstacle.
religions and cultures, cosmologies, mythologies Such rituals of course seemed very exotic to
and world-views that were truly interesting … and the trainees at the Indian sites in the beginning,
here I was with the engineers. and they described them animatedly and at length
To tell you the truth, I was beginning to fear in their field diaries. As time went by, the pujas
that industrial humanities – if such a thing existed however became part of everyday life at the sites,
– was something utterly tiresome and complicated. and the trainees only shortly noted in their diaries
But my trip to India and the visits at two power that “we had an engine puja today” or “puja was
plant projects there opened my eyes to what an performed as usual and the work could begin”.
Managed by a
unit in the
organisation e.g.
a project office
Handled as a
project across
the organisation
Handled in the
existing line
organisation
Advancement Development
Ad hoc courses process on process on
and methods / methods / tools competencies and
tools and appropriate incorporation of
training improvements
Figure 1. Scheme for characterising the respectively present and future definition and
organisation of the aiming at advancing the project management in the company.
24 www.pry.fi
The simple way of controlling the process is to Clarifying need for PM improvements
arrange a stepwise tactic, starting by approaching It is hardly breaking news that it is useful to de-
one focus area, then another etc.! However, you scribe the need or problem that has triggered the
might loose the synergy, the momentum and the company to initiate advanced management of
impact that normally results in an effect on the projects. Anyway, it is surprising how little effort
practical project handling. has been made to clarify the requirement before
In all cases, it is a precondition that something more specific methods are applied.
is initiated, that somebody assumes responsibility During the requirement clarification it is es-
for the agreed operations and that the agreed sential to clarify importance of the advancement
advancement of project management in the process in the company. Has advanced project
company is controlled. management
- any strategic consequence for which tasks
Methods for advancing the management of the company can handle,
projects - any tactical consequence for improved
In general we recommend to apply a broad range handling of the specific project
of focus areas and their methods for facilitating - or has it operational consequence – in line
the actual appearance of change in the practical with other skills?
exercise of project management. However, we Typically, the company management, the project
have learned from experience that the effect is managers and project participants are well aware
increased if the advancement process has focus of the problem and know what should be done.
on achieving selected advancements. Good project management is simply systematised
Further, we recommend that all processes are common sense! The challenge is to do what we
closely linked to the management of specific know is “right” and to drop “wrong” conduct! To
projects and project portfolios and that a stepwise make common sense common practice!
process takes place anchored in and based on vis-
ible results and achieved effects.
The following sections advice on how to prac-
Advancement process
tice each of the other 11 focus areas and their 1. Managing the PM advancement process
-Planning coherent advancement process
methods. -Establishing internal advancement group as initiators
2. Anchoring the advancement process
Anchoring the advancement process -Anchoring the effort solidly at the company management
It is important with an anchoring upwards and 3. Clarifying need for PM improvements
-Analysis of strong / weak points in the project handling
outwards in the organisation to achieve a real -Inspiration via conferences or introductory seminar / course
impact of the advancement process. -Benchmarking as to other companies / projects
Concerning the managerial anchoring upwards -Evaluation of total level of maturity as to project culture
it is a question whether it basically is a manage- -Suitable improvements of the management of projects in brief
ment responsibility to develop the competencies 4. Developing project management methods
of the organisation. The management must ask -Project guidelines with focus on improvement
-Paradigm for project manual with forms
for advancements. -Platform for virtual communication in the projects
However, it is not that simply to achieve the -References to good examples and experienced colleagues
ownership of the management because an aiming -Method description in literature or course maps
Project level
26 www.pry.fi
Assistance in connection with initiation of a requested, long-term profit of a bulk of projects
project is also a matter of communicating experi- is reached.
ences, while the ”clay is soft” and it still might be Recent years have shown a tendency in large
possible to select an alternative approach than organisations to establish project management of-
previously used for management of projects! An- fices as centre of excellence to support the whole
other important task for the assistance is to make range of advancing project management.
us stop and create a forum for focus and peace
that can lead to learning and later be utilised. Advancing portfolio management
The assistance could be given ad hoc between Concerning projects within the company’s core
the project managers or by internal or external area the portfolio management is typically under
consultants. control. Concerning internal development proj-
ects or cross-sectional, strategically aiming the
Facilitating exchange of experiences portfolio management is often a distinct ”area of
Now we have reached the ”learning organisation” improvement”.
or ”knowledge management” concerning man- The rule of the thumb is that it is most prac-
agement of projects. The ultimate dream is that ticable first to advance the levels for project
it becomes a culture for the company that the management and then improve portfolio man-
project managers communicate gained learning agement later.
and that new knowledge on project management
is looked up when needed. However, this is seldom Evaluating effect of PM advancement
the case in a hectic everyday life, where the cur- As a final method we recommend to make a
rent challenges in the projects take all attention periodical evaluation of the achieved level for
and even more. management of projects. Do we practice the
Typically, specific ”mechanism” is required to en- stipulated improvements? As mentioned, we get
sure that the communication of experiences takes what we can control.
place. At company level a project forum / internal Of course, it is more interesting if we achieve
network could be useful if somebody ensures the the requested, long-term effects - in relation
intensity and profit of the specific sessions. to the company’s clients, its management and
A way of facilitating the profit is to stipulate employees. The evaluation is not only a re-active
that each participant formally plans and evaluates control at a time when all resources have been
own management effort – as a combined logbook used. It is a pro-active method for keeping up
and activity plan for the project management. At spirit in a development process that might shrink
the network meetings the project managers give in some periods.
sparring to each other in turn based on the log-
book / activity plan. This ensures a more specific Successful advancing of project management
dialogue and is experienced more relevant than a It is a company management task to initiate
free exchange of experiences. advancement processes as to management of
Registration for certification in project man- projects in the company and to organise and
agement can also serve as a vehicle for both a control the aiming.
continued activity and an intensified network Part of this task is to find time for project own-
between the project managers. ers, project managers, and project participants
to incorporate the requested competencies. The
Project managers’ career path effect of many good course processes could for
A formalised career path for the project managers example be minimised because training of new
is a method to prevent good project managers to methods and improved conduct has not been
run away from the company. A career path can possible in a hectic everyday life simultaneously
also ”serve as a vehicle” for advancing the level with the course.
of project management. It is also a management task to make the chang-
This is done by making project management a es of own methods and own conduct that are
visible discipline in the organisation. In addition, required to achieve the requested advancement
for each career level requirements as to compe- of project management and project culture.
tence levels must be worded. Once more, we refer But it is also important to stress that advanced
to the ”Danish National Competence Baseline” as management of project is a joint responsibility for
a method. all the involved in the specific project. As project
A method to support and create respect for a owner, project manager or project participant
career path is to apply IPMA’s four-level certifica- you should not only be competent to handle your
tion programme. The certification process serves tasks ”as usually”. You must also be competent to
as a lever for competence development and also contribute to an ongoing advancement process!
gives a paper of competence levels.
Multiple-Project Managers
What Competencies
Do You Need?
This study proposes an integrated list of competencies and their level of importance specifically for
multiple-project managers who lead multiple, simultaneous projects in high-velocity industries. It
recognizes that, in addition to technical, administrative/process, intrapersonal, interpersonal, and
business/strategic competencies that may help multiple-project managers lead each project individu-
ally, they should possess some unique competencies — multiple project management competencies
— to be able to coordinate projects. Based on their organizational strategy and culture, organizations
can contingently select and use this list of competencies in multiple-project managers’ hiring process,
skill development, performance appraisal, and a process of project manager appointment.
Peerasit Patanakul
Howe School of
Technology Management
Stevens Institute of Introduction 2002). Note that even though the terms we used
Technology, In the current business environment, projects are are often used in other studies, they are still not
Stevens Institute Of often considered as means to business success in an industry standard.
Technology, (Frame 1994; Forsberg et al., 2000). And, often To lead a project to success, a project manager
Castle Point On Hudson times, these projects are implemented in a mul- should have knowledge and skills in project man-
Hoboken, New Jersey tiple-project management environment, where agement (Pinto and Slevin 1988; Brown and Eisen-
07030 U.S.A. some projects are managed individually as single hardt 1995). In the literature, several researchers
Phone +1 201 2168156 projects, others as programs, and still others as centered their studies on the competencies of
Fax +1 201 2165385 groups of multiple projects (see Figure 1) (Platje project managers (Gaddis 1959; Archibald 1975;
ppatanak@stevens.edu and Seidel 1993; Ireland 1997; Pennypacker and Einsiedel 1987; Frame 1999; Pettersen 1991;
Dye 2002). Usually, single projects are sufficiently Thamhain 1991). However, those studies were
large and strategic in nature and have one project conducted on the basis of a traditional single-
manager dedicated full-time to a project, often project management environment where a single-
called a single-project manager (Archibald 1975). project manager handles one project at a time.
On the other hand, a program, led by a program Studies on the competencies of multiple-project
manager, is a family of projects that are strongly managers are rare. We believe that between these
dependent, share common goals, and lead to a two groups of project managers, a difference in
single deliverable product or service (PMI 2000). In management tasks exists. Our rationale here is
many cases, some projects, which are smaller and that multiple-project managers may need some
have a more tactical nature tend to be grouped additional competencies that a single-project
such that one project manager (multiple-proj- manager may not.
Dragan Milosevic
ect manager) can lead them at the same time To substantiate our rationale, this research
Department of
(Wysocki et al. 2002). Typically, these projects performs an analysis of multiple-project environ-
Engineering and
are independent in terms of project deliverables, ments in order to develop a framework and to
Technology Management
but they are grouped to achieve more efficiency identify a set of competencies that a multiple-
Portland State University,
in the use of resources and better management project manager should possess, especially in high-
Oregon, U.S.A.
(Archibald 1975; Ireland 1997). This type of proj- velocity industries. By high-velocity, we mean
dragan@etm.pdx.edu
ect management is currently of strong interest to the industries that have rapid and discontinuous
many organizations in various industries (Fricke change in technologies, customer demands, and
and Shenhar 2000; Pennypacker and Dye 2002). competitors, so that information is often insuf-
At a higher level, an aggregation of all projects ficient and inaccurate (Bourgeois and Eisenhardt
in a multiple project management environment 1988). At this time, we do not intend to study the
of one specific organization is often recognized competencies of program managers and portfolio
as a portfolio of projects and is managed by a so managers.
called portfolio manager (Pennypacker and Dye
28 www.pry.fi
Portfolio of Projects
Portfolio manager
Department purpose Product development Product development Software development Support software
management management management development
Number of projects 30-40 40-50 >50 >100
per year
Number of project 12 18 8 4
managers
Average number of
projects per project 2-4 2-4 4-8 10-12
manager
Typical projects New product New product Software Hardware support for
development development development software development
30 www.pry.fi
Experts in this study believe that the single managers resort to condensed/discontinuous
most important competence is the knowledge of team building. In particular, single project man-
product applications (5.83), which provides mul- agers can use any activity in their project agenda
tiple-project managers with an understanding of and even dedicated workshops throughout the
the general technological concepts of products project life—that’s why we call it diluted—to ham-
and their applications, followed by knowledge mer out their team building message within the
of technology and trends (4.67), knowledge of same project team. In contrast, multiple-project
technical tools and techniques related to product managers may have a few hours per week for
development (4.00), specific knowledge of product any one team and that is the time they have to
technology (3.50), and the ability to solve technical use to condense the whole art of team building.
problems (2.67). The low ratings of the last three In addition, after these few hours, they may not
technical competencies seem to be in tune with see the team for a whole week. This creates an
some arguments in the literature that when it “out-of-sight out-of-mind” situation, increasing
comes to project products and technology, project the pressure on the multiple-project manager to
managers need no more than a “working” level successfully condense his team building magic in
of their knowledge. We heard from the interview those few available hours.
that “Even though they (multi-project managers) The two examples of leadership and team
might not have technical expertise the project building competencies clearly indicate that their
needs, I would say, it is okay. The team is going intensities and dynamics are significantly different
to be staffed with technical people.” for single-project managers and multiple-project
The competencies previously discussed are very managers when they manage individual projects
important for managing each individual proj- (such is also the situation with some other compe-
ect. In fact, all project managers, single-project tencies - e.g. project planning). In this difference
managers and multiple-project managers, should lies a major risk in that many see them as being
possess those competencies; however, they may the same while they are not.
need them in different intensities and dynamics.
For example, in the aspect of leadership, because Competencies needed for coordinating projects
multiple-project managers need to lead multiple Multiple project management competencies: De-
teams concurrently, their time for each team is spite the fact that managing groups of multiple
limited and used intermittently. Consequently, projects has been around for a long time (Archibald
in their leadership capacity, they need to apply 1975), there has been very little empirical research
a condensed, fast leadership approach, acting in about it (Fricke and Shenhar 2000), especially, the
a discontinuous manner—lead one team, discon- research on the competencies. In this study, the
tinue, and lead another team with a contingency ranking from the expert panel shows that it is
leadership approach. These same issues have dif- necessary for multiple-project managers to have
ferent manifestations to single-project managers experience in managing multiple projects (6.17), be
since they have all their time to lead one team in able to manage interdependency (5.83), multitask
a continuous manner. (5.67), simultaneously lead multiple project teams
Similarly, the competency of team building (5.33), and understand interproject process (5.17),
has different intensities and dynamics when used accordingly. The fact that the experts ranked
by single-project managers and multiple-project experience in managing multiple projects as the
managers. While the first apply team building in most important competency is in tune with the
a diluted/continuous manner, multiple-project study of Kuprenas, et al. (2000).
Katz, R. L. (1955).
Skills of an effective administrator. Harvard Business
Review, 33(1), 33-42.
Pettersen, N. (1991).
Selecting project Managers: An integrated list of predic-
tors. Project Management Journal, 22(2), 21-26.
Project Management
st
in 21 Century
This paper argues for a paradigm shift in understanding of project management and application of the underlying models.
Project management is an essential competency within the spectrum of the required professional competencies. However,
the nature of competency needed to engage with projects and programmes in an increasingly uncertain and chaotic
world, transcends the contemporary approach (called normative model). The current project management model is mono-
discipline and narrowly focused on management of the delivery phase of projects. Not only must our understanding of
project management as a discipline change, but also our models of professional development and practice must realign
with the demands of complexities that projects and programmes increasingly face, particularly in the new economy.
A multiple competency model of professionalism dubbed- creative-reflective model- is advocated. Under this approach and
as a direct response to the messy nature of projects and their complex environments, the focus is shifted from control to
strategy and leadership. Creativity, flexibility, dynamic processes and focus on upstream side of projects are the hallmarks
of the new approach. This calls for a different mindset on the part of the actors and the act of project management. The
new mindset is dubbed creative-reflective mindset.
As project solutions and strategies must be shaped by challenges created by project and environmental complexities,
creativity becomes vital in this process. The whole approach is shaped by the acute need to engender and deliver break-
through solutions within an intelligent risk resilient framework. Such solutions are often at the cutting edge of technology
and achieved mainly through coalitions of organisations and global networks.
Globalisation, - Need for global & strategic links/ - Need to work in network economies
emergence of network partnerships, risk sharing, leveraging - Contribute to global value chains
economies expertise, scale and technology - Manage self, align competencies
Competitiveness shift - New business models leveraging the - Need for multiple competencies
human capital & partners' - Continuous learning & self
capabilities, risk resilience assessment
- Learning ahead of competitors - Need to participate in diverse
- Emphasis on creativity/innovation assignments/roles increases
ICT advancement - Leveraging ICT for competitiveness - Mastering work within ICT
- Mastering virtual organisation environments & knowledge systems
concept - Need for new work psychology (based
on trust & teamwork)
Rise of services sector - New business models to apply - More complex product/projects
holistic product-service philosophy demand greater product/customer
knowledge, broader focus
- Leadership/selling skills vital
Freeing of capital & - Vulnerable to capital markets trends - Competency to understand & factor
labour markets - Location-independent labour in global resourcing dynamics
- Rise in international dependency - Frequent career & location changes
- Competition for work increases
of today, organisations in developed economies human capital and use of creativity and ingenu-
must increasingly shift away from a commodity ity as the basis of competition not just efficiency
economy (particularly in the services sector) and and cost competitiveness, typical of a commodity
deliver complex products and services that can based economy (Jaafari, 2004b, 2003a,b,c, 2002,
make a difference to the life of ordinary people 2001).
or deliver a strategic advantage to customers and As seen from Figure 1, going from a simple
clients (Collins and Porras, 2000; Kadama, 2002; product to a highly complex product and service
Simpson, 2002). This requires a well-developed increases risks by orders of magnitude. This is
due to an exponential rise in complexity of both
Log.Scale products and the environment (from local to
1000X international, from a random placid to a turbu-
lent chaotic state). Only capable organisations
can respond to the challenges of business risks
Potential Reward
100X
associated with complex products and services
(Figure 2). Capable organisations can take on
10X daring projects/ventures; apply their capabilities
(e.g. creative-competent people, systems, capital
1X resources) and thus reduce the business case risks
Risk to a manageable size.
Low Medium High Very High In the process, capable organisations stand to
reap the rewards, particularly during a product’s
Commodities
Capabilities
Products &
Consumer
Example
Products
Durables
Complex
Products
sition can shield them from competition. Figure
2 shows a basis for classification of organisations
Figure 1. Schematic relationship between from basic capabilities (e.g. a quality certified firm)
risks and associated rewards (Jaafari, 2004b, to a creative-dynamic organisation (Jaafari, 2004b,
2003a,b,c, 2002, 2001) 2003abc, 2002, 2001).
36 www.pry.fi
I
Very High
Class V (creative-dynamic)
Reduction in Business Risk
IV
Medium
V
Low
Object
What needs to
be done to
reach objects It is believed
Strategy Values
Standard
Behaviour
The conducts model which guides
how to operate the project
Figure 3. The Project Management Mission model (Figueroa, 2003)
Agent for creativity - Promote a creative culture (allow - Creative broadened mindset
time for questioning & new ideas) - Systematic value analysis/
- Risk resilience attitude management expertise
- Emphasise the whole value chain - Synthesis rather than analysis
- In search of excellence mindset
Strategic - Goals focus & flexible management - Mission orientation & competency to
project/business - Strategic leadership framework and deliver goals
management systems (corporate governance) - Ability to contribute to & manage
- Outsourcing and alliance focus distributed business ventures
Customer strategic - Focus on delivering value - Core skills in customer value &
advantage and value - Customers and public interest relationship management
focus recognised & included systematically - Core skills in communication
ICT leverage for superior - Constant development of business - Mastery of ICT for project value
performance & cohesion management infrastructure to enhancement & productivity
leverage information and knowledge - Leverage ICT for communications
Promotion of strong - Transparent, consistent policies and - Strong personal & professional ethics
personal and corporate systems - Management of ethics, social and
values & ethics - Emphasis on corporate ethics, social environmental responsibilities at
& environmental responsibilities project/programme level essential
- Emphasis on cultural tolerance & competency
development of social cohesion
Table 2. Nature and role of project management in the age of complexity
38 www.pry.fi
Very High
High
Type 2. Bureaucratic
Low
Type 1. Ad-hoc
Thinking Primarily deductive / analytical; sceptical Inductive, deductive and abductive; uses
of intuition 'intelligent intuition'
Professionalism Objectivity, rules, codes of practice Exploration of own and others' values,
personal ethics, mutual enquiry, shared
expectations
Professional standards Defined by the employer, professional Negotiated by the participants and other
body or other external agency according stakeholders in the practice situation in
to its norms and values accordance with their values, beliefs and
desired outcomes
Professional Initial development concerned with Ongoing learning and practice through
development acquiring knowledge, developing reflective practice, critical enquiry and
competence and enculturation into the creative synthesis and action; continual
profession's value system; continuing questioning and refinement of personal
development concerned with maintaining knowledge, understanding, practice,
competence and updating knowledge values and beliefs
Table 3. Point comparison of normative versus creative-reflective model of professionality
(after Lester, 1994)
They rely on the skills of these project managers project assignments as and when needed virtually
to access the outsourced resources. globally (Jaafari, 2001).
One consequence of these developments is a rise To summarise the discussion:
in the number of freelance knowledge workers and - Managerial skills (project and or general man-
professional consultants who can participate in agement) are needed by all professionals in order
to participate in, and or manage business and or
government endeavours, particularly focusing
on hard aspects, users’ validated performance
targets, financial targets, time, production of
artefacts etc; Thus, the managerial competency
is one dimension of professionalism;
- Leadership and socio-cultural skills are also
needed by all professionals in order to develop
self, relate to social structures in teams, projects
and business units or in wider sense of leading
organisations, as well as promotion and adher-
ence to strong personal and professional ethics.
These competencies focus on the soft aspects
and human and organisational cultures;
Technical competency (26%) - Technical competencies are also essential, and
Management competencies (43%) go hand in hand with other key competencies.
Technology plays a key role in the competitive-
Soft competencies (31%) ness of ventures and business models. Project
Figure 5. Results of an empirical study showing managers need to be firmly grounded in a
base expertise and develop an appreciation of
competencies held by professionals
the commercial and technological dynamics
(Jaafari, 2002)
40 www.pry.fi
of their field. A project manager who is active Figueroa, M. S. (2003). The mission in the project manage-
ment of large projects: The cases of Bilbao Guggenheim
in the culture and arts field is not sufficiently Museum, Valencia Congress Hall and Barcelona 92
knowledgeable to engage in the oil and gas Olympic Games. 17th IPMA World Congress on Project
industry and vice versa. Management. 4-6 June 2003. Moscow, Russia. 5 pp.
Fielding, R. (2002a). Project managers lack proper training.
In conditions of uncertainty, complexity and http://www.vnunet.com/News/1136305
chaos focus on rationality and linear processes Fielding, R. (2002b). IT projects doomed to failure. http://
will not be sufficient; competencies must relate www.vnunet.com/News/1137099
to performance in a complex shifting and uncer- Gray, C. F. and Larson, E. W. (2001). Project Management:
The Managerial Process. McGraw-Hill, New York.
tain world. In this environment, both goals and Geyer, F. (1998). From simplicity to complexity: adapting
environments tend to shift so frequently that they to the irreversibility of accelerating change. 14th World
render rational approaches ineffective. As stated Congress of Sociology, Montreal, July 26 - August 1,
1998 WG01 Session 13 (see also: http://www.unizar.
in Geyer (1998), Jaafari (2004a) Lester (1994) es/sociocybernetics/chen/pfge12.html)
and Robinson (2000), in such conditions, success Jaafari, A. (2004a). Modeling of large projects. Chapter 13 in
largely depends on adaptability, autonomy and The Wiley Guide to Managing Projects (eds. Morris, P. W.
G. and Pinto, J. K.). pp. 288-320.
agility, which in turn depends on the mindset and Jaafari, A. (2004b). Project management in 21st cen-
competence of the professionals and their strong tury. Proceedings of the 6th Bi-annual Conference
adherence to personal and professional ethics. of International Research Network of Organising by
Projects (IRNOP VI), Abo Akademi University, Finland
Technocrats and administrators give way to lead- (Eds. Wikstrom, K and Artto, K.). Aug 25-27, 2004: 25, pp.
ers, who can set the goals, promote creativity and 340-365.
encourage development of breakthrough solutions Jaafari, A. (2003a). Project management in the age of
(Robinson 2000). The contemporary normative chaos: a study of professionalism in 21st century. 17th
IPMA World Congress on Project Management. 4-6 June
model of professionalism, that has been the foun- 2003. Moscow, Russia. 7pp.
dation for professional education and certification Jaafari, A. (2003b). Project management in the 21st century:
since the dawn of the 20th century, has thus come The human and behavioural challenges. PM-Research
Conference. 29 October 2003, Vienna, Austria. Published
under threat (Lester, 1994). by PM Group, Vienna University of Economics and Busi-
It is befitting to note that the realisation of the ness Administration, Vienna, Austria. 15pp.
transformative leaders and practitioners requires Jaafari, A. (2003c). Project management in the age of com-
plexity and change. Project Management Journal. Project
a new approach to education and enculturation Management Institute, USA. Vol. 34, No.4. December
of professional people of all disciplines including 2003. pp 47-57.
project managers. That is why we have set up Jaafari, A. (2002). Knowledge, leadership, competencies,
mindsets and the role of educational and research
new institutions to promote this level of thinking institutions. The First International Conference on Con-
and professionality (see www.apicollege.org and struction in the 21st Century (CITC2002): Challenges and
www.aiuni.org). Opportunities in Management and Technology. Miami,
Florida, 25-26 April, 2002. pp. 467-474.
Jaafari, A. (2001). “Project management and the third
Conclusions revolution: can we deliver?” PM-Research Conference.
The author presented a case for a fundamental 21 – 22 November 2001, Vienna, Austria. Published by
PM Group, Vienna University of Economics and Business
shift of project management thinking to a new in- Administration, Vienna, Austria. 8 pp.
tellectual and professional platform. The creative- Kadama, M. (2002). Creating new businesses through a
reflective model of professionality was proposed as strategic innovation community – case study of a new
interactive video service in Japan. International Journal
suited to the messy nature of business and projects of Project Management. Vol. 20, pp.289-302.
in today’s complex environment. The author re- Kanter, R. M., Stein, B., and Jick, T. D. (1992). The Challenge
viewed the nature of environments under which of Organizational Change: How Companies Experience It,
and Leaders Guide It. New York: Free Press.
projects and programmes are conceived and deliv- Leroy Ward, J., Haddad, R., Foreman, J., and Taylor, J. C.
ered locally or globally. The rise in complexity has (2003). Untying the Gordian knot of complex projects.
necessitated shifting of emphasis from traditional 17th IPMA World Congress on Project Management, held
in Moscow, 3-6 June 2003. Moscow, Russia. 6 pp.
business models to newer approaches embodied in Lester, S. (1994). On professionalism and professionality.
dynamic organisations. Project management is a published at: http://www.devmts.demon.co.uk/profnal.
core capability for dynamic organisations. htm
Project management is not a mono-discipline Morris, P. W. G. (2003). The irrelevance of project man-
agement as a professional discipline. Keynote paper
(never has been). It is not just a set of useful tools presented to the 17th IPMA World Congress on Project
that can be applied by professionals in different Management, held in Moscow, 3-6 June 2003. Moscow,
contexts. It is a category of professional compe- Russia. 19 pp.
Mulcahy, D. and James, P. (2000). What skills? Whose
tencies alongside other categories, as leadership knowledge? Futures for CBT. Third National Conference
and socio-cultural competencies, business acumen of the Australian Vocational Education and Training Re-
and associated technical competencies. search Association (AVETRA): Future Research, Research
Futures. March 2000. Canberra, Australia (see: http://
www.avetra.org.au/papers%202000/mulc_jam.PDF).
References Porter, M E. (1990). The Competitive Advantage of Nations.
Beinhocker, E. d. (1997). Strategy at the age of chaos. McK- London, Macmillan.
insey Quarterly. No. 1, 1997. pp.24-39. Robinson, M. S. (2000). Transformational leadership defined.
Boyatzis, R. E. (1982). The Competent Manager: A Model for Published at: http://www.ethoschannel.com/personal-
Effective Performance. New Your. John Wiley. growth/new/1-msr_transformational.html
Buckingham, M. and Clifton, D. O. (2001). Now Discover Your Simpson, R. (2003). New world methodology for developing
Strengths. The Free Press, New York. new world technology. 16th IPMA World Congress on
Buckingham, M. and Coffman, C. (1999). First Break All the Project Management. Berlin, 4-6 June 2002. Organised
Rules. Simon & Schuster, New York. by German Project Management Association (GPM).
Collins, J. C. and Porras, J. I. (2000). Built to Last. Successful Vernadat, F. (1996). Enterprise Modelling and Integra-
Habits of Visionary Companies. Random House Business tion – Principles and Applications. Chapman and Hall,
Books, London. London, U.K. 513 pp.
Emery, F E., Trist, E L. (1965). The causal texture of organi- Volkswagen (2002). Project management in Germany: state
zational environments. Human Relations, 21-32, Vol. 18 and trends. Report published by Volkswagen Coaching in
1965. 2002, 196 p.
2 4
System delivery
Large Large system
upgrades Mobile telephone
projects system
development
Project size
1 3
Software
development Organization
Small development
projects Consultancy
projects Maintenance
42 www.pry.fi
The software development projects studied in this the project manager the main task is to resolve
paper would most probably end up in quadrant conflicts of different kinds (Maylor 2003: 11).
number one, as they often are short and, both
due to the workers connection to the project and Method
to the size of the budget, are small (Turner 1993, The study comprises the following main parts:
1999). The projects in quadrant number four, on 1. Introductory interviews to learn to know
the other hand, are mainly the traditional large the company and the project managers
and relatively long projects for which the project 2. During one week each the work of the
techniques were developed. project managers and the assisting project
manager were followed and documented
Multi-project Organization 3. Second interview to validate what was
Companies running projects in parallel and in documented
sequence are usually called multi-project organi- 4. Material analysis
zations (Engwall and Jerbrandt 2003, Payne 1995). The company studied, Telesoft, was earlier a
In these organizations there are often routines part of a large telecommunications company but
developed on how to handle the interrelationships due to the rapid change in the telecom industry
between the different projects. Payne (1995) sug- recently, demands on a more efficient organiza-
gested that the projects in multi-project organi- tion led to some organizational changes where the
zations often are smaller and shorter in duration client sold Telesoft a year ago. Today Telesoft is
than in organizations running single projects. owned by another large company but is still acting
In multi-project organizations both the project and working mainly for the former owners, now
managers and the project workers usually work in in a client – consultant relationship. Hence, the
more than one project at the time. The projects in project studied was now shared between the two
the organization have to compete for the financial organizations with Telesoft acting as a consultant
and personnel resources needed (Sjögren Källqvist to the former parent company. The organization
2002, Turner 1999). Due to the shared resources structure is complicated and will be described
each project manager also need to keep an eye from two different perspectives, the organizational
on what is happening in the other projects as perspective and the time-line perspective.
something happening in another project would
affect their own project. Organizational perspective
It is suggested that there are differences be- The project is a software design project in a larger
tween the job of general project manager (cf. telecom system project, figure 2. Earlier main-
PMBoK 2000), but little research seems to support projects is also connected to the Design project
such a statement. There might be some differences via the superior Software sub-project. The main-
though, as Maylor (2003) suggests, that the proj- projects are run by the client but the software
ect manager is responsible for overseeing change design project is run entirely by Telesoft and three
while the general manager manages status quo. of its peer projects are shared between Telesoft
The project manager have different tasks that are and the client, with some workers at Telesoft and
changing all the time to manage within the tem- some at the client. It could be argued that the
porary structures of the project while the general design project is not a single project as it is part
manager’s tasks are consistent for a long time of a larger project, however, the design project
and are handled within more or less permanent is responsible for achieving its own goals for its
structures. The main task for the general manager clearly defined products, and by making its own
is to optimize the organization and the work. For planning and resource allocation it can be seen as a
Figure 2. Project organization chart with a dashed line showing the studied project
Project Perspectives 2005 43
project of its own. In other words the organization as the changes like the change requests were ex-
described is the product breakdown structure of pected to come. When handling other unexpected
the telecom system where every sub-project has changes the method used emerged at the time as
clear goals and frames. there were no pre-designed routines available.
Some other changes were familiar to the project
Time-line perspective managers and they had their own routines to
For every new model of the telecom system handle those.
planned there will be a new project on the
main-project level. For every model there will be External changes
number of versions of the software with differ- Decisions on changes originating from outside the
ent functionality. These projects are running for design project are outside the control of the proj-
between 8 and 12 weeks ending up in a state of ect manager as they are often made on a higher
maintenance after delivery when the products are hierarchical level. One example was when one
tested, working fine and delivered to customer. project was getting closer to the end and someone
During the maintenance stage errors made during brought up the question of whether it was possible
the design will be corrected and some late changes to change the previous decision on which version
will be implemented. This result in the design of the first project that was to be used as a base
project having a number of projects running at for the next. David argued that a change would
the time. Consequently, the project always has save his team some job and the project might then
projects running in different stages and it is in this finish before plan. Two days later a meeting on a
environment the project manager has to work and higher level changed the decision so the version
try to make their project to reach the goal. that David suggested was to be the base on which
the new project would be built. In this case David
The studied project managers had to wait for the decision from higher level and
In the design project the management is divided could only give suggestions on what he though
between David, acting as the project manager, and were the best. He then had to plan his teams’ work
Diana, acting as assistant project manager. David to fit the two possible outcomes. Another example
started at the client’s organization about five years was one occasion when the client’s organization
ago after having finished his studies in informatics. planned to show one of the earlier products for
He has worked mainly as a software designer but a potential customer. At this stage the product
he has for a recent period worked as team leader was not tested and finished so orders were sent
in one of the teams in the design project. When out that everything else was less important than
the study was conducted he had had the position correction of any faults that may occur in the
of a project manager in the design project for only product to be shown. For David this meant that
a couple of months, however, he had good help he had to plan for who had to work overtime and
from Diana, his assisting project manager who had during the coming weekend and also he had to
held her position for some years. Diana started plan the other work so the right priorities were
as a computer engineer in the client’s company made there in order not to loose too much ground.
18 years ago. She started as a software designer These two examples show the project manager in a
but during the last 7 years she has had different situation where someone else is making the deci-
positions as project manager and assisting project sions and the project manager has to implement
manager. what is decided. Hence, the project manager does
not seem to be as influential as Galbraith (1971)
To change, or not to change: that is the suggested.
question for a project manager
One major task the project managers’ job con- Internal changes
sisted of was change management. The changes Other changes stem from within the single project.
were, for example, in delivery dates, the product It can be the person coming back from sick leave
specifications or the staffing. It is the project earlier than expected. In this case the project
managers’ duty to handle the changes there ef- manager had to discuss with several people to
fect on the project is as positive as possible. Some find out where they needed him the most before
changes would result in more work and therefore he could put him into work. Another example
in a delay. It was then the project managers’ job of internal changes was the extra meetings that
to try to postpone the changes in order to be were held during the end of the study to handle
able to schedule for them in later versions of the the increasing amount of trouble reports. During
product. In other words, the project managers the weeks of the study there were an unusually
are in a position where they are responsible for high amount of trouble reports and with all the
implementing changes at the same time as they work that was planned this became a problem. In
have to prevent change to protect the project and order to solve this problem it was decided to meet
the project workers. every morning to discuss what team had too much
to do and to send people between the teams to
Implementing change help where it was needed. Contrary to the earlier
Some changes stem from the project’s environ- described changes the latter were in the design
ment including the company and the peer projects project and the project manager had to find his
while other changes stem from issues happened own solutions in order to handle them. All solu-
within the sub-project. This means that when tions, except those affecting the project workers’
handling some changes the project managers had work situation, were decided upon by the project
to stick to routines established by the company, manager himself.
44 www.pry.fi
Avoiding change to protect the teams and the project workers from
Project managers spent much time keeping disturbance in order to get the job done. The situa-
changes and demands from outside the project tion with the project’s ever changing requirements
away and to protect the project workers from might not be experienced similarly on the top level
disturbances. According to Pinto and Slevin (1989) of the main-project, but for the project managers
this is a success factor, to shield the project from in the design project it is a daily fact. Therefore,
disturbances. One example from the present study looking at the multi-project environment from
was the handling of change requests. When Diana the short-duration project’s perspective opens up
received a change request she tried to determine a new interesting field for further studies.
how much work it demanded and what team, or
teams, was needed to do the job. Her first way of Acknowledgements
handling the change request was then to try to I appreciate financial support from Hans Werthén-
postpone the change as long as possible to be able Foundation, Wallenberg’s foundation and from
to plan the work to fit into the other work. Handelsbanken Research Foundation. Tomas
This pattern of managing change was repeated Blomquist, Anders Söderholm and Tim Wilson have
in almost all cases where change was requested for supported during the research process and have
or when suggestions came up needing the project given feedback on earlier versions of this paper.
managers to re-plan the project. One example on An earlier version of this paper was resented
the latter was when someone superior wanted to at the IRNOP VI conference in Turku, Finland in
re-schedule the versions. The first reaction from August 2004.
all the project managers present in that meet-
ing was: “No, that’s not possible”, but later they References
agreed to the change under the conditions that Artto K. A., Dietrich P. H. and Ikonen T., 2002
other changes to the planning was made and the Industry Models of Project Portfolio Management and
Their Development, In, Proceedings from PMI Research
version discussed were kept “Slim”, not including
Conference, Seattle, p. 3-13
to much new functionality. Some of the other
functionality should then be placed in a new, not Blomquist T. and Müller R., 2004
yet planned version. Program and Portfolio Managers. In Slevin D.P., Pinto J.K.
and Cleland D.I. (eds) Frontiers of Project Management
Research, Newton Sq: PMI
Short-duration project managers’ work
Earlier studies of multi-project organizations have Engwall M. and Jerbrandt A. 2003
mainly been from a top-management perspective The resource allocation syndrome: the prime challenge
of multi project management?, International journal of
(cf. Artto et al. 2002, Blomquist and Müller 2004,
project management, 21(6), pp 403-409.
Sjögren Källqvist 2002) where focus has been on
how the top management handles a portfolio or Galbraith J. R., 1971
a program of projects. In this study the opposite Matrix organization designs: How to combine functional
perspective was taken resulting in a description and project forms, Business horizons, 14(1), pp. 29-40
of how the project managers handle their single, Maylor H., 2003
small, short-duration projects in the multi-project Project Management, 3rd Prentice Hall, London
environment. Payne J. H., 1995
Looking at the main-projects from the top Management of multiple simultaneous projects: a
management perspective in this case would show state-of-the-art review, International Journal of Project
three relatively clearly defined projects, one main- Management, 13(3), pp. 163-168
tenance project, one project in a closing phase, Payne J. H. and Turner J. R., 1999
and one project where production is going on. Company-wide project management: the planning and
If we instead look at it from the short-duration control of programmes of projects of different type.
project managers’ perspective the three projects International journal of project management, 17(1), pp.
are handled more or less as one project with several 55-59
versions. Even though the main-projects on lower Pinto, J. K. and Slevin, D. P. (1989)
level are handled as one there still are priorities Critical Success Factors In R&D Projects. Research Tech-
made on higher level leading to changed focus nology Management, 32(1), pp. 31-35
for the short-duration project managers and their PMBoK, 2000
teams’ work. Looking at the projects from the A Guide to the Project Management Body of Knowl-
above would probably have made the effects of edge, Project Management Institute, Newtown Square,
the prioritization hard to see but from the sub- Pennsylvania
project level the prioritization gets high impact. In Sjögren Källqvist A., 2002
the complex situation where the project managers Projektledning från ovan [Project management from
work, they constantly need to adjust their project above]. INDEK, Royal Institute of Technology, Stockholm
to what is happening in the project’s environment. Turner J. R., 1993
They need to keep these relations under constant Handbook of project-based management: Improving the
observation and use them to keep the project processes for achieving strategic objectives, McGraw-
development in the right direction. Hill, London
Turner J. R., 1999
Conclusion Handbook of project-based management: Improving
It appeared in the study that much of the project the processes for achieving strategic objectives, 2nd ed.
managers’ time was spent in meetings where han- McGraw-Hill, London
dling of different kinds of change was a major task.
When handling the change the primary action was
46 www.pry.fi
Disasters generate situations where breaking study is directed to study leadership in Project
of daily life happens altogether with high risk Management designed for cases where natural and
and high incertitude: reviewing our portfolio environmental risks happen as disasters.
of management or administration techniques is
necessary. The 9 W’s and disasters
Morris and Hough (1987) learn from the anato- The anatomy tool is the 9 W of disasters inter-
my of big projects the reality of Project Manage- vention questions, cited by Benyakar, which are
ment, just questioning systematically on success similar or almost identical to the usual questions
and failure reasons of real cases; they provide a that a Project Manager might use when analyz-
listing of both. This exercise generates a list of ing or studying a case of risk minimization or
factors that may improve the chances to achieve avoidance:
success. Listing major crisis and associated projects
will possibly change our view on management in
Warning or prevention, Why, What, Who,
disruptive environments.
Whom, When, Ways and Wholeness
Disruptive Environments in Natural Risks
and Environment Disasters. “Prevention or warning” includes recogniz-
ing external menacing factors associated to the
Disruptive Environment and major crisis: local, abilities, capabilities or skills of the individual
multi-local and worldwide scenarios or organizations that face the situation, or that
Natural risks and environmental disasters are major needs to activate these capabilities and use them
crisis where high risk and incertitude generate dis- in order to avoid the occurrence might happen.
ruptive situations. Benyakar defines the disruptive Specialized Public Centers and Universities draw
environment situation. This author leads a research scenarios or maps of high risks caused by me-
mainly oriented to psychiatric treatments, as an teorological disasters; insurance companies and
expert in military and civilian incidents. a limited number of public may now directly use
Risk Management as part of a project is applied that information.
in a different manner. Project Management treats “Why” requires in many cases generating an
Risk Management as a way to respond to project immunity in face of psychological impacts of the
risk: the outcome is a risk management plan. This risks treated, in order to avoid sequels or psychic
topic is studied by authors like Chapman (see trauma of population. It often determines what
the different references (Chapman & Ward 2002; must be done, who must do it, how it must be
Chapman 1997; Chapman CB & Ward 2000)). Other done, etc. As an example, Administering Land Plan-
works define the dimension of risks and incertitude ning impact directly on risk patterns when natural
in traditional project management, or as Casals disasters and determine in some extent ways to
(2001) describes accidents and risks issues for the solve that question once it may be considered.
chemical industry. Risk identification, analysis, re- “Why” or the explicit reality of “why” is hard to
sponse and, monitoring and control are considered investigate and its importance may affect the role
at Project level. Public officers use the adminis- of Project Managers as it is described in the two
trative laws to ensure that the risk management examples above.
topics are properly considered. Boundaries and “What” allows determining your focus of atten-
interactions are analyzed to attain compliance to tion, human level or the different resources. “Who”
existing laws or techniques. Authorities comply refers to the position of the Project Manager in
with their formal work and must inform civil relation with the different “whom” or “stakehold-
authorities for their bigger plan. ers” (Mc Cleland 1983). “When” can be sometimes
More specifically, implementation of the reac- anticipated, or at least forecasted. It seldom hap-
tive system is mainly inside nation’s territorial pens as unpredictability is one of the properties
boundaries. Advisory or normative committees are that determine many of such situations. Responses
formed by international institutions (see the dif- to “when” include the teleological chains of
ferent treaties regarding oil spills, waste disposal, activities and its pace according priorities; then
etc.) providing uniform legal solutions that finally timing and more in detail, time-planning of tasks
are introduced in nations’ systems. These laws and management of resources are essential. Civil
create organizations teams and have as expected Protection, NGO, public organizations, all offer
a legal framework. But we all can cite cases to their own and different understanding but most do
demonstrate that national coordination between no Project Management philosophical approach.
even well trained people and organizations tends “Where” identifies scenarios and time, capability
to make results slow or worse. and flexibility of deliveries. Resource inventories
But disruptive situation never end and borders and availability, and decision modeling or supply
are ignored. As Benyakar describes, during the chain models of management must be ready for
World Psychiatric Association (WPA)- 2002, Prague implementation assistance. “Wholeness” requires
and afterwards Germany both suffered serious recognizing complexity and interactions; the two
floods; Middle East continued madness and Argen- cases explained determine the need of a “holistic”
tina was ill-crossing through its socio-economic vision.
disaster. All have multi-national or worldwide Our typical vision of Risk Management and
impacts. We are obliged to apply common sense, Uncertainty (why it alters schedules and costs) is
finding methods to better the management of a different vision from the case where risk is really
those conflicts allow us to exert our responsibility generating the disruptive situation and we imple-
and rebuild normal life. As a first approach the ment project management to solve the conflict.
Picture 2. Prestige tanker towards the ocean Picture 3. Asphalt covered beach
48 www.pry.fi
Next conclusion is that, Disruptive Environment
is a complex situation that requires implementing
a different self-organized complexity before daily
or normal life can start again. Complex-Problems
solving generate situations that may need all the
multiple managers’ roles as Mintzberg (1991) de-
fines; it is difficult to imagine one lonely person
matching the capabilities needed. A series of proj-
ect teams can. Proposed “Who” are international
Management Teams, using effective Information
Systems. Stakeholders include citizens of differ-
ent countries, governed by different orientations,
and their interests or positions are different; the Picture 5. Volunteers collecting asphalt
matter is that EU authorities should work in or-
der to integrate this combination of multi-local References
international teams and share their experiences. Alexievitch, S. 1998.
A major problem is that EU arm’s length may not "La supplication” Éditions Jean-Calude Lattès
arrive to neighboring countries that have social Benyakar, M.2003
distress as a second disruption cause. Lo disruptivo. Ed. Biblos, Buenos Aires
Information for and from the team is essential:
main effort in both cases was directed to limit Casal; J y otros 2001
Análisis del riesgo en instalaciones industriales, Edicio-
access of the existing knowledge to stakeholders: nes UPC – Politext, Barcelona
War, Espionage or Against Enemies Acts must not
inspire governments’ priorities or emotions to Chapman CB and Ward SC. 2002
prevent what they still see as of sedition or fear. Managing Project Risk and Uncertainty: A constructively
simple approach to decision making. Wiley, Chichester.
Processes of error self-righting need the public
debate – as a very positive remark, informing the Chapman CB 1997
public is a legal requirement included in EU envi- Project risk analysis and management PRAM the generic
ronment policies as a basic principle. Information is process. International Journal of Project Management.
15 - 5, pages 273-281.
essential and channels must be open. Transparent
information will assist leadership and stakeholders. Chapman CB and Ward SC. 2000
Polite frankness can break the communications Estimation and evaluation of uncertainty: a minimal-
channels. ist first pass approach. International Journal of Project
Management 18 , 369-383
Team leaders must consider as a priority part-
nering with stakeholders. Why can not we share Mc Cleland 1983
information with the persons that are so dramati- Systems Analysis and Project Management Ed. Mc Graw
cally affected? We all must share liabilities; we Hill, New York (N.J.)
need readiness and all cooperation to respond. Mintzberg 1991
Project Managers in Disruptive Environments La naturaleza del trabajo directivo. Ed. Ariel, Barcelona
for leadership should implement: Morris and Hough 1987
- Multi-national teams for complex problems The anatomy of major projects. John Wiley and sons,
- Open Information Channels London
- Acceptance that situation would never return
Pons L 2003
to the previous one Explaining Risk and Uncertainty. VII Congreso Internacio-
Disruptive situations will give us again the op- nal de Ingeniería de Proyectos. Pamplona.
portunity to check the paper contributions.
Bio summary
Author:
Pons Puiggrós, Luis
Affiliation:
Professor,
Universitat Politécnica de Catalunya
Degrees:
Dr. in Management and Business
Administration
Professional activities:
Professor of Project Management,
Experience in Media Business,
Technological Innovation and Engineering
Societies:
PMI, AEIPRO, AIQS
Contact information:
luis.pons@upc.es
Picture 4. Slow flowing trickles of asphalt
Network Oasis
Environment for Work and Information
Management in Multiple Projects
Rapid changes and discontinuities in business environment will challenge enterprises. To challenge
sustainable growth, companies have to find out new business solutions. There will be needed knowl-
edge and value innovations by networks of companies to create these solutions. There is urgent need
to increase productivity of the knowledge work. New tools, methods and environments are needed
to challenge traditional project work in multiple projects. The quality of the human interactions is
taking a vital role in successful projects.
Rapid changes and discontinuities in business environment will challenge enterprises. Companies
have to find out new business solutions to be able gain sustainable growth. Knowledge and value
Ilkka Kakko innovations by networks of companies will be needed to create these solutions. There is urgent
Network Oasis need to increase productivity of the knowledge work. New tools and new environments are needed
Joensuu Scince Park Ltd to challenge traditional project work in multiple projects. The quality of the human interactions is
taking a vital role in successful projects.
A new environment for project work, mWork and netWork is introduced in this article. netWork
Oasis is an environment, which supports companies in multiple project management by offering
an innovation environment metaphora. It will help people in running and participating in multiple
projects linked to each others. It will offer both the real working spaces with state of the art equip-
ment and the virtual project management tools with professional facilitation services.
netWork Oasis is highlighting the importance of high quality interactions and the guiding principle
for the planning of Oasis has been, how to increase the random meetings of very diverse groups of
people. To fulfil its potential and to be highly successful network Oasis has to become the meeting
Vesa Salminen zone for Art, Science and Business.
Lappeenranta University
Of Technology
Introduction service introductions even more important, chal-
Increased competition and globalization of busi- lenging and specifically more difficult. Companies,
nesses are forcing companies to develop new which are able to manage these challenges on
products faster. Electronic business, which brings project management effectively, are the ones to
customers, vendors, suppliers and employees succeed in dynamic markets in which internal and
together, is influencing the way we operate external service providers will execute the devel-
our companies through the use of information opment activities. The management will be done
technology. Time-to-market has to be reduced, according to value recognition and networking.
efficiency has to be increased, and companies are Clusters of networked organizations are collabo-
outsourcing more and more of their businesses, rating around a specific technology and make use
even Product Development (PD). This leads to a of a common architecture to deliver independent
complex and distributed development process. elements of value that grows with the number of
Furthermore, complexity is increasing due to new participating organizations. New ways to create
generations of products with multiple functions in new ideas and innovative working environments
diverse operating conditions. The implementation are needed to sustain in global competition.
of technologies is becoming more multidisciplinary The enterprises have to:
and the use of external knowledge has increased - meet the ever faster changes in business
rapidly. environment and customer requirements
Business environment is influenced by variety - apply growingly new technologies in their
of economic and dynamic trends according which products and product development
companies have to consolidate on a global scale. - enhance the reuse of internal and external
Companies can at the same time be driven by engineering knowledge
technological innovations, all kind of deregulation, - concentrate on core competences by
customer requirements, and other factors. All these making maximum use of components and
factors and trends add the complexity of product services available on the world market
development and make the fast new product and
50 www.pry.fi
- form virtual enterprises with companies plications. The interaction between the modules
focusing on complementary core compe- is implemented in a “publish” and “subscribe” ap-
tences proach. The major advantage that this framework
- change the engineering culture by replac- offered is the ability for the distributed modules
ing previous competition by new forms of (that contain data and tools) to interact and com-
cooperation. municate over the network.
That means actually need for better working Levitt et all [Levitt, et all, 1999] introduced the
methods to manage multiple amounts of projects concept of activity complexity. It refers to how
and need for networked project environment to many variables must be considered simultane-
support project management. ously in one activity while solving a problem. To
Knowledge intensity has increased dramatically determine activity complexity they added the re-
in products and processes. Knowledge manage- quirement complexity of each of the requirements
ment is becoming a key strategic issue in enter- to which the activity contributes. They argue that
prises. The networking will be another new success activity complexity increases as a linear func-
factor. It will change most of the processes within tion- not an exponential or factorial function- of
enterprise environments. requirement complexity.
It is possible to reduce time to market by Process complexity can be described as activity
boosting the new product introduction process. complexity. The higher the activity complexity is,
That increases efficiency in product development the higher is the need for cognitive information
cycle by using re-using and sharing product/parts processing and the higher is the probability of
knowledge. It is also possible to achieve an optimal making design mistakes. The success in executing
product mix by improving product modularity and activities depends on available potential alterna-
introducing alternative components in company tives and an important element in that is creation
own product platforms and architectures. This and applying knowledge. Collaborative problem
also influences on optional outsourcing readiness, solving and activity flexibility depends on team
which means flexibility in dynamic markets. Many assignment with an appropriate level of goal
companies, from different sectors of industry, are incongruence well as on the level of skill. Com-
changing rapidly towards a networked, virtual plexity of an activity is a measure of the cognitive
business. This kind of business strategy requires problem-solving load that a certain activity will
newly defined responsibilities, processes, models impose on the actors within the organization
and tools. Moreover, it is only possible to imple- [Thomsen et al., 1998]. Activities that contribute
ment through knowledge systematization, knowl- to many different (possibly conflicting) require-
edge reuse, and better access to available and ments will require more cognitive energy than
existing knowledge. In a collaborative, networked simple activities that relate only to one or two
environment, a strategic management frame- requirements. Activity complexity depends also on
work is required as a backbone for cooperation the difficulty of satisfying each individual require-
[Salminen et al., 2000]. This type of framework ment (i.e. requirement complexity). Requirement
is possible to be supported by common network complexity increases as a function of the number
solutions. of potential solution approaches in activities
netWork Oasis is an ambitious attempt to build that contribute to the requirement. To determine
a networked project environment for multiple the activity complexity, we add the requirement
project management. It combines art, science complexities of each of the requirements to which
and business while introducing a new Oasis way the activity contributes.
of working. Professional facilitation services and Organizational complexity can be in the struc-
state of the art equipment will enable a fast and ture of the organization and in the behavior forms
effective problem solving in any phase of the or procedures [Kelly and Allison, 1998]. It can
project. The special emphasis in Oasis is thus in also be in the networked environment and how
generating new ideas, probably even with help organization is networked. Complexity can arise
of serendipity. The diversity of the Oasis working also from the individual behaving in networked
community is in key role when achieving better environment and organization. It is also influenced
than expected results. by the deficit of individuals’ or teams’ capability
when executing tasks they are responsible for. That
Theoretical Background shows us that enterprises should have a compe-
There are many attempts to build community tence strategy showing how competence will be
practices and frameworks to solve multiple project converted into human resource management and
management in virtual environment. knowledge management.
The long-range vision, of research, is that value The Design Roadmap (DR) framework described
networks will grow up as dynamic markets in which by Park and Cutkosky [Park H, Cutkowsky, M, 1999]
valued knowledge is traded by value added service is a process-oriented model of Product Devel-
providers [Salminen V et al., 1997]. The need for opmentPD, which enables computer supported
Global Engineering Networking has gradually been collaboration among distributed development
increased in global business environment. teams. The DR framework is built on a directed
Pahng et al. [1998] proposed an object oriented graph description of the development process,
framework where a large design problem is mod- where each node, in the graph, represents an activ-
eled through the interaction of several distributed ity, and arcs represent a precedence relationship
modules. Each module represents a specific aspect between the activities. These graphs represent
or concern in the development process and can design process templates, which can be reused
encapsulate engineering models and software ap- within their framework.
Stock Web
Wire Press Dryer Converting
Preparation Headbox Surface
Section Section Section Section
Section Treatment
17 % 20 % 30 % 3% 20 % 5% 5%
52 www.pry.fi
The urgent need to increase The urgent need to increase the productiv-
the productivity of knowledge ity of knowledge work is guiding many business
work is guiding many processes. New ways of working has to be imple-
business processes mented. netWork Oasis concept is giving solutions
by offering the physical working spaces with state
of the art equipment in Joensuu Science Park. It
includes also professional facilitation of dynamic
projects, virtual working environments and very
diverse working community with multitalented
people.
References
- Diverse working community – science and [Hisup, 1999] Hisup Park, Mark R. Cutkosky
art strongly present, the Creative Class “Framework for Modeling Dependencies in Collaborative
Engineering Processes,” Research in Engineering Design
touch and feel, international but creative
11 (1999) 2, 84-102.
ambiance
- Very close work, learn and play connec- Horttanainen A, Salminen V, 1999
tion – working spaces closely connected to R&D Support Network, Community for SMEs Internation-
al Conference on Concurrent Engineering, ICE ´99, 15-17
workshop flats with high quality accom-
March, 1999, Paris.
modation services and surrounding Meh-
timäki Brainstorming Campus with great [Kelly and Allison, 1998] Kelly S., Allison M-A
possibilities for outdoor activities. The Complexity Advantage. Business Week Books, Mc-
Graw-Hill 1998.
- Close follow -up for the results – new
methods for measuring the productivity of [Levitt et al, 1999] Levitt R., Thomsen J., Christiansen T.,
knowledge work to be developed Kunz J., Jin Y., Nass C., Simulating Project Work Processes
- Essential new infrastructure will be imple- and Organizations: Towards a Micro-Contingency Theory
of Organizational Design. Management Science, Vol 45,
mented and tested – the main principle
No.11, November 1999, pp.1479-1495.
being users as developers
netWork Oasis – project itself has been a very [Pahng, 1998] Francis Pahng, Seokhoon Bae, David Wallace,
challenging multiproject achievement. During the “A web-based collaborative design modeling environ-
ment”, Proceedings of the Seventh IEEE International
project work we have implemented and tested
Workshops on Enabling Technologies; Infrastructure for
many new ways of thinking and working. The proj- Collaborative Enterprises Conference, Stanford Univer-
ect planning groups consist of around 40 people sity, pp.161-167, 1998.
from different fields of life. Very diverse experience
[Salminen, 1997] Salminen, V, et al.
and expertise is needed to successfully accomplish
“Global Engineering Networking Turning Engineering
the project and managing all that talent has been Knowledge into an Accessible Corporate Asset. Inter-
a tremendous challenge. national Conference on Engineering Design, ICED 97,
In the very beginning there was a lot of excite- Tampere, August 19-21 1997.
ment and a flow of new ideas. That was leading
Salminen, V and Pillai, B [2001]
into the chaos and in some early stages of the Adaptive Learning Scheme for Multi-Component En
project the whole group needed a great amount vironment
of tolerance towards the uncertainty. As a result
A Case study Briefing, published in Proceedings of 32nd ISR,
of that challenging phase in project the values for
Seoul, Korean Republic.
the Oasis were created almost automatically, they
needed just to be written down and they were [Salminen et al., 2000] Salminen, V., Yassine A., and
straightaway accepted by the whole team. The Riitahuhta A., A Strategic Management Framework for
Collaborative Product Development. 4th International
values for productive Oasis way of working are:
Conference on Engineering Design and Automation,
- respect yourself and your team ED&A in Orlando, Florida, July 30-August 2, 2000.
- trust yourself, your intuition and your
team [Thomsen et al., 1998] Thomsen J., Fischer M., Levitt R.,
The Virtual Team Alliance (VTA): An Extended Theory
- love co-discovery
of Coordination in Concurrent Product Development
- encourage honesty and openess Projects. CIFE Working Paper # 44, March 1998, Stanford
- find sustainable solutions on personal level University.
and in your team
- remember human ecology
- look for serendipity
- create wellbeing within yourself and in
your team on physical, mental, emotional
and spiritual level
Conclusions
The cultures of many sectors of industry are
changing rapidly towards networked, virtual busi-
ness. This kind of business strategy demands the
newly defined responsibilities, risk management
and cost/profit sharing system. These are possible
to implement only through knowledge systemati-
sation and through knowledge reuse.
Finnish Software Measurement Association FiSMA is registered association, where the best Finnish
organisations are solving software management problems together.
What you cannot measure, you cannot control.
Join us today and gain all the benefits FiSMA can provide!
More details at www.fisma.fi
www.marsh.fi Ahventie 4 B
02170 ESPOO
Kauppiaskatu 10 C
20100 TURKU
Kirkkokatu 10 A
90100 Oulu
Tel (09) 8677 4200 Tel (02) 2750 770 Tel (08) 5632 400
Fax (09) 8677 4299 Fax (02) 2750 777 Fax (08) 5632 444