Activities undertaken by companies can be divided into two groups: its daily usual business operations and projects that are devised and implemented in order to achieve a specific objective, usually measures and activities that will assist in profit maximisation in short or/and long-term perspective.
Nowadays project management is used by companies not only to achieve a specific objective like building a new facilities or introducing a new software, project management as also being used as an efficient tool to achieve strategic objectives of a company.
This first part of the report analyses the reasons as why organizations are using project management in order to achieve their strategic objectives. It starts with the introduction of the problem and a brief analysis of the evolution of project management in order to study the background of the issue. Then the importance of project management in achieving strategic objectives is discussed together with the challenges likely to occur in linking project management and organizational objectives.
II. The Evolution of Project Management
The analysis of the evolution of project management gives us necessary knowledge and perspective required to assess the role of project management in achieving strategic objectives in a due manner.
Project management started as a tactical method mainly used to facilitate the completion of individual projects and initiatives such as introducing new software, initiating a new program or creating a new system. The beginning and popularization of project management is widely linked to the major work of Drucker “The Practice of Management” (1954). According to Panico (2002), from the 1940’s through the 1980’s PM was mainly thought to be a practice used by people working in engineering, construction and military.
The Development of modern project management can be divided into following four periods (Azzopardi, 2010):
1. The period before 1958 when the development of technology had shortened the timeframe of project completion. Also the invention of Gantt chart by Henry Gant assisted the development of project management.
2. 1958-1979: The principles of management sciences began to be applied to project management. The development of project management tools like CPM, PERT and many others by business scientists within this period aided the further development of project management and resulted in project management to be studied as a separate subject.
3. 1980-1994: The development of information technology had an immense effect on project management. Personal computers made many aspects of project management more simplistic and took project management to a new level.
4. 1994-present: Internet had a huge impact on the development of project management in a way that various project management software were available online and also internet began to be utilised by project managers as a source of information for finding contractors, gaining general knowledge, etc.
III. The Importance of Project Management in Achieving Strategic Objectives
The potential of project management in achieving organizational strategic objectives has been spotted and utilised by organizations with varying degree of success in a way that projects are being planned and implemented in such a manner that it not only solves a current problem or achieves its purpose, but it also contributes to the long term objectives of the organization.
The strategic objectives of the company come from the vision of the company that is the place employees see the company and themselves after a certain period of time. Then this vision translates into mission statement of the company which is used as guidance for all employees of the company, and, at the same time, communicates the message to the public about what the company stands for.
Organizational strategy and objectives are achieved through two elements: the planning and management of operations on high level and project portfolio management. The planning and management of operations on high level relates to the activities of senior level managers who define the ways and methods of how organizational objectives are going to be achieved. The senior level management undertakes the project portfolio planning and management which consist of various projects within the organization, as well as the management of on-going operations.
Each individual project within the project portfolio is devised either to deal with a specific problem concerning on-going operations or to increase the efficiency of on-going operations in some specified ways.
To put it simply the role of project management in achieving organizational objectives consist in the fact that the project management assists the operations through which organization’s strategic objectives are achieved, as well as, project management assists organizational objectives to be achieved being a part of project portfolio management.
Kendall and Rollings (2003), claim that the following conditions should be met in order for the project management to contribute to achieving strategic objectives:
A. Sufficient resources should be provided for project managers. The lack of resources for the project may cause for the project to be delayed and its quality compromised.
B. Project priorities should be constant. It requires efficiency on the planning stage of the project management. Frequently changing project priorities not only waste the resources, but also can cause the de-motivation of the workforce.
C. Projects should be launched only when sufficient resources are available. Thorough financial analysis is required priory to commencing of projects with the great emphasis on the availability of the resources.
D. Projects should be linked to company strategy. It is clear that projects with the aim not linked to the company strategies cannot provide long-term efficiency for the company, thus is considered not efficient use of resources used for the project.
Wessel (2007) differentiates between strategic project management and traditional strategic planning in following ways:
1. Strategic project management supports main business processes of strategic planning, strategic goal setting and enterprise project management
2. Strategic project management provides the opportunity of efficient use of resources employing the analogy of financial resources
3. Strategic project management provides a high level of ROI through an opportunity of managing several projects together
4. Changes on projects are implanted more easily under strategic project management.
Three main components of project management can be identified as planning, execution and control (Koskela and Howell, 2001). Careful and thorough planning is one of the main important factors of success in project management. Planning should comprise all aspects of the project to be undertaken, including the timeframe of the project, the amount, availability and sources of resources, delegation of responsibilities among team members involved on the project, and the ways the project can contribute to the achievement of strategic objectives of the company.
The execution phase of the project management is also important and requires the existence and application of required skills and knowledge from project members in order to achieve the aims and objectives of the project in a best possible manner. The importance of control in project management should not to be underestimated. It is the responsibility of project manager and should ensure the high quality of the project and efficient use of the resources available.
IV. Major Challenges in Project Management
There are certain challenges in project management that are going to compromise the quality of projects if not addressed appropriately. The most common issue in project management is the amount of resources decision makers allocate for the projects that sometimes prove to be not enough due to many factors including lack of understanding the complexity of the project by decision makers. How efficiently available resources are going to be used depends on the competency of project manager, but still if required amount of resources are not provided.
Another challenge in project management is lack of skills in project manager and other members. Because each project is unique in some aspect various set of skills are required to complete them efficiently. An employee who is good in doing his usual tasks at workplace may not be efficient in equal manner when involved in a project where flexibility is required.
Duranti (2009) mentions about the possibility of contradiction between project management evaluation criteria and strategic objectives of a company, stating that even if a project cannot be successful when evaluated by management criteria, at the same time, it can be a successful project in terms of achieving company’s strategic objectives.
Companies engage in project management that are designed to assist in increasing the efficiency of on-going operations through fixing existing issues or implementing new initiatives. The important role of project management in achieving strategic objectives have been realised by many executives of companies and therefore, project management is used not only to achieve its immediate objectives but also to contribute to the strategic objectives as well.
This report identified the contribution of project management to the strategic objectives of the company through two channels. Firstly, each project is part of the project portfolio management of a company which directly contributes to the company’s strategic objectives. Secondly, projects assist on-going operations which are the main method of achievement of strategic objectives of the company.