Projects, programmes and portfolios

SAHANUN YAKUBU Draft

Project
The term project is used widely and in a variety of contents, and technical vocabulary has grown up to describe different aspects of projects. Below are some definitions of a project. 1. Project according to Cleland and King is a complex effort to achieve a specific objective within a schedule and budget target, which typically cuts across organizational lines, is unique and is usually not repetitive within the organization. 2. Project is a temporary endeavor undertaken to create a unique product or service. Temporary, means that the project has a definite ending point and unique means that the product or service differs in some distinguishing way from all similar products or service (PMBOK GUIDE). 3. Project is a human endeavor which may legitimately be regarded by its stakeholders a project when it encompasses a unique scope of work that is constrained by cost and time, the purpose of which is to create or modify a product or service so as to achieve beneficial change defined by quantitative and qualitative objectives (Davies,2004) 4. A project is any series of activities and task that have a specific object to be completed within certain specifications, have defined start and end dates, have funding limits, consume human and non-human resources and are multifunctional ( i.e. cut across several functional lines) kerzner 2003 From the above definitions it may be concluded that a project has the following characteristics: Temporary; having a start and finish dates. Unique; no two projects are the same Specific objective Risk and uncertainty The cause and means of change The commitment of resources; human, material, and financial Progressively elaborate

Projects vary from small to large, and simple to complex. Examples of a project include: Construction of a dam, road etc. Design of a car Software development

Preparation of breakfast Eradication of polio/poverty reduction

Projects many at times are confused with routine works such as a production line or managing companys operations. These are activities or tasks that run continuously and have no single end point. Thus operations are on-going and repetitive. They have no end date and the same processes are repeated to give the same results. Examples of operations may include the following: Assembly of cars Production of different types of shoes by Clarks

Program
A program is a collection of inter-dependent projects, managed in a coordinated manner that together will provide the desired outcomes (successful project management: Trevor L. Young, Kogan page...) Program is also defined as a collection of change actions (projects and operational activities) purposefully grouped together to realize strategic and tactical benefits (Murray Webster andThiry, 2000) A program is a framework to provide strategic direction to a group of projects so that they can combine to provide a higher order strategic direction or developmental change for an organization. The central idea common to the above definitions is the integration of individual projects to achieve a development objective. Examples of a programme: World food programme; it has forestry, health and education components as projects National poverty reduction programme Primary health community programmeetc

From the strategic management point of view, the main driver for management of series of projectsin different forms such as programme, is the change in the business environment of an organization (OGC, 2002) Programme management helps to organize, manage, accommodate, and control adaptation and changes such that the eventual outcome meets the objectives. Programme management is the utilization of project management and its inherent processes to manage a collection of closely inter dependent projects in a controlled and structured manner to achieve some clearly defined objectives identified as strategic needs. (Trevor).

OGC (2002) defines programme management as the coordinated management of a portfolio of projects that change organisations to achieve benefits that are of strategic importance.

Portfolio
Portfolio is a set of projects that are managed in a coordinated way to deliver benefits that would not be possible if the projects were managed independently (Platje et al. 2001) Again Portfolio is defined as acollection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives (PMBoK 2004)

Differences among project, portfolio, and programme

From the various definitions of project, programme, and portfolio, table 1 below shows a detailed difference amongst them. Table 1: Comparison of projects, programmes, and portfolios AREA Scope PROJECTS Limited scope to meet short term project objective PROGRAMMES Broad scope with flexible boundaries to meet medium- term expected business benefits Change is first seen as an opportunity Measured in financial terms, value creation and benefits delivery Facilitating style management of powerful stakeholders conflict resolution intuitive decision making Placing and interfacing projects; business benefits delivery Strategic decision implementation. PORTFOLIOS Organisational scopes adapted t corporate goals

Change

Success

Measured in terms of objective, time, scope, cost Motivational leadership participative decision making

Monitor environmental changes that affect the corporate strategy Measured in terms of overall portfolio performance Administrative style focused on adding value from allocation of resources. Rational decision making. Resources management, deliver value to corporate stakeholders Align portfolio with corporate strategy.

Leadership

Role

Responsibility

Develop opportunistic emergent strategy

Main task

Coordinate project activity and key deliverables within the project, develop and maintain project team members spirit and contribution to project

Control

Coordinate project resources and key deliverables: market programmes and build business case on a regular basis, develop and maintain project managers team spirit and contribution to programme Appraise project deliverables and resources usage prospectively against expected benefits; report to business stakeholders

Adjust portfolio to changes in organisational environment. Allocate resources to portfolio components, re-asses portfolio on on-going basis; collect and use program and project data to make decisions

Measure aggregate value of portfolio retrospectively against pre-set corporate performance indicators; report to corporate stakeholders

Source:

Management of Projects, Programmes, and Portfolios

The management of projects, programmes and portfolios is not the same as programmes and portfolios. Project management is defined as the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations. It is also defined as the coordination of set of activities related through efficient and effective utilization of resources (both human and non-human) to achieve a specific objective. Moreover, project management is described as the dynamic process of utilizing the appropriate resources of the organisations in a controlled and structure manner, employed to achieve a change clearly defined with specific objectives identified as strategic needs. It is also defined project planning and quality of work and resources that are needed; (Kerzner, 2003). The objectives of project management are as follows: It is a way of effectively identifying the most critical and urgent needs and for applying the best priorities To get people to work effectively together It is a way of efficiently using scarce resources and effectively allocating them where they are most urgently needed. It is a way of obtaining results faster and more efficient

It is a way of increasing the probabilities of completing the project on time and within budget Completing the projects on time within budget will give people more trust and confidence in their government, and will encourage the system to be more responsive to public needs and expectations.

Program Management
Program management is the utilization of project management and its inherent processes to manage a collection of closely inter dependent projects in a controlled and structured manner to achieve some clearly defined objectives identified as strategic needs. (Trevor). OGC (2002) defines program management as the coordinated management of a portfolio of projects that change organizations to achieve benefits that are of strategic importance. Thus Program management helps to organise, manage, accommodate, and control adaptation and changes such that the eventual outcome meets the objectives.

Portfolio Management
Portfolio management like project management and program management have been defined in various ways by different writers. Portfolio management encompasses managing the collection of projects and programs in portfolio (e-book, PMP, 2003). This includes weighing the value of each project and / or potential project against portfolios strategic objectives. Portfolio management ensures that projects are aligned with strategic goals and prioritized appropriately (Erik and Clifford, 2006). Portfolio management is the art and science of applying a set of knowledge, skills, tools, and techniques to a collection of projects to meet or exceed the needs and expectations of an organisations investment strategy (Dye and Penny packer, 1999). The needs or wants of organisations are unlimited but resources are scarce. Therefore projects and programs compete for the limited resources. Accordingly portfolio management provides information to make better decisions. Furthermore Portfolio management refers to the selection and support of project investments or program investments that are guided by the organisations strategic plan and available resources (PMBoK, 2000) The three well-known objectives of portfolio management are as follows: Maximising the value of the portfolio Linking the portfolio to the strategy Balancing the portfolio.

Strategy and strategic management

The word strategy takes its root from the Greekword stratos (army) and agein (to lead). The concept of strategy originated from the war between Athens and Persia in 506BC. The word strategy later expanded to include the art of managerial skills for employing forces to overcome opposition (Mintzbery et al. 1995). Ancient military terminology and early strategic management literature emphasize the relative position of an organisation to its external competitive environment, with emphasis on activities necessary to achieve a desired position (Chaffee, 1985). The nature and process of strategy have made authors classified strategy into schools of thought. An often quoted classification of strategic schools of thought is that provided by Mintzberg et al. (1998) who make the following distinctions: Prescriptive Schools The design school, in which strategy is a deliberate process of conscious thought where responsibility rests with top management. The strategy seeks to match the internal capabilities of a firm with the opportunities proved by its external environment (Andrews, 1987; Chandler, 1962; Selznick, 1957). The planning school, where specialist strategic planners adopt formal, step-by-step techniques to do much the same as the design school (Ansoff, 1965) The positioning school, which is built on the design and planning schools but focuses on strategy content (porter, 1980, 1985)

Descriptive Schools The entrepreneurial school, in which strategy is seen as a visionary process carried out by leaders (Peters and Waterman, 1982). The cognitive school (Bogner and Thomas, 1993, Regner and Huff, 1993), which focuses on the mental and interpretive processes of strategies. The learning school, where strategies emerge as people learn over time (Lindblom, 1959; Nelson and Winter, 1982; Quinn, 1980) as distinct from deliberate strategy (Mintzberg and Watters, 1982) The power school, which sees strategy as a political process (Pettigrew, 1977). The cultural school, which is concerned with the influence of culture on strategic stability (Peters and Waterman, 1982) The environmental school, which sees the environment as the active cause of strategy while the organisation is passive (Hannan and Freeman, 1989).

Synthesis The configuration school, which integrates the view of all the other schools in terms of configuration or in terms of transformations (Miller and Freeson, 1980; Mintzberg, 1983).

DEFINITIONS OF STRATEGY
There are varied definitions of strategy by many writers because of the nature and process of strategy. According to Xenophon (Cummings 1993; 134): strategy is, knowing the business you propose to carry out. This means that strategy involves knowing the purpose of the business, how it interacts with other businesses, its future outlook, and what actions to be taken. Andrews (1971) defined strategy as: The pattern of major objectives, purposes or goals and essential policies or plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be. Ansoff (1987:1965) offers a brief definition; Strategy is a rule for making decisions. Again Ansoff (1987) defines strategy as When one is out of ammunition but keep firing so that the enemy will not know. Ohmae (1983:92) defines strategy as: the way, in which a corporation endeavors to differentiate itself positively from its competitors, using its relative strengths to better satisfy customer needs. Wright et al. (1992) defines strategy as: top managements plan to attain outcomes consistent with the organisations missions and goals. Stacey (2007) refers to strategy as: the generalised articulations of the on-going pattern of activity that people in an organisation are engaged in. There is varied view between early study of strategic management literature and later study. Whilst the early study concentrated on the content of strategy latter study distinguished between the content of the strategy and the process of formulating and implementation (Chaffee, 1985). Content means a description of an organizations position in a market and of the resources, completion as, skills, information and knowledge that the organisation uses to take that position. Process refers to the administrative systems and decision making procedures managers use to formulate and implement strategy content. It also refers to the routines, habits, frames of reference, interpretive schemas, cultures, political activities, learning, activities, norms and values of the organisation (Stacey, 2007). According to Leslie (1995), strategic management is concerned with the managerial decision making process associated with the setting of objectives and the methods used to achieve those objectives in terms of policies, resource allocation administration, operating and control systems and organisational structure. Ackoff (1981, 1994) argues that strategy is a concept that should be seen not just the role of leaders but also the participation of members of an organisation in making strategic choice. And this according to Stacey (2007) is a shift in ideology from command and control to teamwork and democratic

participation. This is consistent with (Hart, 1992 and Chaffees 1998) lines of reasoning. According to Hart, emphasis should be placed on the extent and type of involvement (stakeholders) in strategy process instead of the emerging recognition of an existing imperfect rationality in organisations. Strategic management is therefore the concern of the whole organisation and only the top management.

STRATEGY FORMULATION AND IMPLEMENTATION

Strategic management consists of two components; content and process. According to Aaltonen and Ikavalko (2001), strategic management literature mainly focuses on strategy formulation aspect with less attention given to strategy implementation. Strategy formulation process consist of three interlocking elements; strategic intent, strategic assessment and strategic choice (Oxford University press, 2004) Strategic intent answers the question where are we now? and finally strategic choice answers the question which options will we choose for getting where we want to be from where we are? There is no universal strategy formulation process. It however has to be designed, customized or tailored within the unique context of a particular organisation at a particular time. Strategy implementation is the last stage of strategic management process. It plays a key role in the realization of a strategy. No matter how well crafted a strategy may be, it may not achieve its purpose if it is poorly implemented. To emphasize the importance of strategy implementation, Ansoff et al (1976) put it: the outcome of strategic planning is only a set of plans and intentions. By itself strategic planning produces no actions, no visible charges in the firm. To effect the changes the firm needs appropriated capabilities; trained and motivated managers, strategic information, fluid and responsive systems and structure. According to the oxford University press (2004) strategy implementation process has five critical strands. Two of those change leadership and programme and project management run through the better three, culture, process, and structure to achieve the new organizational capability required. This is illustrated in figure 1.1 below: Figure 1.1 The Strategy implementation process Program and project management Culture Change Change Leadership

Transformed Enterprise

Structural change

Process Change

Source: Projects, programmes and portfolios are linked to strategy process to achieve business benefits or strategic change. Figure 1.2 may be helpful in illustrating how the linkage is done. Figure 1.2 How portfolio, Program and project are linked to strategy VISION

MISSION

OBJECTIVES

STRATEGY

NEW IDEAS

PROJECT/PROGRAM

OPERATIONS

PORTFOLIO

BUSINESS BENEFITS SOURCE: TREVOR YOUNG

To achieve strategic change or business benefits, organisations need to manage different change initiating concurrently. This is done by acquiring teams and resources to achieve specific outcome. This can be achieved through portfolio, programme and project management as discussed in earlier section of this chapter.