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Engineering Management Journal

Vol. 13 No. 4

December 2001

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Engineering Management Journal Vol. 13 No. 4 December 2001 9 IMPACT OF PROJECT MANAGEMENT STANDARDIZA TION
Engineering Management Journal Vol. 13 No. 4 December 2001 9 IMPACT OF PROJECT MANAGEMENT STANDARDIZA TION

IMPACT OF PROJECT MANAGEMENT STANDARDIZATION ON PROJECT EFFECTIVENESS

Dragan Milosevic, Lane Inman, and And Ozbay Portland State University

Lane Inman, and And Ozbay Portland State University Abstract This article explores the impact of project

Abstract This article explores the impact of project management (PM) standardization on project effectiveness. It emerged from the observation of three companies: Intel, Armstrong World Industries, and Oregon Anesthesiology Group. Respectively, each

has successfully focused on schedule-driven, cost-driven, and cost-

quality-driven project effectiveness.

effectiveness, what PM strategies could these and other companies use? To answer this question, we surveyed 239 project managers and team members from various industries and organizations in the U.S. and Canada. From the responses, we identified cross- industry benchmarks that promote higher project effectiveness based on PM standardization. The benchmarks show that organizations with higher levels of certain types of PM standardization gain higher project effectiveness. Standardization—including PM culture, structure, and systems— does not automatically lead to higher project effectiveness. Also, in pursuing PM standardization, organizations need to differentiate depending on their situation.

To increase project

The Problem Definition Delivering projects, moving them quickly and efficiently from

inception to deployment per a predetermined schedule, cost, and quality is vitally important in the ever-changing business arena. The speed of project delivery is fundamentally significant to

competitiveness.

computer chips faster and faster is essential to their prosperity. Effective chip development projects produce ever-shrinking new

chip development cycle times.

environment that rewards short cycle times, Hewlett-Packard, Ingersoll-Rand, IBM, and Honeywell succeed as well. Armstrong World Industries (AWI) pursues project goals differently than Intel. AWI strives to become a leader in cost- driven project effectiveness. As a plant manager put it, “Technological change is not a big factor in our industry; rather, it is the ability to compete on cost. Part of that effort has been the process for managing our cost cutting and manufacturing process development projects.” Other manufacturing firms have made the same discovery. They handle projects by concentrating on cost-driven project effectiveness. While Intel and AWI’s project effectiveness is schedule and cost-driven respectively, Oregon Anesthesiology Group (OAG) relies on quality-driven project effectiveness. Their aim is to accomplish quality and cost goals. An OAG vice president says, “We standardized our PM protocols in order to bring our projects within quality and cost goals … or our customers will take their business somewhere else.” The philosophy of using quality as a focus of project effectiveness

For example, Intel’s ability to roll out new

Faced with a competitive

Refereed research manuscript. Accepted by David Lee, associate editor.

spread rapidly throughout industries (Evans and Lindsay, 1999). Schedule-driven, cost-driven, and quality-driven project

The ability to deliver

projects rates as much importance as traditional sources of competitive advantage, such as economies of scale or financial capital. Intel, AWI, and OAG strategize the exploitation of their project effectiveness. Each company’s perspective of how project effectiveness should be driven differs: schedule-driven (Intel), cost-driven (AWI), and cost-quality driven (OAG). The question then, is what PM strategies could be used by organizations to enhance schedule-driven, cost-driven, and quality-driven project effectiveness? We began with a literature search to identify a set of PM strategies frequently deployed in industry. We termed this set standardized project management (SPM). SPM should be able to enhance these three types of project effectiveness. The prescriptive and descriptive literature we reviewed did not provide adequate evidence that SPM may increase project effectiveness. Hoping to contribute evidence, we embarked on a study to examine how SPM could increase project effectiveness. With this mind, we define SPM, describe our hypotheses, explain our methodology, and discuss the results and implications for project managers.

effectiveness are competitive factors.

About the Authors Dragan Milosevic is an associate professor of engineering

and technology management at Portland State University and

a vice-president

RapidInnovation. He received B.Sc. and Ph.D. degrees in engineering and an M.B.A. from the University of Belgrade. His research interests center on management of technology and he is currently exploring issues associated with value creation through project management standardization. Lane Inman is the best practices principal consultant with VERITAS Software Enterprise Consulting Services. He holds a B.S. in mechanical engineering from Oregon State University and an M.S. in engineering management from

Portland State University, where he is currently working on

his Ph.D. thesis. His research work is in the area of technology

forecasting using state-of-the art surfaces. And Ozbay received his B.Sc. in industrial engineering and M.S. in systems and control engineering at Bogazici University. He worked in industry for five years as a Web applications developer. He is currently studying for his Ph.D. at Portland State University. His research interests focus on e-business technology management. Contact: Dragan Milosevic, PO Box 751, Portland, OR 97207; phone: 503-725-5465; dragan@etm.pdx.edu

for

of

technology

management

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Engineering Management Journal

Vol. 13 No. 4

December 2001

Standardized Project Management Review of Literature. SPM is not a stranger to the PM community. In a recent report, the Fortune 500 Project Management Benchmarking Forum asserts that 85% of their members use standardized approaches and procedures (Toney and Powers, 1997). Practitioners and researchers refer to SPM in a variety of ways. We took the term standardized PM approaches and procedures and shortened it to SPM. The term came from the Fortune 500 PM Benchmarking Forum, and we

heard project managers and companies use SPM as a standard term. At this time, neither SPM nor any other terms comes close

to being adopted as an industry standard. SPM refers to a process of managing projects composed of

standardized practices. The degree of absence in variation of

implementing practices defines standardization.

the lower the variation, the higher standardization; the more

varied the practices, the less standardized they are. SPM creates

a predictable process, whose implementation prevents PM

practices from differing project to project, project manager to

project manager. As a result, the process becomes repeatable regardless of changes in customer expectations and competitive landscape. Our literature review helped to identify seven components

of SPM: process, organization, information technology, methods,

metrics, culture, and leadership (Toney and Powers, 1997; Kerzner, 1998). We emphasize that all these components are executed via specific PM practices.

Accordingly,

The first component, process, can be defined as a sequence

of activities intended to create added value for project customers.

According to Kerzner (2000), the PM practices in process include

the implementation of project life-cycle stages, PM activities, and milestones. Sobek et al. (1998) claim that standard processes save project people the trouble of reinventing a new process for

each individual project.

component, is defined as the ability to integrate all company projects and facilitate their PM (Kerzner, 2000). This is especially important when managing multiple projects within the organization. Integrating projects and aligning them with the business strategy is the bottom-line focus (Dinsmore, 1999). The third component of SPM is information technology. This key piece of the PM information system gathers, integrates, and disseminates the outputs of the PM process (PMBOK ® Guide, 1996). Making the process accessible to project participants, it

enables support of all aspects of the project from initiation through closure. Methods, the fourth component of SPM, include procedures and techniques to accomplish the PM task. The PMBOK ® Guide uses the term “tools and techniques” instead of methods. Sobek

et al. refer to methods as “standard work procedures.” Generally,

project managers employ methods throughout PM processes to convert inputs into outputs, such as historic project information into project plan (PMBOK ® Guide, 1996). The fifth component of SPM, metrics, has historically been known as “performance measurement” (PMBOK ® Guide, 1996). Metrics help with understanding how well the project strategy works, and are based on a set of standard performance measurements, the project scorecard. PM organizations strive to design an effective organizational culture, the sixth component of SPM, where project personnel

Project organization, the second

know their role and understand expected behaviors (Kerzner, 1998). Personnel need to identify with the PM organization,

investing both materially and emotionally in their culture. Intimately linked with cultural style is leadership style. Today specific leadership competencies tend to define leadership style

Sobek et al. (1998) call them standard skills,

arguing that organizations give each person in a project the same

set of skills to accomplish their tasks.

that project managers need interpersonal, business, and process competencies. We divided the seven components of SPM into three areas, building on the work of other researchers (Schwartz and Davis, 1981). First is the project structure area. This encompasses process, project organization, and information technology that reflect the PM process structure, organization structure, and information technology structure, respectively. They provide the organization’s operational foundation for projects. The second area includes PM methods and metrics, often referred to as PM systems. This represents the infrastructure of an organization’s PM. The third area, often the least visible, includes soft components such as PM culture and leadership. Culture is used to describe both value components. To standardize the three areas, we will refer to them as structural, systemic, and cultural standardization. Exhibit 1 shows references of SPM components and areas using thePMBOK ® Guide, an established PM standard. Now that we have defined the basics of SPM, we can go to the next step: asking practicing project people how they use structural, systemic, and cultural standardization to increase schedule-driven, cost-driven, and cost-quality-driven project effectiveness. Then, we will identify from their responses across- the-industry benchmarks that project managers may consider in their never-ending pursuit of higher project goals. For this purpose, we surveyed 239 project managers and team members from various industries and organizations in the U.S. and Canada (sample description shown in Exhibit 1).

(Frame, 1999).

Frame (1999) suggests

Hypotheses. Organizations that actively build their PM initiatives around the following three domains are viewed as SPM organizations: (1) structural standardization including PM process, organization, and information technology (Toney and Powers, 1997); (2) systemic standardization whose elements are PM methods and metrics (Ibbs and Kwak, 1995); (3) cultural standardization based on PM culture and leadership (Kerzner, 1998). These organizations have traveled further along the SPM road and therefore undergo a greater perceived outcome on various project effectiveness measures. Researchers and practitioners report that SPM efforts in organizations bring about improvements in accomplishing project goals. If pursuing the underlying philosophy, strategies, and practices of SPM can be viewed as improving the accomplishment of project goals, we expect a successful SPM organization to be characterized by a significantly

higher level of project effectiveness results.

hypotheses:

Hypothesis on schedule-driven effectiveness: The implementation of SPM in the organization will improve schedule- driven effectiveness. Hypothesis on cost-driven effectiveness: The implementation of SPM in the organization will improve cost-driven effectiveness. Hypothesis on quality-driven effectiveness: The

Thus, the three

Engineering Management Journal

Vol. 13 No. 4

December 2001

Exhibit 1. The references of SPM areas and components to A Guide to The Project Management Body of

Knowledge PMBOK Æ Guide

(

), 1996 edition

Area of SPM

Component of SPM

Æ

PMBOK

Guide

Structural

Process

Project phases and the project life cycle: section I.2.1 PM processes: section I.3 PM processes in PM knowledge areas: sections II.4-12 Organizational structure: section I.2.3. Organizational planning: sections II.4.1 and II.9.1 PM information system: section II.4.1.2.3 PM software: section II.6.4.2.5 and II.7.4.2.4

Organization

Information technology

Systemic

Methods

Organizational systems: section I.2.3.1 Tools and techniques: sections II.4-12 Performance measurement: section II.10.3.2

Metrics

Cultural

Organizational culture

Leadership

Organizational culture and styles: section: I.2.3.2 Cultural influences: section I.2.5.3 Key general management skills: section I.2.4 Leading: section I.2.4.1

11

implementation of SPM in the organization will improve quality- driven effectiveness.

Research Method Questionnaire Development.

to collect data for testing our hypotheses was conducted in two phases. First, we gathered data by conducting informal interviews with project managers from 10 organizations, including high tech, traditional manufacturing, nuclear, software, and the health industry. From this group, we selected Intel, AWI, and OAG to introduce the concept of different types of project effectiveness. Their selection provided a balance of different industries, company sizes, and nature of projects. Through analysis of data from the 10 organizations, we identified a set of concepts and themes that captured the range of issues represented in the qualitative data. Next, we grouped these concepts and themes into the three areas of structural, systemic, and cultural standardization. From this set of concepts and the qualitative data from which they came, we defined an initial pool of questionnaire items. In the second stage, this set of questions was first circulated to two academics and three practitioners with previous experience in PM, then to five PM practitioners, with a goal of increasing the clarity of the questions. The final questionnaire consisted of two pages of questions and a one-page cover letter. Questions covered issues surrounding PM process, organization, information technology, methods, metrics, culture, leadership, accomplishment of project goals, and background information of the respondents. Questions classifying companies by type of project effectiveness—schedule-driven, cost-driven, and quality-driven —were not included. Questions were directed toward discovering how the best performers shape their SPM to improve certain areas of goal accomplishment—for example, schedule-driven accomplishment. The logic is to benchmark against the best-in- class companies in the whole sample, regardless of industry or

The questionnaire development

project effectiveness type. Benchmarking has been very successful in practice and applied by many companies (Evans and Lindsay, 1999). This carries the risk of benchmarking against companies

that do not have the same type of project effectiveness. We decided the short questionnaire was more viable than a longer questionnaire that would include questions about the type of project effectiveness, heeding advice from a researcher warning that “… research may have to be broken into smaller increments” (Griffin, 1997). Using the questionnaire over several months, we collected data from the project participants who attended various PM

workshops.

statistical tests performed, multiple interviews—some in person,

some by telephone—were conducted. This yielded insights into practices, substantiating our findings.

Once the quantitative data were gathered and

Dependent Variables. Three criteria were included in the

questionnaire measuring the effectiveness on the project level. The degree that the projects accomplished their schedule, cost, and quality goals allows the firm to assess how well they do on schedule-driven effectiveness, cost-driven effectiveness, and quality-driven effectiveness. Schedule, quality, and cost goals

In our study, we found that the

are not mutually exclusive.

correlation coefficient of schedule and cost goals was .414, while

the coefficient for schedule and quality goals was .408. This indicates a solid relationship between the goals. Individual types of project effectiveness are measured by the

degree that the respondent agrees the project schedule, cost, and quality goals were met on a 5-point Likert scale (5 being the

An example of a question was,

highest, 1 being the lowest).

“Please indicate to what extent projects meet the following goals.”

Independent Variables.

extent of standardization for PM process, organization, information technology, methods, metrics, culture, and

The questionnaire asked about the

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Engineering Management Journal

Exhibit 2. Descriptive statistics of the sample

Industry participation

Project participants

Firm

Vol. 13 No. 4

December 2001

Project

Industry

# of business units

2

Avg. PM

# of

 

Size

% of

Size

% of

experience

participants

 

bus. units

projects

 

in years

(avg.)

   

Comp. / SW Electronics Design Construction Consulting Utilities Machinery / Metals Health care Other

73

4.3

26

> $50M

68

> $50M $21M - $50M $5M - $20M

9

51

4.0

52

$31M - $50M

7

5

42

4.5

28

$11M - $30M

8

12

34

>5.0

69

$

5M - $10M

6

$500K - $4.9M < 500K

33

34

2.9

21

< $5M

11

41

30

>5.0

72

   

14

>5.0

45

9

>5.0

46

50

4.5

27

leadership. The numerical responses for the first three questions were added, averaged, and labeled structural standardization. We also developed numerical responses for systemic standardization based on numerical responses for methods and metrics, and cultural standardization based on numerical responses for culture and leadership. Numerical responses about the extent of standardization were captured on a 5-point Likert scale (5 being the highest, 1 being the lowest). An example of a question is “To what extent is the project management process shared and consistent?”

Demographic Variables. The questionnaire also gathered demographic information. Respondents indicated their role as project managers or team members, and their experience level in PM. Also, they indicated the type of their project (e.g., product development, construction, etc.) industry participation, firm size and project size.

Sample.

sample, with experienced respondents, whose business units and

projects vary in size. Most of the study respondents attended PM workshops. Initially, we received 295 responses from project participants (project directors, project managers and team

members).

checked one criterion: two years of project work experience. The final qualifying sample included 239 project participants. They represented business units of firms from different industries— electronics, computer and software, construction, utilities, etc. Although some firms were in more than one industry, their projects fall in the area of product development, information systems, facilities management, design and construction among others.

Examining our hypotheses required a cross-industry

To ensure they had sufficient PM experience, we

Methods. As suggested by Kerlinger and applied by many researchers, although most Likert scales are ordinal, we can assume equality of intervals. Although risks exist when using parametric techniques to examine relationships between variables measured with ordinal scales, the risks are small. For testing the three hypotheses, we used the same statistical plan—two methods of bivariate data analysis, and one multivariate method. The purpose was to verify relationships between structural, systemic, and cultural standardization (independent variables)

and schedule-driven, cost-driven, and quality-driven effectiveness (dependent variables). The bivariate methods included:

Pearson product-moment correlation—measures the simple correlation between each independent and dependent variable; for example, between structural standardization and schedule-driven effectiveness. Usually, magnitudes less than .3, when statistically significant, reflect a modest relationship (Cooper and Emory, 1995).

t test—assesses the significant difference in means between the best group and the worst group of cases in terms of goal effectiveness—schedule-driven effectiveness, for example. First, for each component of project effectiveness (dependent variable)—that is, schedule, cost, and quality effectiveness— we divided our data points into four groups based on degree of effectiveness—the worst (scored 1 and 2 on Likert scale), lower (3), upper (4), and best (5). This created unequal groups, acceptable for this procedure (Cooper and Kleinschmidt, 1994). For each group we calculated the mean value of structural, systemic, and cultural standardization (independent variables). Judgment presumes that the best group with highest project effectiveness—schedule-driven, for example—will have the highest levels of structural, systemic, and cultural standardization. Should the judgment hold, t test will indicate significant differences between the best group and the worst group for each type of standardization. This proves our hypotheses that the higher the levels of standardization, the

higher the project effectiveness.

differences do not exist among the best and worst groups, increasing PM standardization may not impact project effectiveness, indicating that our hypotheses are not supported. The meaningfulness of the statistical differences between the best and worst groups becomes obvious—statistical differences, indicate value in increasing PM standardization because it increases project effectiveness. This finding needs to be viewed in light of our sample, an across-the-industry one, meaning that the finding can be generalized across industries in our sample. Stepwise multiple regression analysis was used as the only multivariate technique to validate the previous bivariate analyses. For each criterion (i.e., dependent variable—schedule-driven, cost-driven, and quality-driven effectiveness), a regression

In contrast, if significant

Engineering Management Journal

Vol. 13 No. 4

December 2001

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Exhibit 3. Impact of PM standardization on project effectiveness measured by correlation coefficient (p-value)

PM

Effectiveness measure

 

Standardization

Area

Schedule-driven

Cost-driven

Quality-driven

Structural

Systemic

.308

.288

-4

(<10 )

-4

(<10 )

.190

.420

(.01)

-7

(10 )

.203

.328

(.025)

-4

(<10 )

Cultural

.256

(.001)

.110 (.109)

.266

(.001)

analysis was run with predictors (independent variables) including structural, systemic, and cultural standardization. Since Pearson product-moment correlation indicated correlations between independent variables, several regression runs were performed, eliminating the correlations’ effects.

Results Schedule-Driven Effectiveness. Hypothesis on schedule-driven effectiveness: The implementation of SPM in the organization will improve schedule-driven effectiveness. This hypothesis is supported. We performed the two bivariate and one multivariate tests. As shown in column of Exhibit 3, correlation coefficients show a significant relationship; and t test confirmed there are significant differences in PM standardization between the best and worst groups (p-values ranged from .001 to <10 -4 ). Of the three areas of PM standardization considered to have an impact on schedule-driven accomplishment, all three show the impact, in rank order of structural, systemic, and cultural standardization (as the Pearson correlation coefficients of Exhibit 3 show). There is significant evidence that the higher structural, systemic, and cultural standardization, the higher the accomplishment of schedule goals. Still, what we found shows a relatively modest impact of these standardizations on schedule effectiveness. At .308, .288 and .256, correlation coefficients are low. Stepwise multiple regression validated the previous bivariate analyses (see Exhibit 4, column two). All three standardizations entered the equation. All three showed statistical significance at .005, .009 and .016, respectively. The equation also proved strong significance (p-value <10 -5 ). The explained variance (adjusted R 2 ) was .139. This modest explained variance indicates there are other important factors beyond PM standardization, which impact schedule-driven effectiveness. Our hypothesis on schedule-driven effectiveness is supported. The point appears to be that PM standardization pays off. Standardized PM structure, systems, and culture prove integral to delivering projects on time. Attempts to “speed up the schedule by letting each project run ad-hoc,” may have the opposite effect. It may increase the risk of failure, yet not speed up the schedule. By investing in PM standardization, companies can set ambitious schedule goals and accomplish them. Look at product development projects. Although often nothing matters as much as the capability to deliver in a speedy manner, the majority of these projects exhibit low attainment of their schedule goals (Griffin, 1997). The application of the standard process may help many of these projects increase their timeliness and speed. Look at metrics, a component of project systems. Our finding that higher standardization means higher schedule-effectiveness implies that designing standard metrics and applying them

properly may lead to increased ability to meet schedule goals. The deployment of standard metrics can help companies accelerate projects. In summary, an avenue toward faster project cycle times lies in standardizing project structure, systems, and culture.

Cost-Driven Effectiveness. The hypothesis on cost-driven effectiveness theorized that the implementation of SPM in the organization would improve cost-driven effectiveness. This hypothesis is only partially supported. As shown in Exhibit 3

(third column), the two bivariate methods yielded pretty clear results. Systemic standardization was found to have a strong impact, as indicated by a high value of Pearson correlation

coefficient.

(Exhibit 4, column three) confirm this. Structural standardization

may have a very modest impact as indicated by .19 value of Pearson correlation coefficient, although t-test was relatively strong (p-value = .008). But that impact was not enough to enter a regression equation. Cultural standardization does not have a

significant impact by any of the three tests—Pearson coefficient, t test, and multiple regression. This shows significant evidence that the higher the systemic standardization, the higher the accomplishment of cost goals. The regression equation was also

strongly significant (p-value <10 -5 ).

variance (adjusted R 2 ) was .169, which indicates that there are other factors beyond systemic standardization that impact cost- driven effectiveness. These findings suggest that the increase of structural and cultural standardization may not improve the cost-driven project effectiveness significantly. This runs contrary to a basic premise of standardization, especially structural standardization and the process component. The premise is that creating a repeatable, streamlined process could lead to lower costs. Our finding indicates that may not be the case in projects run by companies pursuing cost leadership. It implies that building the standard process does not necessarily help a company elevate accomplishment of project cost goals. We also learned that cultural standardization might not help increase attainment of project cost goals. This may seem strange to companies believing that standardizing values and beliefs of employees reduces variation in their behavior. In contrast, the finding that increasing standardization of project systems may result in enhancement of cost goals accomplishment does not seem strange. As important as these findings are for practitioners, they need further clarification. Lacking information, we turned to practicing project managers. Practicing project managers that we interviewed expressed concern that structural and cultural standardization may lead to

t test (p value <10 -5 ) and multivariate regression

The modest explained

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Engineering Management Journal

Vol. 13 No. 4

December 2001

Exhibit 4. Multiple regression analyses of project effectiveness versus project management standardization measured by beta coefficient (p-value)

PM

Effectiveness measure

 

Standardization

 

Area

Schedule-driven

Cost-driven

 

Quality-driven

Structural

Systemic

.193

.174

(.005)

(.009)

.401

-7

(10 )

.278

-4

(<10 )

Cultural

.155

(.016)

.195

(.004)

R

2

adj

.139

-5

(<10 )

.169

(<10 )

-6

.143

-6

(<10 )

higher administrative and bureaucratic expenses. Standardization

structural standardization show modest impact (correlation

Second, the

may adversely impact project cost.

Specifically, constructing

coefficients below .3), systemic standardization has a solid impact

standard project process, organization, and information technology, all components of structural standardization, may come with a high price tag. Training employees to instill and enforce standard values and beliefs, the cornerstone of

(correlation coefficient is .328). To validate bivariate analyses, we ran stepwise multiple regression (see Exhibit 4, column four). First, systemic and

organizational culture, is a resource-consuming practice.

cultural standardizations entered the equation. equation was strongly significant (p-value <10 -5 ).

Third, the

Therefore, standardization may not induce cost-driven effectiveness. Practicing project managers pointed out a possible reason for our finding may be within the nature of our sample. In high- tech industries, schedule goals are more important than cost goals because the brevity of the technological life cycle. Our respondents may not have sufficient knowledge to evaluate all aspects of cost-driven project effectiveness. If this is accurate, it shows the risk in taking an approach like ours—across industry benchmarking. Systemic standardization may have significant impact on the cost-driven project effectiveness. The establishment of regular points of performance evaluation, an application of a metrics component of project systems, and predetermined methods of managing the projects increase the predictability of cost. This may lead to the rise of the cost-driven project effectiveness. For companies managing projects with a focus on cost effectiveness, the significance of our findings offers practical advice: concentrate

explained variance (adjusted R 2 ) of .143 is obviously modest, suggesting there are important factors beyond systemic and cultural standardization that influence quality-driven effectiveness. Note that structural standardization showed a low correlation coefficient (p-value = .025). When the p-value was <10 -5 , structural standardization did not make the regression equation (see Exhibit 4). We interpret this as marginal or no impact of structural standardization on quality effectiveness. This is unexpected. We would expect structural standardization to have significant impact on quality effectiveness, especially since consistent process—its primary component—has been identified by experts as a central piece of quality management (Evans and Lindsay, 1999). Why did we get this result? We enlisted our respondents to help answer this question. The prevailing view was that process impacts quality effectiveness that gets overwhelmed by the lack of impact of project organization and information technology—the other two components of structural

standardization.

To verify this, we broke down structural

on standardizing PM systems—methods and metrics. It may be one way to adapt your PM and increase cost accomplishment.

Quality-Driven Effectiveness. The hypothesis on quality-driven effectiveness postulated that the implementation of SPM in the organization would improve quality-driven effectiveness. This hypothesis is partially supported. As with the other hypotheses, we performed the two bivariate and one multivariate tests on quality-driven effectiveness and obtained similar results (see Exhibit 3, column four). The correlation coefficients show a significant relationship between quality effectiveness and each of the three standardizations. t test results confirm significant differences between the best and worst group for all three areas of standardization (p-values ranged from .025 to <10 -4 ). We conclude that all three areas of PM standardization theorized to impact quality-driven effectiveness really have impact, in rank order of systemic, cultural, and structural standardization (see Exhibit 3, column four). Significant evidence exists that the higher the systemic, cultural, and structural standardization, the higher the accomplishment of quality goals. While cultural and

standardization into its three components and ran a battery of statistical tests. We found that PM process has significant impact on quality effectiveness, unlike project organization and information technology, which did not. Still, this did not change our conclusion that structural standardization does not impact quality effectiveness significantly. What may be at the root of our finding when testing the hypothesis on quality-driven effectiveness, is what drives quality improvement—reducing variation. Although Deming taught significant lessons about this, we have known for a long time that by reducing variation, projects can expect to save time and money, and increase quality and reliability. That is the issue we looked at—increasing standardization, or reducing variation, of the systems and culture in projects improves quality-driven effectiveness. Consider methods—an example of project systems. Our finding means that deployment of standard methods can enhance the capability to attain one’s quality goals. Software development projects provide a good example. The use of standard methods, such as template schedules and checklists,

Engineering Management Journal

Vol. 13 No. 4

December 2001

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Exhibit 5. Certain types of project management standardization support certain types of project effectiveness

May lead to higher

Schedule-driven project effectiveness

Cost-driven project effectiveness

Quality-driven project effectiveness

Higher

Project structure

3

standardization

Project systems

3

3

3

of

Project culture

3

3

Higher standardization of project systems may lead to higher cost-driven effectiveness

helped many of these projects increase their quality level (Lientz and Rea, 1999).

Managerial Implications and Conclusions This article considers how SPM impacts project effectiveness. We have discerned it in observing three companies: Intel, AWI, and OAG. They have become successful in projects implementation by having a distinct focus on schedule-driven, cost-driven, and cost-quality-driven project effectiveness, respectively. To further enhance their project effectiveness, what PM strategies could these and others with the same choice of project effectiveness use? To find answers, we turned to the literature search that led us to SPM, the focus of our article. Then, we asked practicing project people, across various industries, how they use SPM. From them we learned the results shown in Exhibit 5.

If You Pursue Schedule-Driven Project Effectiveness,

Standardize Your PM Structure, Systems, and Culture. This key message emerges from the research. As illustrated in Exhibit

5, those valuing focus on fast-track projects may consider reaching

cultural

standardization. Here are some practices we found in our sample:

In the standardized project process, standard process language or vocabulary plays a significant role and tends to increase the clarity and velocity of communication in projects’ time-to-deployment race.

The overwhelming emphasis lies in time-scheduling templates for repeated use.

A set of standard performance metrics serves regular use, including: time-to-market, time-to-profit, and time-to- achievement of the business plan. Although many firms espouse these practices, the secret lies in the full alignment of the practices with the firm’s PM strategy and culture.

the

next

level

via

structural,

systemic,

and

A Strong Systemic Standardization of PM Can Help in the

Pursuit of Cost-Driven Project Effectiveness. For project managers keen on cost-effectiveness, we recommend systemic standardization (see Exhibit 5). This may help their goals of delivering on-target budgets. Here are two practices identified in our study that illustrate our recommendation:

Project managers use template work breakdown structures, usually with 10–15 work packages, making work manageable but avoiding the higher cost of tracking too many

work packages. Once a week, project managers issue a one- page, standardized, summary progress report. It focuses on the variance between the actual and planned cost and schedule, causes of the variance, the future trend based on the current performance, and remedial actions to regain control.

When Practicing Quality Orientation in Project Effectiveness. Go for Systemic and Cultural Standardization. (See Exhibit 5.) Pursuit of quality initially may require investments, but consistency over time reduces the total cost. The justification that quality brings less rework and less rejected materials makes it cheaper. Consequently, building systemic and cultural standardization into project management may increase project quality and cost goals. Consider the practices we found in our sample:

In between project stages are stage gate reviews, where project deliverables are rigorously scanned to ensure that quality and cost expenditures coincide with corporate purpose.

Frequent use of SPM methods precede gate reviews. In one example, the project managers develop a quality plan, a standardized tool designed to proactively manage quality.

Before and throughout the project, the project team closely reviews mechanisms to implement this project better (quality) and cheaper (cost) than the previous ones.

PM Standardization Can Vary Widely. In Exhibit 5 both cost- driven and schedule-driven effectiveness include systemic

standardization. The systemic standardization varies with the

type of the targeted project effectiveness.

pursues cost-driven effectiveness, the methods and metrics selected will help manage cost. Those seeking schedule-driven effectiveness install systems around schedule. Systemic standardization in two companies, one with a schedule-driven

If an organization

effectiveness focus, the other focusing on cost-driven effectiveness,

will be customized differently.

standardization, structural or cultural, recommended to help improve project effectiveness.

The same holds true of other

Words of Warning: Do Not Overemphasize PM Standardization. Increasing project effectiveness has a natural appeal in our highly competitive world. Given the dismal project performance in some industries, it also appeals to senior managers. The following offers good news:

This study’s findings corroborate previously published

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case studies and conceptual papers (Toney and Powers, 1997; Ibbs and Kwak, 1995; Kerzner, 1998). This confirms that the drive toward standardization of project structure, systems, and culture may enhance project effectiveness. Look at these findings as possible “traffic” signs, signaling which element of standardization carries potential for increasing specific types of projects’ effectiveness. Several words of caution:

SPM efforts may offer significant project improvements. This does not mean that designing PM systems with an SPM focus will increase any type of project effectiveness. Remember the modest correlation coefficients in our hypotheses testing, indicating that improving project effectiveness is built on many foundations, some of which are structural, systemic, and cultural standardization. Other important factors, such as market position, may have an effect and project effectiveness may not improve.

We recommend that a business strategist look at our findings as benchmarks, coming from cross-industry research. Pursuing the benchmarks will inevitably sow the seeds of risk, for they are generic in nature and not tailored to any specific type of project effectiveness. Therefore, use the benchmarks to design and shape an SPM effort to your environment and the project effectiveness you seek. There is value in PM standardization. We cannot claim that standardization ensures direct improvement in project effectiveness. The research we described provided evidence that organizations with higher levels of standardization have higher project effectiveness. To get more from PM, structural, systemic, and cultural standardization may succeed if tailored to organizational specifics and culture.

Limitations and Future Research Issues There are limitations to how we arrived at our findings and to their value. Our study respondents attended PM workshops. They typically know more about PM than an average project participant. Our sample of respondents may not represent the population of project participants. Also limiting is that we looked at a narrow set of factors, including standardization of the structure, systems, and culture. Other factors may have a stronger impact on project effectiveness. While more research in the area of PM standardization is necessary to corroborate our findings, some emerging issues deserve a close look. First some of our respondents believe PM standardization produces positive returns only to a certain point,

after which it produces negative returns, needs research. Second, research is needed on how an organization’s competitive strategy influences the architecture of its PM standardization. Third, more work is needed to learn what type of SPM efforts best fit particular types of organizations, conditions, and situations.

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