The Wiley Guide to Project, Program, and Portfolio Management E-Book

Peter W. G. Morris

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: The Wiley Guides to Project Management
• Sprache: Englisch

Seitenzahl: 653

Veröffentlichungsjahr: 2010

Beschreibung

A comprehensive guide to project management and its interaction with other management systems and strategies

The Wiley Guides to the Management of Projects address critical, need-to-know information that will enable professionals to successfully manage projects in most businesses and help students learn the best practices of the industry. They contain not only well-known and widely used basic project management practices but also the newest and most cutting-edge concepts in the broader theory and practice of managing projects.

This first book in the series, The Wiley Guide to Project, Program & Portfolio Management, is based on the "meta" level of management, which, simply stated, asserts that project management must be integrated throughout an organization in order to achieve its full potential to enhance the bottom line. This book will show you how to fully understand and exploit the strategic management of projects, portfolios, and program management and their linkage with context and strategy in other concepts and processes, such as quality management, concurrent engineering, just-in-time delivery, systems management and engineering, teams, and statistical quality control.

Featuring contributions from experts all around the world, this invaluable resource book offers authoritative project management applications for industry, service businesses, and government agencies.

Complete your understanding of project management with these other books in The Wiley Guides to the Management of Projects series:
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The Wiley Guide to Project Control
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The Wiley Guide to Project Organization & Project Management Competencies
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The Wiley Guide to Project Technology, Supply Chain & Procurement Management

Leseprobe

Table of Contents

THE WILEY GUIDES TO THE MANAGEMENT OF PROJECTS

Title Page

Copyright Page

Introduction

Project Management

The Management of Projects

Structure of The Wiley Guide to Project, Program & Portfolio Management

About the Authors

References

CHAPTER ONE - STRATEGIC BUSINESS MANAGEMENT THROUGH MULTIPLE PROJECTS

Different Project Types and Their Different Strategic Importance

Programs and Portfolios

Constructing a Theoretical Framework

Empirical Examples from Four Case-Study Organizations

Conclusion: A Framework for Strategic Business Management

Acknowledgments

References

CHAPTER TWO - MOVING FROM CORPORATE STRATEGY TO PROJECT STRATEGY

Developing Corporate Strategy

Positioning Project Management within a Business Management Context

Creating Corporate and Business Strategies

Hierarchy of Objectives and Strategies

Hierarchy of Strategy Plans

Moving Business Strategy through Portfolios, Programs, and Projects

Strategic Framework and Project Management Practices

A Structured Approach to Creating and Moving Strategy within Projects

Competencies, Roles, Responsibilities, and Accountabilities for Moving Strategy

Four Studies of Moving from Corporate to Project Strategy

Survey Data on How Companies Move Strategy from Corporate to Projects

Summary

References and Further Reading

CHAPTER THREE - STRATEGIC MANAGEMENT: THE PROJECT LINKAGES

Background

Project Evaluation and Selection

Relationship to Strategic Management

Organizational Changes

Context of Project Strategy

The Importance of Project Planning

The Work Breakdown Structure (WBS)

Project Planning Work Packages

The Project Plan

Project Strategy Documentation

Understanding Linkages

Project Planning Principles

Summary

References

CHAPTER FOUR - MODELS OF PROJECT ORIENTATION IN MULTIPROJECT ORGANIZATIONS

Models of Project Orientation

Project Orientation Variables

Project Orientation Data: A Profile of the Sample

Instrument Testing

Data and Analysis

Findings and Implications

Conclusions

References

CHAPTER FIVE - PROJECT PORTFOLIO SELECTION AND MANAGEMENT

Literature Review

Characteristics of Projects Affecting Portfolio Choice

Portfolio Selection Models and Methodologies

Process Model for Portfolio Selection

Portfolio Management

Summary

References

CHAPTER SIX - PROGRAM MANAGEMENT: A STRATEGIC DECISION MANAGEMENT PROCESS

Program Management Paradigms

Definitions

The Link between Programs and Strategy

Program Management Process

The Formulation Phase

The Organization Phase

The Deployment Phase

The Appraisal Phase

The Dissolution Phase

The Program-Based Organization: Framework and Support

Summary and Conclusions

References

CHAPTER SEVEN - MODELING OF LARGE PROJECTS

Objectives

Characteristics of Large Projects

Environmental Complexity and Influence on Strategic Direction of Large Projects

Project Life Cycle

Management of Risks and Uncertainties

Critical Success Criteria and Framework for Adoption

Modeling and Integrated Life Cycle Planning

Life Cycle Project Management

Project Initiation

Project Planning and Documentation

Project Execution and Control

Project Handover and Closeout

Summary

References

CHAPTER EIGHT - HOW PROJECTS DIFFER, AND WHAT TO DO ABOUT IT

Introduction

The Theory of Contingency

The Basic Frameworks: The UCP Model

Mapping the Frameworks for Project Distinction

Strategic Portfolio Classification

The NCTP Model: Novelty, Complexity, Technology, Pace

The Work Package Framework

Using the Frameworks in Practice

Summary

Acknowledgments

References

CHAPTER NINE - VALUE MANAGEMENT:

From Value Analysis to Value Management

Value Management Today: A Style of Management

The VM Process

Summary

References

CHAPTER TEN - PROJECT SUCCESS

A Brief Survey of the Literature on Project Success

Distinguishing Three “Levels” of Success

Project Management Success—How to Ensure That the Project Is Done Right?

Project Success—How to Ensure That the Right Project Is Done?

Consistent Project Success—How to Ensure That the Right Projects Are Done ...

Summary

References

CHAPTER ELEVEN - MANAGEMENT OF THE PROJECT-ORIENTED COMPANY

The POC: A Social Construct

Organizational Fit of the Strategies, the Structures, and the Cultures of the ...

Specific Business Processes of the Project-Oriented Company

Maturity of the Project-Oriented Company

Summary

References

CHAPTER TWELVE - MANAGING PROJECT STAKEHOLDERS

The Growing Complexity of Stakeholder Management

Managing Stakeholders

Understanding the Power of Project Stakeholders

The Case of Settlement on the London Stock Exchange

Approaches to Managing Stakeholders

Summary

References

CHAPTER THIRTEEN - THE FINANCING OF PROJECTS

Characteristics of the Financing of Projects

Types and Sources of Finance

Project Finance

The Process of Financial Management

Summary

References and Further Reading

CHAPTER FOURTEEN - PRIVATE FINANCE INITIATIVE AND THE MANAGEMENT OF PROJECTS

What Do We Mean by PFI?

Defining the Project Mission

Mobilizing the Resource Base

Riding the Project Life Cycle and Leading the Project Coalition

Maintaining the Resource Base

Acknowledgments

References

INDEX

THE WILEY GUIDES TO THE MANAGEMENT OF PROJECTS

Edited by Peter W. G. Morris and Jeffrey K. Pinto

The Wiley Guide to Project, Program & Portfolio Management 978-0-470-22685-8

The Wiley Guide to Project Control 978-0-470-22684-1

The Wiley Guide to Project Organization & Project Management Competencies 978-0-470-22683-4

The Wiley Guide to Project Technology, Supply Chain & Procurement Management 978-0-470-22682-7

This book is printed on acid-free paper.

Copyright © 2007 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

Wiley Bicentennial Logo: Richard J. Pacifico

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ISBN: 978-0-470-22685-8

THE WILEY GUIDE TO PROJECT, PROGRAM & PORTFOLIO MANAGEMENT:PREFACE AND INTRODUCTION

Peter W. G. Morris and Jeffrey Pinto

In 1983, Dave Cleland and William King produced for Van Nostrand Reinhold (now John Wiley & Sons) the Project Management Handbook, a book that rapidly became a classic. Now over twenty years later, Wiley is bringing this landmark publication up to date with a new series The Wiley Guides to the Management of Projects, comprising four separate, but linked, books.

Why the new title—indeed, why the need to update the original work?

That is a big question, one that goes to the heart of much of the debate in project management today and which is central to the architecture and content of these books. First, why “the management of projects” instead of “project management”?

Project management has moved a long way since 1983. If we mark the founding of project management to be somewhere between about 1955 (when the first uses of modern project management terms and techniques began being applied in the management of the U.S. missile programs) and 1969 / 1970 (when project management professional associations were established in the United States and Europe) (Morris, 1997), then Cleland and King’s book reflected the thinking that had been developed in the field for about the first twenty years of this young discipline’s life. Well, more than another twenty years have since elapsed. During this time there has been an explosive growth in project management. The professional project management associations around the world now have thousands of members—the Project Management Institute (PMI) itself having well over 200,000—and membership continues to grow! Every year there are dozens of conferences; books, journals, and electronic publications abound; companies continue to recognize project management as a core business discipline and work to improve company performance through it; and, increasingly, there is more formal educational work carried out in university teaching and research programs, both at the undergraduate and, particularly, graduate levels.

Yet, in many ways, all this activity has led to some confusion over concepts and applications. For example, the basic American, European, and Japanese professional models of project management are different. The most influential, PMI, not least due to its size, is the most limiting, reflecting an essentially execution, or delivery, orientation, evident both in its Guide to the Project Management Body of Knowledge, PMBOK Guide, 3rdEdition (PMI, 2004) and its Organizational Project Management Maturity Model, OPM3 (PMI, 2003). This approach tends to under-emphasize the front-end, definitional stages of the project, the stages that are so crucial to successful accomplishment (the European and Japanese models, as we shall see, give much greater prominence to these stages). An execution emphasis is obviously essential, but managing the definition of the project, in a way that best fits with the business, technical, and other organizational needs of the sponsors, is critical in determining how well the project will deliver business benefits and in establishing the overall strategy for the project.

It was this insight, developed through research conducted independently by the current authors shortly after the publication of the Cleland and King Handbook (Morris and Hough, 1987; Pinto and Slevin, 1988), that led to Morris coining the term “the management of projects” in 1994 to reflect the need to focus on managing the definition and delivery of the project itself to deliver a successful outcome.

These, at any rate, are the themes that we shall be exploring in this book (and to which we shall revert in a moment). Our aim, frankly, is to better center the discipline by defining more clearly what is involved in managing projects successfully and, in doing so, to expand the discipline’s focus.

So, why is this endeavor so big that it takes four books? Well, first, it was both the publisher’s desire and our own to produce something substantial—something that could be used by both practitioners and scholars, hopefully for the next 10 to 20 years, like the Cleland and King book—as a reference for the best-thinking in the discipline. But why are there so many chapters that it needs four books? Quite simply, the size reflects the growth of knowledge within the field. The “management of projects” philosophy forces us (i.e., members of the discipline) to expand our frame of reference regarding what projects truly are beyond of the traditional PMBOK /OPM3model.

These, then, are not a set of short “how to” management books, but very intentionally, resource books. We see our readership not as casual business readers, but as people who are genuinely interested in the discipline, and who seek further insight and information—the thinking managers of projects. Specifically, the books are intended for both the general practitioner and the student (typically working at the graduate level). For both, we seek to show where and how practice and innovative thinking is shaping the discipline. We are deliberately pushing the envelope, giving practical examples, and providing references to others’ work. The books should, in short, be a real resource, allowing the reader to understand how the key “management of projects” practices are being applied in different contexts and pointing to where further information can be obtained.

To achieve this aim, we have assembled and worked, at times intensively, with a group of authors who collectively provide truly outstanding experience and insight. Some are, by any standard, among the leading researchers, writers, and speakers in the field, whether as academics or consultants. Others write directly from senior positions in industry, offering their practical experience. In every case, each has worked hard with us to furnish the relevance, the references, and the examples that the books, as a whole, aim to provide.

What one undoubtedly gets as a result is a range that is far greater than any individual alone can bring (one simply cannot be working in all these different areas so deeply as all these authors, combined, are). What one does not always get, though, are all the angles that any one mind might think is important. This is inevitable, if a little regrettable. But to a larger extent, we feel, it is beneficial for two reasons. One, this is not a discipline that is now done and finished—far from it. There are many examples where there is need and opportunity for further research and for alternative ways of looking at things. Rodney Turner and Anne Keegan, for example, in their chapter on managing innovation (The Wiley Guide to Project Technology, Supply Chain & Procurement Management, Chapter 8) ended up positioning the discussion very much in terms of learning and maturity. If we had gone to Harvard, to Wheelwright and Clark (1992) or Christensen (1999) for example, we would almost certainly have received something that focused more on the structural processes linking technology, innovation, and strategy. This divergence is healthy for the discipline, and is, in fact, inevitable in a subject that is so context-dependent as management. Second, it is also beneficial, because seeing a topic from a different viewpoint can be stimulating and lead the reader to fresh insights. Hence we have Steve Simister giving an outstandingly lucid and comprehensive treatment in The Wiley Guide to Project Control, Chapter 5 on risk management; but later we have Stephen Ward and Chris Chapman coming at the same subject (The Wiley Guide to Project Control, Chapter 6) from a different perspective and offering a penetrating treatment of it. There are many similar instances, particularly where the topic is complicated, or may vary in application, as in strategy, program management, finance, procurement, knowledge management, performance management, scheduling, competence, quality, and maturity.

In short, the breadth and diversity of this collection of work (and authors) is, we believe, one of the books’ most fertile qualities. Together, they represent a set of approximately sixty authors from different discipline perspectives (e.g., construction, new product development, information technology, defense / aerospace) whose common bond is their commitment to improving the management of projects, and who provide a range of insights from around the globe. Thus, the North American reader can gain insight into processes that, while common in Europe, have yet to make significant inroads in other locations, and vice versa. IT project managers can likewise gather information from the wealth of knowledge built up through decades of practice in the construction industry, and vice versa. The settings may change; the key principals are remarkably resilient.

But these are big topics, and it is perhaps time to return to the question of what we mean by project management and the management of projects, and to the structure of the book.

Project Management

There are several levels at which the subject of project management can be approached. We have already indicated one of them in reference to the PMI model. As we and several other of the Guides’ authors indicate later, this is a wholly valid, but essentially delivery, or execution-oriented perspective of the discipline: what the project manager needs to do in order to deliver the project “on time, in budget, to scope.” If project management professionals cannot do this effectively, they are failing at the first fence. Mastering these skills is the sine qua non—the ‘without which nothing’—of the discipline. Volume 1 addresses this basic view of the discipline—though by no means exhaustively (there are dozens of other books on the market that do this excellently—including some outstanding textbooks: Meredith and Mantel, 2003; Gray and Larson, 2003; Pinto, 2004).

PROJECT MANAGEMENT: “On time, in budget, to scope” execution/delivery

The overriding paradigm of project management at this level is a control one (in the cybernetic sense of control involving planning, measuring, comparing, and then adjusting performance to meet planned objectives, or adjusting the plans). Interestingly, even this model—for us, the foundation stone of the discipline—is often more than many in other disciplines think of as project management: many, for example, see it as predominantly oriented around scheduling (or even as a subset, in some management textbooks, of operations management). In fact, even in some sectors of industry, this has only recently begun to change, as can be seen towards the end of the book in the chapter on project management in the pharmaceutical industry. It is more than just scheduling of course: there is a whole range of cost, scope, quality and other control activities. But there are other important topics too.

Managing project risks, for example, is an absolutely fundamental skill even at this basic level of project management. Projects, by definition, are unique: doing the work necessary to initiate, plan, execute, control, and close-out the project will inevitably entail risks. These need to be managed.

Both these areas are mainstream and generally pretty well understood within the traditional project management community (as represented by the PMI PMBOK® ‘Guide’ (PMI, 2004) for example). What is less well covered, perhaps, is the people-side of managing projects. Clearly people are absolutely central to effective project management; without people projects simply could not be managed. There is a huge amount of work that has been done on how organizations and people behave and perform, and much that has been written on this within a project management context (that so little of this finds its way into PMBOK is almost certainly due to its concentration on material that is said in PMBOK to be “unique” to project management). A lot of this information we have positioned in Volume 3, which deals more with the area of competencies, but some we have kept in the other volumes, deliberately to make the point that people issues are essential in project delivery.

It is thus important to provide the necessary balance to our building blocks of the discipline. For example, among the key contextual elements that set the stage for future activity is the organization’s structure—so pivotal in influencing how effectively projects may be run. But organizational structure has to fit within the larger social context of the organization—its culture, values, and operating philosophy; stakeholder expectations, socio-economic, and business context; behavioural norms, power, and informal influence processes, and so on. This takes us to our larger theme: looking at the project in its environment and managing its definition and delivery for stakeholder success: “the management of projects.”

The Management of Projects

The thrust of the books is, as we have said, to expand the field of project management. This is quite deliberate. For as Morris and Hough showed in The Anatomy of Major Projects (1987), in a survey of the then-existing data on project overruns (drawing on over 3,600 projects as well as eight specially prepared case studies), neither poor scheduling nor even lack of teamwork figured crucially among the factors leading to the large number of unsuccessful projects in this data set. What instead were typically important were items such as client changes, poor technology management, and poor change control; changing social, economic, and environmental factors; labor issues, poor contract management, etc. Basically, the message was that while traditional project management skills are important, they are often not sufficient to ensure project success: what is needed is to broaden the focus to cover the management of external and front-end issues, not least technology. Similarly, at about the same time, and subsequently, Pinto and his coauthors, in their studies on project success (Pinto and Slevin, 1988; Kharbanda and Pinto, 1997), showed the importance of client issues and technology, as well as the more traditional areas of project control and people.

The result of both works has been to change the way we look at the discipline. No longer is the focus so much just on the processes and practices needed to deliver projects “to scope, in budget, on schedule,” but rather on how we set up and define the project to deliver stakeholder success—on how to manage projects. In one sense, this almost makes the subject impossibly large, for now the only thing differentiating this form of management from other sorts is “the project.” We need, therefore, to understand the characteristics of the project development life cycle, but also the nature of projects in organizations. This becomes the kernel of the new discipline, and there is much in this book on this.

Morris articulated this idea in The Management of Projects (1994, 97), and it significantly influenced the development of the Association for Project Management’s Body of Knowledge as well as the International Project Management Association’s Competence Baseline (Morris, 2001; Morris, Jamieson, and Shepherd, 2006; Morris, Crawford, Hodgson, Shepherd, and Thomas, 2006). As a generic term, we feel “the management of projects” still works, but it is interesting to note how the rising interest in program management and portfolio management fits comfortably into this schema. Program management is now strongly seen as the management of multiple projects connected to a shared business objective—see, for example, the chapter by Michel Thiry (The Wiley Guide to Project, Program & Portfolio Management, Chapter 6.) The emphasis on managing for business benefit, and on managing projects, is exactly the same as in “the management of projects.” Similarly, the recently launched Japanese Body of Knowledge, P2M (Program and Project Management), discussed inter alia in Lynn Crawford’s chapter on project management standards (The Wiley Guide to Project Organization & Project Management Competencies, Chapter 10), is explicitly oriented around managing programs and projects to create, and optimize, business value. Systems manage-ment, strategy, value management, finance, and relations management for example are all major elements in P2M: few, if any, appear in PMBOK.

THE MANAGEMENT OF PROJECTS involves managing the definition and delivery of the project for stakeholder success. The focus is on the project in its context. Project and program management - and portfolio management, though this is less managerial - sit within this framework.

(“The management of projects” model is also more relevant to the single project situation than PMBOK incidentally, not just because of the emphasis on value, but via the inclusion of design, technology, and definition. There are many single project management situations, such as Design & Build contracts for example, where the project management team has responsibility for elements of the project design and definition.)

Structure ofThe Wiley Guide to Project, Program & Portfolio Management

The Wiley Guides to the Management of Projects series consists of four distinct, but interrelated, books:

• The Wiley Guide to Project, Program & Portfolio Management

• The Wiley Guide to Project Control

• The Wiley Guide to Project Organization & Project Management Competencies

• The Wiley Guide to Project Technology, Supply Chain & Procurement Management

This book, The Wiley Guide to Project, Program & Portfolio Management, is based on the “meta” level of management, understanding and exploiting the strategic management of projects, portfolios, and program management and the linkage with context and strategy.

Strategy represents the fundamental goals and objectives that drive the organization and which, if well understood and delineated, should affect the manner in which projects are selected, shaped, and executed. The organization’s strategy encompasses the way in which it makes sense of its external environment, identifies opportunities, and evaluates its performance. In this manner, projects become, in a term David Cleland coined, “the building blocks of strategy,” allowing the organization to operationalize its goals in meaningful, measurable ways (Cleland, 1990). The organization’s use of its strategic portfolio of projects and the manner in which it shapes and maintains its programs, reflects its commitment to a proactive, rather than reactive, means of achieving its goals.

Acknowledging the links between strategy at the corporate, portfolio, program, and project levels allow organizations to focus on improving their portfolio and program management. These are themes explored in several different chapters in this volume; the result is that our basic “management of projects” model can now be expanded to reflect our increased knowledge of program management and its concerns—managing for business benefit, managing products (brands, technology), resource allocation, etc.—along with portfolio management and its special challenges.

1. In Chapter 1, Karlos Artto and Perttu Dietrich offer a comprehensive and very thorough overview on “Strategic Business Management through Multiple Projects.” Covering a wealth of academic work in the area, Karlos and Perttu examine the way that companies manage the relationships between portfolios, programs, and projects in different situations. They then generalize this into an overall theoretical model which they illustrate from a series of research projects they have undertaken with industry.

2. Ashley Jamieson and Peter Morris, in Chapter 2, similarly survey the literature on moving from corporate strategy to project strategy, again emphasizing the sequence of moving, via portfolios and programs, into projects (and subprojects / tasks). Like Artto and Dietrich, their chapter introduces fresh research evidence to substantiate their findings, this time from a project funded largely by PMI calling on case study data as well as evidence from a questionnaire survey of PMI members showing that most of those who replied routinely work in programs and projects, and use techniques to value optimize the strategy (as will be later discussed in Chapter 9).

3. David Cleland builds on this argument in Chapter 3, drawing on a wealth of experience to extend the arguments regarding corporate planning and programs with more detail at the project planning end, for example explaining how project strategic planning feeds into work packages via the work breakdown structure.

4. Joe Lampel and Pushkar Jha, in Chapter 4, in their chapter on project orientation, contend that many projects fail as a result of poor strategic orientation—of not achieving a proper fit between the enterprise and the project. They hypothesize three types of project/enterprise orientation—project based, project led, and core operations led—and propose that project scoping, programming, and autonomy shape the interaction between the project and its corporate parent. They conclude by presenting research findings that explore these interactions.

Having reviewed aspects of the linkages between strategy at the corporate, portfolio, program and project levels, the next two chapters focus more purposefully on, firstly, portfolio management, and secondly, program management.

5. Norm Archer and Fereidoun Ghasemzadeh are two of the world’s leading authorities on portfolio management (in the project, as opposed to the financial, sense). Their chapter demonstrates the importance particularly of managing risk and outsourcing options at the portfolio level, and the need for a framework for classifying project type. They then proceed to look at the different characteristics that affect portfolio choice and develop a generic process model for portfolio selection.

6. Michel Thiry, in Chapter 6, develops a number of interesting perspectives to better understand the characteristics of program management. Building on the ideas already presented in the previous chapters on strategy and portfolio management, Michel emphasizes the importance of learning in developing a strategic response to evolving conditions—in his process model of program management, learning needs understanding as clearly as performance delivery (this leads him to define project management in the more specific sense of being primarily about uncertainty reduction). He then elaborates this into a two-dimensional phase model linking strategy, programs, projects, and operations cyclically around the activities of formulation, organization, deployment, appraisal, and dissolution.

7. Ali Jaafari, in Chapter 7, focuses on the characteristics of large (engineering) projects, emphasizing in particular how they are subject to environmental uncertainty and may need much more front-end, strategic management than the smaller project. Ali then walks us through a high-level process model of the major things that need doing in the management of large projects.

8. An issue one comes up against in looking at the discipline of managing projects across a broad range of contexts is how to categorize the application area. Aaron Shenhar and Dov Dvir have done as much work as anyone in this area and they provide a stimulating discussion in Chapter 8 showing that there are several different categorizations which are valid and which work well under different circumstances. Based on their research, Aaron and Dov believe that in order to select the appropriate management style, managers should first assess the environment, the product, and the task; second, classify the project by the levels of uncertainty, complexity, and pace; and third, select the right style to fit the specific project type.

9. Value Management (VM), the process of formally optimising the overall approach to the project (including whether or not it should be done) is addressed in Chapter 9 by Michel Thiry. He begins by discussing what is meant by value and by defining the various terms used in VM (Value Engineering, Value Analysis, etc.). VM is positioned as a strategic process comprising sense-making, ideation, elaboration, choice, and mastery. Techniques within each of these, such as Function(al) Analysis, are described. Overall Michel takes an ambitious view of VM, positioning it as “the method of choice to deal with the ambiguity of stakeholders’ needs and expectations and the complexity of changing business environment at program level and project initiation.”

10. Project success is often quoted as the measure on which the project should be assessed. The trouble is this is a portmanteau term covering many different issues. Terry Cooke-Davies in Chapter 10 reviews the studies that have been carried out in this area since the landmark work by Baker, Murphy, and Fisher in 1974. He concludes that there are essentially three levels of success measure: was the project done right (what he calls “project management success”), was the right project done (“project success”), and were the right projects done right time after time (“consistent project success”). While warning that there are no silver bullets, Terry nevertheless identifies the half dozen or so key factors that he believes, from his research and that of his colleagues, are critical at each level.

11. Roland Gareis, in Chapter 11, discusses the characteristics of organizations that are project (and program) oriented. Again building on years of original research as well as practical consulting, Roland encapsulates most of the ideas this resource book addresses, although using his own distinctive “management by projects” framework (which is just slightly different, as the wording would suggest, from our “management of projects”).

12. Graham Winch, in Chapter 12, provides an enormously useful practical account of the importance of stakeholder management in achieving successful project outcomes. Taking a systems development project as an example (the computerization of share dealing on the London Stock Exchange) Graham shows how the failure to identify and manage different parties’ expectations can not only lead to “academic” discussions of whether and for whom the project was or was not a success, but can in a very real sense lead to loss of control and ultimately project disaster. Graham concludes by drawing out nine key lessons for managing stakeholders effectively.

Finance is an important dimension to the strategic development of projects. The availability of money will affect what can be done, and when. In the public area particularly, changes in the way projects are funded have had a huge affect on the whole way projects are set up and carried out. The next two chapters, by Rodney Turner and Graham Ive, illustrate this.

13. In Chapter 13 Rodney Turner gives a masterful overview of the characteristics and means of financing projects as well as the process of financial management on projects.

14. One of the newer forms of project finance to have developed over the last 20 or so years (coming out of the oil sector in the 1970s) has been that of basing the project’s funding solely on the revenues generated specifically by the project itself, with no other security from other parties. This form, strictly termed “project financing,” has become very important in many parts of the world in bringing ways of using private funds to finance public infrastructure projects. It is no exaggeration to say that this has had a revolutionary impact on the management of public sector projects where it has been applied. Graham Ive, in Chapter 14, discusses this form of project financing in detail, with particular reference to its application in the British public sector, which is widely regarded as leading the field in this area. He outlines the origin of this form of financing, known in the UK as PFI (for Private Finance Initiative), and shows how it impacts on the management of projects, for example by requiring increased clarity on project objectives, risk management, value management, securing stakeholder consent, capturing users’ requirements, and on procurement and bidding practices. (All issues we have either looked at already or will be doing later in the book.) Interestingly, with regard to the procurement challenges, Graham uses an economic tool (agency theory) to analyze the problems of devising the reward structure, selection of resources, and moral hazard. Throughout, he illustrates his points with reference to a real PFI project—a new hospital.

About the Authors

Karlos A. Artto

Dr. Karlos Artto is Professor at the Department of Industrial Engineering and Management at the Helsinki University of Technology (HUT), Finland, where he is responsible for developing research and education in the field of project-oriented activities in business. His current research interests cover the management of project-based organizations (including the area of project portfolio management and strategic management of multiple projects in organizations); the management of innovation, technology, R&D, new product development and operational development projects in different organizational contexts; project networks and project delivery chains; and risk management (with the emphasis on management of business opportunities and considerations of project success and related criteria).

Perttu H. Deitrich

Perttu Dietrich works as a project manager and researcher at the Helsinki University of Technology (HUT), Finland. He has pursued research and development in several companies in the area of project portfolio management. His research interests include strategic management, multi-project management, and organizational development. His doctoral research will explore these areas by investigating the linkage between projects and strategy.

Ashley Jamieson

Ashley Jamieson worked for many years as a business manager, senior program manager, and project manager with global aerospace and defense companies on British, European, North American, Middle East, South East Asia, and Australasian aircraft programs and projects. He then took up a career in research and academia. He has worked at the Centre for Research in the Management of Projects (CRMP) at UMIST where he carried out research into design management in major construction projects, and more recently at University College London, where through a PMI funded research project, he investigated how strategy is moved from corporate to projects. He holds an M.Sc. in Engineering Business Management and is currently studying for a Ph.D. in project strategy at The Bartlett School of Construction and Project Management, University College London. He is a visiting lecturer in project management at the University of Manchester and UMIST and is the co-author (with Peter Morris) of Moving Strategy from Corporate to Projects (2004) published by PMI.

Peter W. G. Morris

Peter Morris is Professor of Construction and Project Management at University College London, Visiting Professor of Engineering Project Management at UMIST, and Director of the UCL/UMIST based Centre for Research in the Management of Projects. He is also Executive Director of INDECO Ltd, an international projects oriented management consultancy. He is a past Chairman and Vice President of the UK Association for Project Management and Deputy Chairman of the International Project Management Association. His research has focussed significantly around knowledge management and organizational learning in projects, and in design management. Dr. Morris consults with many major companies on developing enterprise-wide project management competency. Prior to joining INDECO, he was a Main Board Director of Bovis Limited, the holding company of the Bovis Construction Group. Between 1984 and 1989 he was a Research Fellow at the University of Oxford and Executive Director of the Major Projects Association. Prior to his work at Oxford, he was with Arthur D Little in Cambridge, Massachusetts and previously with Booz, Allen & Hamilton in New York, and Sir Robert McAlpine in London. He has written approximately one hundred papers on project management as well as the books: The Anatomy of Major Projects (Wiley, 1988) and The Management of Projects (Thomas Telford, 1997). He is a Fellow of the Association for Project Management, Institution of Civil Engineers, and Chartered Institute of Building and has a Ph.D., M.Sc. and B.Sc., all from UMIST.

David Cleland

David I. Cleland is currently Professor Emeritus in the School of Engineering at the University of Pittsburgh. He is the author / editor of thirty-five books in the fields of project management, engineering management, and manufacturing management. He has served as a consultant for both national and foreign companies, and has been honored for his original and continuing contributions to his disciplines. Dr. Cleland is a Fellow of the Project Management Institute (PMI), and has received the Distinguished Contribution to Project Management Award from PMI in 1983, 1993, and again in 2001.

Joseph Lampel

Joseph Lampel is a Professor of Strategy at Cass Business School, City University, London. He obtained his undergraduate degree in Physics from McGill University, Canada, and later pursued his M.Sc. in Technology Policy at the Institut d’Histoire et Sociopolitique des Sciences at Université de Montréal, Canada. After working for the Science Council of Canada and the Ontario government he returned to McGill University to pursue doctoral studies in Strategic Management. His dissertation “Strategy in Thin Industries” won the Best Dissertation Award from the Administrative Science Association of Canada in 1992. He was Assistant Professor at the Stern School of Business, New York University from 1989- 1996. Subsequently, he was Reader at the University of St. Andrews from 1996 to 1999, and Professor of Strategic Management at University of Nottingham Business School from 1999 to 2001. He has also taught at McGill University, Concordia University, Montreal, and the University of Illinois at Urbana-Champaign. Joseph Lampel is the author with Henry Mintzberg and Bruch Ahlstrand of the Strategy Safari, Free Press & Prentice-Hall, 1998. He is also the editor with Henry Mintzberg, James Brian Quinn, and Sumantra Ghoshal of the fourth edition of The Strategy Process, Prentice-Hall (2003). He edited a Special Issue of International Journal of Project Management, Special Issue on Strategic Project Management (2001, vol. 19, No. 8). He has published in Strategic Management Journal, Sloan Management Review, Organization Science, Journal of Management, Journal of Management Studies, R&D Management, International Journal of Technology Management, and Fortune Magazine.

Pushkar P. Jha

Pushkar Jha holds an M.Phil. in process engineering from the University of Newcastle-upon-Tyne and degrees in management and commerce. He is currently a research fellow at Cass Business School, London, working in the area project-based organizational learning. He was a member of the Advanced Process Control Group at the University of Newcastle upon Tyne, and prior to that he worked on development projects in India.

Norman P. Archer

Dr. Norm Archer is Professor Emeritus in the Management Science and Information Systems Area of the Michael G. DeGroote School of Business at McMaster University, and is Special Advisor to the McMaster eBusiness Research Centre (MeRC). Dr. Archer consults, teaches, and supervises graduate student research projects. He is active in the study of organizational problems relating to the implementation of eBusiness approaches in existing organizations, and the resulting impacts on processes, employees, customers, and suppliers. Current research projects include the study of knowledge transfer in network organizations, supply chain management issues, change management in organizations, and management of eBusiness projects. Together with his students, he has published more than seventy papers in refereed journals and conference proceedings, primarily on project management, business-to-business eCommerce, intelligent agents, and the human-computer interface, in Decision Support Systems, Internet Research, International Journal of Management Theory and Practice, IEEE Transactions on Systems, Man, and Cybernetics, International Journal of Human-Computer Studies, Journal of the Operational Research Society, Communications of the ACM, and many others.

Fereidoun Ghasemzadeh

Dr. Fereidoun Ghasemzadeh is an assistant Professor in the Management and Economics School at Sharif University of Technology. Dr. Ghasemzadeh has been involved in teaching MIS, DSS, and E-Commerce courses to MBA students, and supervises graduate students in their research projects. He is the co-founder and currently the CEO of Afranet, a leading Internet and E-Commerce company in Iran, and is heavily involved in advanced E-Commerce and E-Government research and applied projects. Articles by, or interviews with, Dr. Ghasemzadeh have appeared more than fifty times in the media, and he has organized many conferences, symposia, and workshops on these topics. With his colleagues and students Dr. Ghasemzadeh has published ten academic papers in refereed journals and conference proceedings, primarily on project management, electronic commerce, and electronic government.

Michel Thiry

Michel Thiry is a Brussels-based organizational consultant and facilitator with thirty years experience in project management in North America and Europe. He has worked in Canada, the United States, Australia, the UK and continental Europe. He holds an M.Sc. in Organizational Behaviour from the School of Management and Organizational Behaviour, University of London (UK) and regularly speaks and publishes at the international level. Currently he is a seminar leader for PMI SeminarsWorld and associate professor for the ISGI (France) / UTS (Australia) joint Program and Project Management MSc; he also lectures at Reading University (UK). He has also provided value, project or program management expertise to major organizations, in various fields, including construction, pharmaceutical, IT and IS, telecom, water treatment, transportation (air and rail), and others. He has authored the book Value Management Practice and co-authored the “Managing Programmes of Projects” chapter in the Gower Handbook of Project Management, 3rd Ed. He also authored the Program Management and Value Management Chapters in Project Management Pathways, published by the Association for Project Management (UK) in early 2003. In addition, he regularly writes and reviews for the International Journal of Project Management. Mr. Thiry is also past Director of the Project Management Institute’s Montreal and UK Chapters and past President of the European Governing Board for Value Management Certification and Training, based in Paris.

Ali Jaafari

Professor Jaafari received his Ph.D. in Business Economics (Quantitative Modeling & Forecasting) from Surrey University in the UK (Joint SSRC-SRC scholarship holder and Swan Award) in 1977, and his Master of Science (Distinction) in Highway Engineering and Transportation Management in 1974 from the same university. He has a Master of Engineering (Distinction) from Tehran University awarded in 1968. He has acted as an expert consultant to industry and governments worldwide for more than fifteen years. In 1994, he acted as a special consultant to the European Community on the management of the Productivity Initiative Programme as part of TACIS. He has, to date, authored over one hundred and thirty publications in project and program management, including strategy-based project management, whole-of-life framework & philosophy, concurrency, management of technology and innovations, information management systems, TQM, risk, opportunity and uncertainty analysis & management, and education of professionals. Since 1982, he has conducted courses and seminars for over 3,000 executives, managers and professionals in Australia, Asia, and Europe. He specializes in graduate education and professional development, and has developed innovative on-line graduate programs that have won three Excellence Awards. He has been a member of the International Project Management Association since 1984, and a regular contributor to the World Congresses on Project Management. Professor Jaafari has chaired many functions, both nationally and internationally, and is the winner of many prizes and awards. Professor Jaafari has held visiting professorial appointments at a number of universities, in the United States, the UK, Europe, and Asia.

Aaron J. Shenhar

Dr. Aaron J. Shenhar is the Institute Professor of Management and the founder of the Project Management Program at Stevens Institute of Technology. He is also a visiting professor at Tel-Aviv University and the Technion in Israel. He was named, “Engineering Manager of the Year,” by the Engineering Management Society of IEEE in 2000. Prior to his academic career, he has been involved in managing projects, innovation, R&D, and high technology businesses for almost twenty years. Working for the Israel defense industry, he participated in all phases of engineering and management—from project manager up through the highest executive posts. As executive at Rafael, the Armament Development Authority of Israel, he was appointed Corporate Vice President, Human Resources, and later, President of the Electronic Systems Division. In his second career in academia, Dr. Shenhar’s work focuses on research, teaching, and consulting in project management; strategic project leadership, technology, and innovation management; product development and the leadership of professionals in technology-based organizations. He is serving as a consultant to several major corporations. With more than 150 publications to his credit, his writings have influenced project management research and education throughout the world. Dr. Shenhar holds five academic degrees in engineering, statistics, and management, including a Ph.D. in Electrical Engineering from Stanford University. In 2003, he became the first recipient of the PMI Research Achievement Award.

Dov Dvir

Dr. Dov Dvir is Senior Lecturer at the School of Management, Ben Gurion University, Israel. Formerly, he was the Head of the Management of Technology (MOT) department at the Holon Center for Technological Education. He holds a B.Sc. in electrical engineering from the Technion—Israel Institute of Technology, M.Sc. in operations research and an MBA from Tel Aviv University; and Ph.D. in management (specialization in MOT) from Tel Aviv University. His research interests include project management, technology transfer, technological entrepreneurship and the management of technological organizations. Dr. Dvir has accumulated over 25 years of technical, management and consulting experience in government and private organizations.

Terry Cooke-Davies

Terry has been a practitioner of both general and project management continuously since the end of the 1960s. He is the Managing Director of Human Systems Limited, which he founded in 1985 to provide services to organizations in support of their innovation projects and ventures. Through the family of project management knowledge networks created and supported by Human Systems, he is in close touch with the best project management practices of more than seventy leading organizations globally. The methods developed in support of the networks are soundly based in theory, as well as having practical application to members, and this was recognized by the award of a PhD to Terry by Leeds Metropolitan University in 2000 for a thesis entitled, “Towards Improved Project Management Practice: Uncovering the evidence for effective practices through empirical research.” He is now an Adjunct Professor of Project Management at the University of Technology, Sydney. Terry is a regular speaker at international project management conferences in Europe, North America, Australia and Asia and has published more than thirty book chapters, journal and magazine articles, and research papers. He has a bachelor’s degree in Theology, and qualifications in electrical engineering, management accounting and counselling in addition to his doctor’s degree in Project Management.

Roland Gareis

Dr. Roland Gareis graduated from the University of Economics and Business Administration, Vienna; had habilitation at the University of Technology, Vienna, Department of Construction Industry; was Professor at the Georgia Institute of Technology in Atlanta; and was Visiting professor at the ETH, Zurich, at the Georgia State University, Atlanta and at the University of Quebec, Montreal. He is currently Professor of Project Management at the University of Economics and Business Administration, Vienna and Director of the postgraduate program “International Project Management.” He owns the firm Roland Gareis Consulting.

Graham Winch

Graham Winch is Professor of Construction Project Management at the Manchester Centre for Civil and Construction Engineering, UMIST, where he is head of the Project Management Division. He taught for ten years at the Bartlett School, University College London after a career in management research in business schools, and managing construction projects. He is author of Managing Construction Projects, an Information Processing Approach (Blackwell, 2002). He is the author of three other books and over thirty refereed journal articles, complemented by numerous book chapters, conference papers, and research reports. His research currently focuses on the strategic management of projects, and on innovation in the construction industry. In addition to the work on stakeholder management, he works also investigating the processes of risk identification using cognitive mapping.

Rodney Turner

Rodney Turner is Professor of Project Management at Erasmus University Rotterdam, in the Faculty of Economics. He is also an Adjunct Professor at the University of Technology Sydney, and Visiting Professor at Henley Management College, where he was previously Professor of Project Management, and Director of the Masters program in Project Management. He studied engineering at Auckland University and did his doctorate at Oxford University, where he was also for two years a post-doctoral research fellow. He worked for six years for ICI as a mechanical engineer and project manager, on the design, construction and maintenance of heavy process plant, and for three years with Coopers and Lybrand as a management consultant. He joined Henley in 1989 and Erasmus in 1997. Rodney Turner is the author or editor of seven books, including The Handbook of Project-based Management, the best selling book published by McGraw-Hill, and the Gower Handbook of Project Management. He is editor of The International Journal of Project Management, and has written articles for journals, conferences and magazines. He lectures on and teaches project management world wide. From 1999 and 2000, he was President of the International Project Management Association, and Chairman for 2001-2002. He has also helped to establish the Benelux Region of the European Construction Institute as foundation Operations Director. He is also a Fellow of the Institution of Mechanical Engineers and the Association for Project Management.

Graham Ive

At the Bartlett since 1977, Graham Ive is responsible for the overall direction of the M.Sc. Construction Economics and Management (CEM) course, and for economics teaching on the masters program. His research has focused on aspects of the industrial economics of the construction sector, embracing the structure of the construction industries, the strategies, behavior and performance of construction firms; other research includes the complex and specific economic institutions of the construction process, specifically contracting and procurement systems. Current research within this theme focuses on the Private Finance Initiative (Build-Own-Operate-Transfer projects). Much of his research has been undertaken with partners from the UK construction sector, coordinated through the UK’s Construction Industry Council, to whom Graham is an economic advisor. He is author / co-author of two studies of PFI for the Construction Industry Council (The Constructors’ Key Guide to PFI; and The Role of Cost-Saving and Innovation in PFI Projects’), published by Thomas Telford; and two books, The Economics of the Modern Construction Sector and The Economics of the Modern Construction Firm, published by Palgrave Macmilllan.

The Wiley Guides to the Management of Projects series offers an opportunity to take a step back and evaluate the status of the field, particularly in terms of scholarship and intellectual contributions, some twenty-four years after Cleland and King’s seminal Handbook. Much has changed in the interim. The discipline has broadened considerably—where once projects were the primary focus of a few industries, today they are literally the dominant way of organizing business in sectors as diverse as insurance and manufacturing, software engineering and utilities. But as projects have been recognized as primary, critical organizational forms, so has recognition that the range of practices, processes, and issues needed to manage them is substantially broader than was typically seen nearly a quarter of a century ago. The old project management “initiate, plan, execute, control, and close” model once considered the basis for the discipline is now increasingly recognized as insufficient and inadequate, as the many chapters of this book surely demonstrate.

The shift from “project management” to “the management of projects” is no mere linguistic sleight-of-hand: it represents a profound change in the manner in which we approach projects, organize, perform, and evaluate them.

On a personal note, we, the editors, have been both gratified and humbled by the willingness of the authors (very busy people all) to commit their time and labor to this project (and our thanks too to Gill Hypher for all her administrative assistance). Asking an internationally recognized set of experts to provide leading edge work in their respective fields, while ensuring that it is equally useful for scholars and practitioners alike, is a formidable challenge. The contributors rose to meet this challenge wonderfully, as we are sure you, our readers, will agree. In many ways, the Wiley Guides represent not only the current state of the art in the discipline; it also showcases the talents and insights of the field’s top scholars, thinkers, practitioners, and consultants.

Cleland and King’s original Project Management Handbook spawned many imitators; we hope with this book that it has acquired a worthy successor.

References

Christensen, C. M. 1999. Innovation and the General Manager. Boston: Irwin McGraw-Hill.

Cleland, D. I. and King, W. R. 1983. Project Management Handbook. New York: Van Nostrand Reinhold.

Cleland, D. I. 1990. Project Management: Strategic Design and Implementation. Blue Ridge Summit, PA: TAB Books.

Gray, C. F., and E. W. Larson. 2003. Project Management. Burr Ridge, IL: McGraw-Hill.

Griseri, P. 2002. Management Knowledge: a critical view. London: Palgrave.

Kharbanda, O. P., and J. K. Pinto. 1997. What Made Gertie Gallop? New York: Van Nostrand Reinhold.

Meredith, J. R., and S. J. Mantel. 2003. Project Management: A Managerial Approach, 5th Edition. New York: Wiley.

Morris, P. W. G. and G. H. Hough. 1987. The Anatomy of Major Projects. Chichester: John Wiley & Sons Ltd.

Morris, P. W. G. 1994. The Management of Projects. London: Thomas Telford; distributed in the USA by The American Society of Civil Engineers; paperback edition 1997.

Morris, P. W. G. 2001. “Updating The Project Management Bodies Of Knowledge,” Project Management Journal 32(3):21-30.

Morris, P. W. G., H. A. J. Jamieson, and M. M. Shepherd. 2006. “Research updating the APM Body of Knowledge 4th edition,” International Journal of Project Management (24):461-473.

Morris, P. W. G., L. Crawford, D. Hodgson, M. M. Shepherd, and J. Thomas. 2006. “Exploring the Role of Formal Bodies of Knowledge in Defining a Profession—the case of Project Management” International Journal of Project Management (24):710-721.

Pinto, J. K. and D. P. Slevin. 1988. “Project success: definitions and measurement techniques,” Project Management Journal 19(1):67-72.

Pinto, J. K. 2004. Project Management. Upper Saddle River, NJ: Prentice-Hall.

Project Management Institute. 2004. Guide to the Project Management Body of Knowledge. Newtown Square, PA: PMI.

Project Management Institute. 2003. Organizational Project Management Maturity Model. Newtown Square, PA: PMI.

Wheelwright, S. C. & Clark, K. B. 1992. Revolutionizing New Product Development. New York: The Free Press.

CHAPTER ONE

STRATEGIC BUSINESS MANAGEMENT THROUGH MULTIPLE PROJECTS

Karlos A. Artto, Perttu H. Dietrich

Effective management of single projects does not suffice in today’s organizations. Instead, the managerial focus in firms has shifted toward simultaneous management of whole collections of projects as one large entity, and toward effective linking of this set of projects to the ultimate business purpose. This approach is contained in concepts of project-based management, programs, and portfolios. Portfolios of different project types are typically positioned under the governance of organizational units or responsibility areas (see Figure 1.1). Management processes above projects must link projects to business goals and assist in reaching or exceeding the expectations set by company strategy.

One major starting point for the development of business-oriented management of projects in a company context was introduced in the end of 1980s in an expert seminar in Vienna, where the contribution of project management to the general world of management was discussed as contained in the concept of “management by projects” (see the chapter by Gareis). Since that time there have been an increasing number of studies on the broader role available for project-based management, project-based organizations, and project business. Recent examples of such studies include Turner (1999), Turner and Keegan (1999, 2000), Turner et al. (2000), Gareis (2000a, 2000b), Artto (2001), Artto et al. (2002), and Elonen and Artto (2003).

Early theories of organizational strategy saw “strategy as an action of intentionally and rationally combining selected courses of action with the allocation of resources in order to carry out organizational goals and objectives in order to achieve strategic fit and thereby obtain competitive advantage” (Hatch, 1997). This is based on the idea that strategy involves creating a match between organization and environment (Ansoff, 1965). Galbraith (1995) proposed that strategy establishes the criteria for choosing among alternative organizational forms. Each organizational form enables some activities to be performed well while hindering others. Choosing between organizational alternatives involves trade-offs. Strategy can help with this by pointing to those activities that are most necessary, thereby providing a basis for making the best trade-offs.

FIGURE 1.1. TWO COMPANIES (OR TWO BUSINESS UNITS WITHIN ONE COMPANY) WITH NETWORKED PROJECTS AND PORTFOLIOS. THERE ARE CROSS-ORGANIZATIONAL PROCESSES IN THE SHARED NETWORK AT STRATEGIC, PORTFOLIO, AND PROJECT LEVELS.

Source: Artto et al. (2002).

The purpose of this chapter is to introduce managerial practices relevant to strategic business management in multiple-project environments. Multiproject environments are introduced in terms of different project types, programs, and portfolios and their management. Based on the knowledge from this, we introduce issues that serve as guidelines to the theme of strategic business management of multiple projects. We conduct an analysis of content and process of strategy and how these relate to the setting of goals and objectives, and to effective decision making with multiple projects. Based on this, the chapter identifies effective managerial practices for the strategic business management in multiple-project environments. We also combine strategy with management from an applications viewpoint by looking at four case organizations.

Different Project Types and Their Different Strategic Importance

Different project types have different strategic importance; each type typically requires different management approaches. Crawford et al. (2002), Shenhar et al. (2002), and Youker (1999) are studies of project classification that attempt to address this issue. (See Shenhar and Dvir’s chapter in this book.) These are valuable in understanding not only different project types and their characteristics but also the different success criteria and respective strategic importance, and accordingly, different successful managerial practices associated with each project type.

Shenhar et al. classify projects into external and internal types, where the position or closeness of the customer (external or internal) provides the basis for the classification. This classification also considers the ultimate customer in the external markets in relation to how direct or indirect the relationship of the ultimate customer is to the project deliverable. Their starting point is innovation management literature that makes a distinction between incremental and radical innovation. Thus, according to Shenhar et al., projects can be either strategic or operational in their nature, depending on the project type.

External projects typically relate to developing products for customers in the market. Shenhar et al. distinguish between derivative, platform, and breakthrough projects, all as external projects. Wheelwright and Clark (1992) call these three project types commercial development projects