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Aligning Project Success with Organizational Strategy within a Project-Based Organization

SECOND EDITION

By Richard John Cound PMP, PM.PMSA
Canada, South Africa, USA

And

Prof. Jan Meyer (Pr.M)
South Africa


Abstract

Whereas organizations that are not project based make their income mainly through production, project-based organizations derive their income from projects. In companies where the primary business consists of performing projects for clients, it is projects that generate both revenue and profits (Rietiker, 2013). Moreover, for a project-based organization, strategic success equates primarily with financial success derived from project execution, not from the project deliverable.

This obviously means that finding reliable ways of measuring project success is a key consideration in project-based organizations. However, if all we are measuring is the traditional variables of time, cost, and scope, then the assessment of project management we come up with will address only tactical (operational) value – not strategic value. (For an elaboration of this truth, see Jugdev and Muller, 2005.)

For a project-based organization, project execution is an essential area that differentiates it from its direct competitors. The problem faced by most project-based organizations is that they do not have a consolidated project performance management system in place; and thus rely mainly on financial KPI’s to determine project success.

The improvement of performance in project management has to be supported by goals and objectives that are aligned with the strategic intent of the organization. Supportive of the organization’s strategy, therefore, is the development of a Project Scorecard that considers factors in addition to financial KPI’s, including intangible ones.

This paper discusses research, undertaken within a project-based organization, which was used to develop a Project Scorecard based on the Balanced Scorecard methodology developed by Robert Kaplan and David Norton.

Defining project-based organizational project success

Achieving the parameters of the triple constraint of schedule (‘time’), cost, and scope is the accepted classical definition of project success (Kerzner, 2013). For organizations that earn their income mainly through production that is not project based, this is appropriate and adequate. For project-based organizations that make their income by executing projects on behalf of clients, however, project and organizational success equates to financial success (i.e. maximizing the profit and invoiced amounts).

This concept of project success is entirely contradictory to the accepted definition in place until recently. From day one, project managers are taught that the triple constraint and controlling schedule, cost, and scope represent an ideal objective for every project. Thus the need to distinguish between project success for non-project-based organizations and project success for project-based organizations.

At this point, we need to ask: if project success is not based on the triple constraint, then what are the definitions of project success for a project-based organization where financial success is the objective?

More…

To read entire paper (click here)

Editor’s note: Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English. Original publication acknowledged; authors retain copyright. This paper was originally presented at the 9th annual University of Texas at Dallas Project Management Symposium in Richardson, Texas, USA in August 2015. It is republished here with the permission of the authors and conference organizers.

 


 

About the Authors

 

pmwj39-Oct2015-Cound-COUND PHOTORichard John Cound

Canada, South Africa, USA

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Richard Cound, PMP, PM.PMSA is a Program Manager with 40 years’ experience in Electrical & Instrumentation systems and solutions. He operates at a senior level responsible for the project management of large scale multi-million dollar multiple business unit industrial automation projects. The role involves coordination and guidance to other project managers, directing the work of business units, including subcontracted firms. He works with internal, external clients and stakeholders in the project coordination of complex and challenging projects.

Richard Cound’s international project implementation experience lies within multiple industries including Petrochemical, Automotive, F&B, FMCG, Water, Mining, Mineral Processing, Sugar Refining, Metals, Glass, Power, and Pulp & Paper. He holds a Project Management Professional (PMP) certification and is a Professional Member of Project Management South Africa (PMSA). He also has tertiary qualifications in Electrical Engineering and Computer Science and has recently completed a Master’s Degree in Business Administration. Richard can be contacted at [email protected]

 

pmwj39-Oct2015-Cound-MEYER PHOTOProf Jan Meyer

Potchefstroom, South Africa

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Jan Meyer is an Associate Professor and the acting Director of the Graduate School of Business and Government Leadership, North West University, South Africa. His background includes 21 years of service in the South African Air Force, 7 years as a consultant at Xcel IT, joining the academia as a Senior Lecturer at Monash (SA) School of IT and moving to Milpark Business School and the IIE, finally taking up a position at North West University GSB&GL in 2012.

He holds a PhD from the University of Pretoria, Masters in Business Leadership from UNISA, Certificate in Logistics Management from the University of Pretoria and a Bachelor’s Degree in Political Science. He also completed the Graduate Certificate in Higher Education at Monash (Melbourne). His research interests include the Project Management, Supply Chain Management and Data Security. Other fields of interest centre on ICT4D, Information Knowledge Management, e-Governance and e-Government as well as issues in the public sector. Prof Meyer has published in peer reviewed journals in the above fields. Prof Meyer is also on the editorial committee of accredited journals and conferences.

Prof Meyer can be contacted at [email protected]