Project Portfolio Management – There’s More to it Than What Management Enacts

Abstract

Although companies manage project portfolios concordantly with project portfolio theory, they may experience problems in the form of delayed projects, resource struggles, stress, and a lack of overview. Based on a research project compromised of 128 in-depth interviews in 30 companies, we propose that a key reason why companies do not do well in relation to project portfolio management (PPM) is that PPM often only covers a subset of on-going projects, while projects that are not subject to PPM tie up resources that initially were dedicated to PPM projects. We address and discuss the dilemma of wanting to include all projects in PPM, and aiming at keeping the resource and cognitive burden of doing PPM at a reasonable level.

1. Introduction

At any given point in time, most companies engage in many projects. Some of these projects may relate to product development and marketing, others relate to changes in work processes and production flows, while yet others relate to competency development, strategic turns, the implementation of new IT systems, environmental issues, etc. A key managerial task is to dedicate resources across all of these projects (as well as do daily work) and consequently, management across projects (project portfolio management (PPM)) is critical to company performance. This paper is based on a large-scale qualitative study, which shows that many project-oriented companies do not perform well when it comes to PPM. This relates to the inability to accomplish projects that are initiated. In particular, we identify the following problems: (1) Projects are not completed according to plan (or they even peter out during their project life cycle); (2) Management and employees feel they lack a broad overview of on-going projects (especially when the number of on-going projects increases as more and more projects are not completed according to plan); and (3) People experience stress as resources are continuously reallocated across projects in order to make ends meet. These observations are especially interesting because the companies were included in the research project because they were supposed to be especially experienced in PPM, and because they actually engage in PPM according to the extant body of literature on PPM. For example, part of the companies’ PPM included an effort to pick the best projects on the basis of explicit or implicit criteria, and an effort to allocate sufficient resources to these projects. However, despite efforts to practice ‘good’ PPM, these companies experience severe problems in relation to PPM – especially in letting enough resources go into the ‘right’ projects. The purpose of this paper is to confront PPM as advocated by normative theories with actual PPM practices. Hence, the purpose is to confront PPM theories with PPM as perceived by managers and other employees for whom PPM is part of, or affects, their work conditions. However, in this paper, we are more interested in PPM as enacted by companies than in universally true perceptions. Hence, we adhere to Weick’s [1–3] notion of enactment as the preconceptions that are used to set aside a portion of the field of experience for further attention. In regard to PPM, enacted projects are thus the ones management sets aside for further attention (i.e. PPM). As such, we focus especially on ways actors define or enact projects [4] and make sense of how to manage the sum of the projects. Drawing on this perspective, we account for findings that suggest why companies that do engage in PPM still experience problems.

2. Project portfolio theory

This paper draws on Archer and Ghasemzadeh’s [5, p. 208] definition of project portfolios as ‘‘a group of projects that are carried out under the sponsorship and/or management of a particular organization’’. Henceforth, we define PPM as the managerial activities that relate to (1) the initial screening, selection and prioritisation of project proposals, (2) the concurrent reprioritisation of projects in the portfolio, and (3) the allocation and reallocation of resources to projects according to priority. For quite some time researchers have suggested that low completion rates for new product development (NPD) projects and new product failure relate to resource deficiencies in key areas [6,7]. Furthermore, while a host of researchers [8–10] have focused on the dimension of PPM that concerns processes relating to selection of projects to be included in the portfolio, research e.g. [11] also increasingly focuses on the day-today management of the project portfolio.

Among the first scholars who focused on PPM, the issueof choosing the right (number of) projects was especially emphasised. Thus, these researchers suggested how one reaches the optimum project portfolio by means of mathematical models (see e.g. [12]). Newer research (e.g. [13]) introduces portfolio theories, which hinge on the premise that companies generally start more projects than they would, had they only initiated the number of projects, for completion of which they have adequate resources. Furthermore, most of these types of PPM models rely on central tenets of rational decision-making theory, for example, an explication of a series of evaluative criteria mostly related to corporate needs and objectives; an accentuation of the extent to which each alternative (i.e. project proposal) meets these criteria; and a selection (or prioritisation) of the projects offering the most value when evaluated using pre-specified evaluative criteria. In contrast to these PPM theories, some authors define project portfolios as entities that may encompass more than just projects that survived rational decision-making processes. For example, Twiss [14] argues that not all funds are (or should be) allocated to projects that initially score well using the criteria that traditional PPM is based on. Instead, Twiss [14] argues that some (loosely-controlled) funds should be dedicated to projects of personal interest to employees. Primarily, dedicating loosely-controlled funds to side projects ensures that employees do not loose interest, allowing room for creativity. Although scholars such as Twiss [14] acknowledge that actual project portfolios contain projects that survived initial screening as an inherent part of PPM, not to mention unplanned employee-initiated projects, they are all expected to be subject to some sort of screening. For example, Twiss [14] suggests that unplanned projects of no commercial value should be rejected on the basis of some sort of evaluation. Thus, although Twiss [14], for example, points to the importance of emergent projects, the PPM literature emphasises top management’s selection of the right (number of) projects by employing explicit (and primarily objective) evaluation criteria.

In recent years, research on PPM has changed, both in terms of the research questions posed and in terms of the methodological background used. Dawidson [15, p. 1] relates to the changes in PPM studies as follows: ‘‘During the past decade, the research on project portfolio management has expanded into a more complete managerial approach – beside the focus only on tools, techniques and methods – including aspects on how project portfolio management is practiced’’. In accordance with other Authors (e.g. [16]), Dawidson thus argues that PPM studies that focus on PPM as a real-world managerial phenomenon – although only quite recently established as a research field – are increasingly setting the agenda for academic discussions on PPM. Hence, it seems that the research agenda for PPM studies has (finally) transcended the state of unempirical research (i.e. the development of tools and methods for PPM that were not tested for their practical relevance) and has moved towards studies that also look upon PPM as it is actually carried out by companies. H owever,with a few valuable exceptions (primarily the works of Dawidson and colleagues), especially recent ‘organisational’ PPM studies (e.g. [17–19]) seek to offer normative advice on how to set up PPM, which people to involved, and how to organise them [15]. As a result, we adhere to Dawidson’s [15, p. 5] claim that ‘‘. . . the view of how project portfolio management decisions really are made in a squeezed process, the contributions here must be considered sparser’’. Thus, the empirical study accounted for in this paper should be seen as a rather exploratory study, the purpose of which is to contribute to the building of knowledge on how and why companies do PPM in certain ways – and especially to the building of knowledge on the consequences PPM has for project work.

3. Methodology

Over a period of two years, we did empirical research on how companies manage their entire range of projects, e.g. renewal projects, strategic projects, IT projects, departmentally specific projects, and production based projects. In relation to the selection of companies to be included in the empirical study, a key criterion was that the study should cover a wide variety of industries. As a result, the empirical study covers 30 companies from industries as

diverse as, e.g. mobile telephone communications, finances, energy, pharmaceuticals, toys, software, and foods. However, due to the fact that we were looking for companies, where the amount of on-going projects suggested they were engaged in PPM, the study is biased towards larger companies as well as companies that define at least a substantial part of their activities as projects. The degree to which the companies participated in the study varies. Hence, half of the companies are labelled ‘inner circle’ companies due to the fact that we drew extensively on these 15 companies. For example, in these companies more interviews were conducted at various points in time and at various organisational levels. Hence, a longitudinal perspective characterises the involvement of these companies. The remaining half of the companies are labelled ‘outer circle’ companies because their participation in the study has included fewer top-management interviews, the purpose of which was to gain insight into ways in which (top) management defines the content of their project portfolios and manages them.

The primary source of evidence employed was 128 qualitative interviews (with one to three interviews conducted in outer circle companies and 5–18 interviews conducted in inner circle companies). In addition, data was obtained from other sources of evidence than interviews, e.g. project handbooks, project lists, computer systems and databases, and other company-specific documents. Primarily, this type of additional data was used by the researchers to prepare for the next interviews. A final stream of additional data was obtained as the researchers engaged in a series of workshops with the companies. The main purpose of these workshops was to obtain feed-back from the companies on the researchers’ preliminary interpretations, findings, and conclusions. Hence, during these workshops, the findings of the study presented in this article were discussed with and modified in accordance with feed-back offered by the companies. In practice, some of the researchers presented preliminary findings during these workshops and subsequently discussed these findings with the company representatives, while other researchers observed these discussions and took notes. These notes were used during the next phase of analysis in order to ensure that the findings – and especially the choosing of key quotations – actually resemble PPM as enacted by the informants.

The 128 interviews were done in two series. First, the preliminary round of interviews was comprised of 38 interviews that each lasted from one to two hours. A deliberate choice was made not to make these preliminary interviews too structured in order to allow the interviews to affect the interview guides that were to be used in subsequent interviews. All 30 companies participated in this preliminary round and the interviews were conducted with top or higher level managers responsible for PPM. Afterwards, the researchers conducted 90 semi-structured interviews. Some of these interviews were one-on-one interviews and others were group interviews with people at the same organisational level. Apart from interviews with top managers and functional managers, the second series of interviews also included interviews with project managers and project team members. Hence, while interviews with top managers and functional managers especially focused on issues such as strategy and management, portfolios, organisational culture, organising for PPM, and project management, the interviews with project managers and project team members especially focused on the ways in which the management of project portfolios affected employees and their daily work. Hence, the study encompasses a duality of perspectives, covering the perspectives of those who do PPM and those who are subject to PPM. In the following sections we present the key findings of the study.

4. Many projects and a lack of resources

The most striking finding is that the empirical evidence obtained at all organisation levels suggests that the 30 companies experience a host of the resource-related problems and symptoms accounted for in the literature. For example, a managing director, an operations manager, and a vice president in charge of project management stated the following (all interview quotes in this paper were translated from Danish to English by the authors):

‘‘Probably, the key characteristic is that all projects get postponed and postponed.’’ ‘‘I dream that one day we will become better at limiting the number of projects we initiate.’’ ‘‘I think that we are reaching the tolerance level regarding how many balls we can juggle with at once . . . I think that we waste a lot of time on joggling so many balls . . . I think we could do more by doing fewer projects . . . It is important that we find the balance between doing a proper job in choosing between projects and in achieving a fast process and thus, quantity.’’

Also, the marketing manager in one company argued that: ‘‘It is a battle for resources. We have a lot more projects than we are able to work on, we really do. . . I think there is a tendency to always take too much in.’’ Furthermore, three engineers who are part of a project team found that:

‘‘Somehow, perhaps, we ought to have more resources, because we generally have more ideas than we have people to do the work.’’ ‘‘It is easy to say, ‘you get this amount of time’. But when it comes down to it, the time simply isn’t available. I mean, you are assigned a portion of time , but in practice that portion of time simply doesn’t exist.’’ ‘‘I don’t think that we have ever kept a deadline.’’

The lack of resources combined with many (suffering) projects is not an uncommon finding [20]. The interesting point is to figure out why companies heavily involved in project management and PPM (and henceforth a group of companies that may very well be best practice companies  in these respects) have not overcome the crunch in resources for projects. The following sections offer an explanation.

4.1. Content of project portfolios

Although PPM research tends to emphasise NPD projects, we found a number of other project types in the companies included in the empirical study. For example, when addressing the content of the company’s project portfolio, a sales and marketing director reasoned: ‘‘We have a lot of things we need to develop in relation to customers. We spend many resources on those things. Then we have some things we need to develop in terms of production. We also spend a lot of resources there. And then we have an organisation that needs to keep up.’’

Along the same vein, a vice president elaborates on the project portfolio as follows:

‘‘If we are talking about new products, then we have around 5–10 projects . . . perhaps more. . . If we are talking about other types of projects . . ., e.g. organisational development projects . . . there we have. . . I don’t know how many of these qualify as projects . . . but we are building a new plant, I don’t know if that is a project . . .we have new production technologies . . .we also have IT projects . . .IT includes large projects.’’

Although the informants account for a series of different projects, the most important finding is that actual official project portfolios appear to contain other types of projects than NPD projects. Furthermore, it seems that actual, although not official project portfolios contain projects, the existence of which is (more or less) unknown to top management and, thus, not subject to PPM. We apply the notion ‘enacted portfolios’ in order to set projects subject to PPM apart from projects not subject to it. Thus, enacted project portfolios are comprised of the projects included on the project lists that top managers rely on when they engage in PPM, e.g. when they compare new project proposals with each other in order to decide which projects they will (not) dedicate resources to and, hence, which projects they will include in project lists; when they engage in on-going prioritisation of projects on the list and, hence, when they (re)allocate resources across projects; when they decide to kill projects; and/or when they decide to put projects on hold. Thus, enacted project portfolios include projects whose existence top management is aware of and the progress (or lack thereof) that top management takes an active interest in. However, the empirical study suggests that – apart from ‘enacted’ portfolios – companies engage in a plethora of smaller projects that tie up valuable (and scarce) resources; although these projects are never subject to PPM and they do not receive top management’s attention. The following sections account for the two subsets of project portfolios (i.e. enacted projects and projects whose existence management is unaware of) and are followed by a discussion of ways in which these subsets compete for resources.

4.2. Projects that are part of enacted project portfolios

All of the 30 companies included in the empirical study engage in a wide variety of enacted projects. In general, NPD projects account for a substantial portion of all the projects the 30 companies engage in. Apart from NPD projects, enacted project portfolios (i.e. portfolios subject to PPM) encompass larger renewal projects, e.g. IT projects, organisational development projects, and strategic projects.
The notion ‘larger renewal projects’ is adopted in order to account for projects characterised by the following features:

– The origins and end results of the projects are not(directly) linked to the demand-side,

– Primarily, the aim of the projects is to enhance internal activities and not to deliver superior value to customers (directly), and

– The intra-organisational renewal projects cut across more departments (or even the entire company). Regarding both types of enacted projects, companies use stage gate processes characterised by frequent reviews of on-going projects. However, some key factors discriminate between management of NPD and renewal projects. First, the number of projects is a key discriminator as companies have much fewer on-going renewal projects than NPD projects. Second, a renewal project typically represents a much heavier investment than a NPD project does and more of the renewal projects are initiated by top management as well as closely monitored by top management throughout their life-cycles. NPD projects are typically initiated at a lower level in the organisational hierarchy. Third, larger renewal projects and NPD projects are not managed in the same way. For example, after having addressed the management of NPD projects, a managing director and an IT manager, respectively, offered the following comments on the management of larger renewal projects:

‘‘I don’t think we are as professional when it comes to [larger renewal projects]. Or at least, we are not as experienced. Actually, I think this is an area where we could improve. And. . .an area where we could use more structure, more reviews, etc. It is not that we lack seriousness, we are just not that good at it.’’ ‘‘Generally, I feel that we are on top of things in relation to NPD projects. Renewal projects . . .organisational improvement projects and projects relating to processes internally in the company are what I see as prioritised less.’’

Furthermore, no external customers relate to renewal projects. One implication of the lack of external clients is that although top management is highly involved in, or at least concerned about, renewal projects, often NPD pro jects are prioritised before renewal projects (for which it is much more difficult to suggest bottom-line results). Nevertheless, the largest of the renewal projects are so large and strategically important that they occupy a prominent position in the project portfolio.

4.3. Projects that are not part of enacted project portfolios

Apart from enacted projects, all of the 30 companies also engage in a wide variety of smaller projects that are not subject to initial screening; hence, these projects never become part of enacted project portfolios or PPM. One R& D manager explained the nature of un-enacted projects as follows:

‘‘It is those projects that are not formulated, or somehow documented, or promised to anybody but oneself. They are mostly things you have started up on your own. . .’’

The pool of smaller, un-enacted projects includes smaller NPD projects as well as smaller renewal projects (projects characterised by the features listed previously). Thus, this cluster of projects is comprised of smaller projects undertaken by one, or only a few, people located in the same department. It seems that knowledge about these kinds of projects only exists at departmental levels. For example, when asked about the total range of projects that the company is involved in, the IT-manager in one company stated:

‘‘I have to say, I don’t know what is going on in the other departments.’’ Furthermore, a project chief argued that: ‘‘I don’t know exactly what they are doing down there, but I hope that we have about 10 significant projects going on.’’

Also, engineers working with operations in the same company argued that: ‘‘There are lots of project lists. For example, we have a list in Lotus Notes. It is only the big projects that are registered there. Nevertheless, people have so many. . . medium-range tasks and projects . . . I have my own list that I discuss with [my superior] once every so often.’’

Top management is rarely involved in the smaller projects because they pop up independently of top management’s PPM, while they only affect the work of a very few people in the organisation during their life cycles. Furthermore, at all organisational levels, it seems that it is perfectly acceptable not to seek approval for such projects. For example, the following arguments were offered by two engineers:

‘‘There are project portfolio limits in terms of money. If it is projects or tasks below [EUR 7000], top management won’t make a fuss over trifles. It has to cost EUR 100,000 before they spend much time on it at their meetings.’’ ‘‘We are talking about small projects, projects that never become big enough to make it worthwhile to set the whole machinery in motion. . . Most of the time, I just do them without asking anybody.’’

The smaller projects are activities that the individual employee or a middle manager (or a few people) engage in when time/other work-related activities allow for it. Thus, rarely do these activities qualify as real projects in the minds of managers; hence, they are not integral parts of the company’s official project portfolio. As a result, smaller projects are not an integral part of PPM, although the mere number of smaller projects suggests that this type of project work is, indeed, alive and kicking, as well as resources consuming. In fact, the empirical study suggests that, in practice, smaller projects consume quite a substantial proportion of employee time and resources. Middle managers (including project managers) seem to have somewhat mixed feelings about the tendency to engage in smaller projects independently of PPM. One project manager states:

‘‘I could easily start something on my own, but then it is for me only. Somehow, I think that is as it should be. But, it would be unfortunate if we all did our own things independently. Actually, I try to fight against that.’’

As suggested by the above comments, which resemble empirical evidence across all 30 companies, a lot of smaller, un-enacted projects seem to exist in all of the companies, upon which our empirical work is based.

4.4. Ways in which projects compete for resources

The fact that a host of small-scale projects are initiated and completed, but unknown to (top) management has profound managerial implications for the resources available for projects included in enacted and, hence, ‘managed’ project portfolios. Thus, although each un-enacted project does not tie up many resources, the number of such projects suggests that, in sum, they take up a lot of the resources necessary for the completion of on-going enacted projects. Furthermore, these small-scale projects take up resources without ever being screened against the evaluation criteria that are applied when management screens enacted projects. Although most managers welcome small-scale projects and bottom-up initiatives, the projects demonstrate that the demand they put on resources poses a dilemma.

The progress (or lack thereof) of ‘enacted’ projects is closely monitored by top management and, thus, the allocation of resources to such projects is an important part of PPM. In practice, top management spends much time and resources balancing the needs of enacted projects. For example, top management may put a renewal project on hold (or at least dedicate fewer resources to the project) when getting strategically important NPD projects completed is critical. On the other hand, if top management decides that a renewal project needs to be completed quickly, a decision is often made to drain resources from NPD projects. Cooper and Edgett [21, p. 50] argue that ‘‘most businesses have immediate development needs, projects that must be done. . .’’ and that ‘‘these ‘must do’ projects always exist’’. The empirical study corroborates the fact that – during their lifecycles – enacted projects shift priorities. Thus, at a specific point in time, top management may define a specific renewal project (e.g. an IT project) as a must-do project, whereas top management may very well allow the schedule to slip for this project at a later stage. Especially this kind of de-prioritisation of renewal projects seems to relate to some NPD projects turning into must-do projects during their lifecycle. For example, one functional manager pointed out that:

‘‘Customer-related projects may make us put other types of projects on hold. But nothing, nothing at all, should stop these other [renewal] projects. They might stagnate for a while, but it shouldn’t stop them.’’

Managers thus seem to be very aware of the fact that internal projects and NPD projects compete for scarce resources. For example, when addressing the challenges of PPM, one marketing manager argued that:

‘‘. . . especially [tension exists] between customer-related projects and projects steered internally . . . there are lots of considerations concerning this. Sometimes it goes one way and sometimes it goes the other.’’

Apart from project selection and approval, especially management of enacted portfolios thus concerns (1) resource allocation and sharing across projects, (2) reviewing the portfolio and hence, project termination, and (3) reallocation of resources across on-going projects in accordance with shifting project prioritisation. For example, one IT manager reasoned as follows:

‘‘We have to acknowledge that, nowadays, in a figurative sense, you never have an empty in-box. You can’t get to the bottom of the pile, because things change all the time. Thus, you have to be able to reprioritise. Actually, this is one of the most important managerial tasks: to always prioritise resources at the right point in time.’’

Also, one marketing manager argued that especially the management of project portfolios concerns:

‘‘Trying to push some projects ahead of others.’’

Drawing on the preceding section, a key finding of our empirical study is that enacted project portfolios are subject to PPM concordantly with normative PPM theories. In contrast, smaller projects are not subject to PPM and, hence, compete for resources in ways that do not align with PPM theory.

4.5. Why projects subject to PPM fail

The exclusion of smaller projects from the official portfolio is not concordant with Cooper et al.’s [13,22] suggestion that all projects should be subject to a stage gate process due to the fact that all projects (and thus, also small projects) take up resources. Thus, contradictory to theory, the empirical study suggests that smaller projects are not integral parts of PPM, although the mere number of smaller projects identified by the empirical study suggests that these projects are, indeed, an important part of project work. In fact, the empirical study suggests that, in practice, smaller projects and tasks consume quite a substantial proportion of employee time. Even more importantly, the host of smaller projects does not draw on a pool of loosely-controlled funds, i.e. funds not tied up according to pre-specified purposes. Instead, these projects draw on time and resources that top management has dedicated to enacted projects and, thus, smaller projects actually drain resources from enacted projects. The fact that resources are spread too thinly across projects emerged throughout most of the 128 interviews; two engineers stated, for example:

‘‘You really want to do well [in projects]. It is just that you don’t always feel that you have the time for it. You don’t feel you have the time to do your job properly, get the development projects absolutely fine-tuned and completed. That can be difficult.’’ ‘‘It is difficult to run a project without being disturbed.’’

The existence of smaller un-enacted projects is not the only reason for resources being drained from enacted projects. A large amount of other daily work is another important factor. Concordant with the PPM literature, the people in the 30 companies are rarely assigned to projects full-time. Instead, mostly only a portion of people’s time is devoted to project work, while the remaining time is dedicated to other duties and daily work in their departments. However, in reality, daily work often predominates and, consequently, time and resources dedicated to project work are under pressure. For example, one production managerstated:

‘‘It is intriguing to do renewal projects. The thing that is less amusing is when every day is booked with daily work, because renewal projects then take the back seat and it stops being intriguing.’’

At lower organisational levels, employees also address the dilemma of being assigned to both daily work and projects. For example, when elaborating on their attitudes towards projects in general, two engineers argued as follows:

‘‘It depends on the time of the day when I am asked. If you ask me at the project meetings, etc, then project work has the highest priority. If you ask me when we have an important, incoming order, then projects don’t matter at all. When a project lacks results, however, it resumes highest priority.’’ ‘‘Projects are affected profoundly by daily work. Nobody does projects all the time, so we all have to take daily work into consideration as well. So the production flow has first priority and then everything else runs on the side.’’

Also at higher organisational levels, people are aware of the battle for resources between daily work and project work. For example, one managing director stated:

‘‘Once in a while when operations pressure us we manage top-down. At the moment, the situation is that across most of the organisation we have thrown everything else away in order to only focus on operations.’’

Given that, apart from daily work, employees (and especially employees in manufacturing and R&D), as mentioned previously, initiate a host of smaller projects for which no time is officially allocated, which means time dedicated to work on enacted projects ends up being very sparse in practice. Furthermore, employee motivation to work on these projects may be even higher than their motivation to work on enacted projects due to the fact that the end results of these types of smaller projects are highly visible to the individual employee, i.e. the completion of these projects occurs in the foreseeable future. Thus, the existence of smaller projects has the negative side-effect that personnel are spread too thinly across the projects they are supposed to work on. Consequently, although smaller, individual projects do not take up many resources, on an aggregate level they take up a considerable portion of the resources that top management thought was devoted to other projects by means of PPM. The fact that smaller projects tie up resources that have never been assigned to them is addressed as follows by a project chief:

‘‘For larger projects, the managing director decides on the time and money and then I assign people to the projects. As for smaller projects, I think it is more like people try to squeeze them in . . .’’ Also, one engineer confirms that smaller projects are squeezed in as follows:

‘‘It is as if the projects are often managed from the bottom. Some of us say, for example, ‘it would be smart if we did something here’. And then we do it without much managerial interference.’’

This study corroborates the claim made by, e.g. McDonough and Spital [11] and Cooper and Edgett [21], that daily work is a factor, which induces stress in employees. On top of the conflict between daily work and enacted projects, the small, un-enacted projects and tasks make this pressure even worse, while, at the same time, top management  may not be aware of this issue.

5. Managerial implications

A key finding is that the gap between required and available resources is very much attributable to the existence of a host of smaller projects that never become part of enacted project portfolios. Thus, at an aggregated level, the empirical study suggests smaller, un-enacted projects qualify as resources crunchers in so far they are not considered to be a part of enacted project portfolios. In order to overcome this crunch in resources, two solutions seem obvious:

1. Enacting more, i.e. having PPM embrace all projects,

2. Allocating more resources to a pool of loosely-controlled resources for the un-enacted projects to draw on. However, as suggested below, both of these solutions have their drawbacks.

5.1. Embracing all projects

One solution to the resource crunch is to try to make the smaller, un-enacted projects an integral part of PPM. Thus, managers could try to make PPM concordant with Cooper et al.’s [13,22] suggestion that all projects should be subject to PPM. Thus, if all projects – no matter how small they are – were included in the official project list that management relies on when doing PPM, the tendency these projects have to drain the resource pool dedicated to other projects would disappear. However, the empirical study indicates that the task of including all projects in the project list that PPM supervenes on is – in practice – an impossible mission. Especially, four major concerns disfavour any attempt to generate project lists that encompass all projects:

1. Top management has limited capacity (cognitively as well as in terms of time) to apply to PPM.

2. It may be difficult to identify and estimate the activities in the projects, and, thereby, carry out detailed resource management.

3. The resource burden arising from identifying and administrating small projects is very high compared to expected benefits.

4. Bureaucracy induces less employee flexibility and freedom to do independent project work.

At all levels of organisation, our empirical evidence suggests that smaller, independent projects are desirable. However, the generation of all-encompassing project lists qualifies as a rather utopian idea. First, top managers find that it would be a waste of their valuable time if they were to enact all projects no matter their size. Second, top management finds that an organisation with no independent project work would qualify as rather static and un-innovative. Third, middle managers find that a lot of tasks are completed better if employees initiate and complete  them on their own compared to if they had been subject to management interference. Last – but certainly not least – across all 30 companies, employees were very fond of smaller, independent projects. Employees especially appreciate these projects because they empower them, i.e. working on these projects makes them feel that they make a difference and that they are able to control their own work schedules. Hence, the fact that employees work on their own projects has a positive, and substantial effect on the individual employee (an effect we might label increased self-realization and self-respect). Thus, if management finds that it is important to facilitate creativity and initiative on the behalf of employees, then it seems to be a dangerous strategy to take away a means of creati vity and selfempowerment, i.e. smaller, independent projects that employees appreciate.

5.2. Setting up a pool of loosely-controlled resources

Due to the severe problems regarding the first solution (i.e. making PPM all-embracing), another solution would be to assure that there is the space and resources for employees to do smaller, independent projects without these projects becoming subject to PPM. Hence, the second solution is to set up a pool of loosely-controlled resources dedicated to projects that are simply too small for top management to incorporate them into PPM. Thus, management could make room for employees to work on smaller, independent projects of their own choice. A piece of well-known advice in the project management literature is to set up an 80/20 rule, i.e. let PPM cover 80 percent of resources and set aside the remaining 20% for employees to allocate across smaller projects. In practice, this could be done by dedicating four days a week to PPM projects and one day to smaller projects. However, as simple as this may sound, setting up loosely-controlled resources for smaller projects to draw upon may prove difficult in practice. Especially, problems may arise from the following issues:

1. Daily work getting in the way of work on both enacted and un-enacted projects.

2. Tight deadlines on a specific project may make it wiser to focus on that project rather than spread out resourcesacross more projects.

3. The level of liability on behalf of employees that this type of strategy is dependent upon.

4. Implementation of this strategy necessitates that management defines where the boundary between enacted and un-enacted projects actually lies.

5. It may be problematic that un-enacted projects are not evaluated or that they are not subject to some sort of screening like enacted projects are.

In conclusion, it thus seems that a key managerial challenge is to decide whether individual projects should be part of PPM. As the generation of all-embracing project lists is rather problematic, the end result of this decisionmaking processes is likely to be the decision not to generate omprehensive lists. If the end result of the decision-making is to not make comprehensive project lists (i.e. lists that include all minor projects), then management faces two additional challenges. First, top management has to decide on the boundary that sets enacted projects apart from unenacted ones. Thus, managers have to deliberately decide which projects should be subject to PPM and which ones should not be. Second, having decided on degrees of enactment, the challenge is to decide how many resources should be set aside for the plethora of small projects that do not appear on the project list. Otherwise, smaller projects will take up a critical portion of the resources that are – officially – set aside for the completion of projects subject to PPM. It is not, we argue, possible to make any rule-ofthumb to indicate what the extent of top management’s enactment of projects should be. Especially, this is impossible due to the fact that degrees of enactment hinge upon top management’s predispositions towards top-down PPM and employee empowerment. Hence, it especially seems that top management might reduce the crunch in resources by means of deliberately deciding on (1) which projects need top management attention, and (2) which projects are better left to employees.

6. Research implications

The empirical study elaborates on the ‘‘significant shortage of resources devoted to NPD’’ that Cooper and Edgett [21] argue is the fundamental problem ‘‘that plagues most firms’ product development efforts’’. Our work especially suggests that the shortage of resources devoted to enacted projects is not a problem that primarily arises in relation to top management’s PPM. On the contrary, in-good-faith top management dedicates resources to enacted projects on the basis of sound PPM. However, what top managers do not do is take into account the host of smaller projects that individuals initiate and – more importantly – top managers ignore (or at least heavily under-estimate) the amount of resources that these smaller projects tie up. Hence, we argue that especially the crunch in resources may be attributable to the un-enacted competition for resources that smaller projects subject enacted projects to. Consequently, the key contribution of our empirical work to research is that it emphasises that if we wish to study PPM (and especially if we wish to relate PPM to project performance), we might be better off taking into account the entire range of projects that actual (not enacted) portfolios are comprised of. Thus, if we as researchers only enact the projects that are neatly listed by top management, then our research will neglect the host of projects that are not subject to PPM, projects that nonetheless take up valuable, and scarce, resources. The fact that the empirical study includes interviews with managers, i.e. those who do PPM, and interviews with personnel at lower organisational levels, i.e. those whose work is subject to PPM, is the reason why we were able to identify un-enacted projects. Thus, researchers interested in PPM should be careful not to rely too heavily on a management perspective.

7. Conclusion and limitations

The main conclusion is that as long as some projects are un-enacted, companies may experience a drain on resources that reduces the time and resources actually devoted to projects subject to PPM. Hence, each individual company should decide whether or not all projects should be part of PPM and if the end result of such a decision isnot to make comprehensive project lists (i.e. lists that include all minor projects), then management should decide how many resources should be set aside for the plethora of small projects that do not appear on the project list. One way in which the crunch in resources can be reduced is by ensuring that smaller projects do not take up a critical portion of the resources that are – officially –  set aside for the completion of projects subject to PPM. However, due to the exploratory nature of the study accounted for in this paper, our findings relate far more to what companies actually do (positive theory in Hunt’s [23] terms), rather than to what they ought to do (normative theory in Hunt’s [23] terms). Although generating positive theory is indeed a crucial first step – especially in relation to the future of PPM theory – positive theory cannot, and should not, stand alone. Hence, the key challenges for PPM theory in the future are to produce normative theory that offers sound suggestions as to how companies can improve their PPM. Another limitation of our study is that the empirical part was carried out in a Danish context as the 30 companies involved are located in Denmark, which may not be sufficiently representative for companies worldwide because Denmark has, to a larger extent, a bottom-up culture. Therefore, the portion of smaller un-enacted projects may be bigger here than in companies in other countries. We hope that our study will inspire other researchers to carry our similar studies in other countries.

References

[1] Weick KE. Enacted sensemaking in crisis situations. J Manage Studies 1988;24(4):305–17.

[2] Weick KE. The social psychology of organising. second ed. Reading, MA: Addison-Wesley; 1979.

[3] Weick KE. Sensemaking in organizations. Thousand Oaks, CA: Sage; 1995.

[4] Aboloafia MY, Killduff D. Enacting market crisis: the social construction of a speculative bubble. Admin Sci Quart 1988;33(1): 177–93.

[5] Archer NP, Ghasemzadeh F. An integrated framework for project portfolio selection. Int J Project Manage 1999;17(4):207–16.

[6] Cooper RG. Benchmarking new product performance: results of the best practices study. Eur Manage J 1998;16(1):1–7.

[7] Cooper RG, Edgett SJ, Kleinschmidt EJ. Best practices for managing R&D portfolios. Res Technol Manage 1998;41:20–33.

[8] Cooper RG, Edgett SJ, Kleinschmidt EJ. Portfolio management in new product development: lessons from the leaders – I. Res Technol Manage 1997;40:16–28.

[9] Cooper RG, Edgett SJ, Kleinschmidt EJ. Portfolio management in new product development: lessons from the leaders – II. Res Technol Manage 1997;40:43–52.

[10] Graves SB, Ringuest JL, Case RH. Formulating optimal R&D portfolios. Res Technol Manage 2000;43:47–51.

[11] McDonough EF, Spital FC. Managing project portfolios. Res Technol Manage 2003;46:40–6.

[12] Henriksen AD, Traynor AJ. A practical R&D project selection scoring tool. IEEE Trans Eng Manage 1999;46(May):158–70.

[13] Cooper RG, Edgett SJ, Kleinschmidt EJ. New product portfolio management: practices and performance. J Prod Innovat Manage 1999;16(3):333–51.

[14] Twiss B. Managing technological innovation. third ed. London: Longman Publishing; 1987.

[15] Dawidson O. Project portfolio management – an organising perspective. Gothenburg, Sweden: Department of Technology Management and Economics Operations Management and Work Organisation, Chalmers University of Technology; 2006.

[16] Dye LD, Pennypacker JS. Project portfolio management. West Chester, PA: Center for Business Practices; 1999.

[17] Levine HA. Project portfolio management: a song without words? In: Dye LD, Pennypacker JS, editors. Project portfolio management: 39–44. West Chester, PA: Center for Business Practices; 1999.

[18] Cooper RG, Edgett SJ, Kleinschmidt EJ. Portfolio management for new product development: results of an industry practices study. R&D Manage 2001;31(4):361–80.

[19] Cooper RG, Edgett SJ, Kleinschmidt EJ. Portfolio management for new products. Cambridge MA: Perseus Publishing; 2001.

[20] Eskerod P. Meaning and action in a multi-project environment:understanding a multi-project environment by means of metaphors and basic assumptions. Int J Project Manage 1996;14(2):61–5.

[21] Cooper RG, Edgett SJ. Overcoming the crunch in resources for new product development. Res Technol Manage 2003;46:48–58.

[22] Cooper RG, Edgett SJ, Kleinschmidt EJ. New problems, new solutions: making portfolio management more effective. Res Technol Manage 2000;43:18–33.

[23] Hunt SD. The nature and scope of marketing. J Market 1976;40(3): 17–28.

Bodil Stilling Blichfeldt, Pernille Eskerod, University of Southern Denmark, Department of Environmental and Business Economics, Denmark.

Tags: , , , , , , , ,

Facebook Comments:

Welcome to my website


Staying ahead of the modern competitive environment requires flexibility and continual change. Old bureaucratic systems are increasingly being rejected in favour of project-based structures where people work together across disciplines, and functions creating greater adaptability.

I have published several books on Amazon, designed to help anyone, managing projects, implement change and achieve objectives.

ProjectTemplates® is THE tool for key documents for delivering projects in both Government & Private sectors.

“Delivering a project isn’t difficult. What’s difficult is delivering a project without first taking the time to plan properly” James Leal


My Advertising Pays, It Pays To Be On M.A.P!

FBEmail25

Our Books & CD on Amazon