ICB Re-perspectives 2009

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Project PerspectivesThe annual publication of International Project Management Association

2009

ISSN 145 5- 4178

8.00

Vol. XXXI


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Table of Contents4 How does a CEO choose the right way to run his

organizations programmes and projects?Alan Harpham

10 Project Management in Global organizations -Experience of a practitionerAgnesRoux-Kiener

14 Factors influencing design and performance of thebusiness model of a project-based firmJaakko Kujala, KarlosArtto and Annaleena Parhankangas

18 The Global Project Management Support at MAGNASTEYRWolfgang Danzer

23 What Western Project Management can learn fromChinese Culture, Philosophy and Management ApproachJerzy Stawicki, Ding Ronggui and Otto Zieglmeier

28 The prerequisites and steps to develop Corporate ProjectPortfolio Management (PPM)Matti Haukka

32 Maturity of Petrom as a Project Oriented Company andPlans for Further DevelopmentPeter Crerar and Dagmar Zuchi

38 The Dichotomous Nature of Motivation in Collocatedand Virtual Project EnvironmentsRavikiran Dwivedula, Christophe Bredillet and Philippe Ruiz

44 Ecological and business aspects of offering life-cycleservices in the project businessSaara Kujala

54 Project Management On StageHelgi Thor Ingason and JensThordarson

62 ONE SIZE FITS ALL - Implementation of a holistic andscalable project management methodologyThomasGschossmann and Hermann-Josef Weber

66 Project Governance - The Role And Capabilities Of TheExecutive SponsorLynn Crawford and Terry Cooke-Davies

74 Automotive project management - More Lessons toLearn!Reinhard Wagner

80 Unexpected urgent emergency projects - Lessons for allproject managersStephen Wearne

84 Project Management of Total CareProjects in theConstruction IndustryAli Imran Khan, Tiew Ying Ting, Andrew Gale and M ehmood

Alam

92 Knowledge Oriented Project ManagementStanisaw Gasik

Dr. Kalle Khknen

Chief Research Scient istVTT - Technical Research Cent reof Finland

Enabling Business

With Projects

Acknowledgement to IRNOP 2007 and IPMA WC 2007conference organizers.

Several papers of this issue have been picked up from IRNOP2007 and IPMA WC 2007 conferences. The original proceedingspapers have then been updated and or otherwise changed by theauthors to meet the needs of Project Perspectives.

Published byThe Project M anagement Association Finland (PM AF) inco-operation with International Project M anagementAssociation (IPM A). PMAF is:- Forum and a meeting place for project professionals- Developer of project thinking and knowledge- Active partner within the international project community

PM AF serveswith- Two project management journals(Finnish & English)- Yearly Project Day conference and frequent theme events- Project management certifi cation

http://www.pry.fi /index_eng.htm

Editorial Board:Kalle Khknen (Editor in chief), Aki Latvanne

ISSN 1455-4178

Editorial

Throughout various lines of businesses projects haveproved to be flexible and valuable means to achievechange in modern world. Thus it is not wonder that

projects increasingly exist as inherent parts of companies'operational practice. Across the integration of company op-erations and projects we are learning important lessons andshaping our knowledge about the content and appearancesof projects and their management in varying conditions.

Examples of practical challenges that we are covering inthis issue are

- Viewing frameworks of top management over criticalprojects

- Meeting commercial objectives of companies withprojects and their portfolios

- Alignment of project management approach to therequirements of global business

- Ecological implications of current practice- Diversified and distributed project environments

The examples above are demonstrating the emergence ofnew requirements when projects are embedded in business op-

erations. Although projects and their management are widelyconsidered as a separate profession there is a clear need topreset this together with other management paradigms anddoctrines. Vice versa, the other well established managementteaching (for example company, human and communicationmanagement) must acknowledge and incorporate projects andtheir management inside their own doctrines.

The implications of project based operations to the struc-tures of companies and their management are profound.Apparently, being knowledgeable in this respect shall providea substantial competitive advantage for various business ma-noeuvres and required changes in the modern world.


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Most CEOs now have some awareness of programme and project management if not detailedknowledge. Most organisations use programmes and projects, implicitly or explicitly, to deliver theirchange strategies in order to survive and prosper in the world of business, government and notfor profit sectors. To date most have relied on employing specialist staff familiar with projectmanagement to select the way they run their projects. In recent times however most CEOs wantto know when the outcome of the projects and programmes are to be delivered and their quantumrather than when they will receive the outputs and at what cost. The benefits used to justify thebusiness case were built on these forecast benefits and their timing. The choice of programme andproject approach is becoming increasingly important to achieve satisfactory delivery. This paperlooks at where a CEO might seek and select guidance.

How d oes a CEO choose the rig ht

wa y to run his org a niza tionsprog ra mmes a nd projec ts?

IntroductionProjects and programmes have been around a verylong time. As we showed in our paper for the IPMAWorld Congress 2002 (Harpham, 2002), the historyof the study of project and programme manage-ment (PPM) is relatively recent. This is certainlytrue if we exclude wonderful ancient projects suchas the pyramids or the burial place of the Emperorin Xian, China that some of us were privileged tosee at the last IRNOP Conference, about whichlittle is known because the project managers wereexecuted at the end of the project lest the secretsof the Pharaohs or Emperors last resting place on

earth were to escape. How lucky we are to be aliveand able to write about our projects!In the paper we showed a table of this history

of project and programme management in recenttimes, since the last World War. The table nowshows the development of the best practice ap-proaches developed by the Office of GovernmentCommerce (OGC) in the UK namely ManagingSuccessful Projects with PRINCE2 (PRINCE, 2007),a methodology for managing projects and Manag-ing Successful Programmes (OGC, 2007a). Officeof Government Commerce has also developedManagement of Risk: Guidance for Practitioners(OGC, 2007b) and the ITIL : IT Infrastructure Library

(OGC, 2007c). It also includes the development ofBodies of Knowledge by Professional Membershipbodies.

At the same time as PPM has been develop-ing so have other disciplines including Change

Alan HarphamThe APM GroupUnited Kingdom

Management and Leadership (Harpham & Kip-penberger, 2006; Harpham et al, 2006). Leadershipis as complex as it ever was and the theorists haveas many theories as there are leaders! (Cameron &Green, 2005). One thing is becoming clearer, andthat is that effective leaders help organisationsto develop a common vision and then direct itsimplementation. Their focus, unlike programmeand project managers is on the outcome of theprogramme and project more than the output.The outcome is their focus and indeed the pro-grammes and projects themselves are a means tothis end and not the end in themselves, despitethe wishes of some PPM managers! The wholepurpose of programmes and projects is usually tobring about strategic change(s) within organisa-tions that enable them to transform themselvesand their capability in their chosen markets (DeHertogh et al, 2006).

This means that more organisational leadersand Chief Executive Officers (CEOs) of commer-cial organizations are recognising the need foreffective processes that enable them to bringabout organizational changes in a way that theycan mange not only the outputs but also theoutcomes. Many have learnt that Programmeand Project Management can act as an excellent

tool to assist in managing this activity. Howeverit is also true to say that many CEOs have littleor no background in PPM and are unsure whereto start. This paper is intended to help them andthose that advise them.


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Project Perspectives 2009 5

Body of knowledge and Competencebaselines

The Professional Bodies and the Body ofKnowledgeBody of Knowledge is a term that has developedin some professions as a statement of all theknowledge associated with that profession. Theprofession of project management, despite thelarge number of members of the Project Manage-ment Institute (PMI based in US, with internationaloffices) with nearly 200,000 members world wide,and the considerable number belonging to the

International Project Management Associationand its member associations, is still in the processof establishing itself as a profession. Given recentexperiences of the governance of some profes-sions connected with infamous business scandalsit may not represent such an honor to become aprofession!

Never the less, the PMI, the International Proj-ect Management Association (IPMA originallya federation of European PM Associations, butnow with a wider reach) and the Association forProject Management in the UK (APM now ap-parently wishing also to be a global player) areall keen to establish PM or PPM as a profession.

Each has developed its own Body of Knowledge,or in the case of IPMA its International Compe-tence Baseline, now on version 3 (IPMA, 2007)and the latest addition of the three. The PMIoriginally developed its PMBOKin 1985 and is

now on version 3 (PMI, 2004). APM developed itsfirst Body of Knowledge a little later in 1992 butis now on version 5 (APM, 2006). PMI have nowalso produced their Standards for ProgrammeManagement and Portfolio Management in 2005(PMI, 2005a, PMI 2005b) albeit these do not seemto have been so well received in the market placeas the PMBOK.

The difficulty with a Body of Knowledge (BoK) isits potential vastness and where to stop. The BoKcould be potentially huge if it were to literallycarry all the knowledge that could be associatedwith PM, even bigger for PPM. For example our

papers in Shanghai on change management andleadership, the softer, interpersonal skills and soon have traditionally been left out of the BoKs.An analogy might be the Bible with its 68 books,in effect a library of books. As we now knowhistorically many other books were left out whenthe orthodox Bible was agreed upon by the thenChurch. We also know at Nicea they agreed upona Creed thereby excluding some Christians fromorthodox Christianity and making them heretics.Is that how we should think of the PPM BoK, asa library of subjects each containing a library ofbooks? Heaven forbid we should agree a PPM creedand thereby create PPM heretics. It is interesting

to observe however that it has been difficult toget one agreed professional body with one BoK.Indeed the existing BoKs, and for this purpose Iinclude the ICB are all very different. The PMI isand always has had a focus on process, the IPMA

Figure 1. Development History of PPM

Network Planning

Integrated Project Control Systems

PMs Interpersonal skills

PMs Competency

Key roles/responsibilities

PM BOK

APM Body of Knowledge

PRINCE2

Management by Project

Programme Management

Benefits Management

Managing Succesful Programmes

Maturity Models

Management of Risk

Activity 1950s 1960s 1970s 1980s 1990s 2000s


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- ICB on competence and the APMs originallycloser to competences, now a bit broader. As Pe-ter Morris outlined in his keynote speech at theMoscow IPMA World Congress he felt the mainproblem with the Profession was that the Profes-sional Bodies were far too narrow with their BoKs(Morris, 1999a) also similarly outlined in his paperfrom the Centre for Research in the Managementof Projects at UMIST entitled Updating the Proj-

ect Management Bodies of Knowledge (Morris,1999b). Peter Morris also refers to the need tokeep any BoK manageable and points away fromNASAs much bigger work at that time.

What can be said is that all three of the BoKscover the basic agreed tenets of Project Manage-ment, whilst so far only the PMI (among the three)has published on Programme Management.

What is good Project and ProgrammeManagement?Good project management is about delivering theagreed project outputs to an agreed time, cost,

quality and performance. This is all good stuff andfor the main part what the existing BoKs cover, andcover well the generics of project management.However as we have already said above the CEO ismore interested in outcomes that will deliver thestrategy set by the Board. This requires the focusto move more to the outcomes of projects andprogrammes the benefits usually used to justifythe project or programme business case in the firstplace. All too often using straight forward projectmanagement the CEO finds him or herself in ablind spot after accepting the business case andgiving the go-ahead for programmes and projects.S/he may lucky to receive lots of excellent progress

reports about the project outputs perhaps evenwith good forecasts of likely final delivery timeand cost, when what s/he really wants to know isif and when s/he will receive the business benefitsand whether they are to the quantum and at a rate

expected. Programme Management has begun toaddress this shortcoming, but only recently and upuntil 2005 not by the professional associations orinstitutes (and then only by the PMI).

Good Programme Management provides theglue between the business strategy and the proj-ects being undertaken. It should maintain a focuson delivery of the benefits. It helps to ensure theorganisation is focused on doing the right projects

in the right priority to benefit the overall business see Figure 2, from my previous paper SuccessfulProgramme Management or Managing SuccessfulProgrammes (Harpham, 2002).

To summarize good programme managementprovides the CEO with some control over his/herinvestments in transforming the organisationto better match the opportunities it faces in itsmarket place. So how to get effective programmeand project management in place?

How to get effective PPM into anorganization?

Effective total PPM organization needs threethings:- Good Governance- Good Processes and- Good People.Good Governance to establish the right PPM

organizational approach and methods, to selectand approve the right programmes and projectsand to monitor and control them effectively -what some would call total PPM.

Good Processes that enable anyone in the or-ganization to speak the same PPM language withthe same understanding and to make sure thatanyone working in the system understands how

programmes and projects are organized and run.Good People who know and understand theselected process, approach and methodology, aswell as having a good understanding of the total-ity of PPM. Good PPM leaders also have effectiveleadership and interpersonal skills (Harpham &Kippenberger, 2006; Harpham et al, 2006).

What is a methodology and Best Practice?A project management methodology is a preciseset of processes that determine the way in whichan organization will organize and manage itsprojects. Best Practice is the bringing together

of a set of processes that are considered to bethe best process for each activity in the projectmanagement cycle.

The Office of Government Commerce in theUnited Kingdom and its predecessor the CCTA(Central Computer and TelecommunicationsAgency) decided in 1992 to develop its Best Prac-tice in project management which it called PRINCE(Projects in a Controlled Environment) somewhatof a misnomer given that the project environment(or context) is seldom controllable, and rarely bythe project manager or owner! PRINCE is nowPRINCE2 (PRINCE, 2007) (a second version). TheOGC is the authority for best practice in com-

mercial activities in UK Government. As such ithas also developed its best practice approach formanaging progammes (of projects) in a publicationin 1999 called Managing Successful Programmes(OGC, 2007a).Figure 2. The link between Strategy and Projects

Results & Benefits

Dream

Tasks

Project

Programmes

Strategies

Visio

ObjectiveBroad

SpecificDirection

Coherence

Achievement

Action


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From these humble beginnings in the publicsector the demand for these two publications hasgrown and grown. The TSO was given the task ofmanaging these publications along with otherBest Practice publications and the APM Group wasasked to establish an accreditation process for pro-fessionals using this Best Practice. The scale of thishas grown into a world-wide phenomenon nowused as much by the private sector as the public

sector. Earlier this year the 200,000 examinee inPRINCE2 was accredited, and there are more than3,000 examinees taking an APMG exam each weeksomewhere in the world.

We believe, and most of the leaders of theprofessional bodies in PPM agree with us, that thePRINCE2 methodology and the MSP approach arecomplementary to the Bodies of Knowledge, cov-ering one part of the BoK in more detail and notclaiming to represent total PPM as the BoKs do.

How to decide on the right approach?Most established organisations are looking for a

solution that is easy to adopt, has low cost main-tenance, and has access to lots of practitionersthereby reducing the potential induction trainingcosts.

When I was a practicing management consul-tant in the mid-1980s I had a major telecom-munications client who asked us to help themdevelop a way of managing a major telecomsproject. In point of fact it turned out to be a majorprogramme of projects worth in excess of 1.5billion. We set about designing a project man-agers handbook with a framework of processesfor managing this vast set of projects which hadalready been approved by the Board on a two-line

approval based on an economic study. The Boardsapproval failed to specify the what or how ofthe project, only the why there being neithera project definition document nor plan. The de-velopment of the project (programme) definitionand plan became a 30 million exercise in its ownright and took two years to complete.

The development of the Project ManagersHandbook (PMH) cost the best part of 500,000and the roll-out training a further 500,000 as faras I can recall. Not a token amount by any means.The organisation went on to adopt the PMH asthe corporate approach to managing its internalprojects. More recently this same organisationhas decided rather than investing further sumsof money in maintaining and developing its ownmethodology it would adopt PRINCE2. This costs itrelatively little money to procure for an organiza-tion wide license, ensures that it is using a processthat a number of users invest time and effort inmaintaining and developing together with theundertaking of OGC to maintain and develop it,as with their other Best Practice products. Fur-thermore through the APM Groups accreditationwork it knows it has more than 250 competingAccredited Training Organisations to choose fromworld wide for its PRINCE2 training with nearly

500 Approved Trainers. In addition there are over200,000 accredited PRINCE2 personnel worldwide to select from. All it has to do is to tailorthe method to its own purposes and there are Ac-credited Consulting Organisations with Registered

Consultants that can help them to do this.What in some circles they call a no brainer, i.e.

a decision that hardly calls for any brain poweror work!

But back to the question of determining theright approach. I would recommend that thefirst thing is to choose between the various totalPPM training on offer based on the BoKs i.e. doyou want to go with PMI, IPMA or APM? If you

are a truly global organisation this will point youtowards the PMI as it has the most coverage, butthe others are all used quite extensively. This willgive useful all round training on the basic tenetsof good PM.

There are agreed PM syllabi based on the BoKsestablished within the professional associationsand qualifications at various levels that cover thestudents knowledge and understanding at vari-ous levels. There are many providers of trainingcourses in a competitive market usually teachingprogrammes based on these syllabi and usuallywith accreditation from the professional body

concerned.When it comes to a methodology, as indicatedabove this is rapidly becoming a no brainer.PRINCE2 and MSP are the established marketleaders world-wide. For both PRINCE2 and MSPthere is a list of all accredited training organisa-tions (ATO) that offer training in either or both.If you intend to use both it makes sense to startwith an ATO who can offer both, and who has thekind of regional spread that you require or plan torequire. APM Group has established offices in US,Australia, Holland and China as well as the UK andis constantly planning for new territories. Examshave been offered in more than 50 Countries and

in over 10 languages. Truly world coverage.Clearly a training organisation that can offerboth the more general BoK type training as wellas the more specific PRINCE2 or MSP training islikely to provide the best overall match.

For those just starting out with PRINCE2 orMSP, or those wanting to radically raise their gamethere are also Accredited Consulting Organisations(ACO) with specific Registered Consultants whocan advise on how to introduce or improve theorganizations performance at PPM. Currentlythere are more than 20 ACOs, with over 50 Reg-istered Consultants. Having recently obtained ouraccreditation with the Institute of ManagementConsultants to offer their internationally recogn-ised CMCqualification we expect this number togrow significantly in the near future. These ACOsalso have access to a number of specific tools tohelp in their work including an OGC based ma-turity model P3M3 (Portfolio Programme ProjectManagement Maturity Model), the On-line Profiler(for assessing the competences of individuals onprogrammes and projects hard and soft skills andbehaviours), the IPMAs/GPM Project ManagementExcellence model (which can compare individualprojects and their processes and results), and anew product we are developing called PST (Project

Success Tracker an analytical tool for assessingthe likely success of a project during its life andmaking recommendations to bring it back on trackwhen it is found to be off-track).


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ConclusionA s the paper shows it is a relatively easy decisionfacing the CEO of an organization wishing tochoose the right approach to selecting trainingfor his/her staff and the right processes to focuson. Use the materials developed by the Profes-sional Bodies for the generic knowledge andskills training. Use OGCs Best Practice processesand approaches for developing the organizations

own methodology and approach to managing itsprojects and programmes, i.e. PRINCE2 and MSP.Use Accredited Organisations to get training andconsulting support. Finally they should use Pro-fessional Bodies, User Groups and APMGs on-linenetworks to stay in touch with the community,developments in PPM and through these networkshave the ability to influence the future of PPM totheirs and others benefit.

AcknowledgmentI would like to thank all the authors of all the Of-fice of Government Commerce, UKs Best Practice

publications, and those responsible in The Office ofGovernment Commerce and its partners for Pub-lications and Accreditations, namely the TSO andthe APM Group for their work on developing OGCsBest Practice publications and accreditations.See www.ogc.gov.uk ; www.tso.co.uk ; and www.apmgroup.co.uk for more information. I wouldalso like to thank all those who have contributedto the development of the various BoKs and theICB through their writing.

Alan HarphamBSc MBA (1975) FAPM FCMC

Alan is part-time Chairman of the APM

Group, (www.apmgroup.co.uk), with a port-folio of other interests including being adirector of majorsporty (www.majorsporty.com), chair of the Ecumenical Board ofWorkplace Ministry Hertfordshire and Bed-fordshire (www.workplaceministry.org.uk), aboard member of The International Centrefor Spirit at Work (www.spiritatwork.org).He has been a director of P5 the Power ofProjects and Subject Matters, MD of NicholsAssociates (now the Nichols Group), and aformer Director of the MSc in Project Man-agement at Cranfield Universitys School ofManagement. He is a former chair of MODEM

and a former Council member of the APM.He focuses on business start-ups, programmeand project management and executivecoaching individuals and teams.

ReferencesHarpham, A. (2002)

Successful programme Management or ManagingSuccessful Programmes. IPMA World Congress,Berlin 2002.

PRINCE (2007)Office of Government Commerce, UK. ManagingSuccessful Projects wit h PRINCE2 Manual 2005,

5th Impression 2007.OGC (2007a)

Managing Successful Programmes DeliveringBusiness Change in Mult i- project Environments.New Edit ion due in 2007, Office of GovernmentCommerce, UK

OGC (2007b)Management of Risk : Guidance for Pract it ioners,4th Impression (wi th amendments) 2005. New Edi-t ion due 2007, Office of Government Commerce,UK.

OGC (2007c)ITIL The IT Inf rast ructure Library. Version 3 isdue for publication in 2007, Office of GovernmentCommerce, UK.

Harpham, A. and Kippenberger, T. (2006)Change Management and Programme and ProjectManagement . IPMA World Congress, Shanghai2006

Harpham, A., Kippenberger, T. and Winter, K. (2006)Inspirat ional Leadership and PPM. IPMA WorldCongress, Shanghai 2006

Cameron, E. and Green, M. (2005)Making sense of Change Management , KoganPage, USA.

De Hertogh, S., Van Den Broecke, E., Vereecke, A.,Viaene, S. and Harpham, A. (2006)A mult i- level approach to program object ives:definit ions and managerial impl icat ions, VlerickLeuven Gent Working Paper Series 2006/11, VlerickLeuven Gent Management School, Belgium.

IPMA (2007) Internat ional Project Management As-sociat ion. ICB IPMA Competence Baseline v 3.

PMI (2004)PMBOK version 3 - 2004, Project ManagementInst it ute. USA.

APM (2006)Body of Knowledge version 5 2006, Associat ionfor Project Management , UK.

PMI (2005a)The Standard f or Programme Management 2005,Project Management Inst it ut e. USA.

PMI (2005b)The Standard for Port folio Management 2005,Project Management Inst it ut e. USA.

Mor ris, P.W.G (1999a)Project Management in the Twenty-First Cent uryTrends across the Mil lennium. Keynote speechIPMA/Sovnet Congress, Moscow, Sept 1999.

Mor ris, P.W.G (1999b)Updating the Project Management Bodies ofKnowledge, a paper for t he Centre for Research inthe Management of Projects, UMIST 1999.


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The globalization of projects, the extensive use of project management by all functions, and the introduction of bestpractice change management into project management have a major impact on the culture and ways of working ofproject teams, the way they build coalitions around their project, the innovation process, the way projects are organizedand the development of the project management capability.

Most of the projects before were small with lowrisk of damaging the organization. Now globalprojects require big investments with high risk tothe organisation.

Also project members come from differenthorizons with their own culture. Global Projectmanagement has to be flexible enough to beworking in all cultures, whether in Asia, LatinAmerica, Africa, Europe or North America. Thischallenge called for a One Project Management

global language and approach that would fit allcultures.

The adoption of project management for allinnovations (a product, a factory, an IT system,an HR program) and functionsWhen Project Management was introduced sys-tematically in IT, the language and culture of PMwas still appropriate. But if you try to speak thelanguage of project management to marketing orto HR professionals, you quickly realize that theywould reject project management if you do notmake it accessible to them.

And these two functions need project manage-ment as much as the other functions. As HR andFinance administrative tasks are being outsourced,the remaining tasks are to support the business inimproving the organisation. This is mainly donethrough projects.

This cross-functionalisation of project manage-ment is calling for a simplification of the languageused while keeping all the benefits from the Proj-ect Management techniques.

The introduction of best practice changemanagement into project management.This third challenge came from the realization that

change management and project managementhad a lot in common. Every project introduces achange, every change is a project. Change manage-ment techniques have to be embedded into projectmanagement as much as project management has

Project Management in Global organizations

Experience of a pract i t ioner

IntroductionThis paper summarizes knowledge from experienceas a practitioner of working with IBM from 1971 to1993 and with Unilever from 1993 to 2006. Work-ing in IT, in HR and in Organisation, I was involvedin several projects in all functions, across theworld, leading global HR IT projects, working withthe marketing teams to launch products in themarket place, with R&D to replace the functionalorganization by an organization by projects and

lately working with the HR function to introduceproject management in HR.

In 1990, I presented a paper to the IPMA Con-gress in Vienna on Project Organisation a stepto transform the traditional pyramid, based on myIBM experience, focusing on how project manage-ment was influencing the rest of the organisation.This time the focus is on how the organisation isimpacting project management.

This paper will review the trends impactingprojects today and their impact on project man-agement.

Trends impacting projects in globalorganizations

Globalization of ProjectsCompanies in the Fast Consumer Good Industryused to work locally, particularly the Europeanones. The challenge of working globally came laterthan in the Computer and car industries but it hadthe same effect on project management.

Projects which were done before very close tothe market place, in direct contacts with stake-holders are now more and more done regionallyfor Foods and globally for Home and PersonalCare. Before, each country could have its own

way of managing projects, following local bestpractice and local Project Association guidelines.Now, project teams, even if there are physicallylocated in a country, have to follow a global ap-proach, working with and for global stakeholders.

Agnes Roux-KienerOrganisationTransformationFrance


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to be embedded into change management.In Europe, Change managers as a profession

started to exist in the mid 90s, in replacement ofthe previous organisation departments. Changemanagement as a discipline was then developedmostly by HR. Some change managers in charge ofmajor re-organisation or mergers projects startedto use the techniques of project management andembedded project management techniques into

change management.Many of the issues of the marketing projectsare the same as for the HR change projects, e.g.the role of leaders in project management, theimportance of culture for a project, how to in-volve everyone in the change, the importance ofcommunication.

This is leading to the assumption that the char-acteristics of change have a lot in common withproject management:

Change is holisticIf you tackle only some aspects of change, like

changing your structure but not paying attentionto your culture or changing your process and notpaying attention to your strategy and vision forthe business, you will deteriorate performanceinstead of improving. For project management itis the same, if you just do project planning and donot pay attention to project culture or stakehold-ers, you will be less successful.

Change is about building coalit ionsYou build coalitions in change management inorder to minimize resistance to change. The keyword here is involvement. Someone who is in-volved understands why the change is happening

and progressively will go with the change insteadof resisting to it. Too often we still think that oncethe technicalities of our project are done, thenthe implementation is easy. When the problemsonly start..

Change is a processChange is a process that can be split into threesub-processes: planning for change, energizingthe organisation and implementing change. Thebusiness is always tempted to go directly fromplanning to implementation. Best practice tellsthat you have to take time to analyze the culture,the resistance you could face to implement thesolution you are proposing. You need to energizethe organization and to build extended coalitionsinstead of by-passing people resisting to change,instead of putting them in front of the fait ac-compli.

Change is an art , not a scienceThis is also valid for project management. Even ifthere are many things we can solve with scienceand math, each project is like a piece of art, differ-ent from anything that was done before, for whichthe skills of each member of the project team willbe assembled as for an artistic creation.

Impact of these trends on project managementWe shall now look at the impact of these threetrends on different aspects of project manage-ment: project culture, energizing project teams,

building coalitions, innovation process, projectstructure and governance, and development ofthe project management capability.

Impact on project cultureIn my paper Project organisation a step totransform the traditional pyramid, I defined thevalues of a project culture as Team Based, TeamEmpowerment, Networked, Task Oriented, Result-

Focused and Temporary. In a global organisation,I would add a seventh value, Diversity.In order to build high performing teams in glob-

al organization, the culture needs to appreciatediversity. For people to respect others, they needto understand that diversity is enrichment and nota threat, that a team is much more effective fora global project if they represent the diversity ofthe world. You can use all kind of tests for teamprofiling in order team members understand howdifferent they are and how to overcome the dif-ficulties of working together.

How do you create a global project culture?

First priority is to create a common languageas language shapes culture. The glossary has to beinspired by the external best practice and adaptedto your company culture. Different definitionsmay cause problems to global organizations. Dif-ferent functions will use the external differencesas an excuse to continue to use their projectlanguage.

It may be useful to publish a checklist of thingsto do as a support to all project teams and explainswhat happens if you do not follow these principles.The principles have to be understandable by allfunctions. The level of the checklist needs to leaveenough flexibility for adaptation.

It may be useful as well to develop a toolboxthat will be common to all projects, flexibleenough to fit all kind of projects. It will have tobe updated as the knowledge of the organisationprogress. There could be a short list of commontools and common tasks for simple projects and,for complex projects, a longer list from which topick and choose.

To avoid resistance to tools developed externallyto the function, it is advisable to select and buildtools with a cross functional group of people whorepresent their function. And to plan for a com-munication plan that would address the differentfunctional needs.

Impact on energizing project teamsIt is obvious that a project should have a team buthow the team is involved in the project work isvery often an issue. There are still projects todaymanaged within closed doors, the project leaderor planner doing most of the work and just askingadvice to team members.

To avoid this to happen, you have to build yourtools, your process and your overall approach ona team basis. You have to insist on the need tospend time to energize the project team during theproject life and to energize the whole organization

when launching the project.Global teams will be very often located aroundthe world. The kick off meeting becomes then avery important event. If there is only one faceto face meeting of a global team, it needs to be


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the process has to be defined in a way that it willbe applicable to all functions: which tasks (kickoff meeting, defining a project brief, stakeholderinterviews, risk assessment) have to be performedand when.

Portfolio management becomes even moreimportant in global organizations as global proj-ects demand big level of resources. The portfolioprocess allows lots of small projects initially, some

of them making it to the study phase and few ofthem to the implementation phase and ensuresthey are all aligned to the business strategy.

Project management is sometimes defined as aseparate process from the gate process. Instead ofconsidering only one process, project managementpreparing the gate decisions and the gate decisionsdriving the project management process. If youhave two separate processes, project managerscan do all the right things for project managementbut be unable to pass the gates effectively. Andproject managers could perceive the gate processas additional work and time lost.

Impact on Struct ure and Governance of ProjectsWhen introducing project management in allfunctions and countries, most probably you willdiscover a palette of different names for projectmanagement positions. For heads of projectfor example, you could find the title of projectleader or the title of project manager. Which oneto choose?

For the organisation outside of the project or-ganisation, the trend is to focus on the leadershiprole of managers. Leadership is not only at the topbut dispersed at all levels of the organisation. To beconsistent, you need the same emphasis for people

heading projects. You can then opt for the title ofproject leader for the project head.To assist the project leader and in order he can

devote time to his people and the external world,you can create the position of project planner ormanager for large projects. His key role is to ensurethe methodology is followed, to monitor the planand to organize meetings.

For small projects the project leader will playthe role of project planner as well.

In very large projects, change managers arebeing appointed, dedicated to the project. Theysupport the project leader in team development,in stakeholder management and in communica-tion. For small project, the project leader will playthat role.

Global projects can assembled teams of 25/30people. Creating sub teams is the only solutionin order that the core team would be below 10,ideally 6 to 8. Sub team heads are part of the coreteam. The extended team includes also memberswho are not dedicated to the project and who donot need to be at all meetings. They meet at keymilestones (before or after decision meetings) andfocus on planning.

At the start of the project, the project leaderworks with a sponsor or his manager. As the

project is progressing, it needs a formal steeringgroup composed of key stakeholders. Its role isto take decisions and to guide and support theproject team. As projects get bigger, stakeholdermanagement gets very complex and the steering

the kick-off. During this kick-off it is importantto have time for team building. You can use apersonality test in advance and then build anexperience of diversity based on the test results.At the end of the kick off meeting, participantsshould be convinced it is better to work as a teamthan individually and should have defined theirways of working together.

Also in the kick off meeting, the team needs to

spend time defining a vision for their project. Itwill help them build a common message to the restof the organization at the emotional level. Whenpeople experience communicating with emotions,they learn at the same time how to communicatewith stakeholders.

Regularly you can recommend they perform ateam assessment. It could be an assessment onteam stages: Storming, forming, norming andperforming or on team effectiveness based on apre-defined list.

Impact on building coalit ions

Building the coalitions or managing stakeholdersis a crucial activity for global projects. You need tohave common tools to support the project teamsin this activity.

They may need a tool to analyze the organiza-tion around them, looking at formal structures,decision making processes, informal power struc-tures & networks, culture and climate and externalfactors. They may need a tool for building anintegrated communication plan and for preparingan influencing plan for selected individuals whoare resistant to the project.

They need a tool to prepare stakeholder inter-views, understanding who has power and interest

in the project and another one to understandwho is intellectually and emotionally ready forthe project. The first one is very often used forProject management, the second one for changemanagement. You can argue which one is the bestbut the truth is that they are both useful but atdifferent stages of the project.

At the start of the project, you do not knowyour stakeholders and you need to identify who isgoing to have power and influence on your projectand who has a stake and interest. You positionindividuals on the matrix before the interview andcheck after the interview. For the whole durationof the project, this matrix has to be kept updatedby the project team.

When the project approaches launch, youhopefully know your stakeholders. You need nowto build a communication strategy to overcomeresistance to change from groups of people. Youneed to identify which groups intellectually under-stand well your project outcome and which groupsemotionally buy-in your project outcome.

Impact on the Innovation processThe innovation process was designed initially forResearch and development. Progressively otherfunctions started to use it as well for creating

new processes and program for the organization.It brought discipline in the way new programs,like reward program, IT systems, were introducedto the business.

From idea generation to launch of a solution,


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Agnes Roux-Kiener

Consultant, Organisation [email protected]

After 22 years experience in IBM France andIBM Europe Middle East & Africa in IT, HRand Organisation, Agnes joined Unilever in1993 as Head of Organisation Effectiveness,World-wide. As an internal consultant, shewas supporting leaders to change theirorganisations, running workshops and de-veloping simple tools and frameworks forprocess, change and project management.

She retired and created her own ConsultancyCompany in 2006. She is a member of theFrench SMAP (IPMA) and a member of itsscientific committee.

group can play an important role in case of issueswith stakeholders. The chairman of the Steeringgroup is an ambassador to the project and has ahigh stake in its achievement.

Impact on the development of the projectmanagement capabilit yProject management capability should be devel-oped in liaison with Process management. When

you look at a toolbox for project managementand for process management, most of the toolsare common (e.g. stakeholder management, riskmanagement, cause effect analysis). Even a proj-ect network is not very different from a processmapping. For our employees, it is much better toalign these tools from the start instead of teachingdifferent tools for the same purpose.

The development of a capability matrix canbe very useful. A capability matrix identifies therequired skill for a position, e.g. a team memberneeds to have a basic awareness of project gov-ernance when a project leader needs to be fully

knowledgeable about it. A project planner hasto be fully knowledgeable in project planningwhen a project leader needs to be able to assessa project plan.

Training offerings need to be based on thecapability matrix and built as one process. Thereshould be a mix of skill training (e.g. risk manage-ment, communication management), using casestudies, project life-cycle training on real projectsor applied learning, competency training (e.g. stra-tegic influencing, breakthrough thinking). Thesetrainings should be coupled with a certificationprocess where people are encouraged to apply toexternal certification.

A Community of practice is a key enabler of aproject management capability development. Itincludes internal and external facilitators, projectleaders, project planners and change managers.They define the standards to be used, identify bestpractice and translate them into simple tools andprinciples to be used by all.

In summaryGlobal businesses need a common and simpler ap-proach to project management that fits all cultureand all functions.

Introducing best practice change managementleads to a focus on leadership and visioning,employee involvement and team building, stake-holder management and communication.

Portfolio management, gate management andproject management gain to be organized as oneprocess.

Within the project team, there are advantagesto differentiate the project leadership and theproject management roles and to introduce achange management role.

To build the project management capability,training should include project skill, project com-petency and project life cycle. A community ofpractice of project managers / facilitators / train-

ers may take a lead role in building the projectmanagement capability.This is empirical knowledge which I hope will

be useful for Researchers to develop the ProjectManagement capability for the future.

Literature connected to this paperGareis, R. (1990)

Handbook of Management by Projects, Manz,Vienna, Austria.

Wheelwright S. C. and Clark, K. B. (1995)Leading Product Development : The Senior Manag-ers Guide t o Creati ng and Shaping the Enterprise,Free Press, New York, USA.

Kotter, J.P. (1996)Leading Change, Harvard Business School Press,USA.

Binney, G. and Will iams, C. (1997)Leaning into the Fut ure: Changing the Way PeopleChange Organisat ions, Nicholas Brealey Publish-ing Ltd.

Peters, T. (1999)The Project 50 (Reinventing Work): Fift y Ways toTransform Every Task int o a Project That Mat -ters!, Alfred A. Knopf , Inc., New York, USA.

Trompenaars, F. and Hampden- Turner, C. (2004)

Managing People across Cultures, Capstone Pub-lishing Ltd., London, UK.


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In this paper we analyze factors influencing design and performance of the business model of aproject-based firm. We adopt a perspective of a project supplier firm that has constantly multiplesimultaneous delivery projects in its project production line. The business model explains theunderlying economic logic of how the project supplier delivers value for its customers at appropri-ate costs. The design and selection of a business model is mainly influenced by several contextualfactors in the firms business environment. In addition, when analyzing the rationales behind theselection of specific business models, we must take account that knowledge held by managersabout their business environment is limited, and the choices of various business models are biasedby earlier experiences of the firm. The contextual factors affecting the design and performance ofthe business model include factors both at the level of the firms business and environment andat the level of individual projects. The contextual factors include, among others, project complex-ity, interdependence between projects, customers strategies, industry-specific standard practices,generally accepted methods of doing business in the market segment, and the competitive situationin the market. Understanding of contextual factors affecting the selection and performance of thebusiness model enables managers to design business models that consistently provide balancedlong-term and short-term business benefits for both the project supplier firm and its customers.

Fa ctors influenc ing des ig n a nd

performa nce o f the businessmodel of a project-ba sed firm

Corresponding author:Prof.Jaakko KujalaUniversity of Oulu

Prof.Karlos ArttoHelsinki University ofTechnology (HUT)

Prof.AnnaleenaParhankangasNew Jersey Institute ofTechnology (NJIT)

IntroductionThe increasing importance of project-based modes

for controlling and organizing work in differentindustries has been recognized by several research-ers (Gann & Salter 2000, Arenius et al. 2002) andit has even been said to represent a new logic oforganizing in market based economics (Whitley2006). Also project research is expanding in scopeto analyze challenges related to achieving busi-ness targets through projects. Project business isan emerging research field, which takes a businessoriented perspective to study project, project-based firms and industries (Artto 2008). Projectbusiness can be defined as the part of businessthat relates directly or indirectly to projects, withthe purpose of achieving objectives of a firm orseveral firms (Artto & Wikstrm 2005). Whilethis definition covers both internal developmentprojects and customer delivery projects, our focusin this paper is a business of a project supplierfirms that has several project in its production line(Artto et al. 1998).

The business of a project-based firm can beaddressed through a concept of business model,which is a statement of how company makesmoney (Stewart & Zhao, 2000) or how technologi-cal inputs are transformed into economic outputs(Chesbrough, 2003). Project-based organizationshave different types of business models. However,

the existing literature is scarce that would explainwhat the contents of such various business modelsare. Furthermore, there is no existing theory thatexplains selection, design and performance of thebusiness model of project-based organizations. In

this paper we adopt a contingency approach toresearch which contextual factors should be taken

account in the selection and design of a businessmodel a project supplier firm.As there are many interpretations of the content

of the business model concept, we first introducewhat we consider as key elements in a businessmodel. We then identify and classify contextualfactors in project business, which influence se-lection, design and performance of the businessmodel of a project-based firm. Finally, managerialimplications of the research are discussed andavenues for further research are proposed.

Business modelBusiness model defines the underlying economiclogic that explains how a firm can deliver valueto the customer at an appropriate cost (Magretta2002). Based on their comprehensive review ofbusiness model literature, Morris et al. (2005) iden-tified three general categories of business modeldefinitions, including economic, operational, andstrategic, with each comprised of a unique set ofdecision variables. The economic level of a businessmodel identifies revenue sources, pricing meth-odologies, cost structures, margins, and expectedvolumes. At the operational level, the businessmodel focuses on the internal processes that en-able the firm to create value, such as production

or service delivery methods, administrative pro-cesses, resource flows, knowledge management,and logistical streams. Definitions at the strategiclevel deal with the overall direction of the firm andcover issues related to the firms market position-


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ing, interactions across organizational boundaries,and growth opportunities.

For this paper we adopt a definition of businessmodel modified from Chesbrough and and Rosen-boom (2002), who identified six key features thatmust be addressed by a business model:

- How will the firm create value (valueproposition)?

- For whom will the firm create value (po-

tential market segments)?- How will the firm position itself in themarketplace (position within the valuenetwork)?

- How will the firm make money (cost struc-ture and profit potential)?

- What is the firms source of competitiveadvantage?

The starting point for creating a business modelis to define a value proposition to the customer.At its most simplest form, it may be a technicalsolution to meet a customer specification, but inmost businesses suppliers are increasingly claiming

to be solutions providers, which provide value forthe customer by improving their business processes(Galbraith 2002). At the same time, a firm mustdefine an innovative product and/or a serviceoffering that can be are tailored to potential cus-tomer in different market segment (Davies 2004).The increasing complexity of projects makes it dif-ficult for any single firm to own all capabilities andresources. Thus, a firm must decide which resourcesto subcontract and how design appropriate gover-nance arrangements between independent firmsin the supply chain. The options range from purelycompetitive tendering, long term relationships, toa hierarchical mode of governance (Winch 2006).

The positioning in the marketplace also includesa role and delivery scope, which project suppliertakes for different project deliveries. The economicfocus in the business model forces to consider coststructure and profit potential that are related to avalue proposition for different market segments.The profitability is closely related to competitionand firms competitive advantage in the markets,which according resource based view can bebased on the value of the product/solution, andthe rareness and imperfect substitutability of thissolution. (Barney 1991). On a more strategic level,a project supplier may consider whether it willfocus on becoming low cost supplier or select adifferentiation strategy.

Contextual factors in project businessContingency theory suggests that there is nooptimal strategy for managing organizations(Donaldson, 1996) and choice of a most desirablebusiness model depends on several contingencyfactors (Zott & Amitt 2008). In project researchthere has been much effort to create a projecttheory that would explain how projects shouldbe managed in their environments by taking intoaccount various contingency factors, such ascomplexity, uncertainty, scope and size (Shenhar

& Dvir 1995; Shenhar 2001; Andersen 2006). Thesecontingency factors need to be taken into accountwhen defining a business model of a project-basedfirm. For example, Wikstrm et al. (2008) proposesthat project complexity impacts how services can

be integrated into a project business. Additionally,the cost of the total project lifecycle is a signifi-cant contextual factor, because it relates businessvolume and profit potential of maintenance andother after sales services. It is also an importantelement to be taken into account in the customerinvestment decision and thus relates to the valueproposition of a project supplier.

The discourse of project marketing identifies

the uniqueness of individual projects, technicaland organizational complexity of the project of-fering, the discontinuity of demand and businessrelationships between projects as central featuresof the business of a project-based firm (Mandjak& Veres, 1998). In addition, large projects ofteninvolve considerable extent of financial commit-ment and risk carrying capacity of the parties,which makes project size as an important con-textual factor to consider (Cova, Ghauri, & Salle,2002). The interrelationship between projects hasalso been recognized as an important factor thathas to be taken into account. Verma and Sinha

(2002) identified three types of interdependencies,namely the resource, technology and market inter-dependences and they are applicable also in cus-tomer delivery project context. Information linksbetween projects are also important for learningand the transfer of knowledge between projects. Inaddition, the success of any business model is alsoinfluenced external factors such as competitionand customer preferences. In Table 1, we introducethe most relevant contextual factors that definethe performance of a business model.

We claim that these contextual factors explainthe differences between businesses of projectsupplier firms. Thus firms cannot directly copy suc-

cessful business models from other companies indifferent market, but they need to be tailored to fitspecific businesses. Also, when comparing success-ful business models applied by their competitors,project supplier firm has to evaluate, whether itcan more effectively implement similar business

Table 1. Contextual factors in project business

Business environment related factors:- Customers strategies and preferences- Accepted methods of doing business in the market segment

(industry dominant logic)- Competitive situation- The distribution of capabilities and resources in the value chain

Project-based firm related factors:- Market and technological uncertainty- Resource, market and technological interdependence between

projects- Discontinuity between delivered projects to a customer or

market segment- Relative size and frequency of project deliveries

Project related factors:- Project novelty newness of the technical solution to the

market- Project uniqueness similarity of a project compared to

previously delivered projects- Technical and organizational complexity of a project

- Uncertainty related to project goals, technology or implemen-tation process- Distribution and total cost in project lifecycle

The cost of thetotal projectlifecycle is asignificant

contextual factor


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model. For example, competitors mayhave competences or resources thatare not available in the supply chain,which makes their business model dif-ficult to imitate. Traditionally technicalproduct has been considered as themost important element in ensuringcompetitive advantage, but especiallyin mature markets it is difficult to dif-

ferentiate with products and projectsuppliers are combining their productwith services (Artto, Wikstm, Helstm& Kujala, 2008). System integration, thecapability to integrate complex systemsincluding product and services, has be-come one of the key competences forproject supplier firms (Hobday, Davies &Prencipe, 2005). It is also difficult to cre-ate and imitate, which makes it possiblefor a project supplier to gain sustainablecompetitive advantage with a superiorsystem integration capability.

The impact of contextual factorson the design and performanceof the business modelExternal business environment relatedfactors are the primary drivers for select-ing a specific business model. Customerstrategies, competition and industrydominant logic constraint the choicesavailable in the markets, but innovativeproject supplier firm may take a lead inproposing new ways of doing businessand expand their scope of delivery. Forexample they may provide support for

feasibility study and investment decisionprocess or after the delivery to respon-sibility to operate the system. However,the adaptation of new types of businessmodels is influenced by whether they areaccepted by customer and they providecompetitive advantage. Supplier canextend its role only when the customersstrategy is compatible with the aimedrole (Helander & Mller, 2007). In somecases applying new business models mayrequire educating the customers onnew ways of doing business or involvingthem more closely in the design of new

under control and use of subcontractingfor project deliveries. Another examplewould be after sales services providedto the customer. If technological solu-tions are mature and standardized inthe industry, there might be a lot localcompetition from small service firms,which makes it difficult to maintainmargin levels for a larger project sup-

plier with higher overhead costs. Infigure 1 we present a framework whichexplains how contextual factors influ-ence selection, design, and performanceof a business model.

ConclusionIn this paper we identify relevant con-textual factors which have to be takeninto account when defining the busi-ness model of a project supplier firm.Business level factors, such as customerstrategy, dominant logic in the industry

and competition can be considered asconstraints to which type of techni-cally effective business models can beimplemented in practice and providecompetitive advantage to create profit-able business. Cognitive limitations inthe rationality in of the managerial deci-sion making process emphasize the rolemanagement in the design and selectionof a business model. The contextualfactors in project based-firm and in in-dividual projects influence performanceof selected business model.

From a managerial point of view, the

purpose of this paper is to help manag-ers to analyze their project business andto select the most profitable businessmodel. The list of contextual factors canalso be used to provide as a communica-tion tool i.e., as a check list of factors todiscuss about, when discussing factorsthat have influence on running businesswith customers and subcontractors. Assuch, the factors can be used to createa shared understanding of the businesslogic and to help designing the businessmodel that provides benefits for all

firms in the value chain, with balancedshort-term and long-term benefits.Project supplier firms may also attemptto influence the contextual factors fortheir business advantage. For example,modular design has been introduced asa means to standardize project compo-nents and reduce interdependences be-tween them, which allow different typesof business approaches in the design ofa value chain (Hellstm, 2005).

Our research expands the contingencyapproach in project research related toindividual projects (cf. one size does

not fit for all projects, see Shenhar2001) to the business of a project-basedfirm. In accordance to Shenhar and Dvir(1996), who claim that the contingencyapproach could provide a basis for the

Figure 1. Contextual factors influence the selection, design and performanceof the business model of a project based firm

Customers strategiesand preferencesAccepted methods fordoing business in themarket segmentCompetitive situationDistribution of capa-bilities and resourcesin the value chain

Value propositionMarket segmentationPosition in the valuenetworkCost structure andprofit potential

Source of competitiveadvantage

Business perfor-mance of a project

supplier firm

Managerial decisionsmaking process

Project and project-based company related

contextual factors

Business environment Design of a business model

Performance of thebusiness model

types of products or services.The distribution of capabilities and

competences in the value chain impactsthe project supplier firms role in thevalue chain. From a project supplierpoint of view, the challenge is that theimplementation of new business modelsoften requires different competencesand capabilities, which have to be taken

into account when positioning the com-pany in the value chain. All firms inthe value chain are looking for mostprofitable position and have their ownstrategies and related business models.The project supplier firm must selecta role that fits its strategic objectivesand provides competitive advantage.For example, for a small supplier withsuperior technical stand-alone product,the most profitable position is to stay inthe role of subcontractor as comparedto become a system integrator with

large responsibility for overall systemdelivery.In the selection and design of a busi-

ness model it must be understood thatthe knowledge held by managers aboutthe business environment is biased byearlier successes of the firm (Chesbroughand and Rosenboom, 2002). This processis also cognitively limited by dominantlogic prevailing in the industry, whichfilters out new ideas and causes pathdependent behavior. Differences in riskattitude may also have significantly in-fluence on managerial decision making.

Thus the choice of a business model isnot only constraint by external businessenvironment, but cognitive limitationsin the rationality of managerial decisionmaking process.

The success of the select businessmodel is influenced by contextual fac-tors on the project and project-basedfirm level. For example, if projects aredelivered to a market segment or geo-graphical region on a rather infrequentbasis, the cost structure has to betailored to take account into changesin demand by keeping the fixed cost


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theory of project management, wepropose that contextual factors thatexplain the emergence and performanceof different types of business modelscould provide a basis for a theory ofproject business.

ReferencesAndersen E.S. (2006)

Toward a project management theoryof renewal projects. Project Manage-ment Journal 37(4): 15-30

Art to K., Wikst rm K. (2005)What is project business? InternationalJournal of Project management 23:343-353

Art to K., Wikst rm K., Hellst rm M., &Kujala J. (2008) Impact of services onproject business, Int ernational Journalof Project Management , (fort hcoming2008)

Barney J. (1991)Firm resources and sustained competi-t ive advantage, Journal of ManagementStudies, 17(1): 99 - 120

Chesbrough, H, Rosenbloom, R.S. (2002)The role of business model in capt uringvalue from innovat ions: Evidence fromXerox Corporations technology spin-of fcompanies. Indust rial and CorporateChange 11(3): 529-555

Chesbrough, H.(2003) Open Innovat ion:The New Imperat ive for Creating andProfit ing from Technology. HarvardBusiness School Press, Boston, MA.

Cova B., Ghauri P. and Salle R. (2004)Project Marketing - Beyond Competi t iveBidding. Wil ey.

Gann D.M., Salt er A.J. (2000)Innovat ion in project- based, service-

enchanced firms: the construct ionof complex products and systems.Research policy 29:955- 972

Galbrai th J.R. (2002).Organizing to deliver Solut ions. Organi-zation Dynamics 31(2):194-207

Heide J.B., Miner A.S. (1992)The Shadow of the Future: Effects ofAnt icipat ed Int eraction and Frequenceyof Contact on Buyer-Seller Cooperat ion.

Helander A., Mller K. (2007)System suppliers customer strategy.Industrial Market ing Management 36:719730

Hellst rm M. (2005)

Business concepts based on modular it y:a clinical inquiry int o the business ofdelivering projects, Doctoral Dissert a-t ion, bo Akademi University, bo Aka-demi Universit y Press, Turku, Finland

Hobday M., Davies A., & Prencipe A. (2005)Systems int egration: a core capabili tyof t he modern corporation, Industrialand Corporate Change, 14(6): 1109-1143

Mandjk T., & Veres Z. (1998)The D-U-C model and the stages of theproject marketing process, In: HalinenK., Nummela. (Ed.) 14th IMP annualconference proceedings (pp. 471 490),Turku School of Economics and Busi-

ness Administ rat ion, Turku, FinlandMorris, M., Schindehut te, M., Allen, J.

(2005)The ent repreneurs business model:toward a unified perspective. Journal ofBusiness Venturing, 58, 726-735.

Shenhar A.J., Dvir D. (1996)Toward a t ypological t heory of proj-ect management. Research pol icy 25:607-623

Shenhar A.J., (2001)One size does not fit all projects: ex-ploring classical cont ingency domains.Management Science 47(3): 394-414

Stewart D.W, Zhao Q. (2000)Int ernet marketing, business models,

and publ ic policy. Journal of Public Pol-icy and Marketing 2000;19(Fall):28796.

Whit ley R. (2006)Project-based firm: new organizat ionalform or variation of a t heme. Industrialand Corporate Changes, 15:1, 77-99

Prof.Jaakko KujalaDr. Jaakko Kujala is professor of project andquality management at Department of IndustrialEngineering and Management at University ofOulu and adjunct professor at Helsinki Universityof Technology, where he is working with projectbusiness research group at BIT research centre. Hehas over ten year international work experiencein automation system project business beforejoining the academia. His research interests in-clude: 1) project sales and marketing process,2) global project networks and project stakehold-

er management, and, 3) business models for project-based organizations.

E-mail: [email protected]

Annaleena Parhankangas

Dr. Annaleena Parhankangas is an associateprofessor at New Jersey Institutes School ofManagement and the holder of the Henry J. LeirProfessor Bio-Business. During the past years, shehas also worked as professor at Helsinki Universityof Technology and as a visiting scholar at Rensse-lear Polytechnic Institute, the Wharton School ofBusiness, and Chalmers University of Technology,Sweden. Her research interests centers around the

questions of how inter-organizational relationships of technology-basedventures affect the direction and speed of technology development andcommercialization. She is also interested in comparing the nature and out-come of entrepreneurial and innovative activities in different countries.


Karlos A. ArttoDr. Karlos Artto is professor of project business

at the Department of Industrial Engineering andManagement at the Helsinki University of Tech-nology (HUT), Finland. His current research in-terests include: 1) management of project-basedorganizations and strategic management of mul-tiple projects, project portfolios, and programs;2) management of innovation, technology, R&D,new product development and operationaldevelopment projects in different organizationalcontexts; 3) project networks and project delivery

chains, and; 4) risk management, with the emphasis on management ofbusiness opportunities in uncertain business environments. For more infor-mation, the Project Business research groups site at HUT is: http://pb.hut.fi/


Wikst rm K., Hellst rm M., Art to K.,Kujala J., & Kujal a S. (2008). Driversand barriers for adopting services inproject- based firms, European Academyof Management EURAM, 8th AnnualConference, May 14- 17, 2008, Ljubl jana& Bled, Slovenia

Winch G. M. (2006).The governance of project coalit ions towards a research agenda, pp.324- 343, In: Lowe D., (ed.) & Leir inger R.Commercial management of projects:defining the discipline, Blackwell pub-lishing, UK


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With over 100 years of experience, MAGNA STEYR is the leading global, brand-independent engineer-ing and manufacturing partner to the Original Equipment Manufacturer (OEM) in the automotive

industry. The increase of global activities forces MAGNA STEYR to align their project managementapproach to the global requirements and cultural differences. Therefore the company standardized asimple project management approach groupwide and is implementing this approach with a supportto the functional departments and business units as well as the projects itself.

Dr.Wolfgang DanzerMAGNA STEYR

The Global Project Management Suppor t at

This project management approach calledMAGNA STEYR Project Management [MSPM] wasalso established to have one face to the customerregarding project management and to assure aquality standard within projects.

Company DescriptionMagna Steyr is a company of Magna InternationalInc. in Canada. Magna International is one of the

worlds biggest automotive suppliers. It has morethan 84.000 employees at 229 production sitesand 62 development sites in 23 countries. In 2007,Magna International achieved a sales volume of26 billion $.

IntroductionMAGNA STEYR is the leading global, brand-inde-pendent engineering and manufacturing partnersto the OEMs. The goal of MAGNA STEYR is tosystematically pursue the companys expansionistpolicy by gaining market shares, acquiring newcustomers and penetrating new markets both inand outside Europe.

To facilitate the collaboration over all locations,MAGNA STEYR set up its own project managementapproach as a global group standard in the year2005 derived from internal experience, state-of-the-art project management and the PhD thesisof the author of this article.

Figure 1. 100 Years of Experience at MAGNA STEYR

MAGNA STEYR


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With over 100 years of experience, MAGNASTEYRs range of services makes us the lead-ing global, brand-independent engineering andmanufacturing partner to the Original EquipmentManufacturer (OEM) and positions us at the cut-ting edge of the automotive supply industry. Wedo not, however, wish to be solely a partner to ourcustomers, but also strive to consolidate our lead-ing position in the industry with our own ideas and

new developments. Engineering and assembly ofcomplete vehicles, development and manufactur-ing of components and systems, and innovationson the road to the automotive future - vehicles arenot merely our business, but our passion.

In concrete terms, this means- we are innovative and constantly seek new

and better solutions for our partners,- we take a proactive approach to our busi-

ness responding quickly and flexibly to ourpartners needs and

- our partners can totally rely on us and ourstability in every situation.

MAGNA STEYR has global capabilities with 16 facil-ities, and 9,850 employees in 2007 located throughoutNorth America, Europe and Asia Pacific.

CustomerMAGNA STEYRs diverse customer base includesAudi, BMW, Chrysler, Fiat, Ford, General Motors/Saab, IVECO, Jeep, Mercedes-Benz, Porsche, Smart,Stewart & Stevenson, Volkswagen, Volvo and theirrespective operating divisions and subsidiaries.

Product ListingEngineering

- Advance Development

- Product Development Process- Styling- Vehicle Concepts / Innovations- Complete Vehicle- Body & Trim- Chassis Modules- Drivetrain & All-Wheel Drive Systems- Engine Integration- Electrics/Electronics- Prototype & Low-Volume ProductionVehicle Assembly- Production Process- Complete Vehicle Assembly (Body-in-

white, Paint, Assembly)- Completely Knocked DownComponents, Modules & Fuel Systems- Body Modules- Fuel SystemsServices- Production Planning- Accredited Materials Testing- Product Lifecycle Management- Metrology- Homologation- Risk ManagementSpace Technology- ARIANE Propellant Feed Lines

- Thermal Control Systems- Satellite Propulsion System- Cryogenic Fuel Lines- Automotive Applications- Manufacturing Technologies

Fit for Going GlobalThe increase of global activities force MAGNASTEYR to align their project management approachto the global requirements and cultural differenc-es. Therefore the company standardized a simpleproject management approach groupwide. Beforestarting to describe the approach some interestingglobal aspects should be discussed as some theses.To point out the impact this theses are verbalized

the other way around to their meaning.1. Business Language is English ?2. Culture has no influence on projects ?3. Roles are always the same ?

Business Language is English ?The business language within a project is mostimportant to the project effort. As an outcomeof an internal research out of lessons learned theproject culture and communication within projectis one of the top 3 issues initiating problems.

Even if English is well settled as business lan-guage worldwide at a top level of management,

collaboration within a project can be made im-possible if one or both of intercultural partnersis not able to communicate in the set businesslanguage.

Using translators within projects can ease thatproblem but still sometimes you cannot avoidplaying chinese whispers. One of the most inter-esting examples was a translation from germanto english to german and at least to the foreinlanguage due to agreements within the projectand translation requirements.

Culture has now influence on projects ?In Europe he was an excellent manager. He was

highly skilled and had an exceptional ability toget things done. Surprizing all he failed due to hischaracter. Here in Europe it was common to use abiting tone, but here in China it did not work outfine, which was not understandable for him

Quotations like this give an example of howimportant cultural aspects are. And even if weare aware of them it is necessary to put a highlyeffort into the collaboration to overcome thesecultural differences.

Roles are always the same ?Terms and their definition are as different as cul-

tures itself. Sometimes roles and their definitionsvary from one department to the other even withinone company. Therefore MAGNA STEYR sets a fo-cus on the ensurance that the social relationshipsare promoted within the project team so that theproject targets can be achieved jointly. One of thetasks there is to clarify the various roles, which hasto be done anew for each project.

Project Management at MAGNA STEYR

What is MAGNA STEYR Project ManagementMAGNA STEYR Project Management [MSPM] isa project management approach derived from

the knowledge of the most experienced projectmanagers at MAGNA STEYR. Therefore MSPM isour project management approach which usescorporate knowledge and wording, but of coursefollows the state-of-the art approach to project


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- To assure a quality standard within proj-ects

To facilitate collaboration we defined only afew necessary terms and generic methodologiesbecause the common understanding for the ap-proach enables to work on the content of theproject to reach the targets and avoids discussionsabout the basic methodology.

Our customers are used to a unique quality

level and flexibility, therefore they expect thesame quality and flexibility all over the world. Toensure this we standardized our generic projectmanagement approach.

To ensure a quality standard within projects weconsidered newest and most innovative manage-ment approaches as well as the experience of ourbest project managers during the creation of theproject management standard MSPM.

Successful projects as an impact of good projectmanagement lead to satisfied customers and re-awarded new business

Definition of a ProjectTo give a distinction between what has to be aproject at MAGNA STEYR, and therefore has to fol-low the guideline of MSPM, the company specifiedsome characteristics of projects.

Projects:- are unique- are target-oriented- have a specified time- have limited resources- are complex- are possibly corss-funcionalKnowing that, still a black-or-white decision

cannot be made if it is a project or not. Therefore

three hard facts have been installed to decidewhether it is a project or not:- project must be defined- project has been ordered by the internal

customer- project manager responsible for the results

has been nominated. Decision-makingpowers have been clarified, also regardingall the resources

Following this criteria a project is a project atMAGNA STEYR if there is somebody within the

management beside the PhD thesis of the authorof this article.

MSPM as a general and generic approach toproject management has to be taken for all typesof projects within the company and is valid as agroup standard MAGNA STEYR worldwide.

To document the specific knowledge regardingspecific types of projects the company decided tostandardize this in so called guide lines that arebased on MSPM and that describe a framework forthe specific type of project like for the product-development process.

Within specific projects project manuals arewritten as an documented agreement of how toreach the set project targets within the project

team. This project manual also is based on MSPMand the particular guide line.

Why MAGNA STEYR Project ManagementThe reason for MAGNA STEYR to set up a proj-ect management standard within the companyworldwide was to:

Achieve the goals of the company with proj-ects

- Facilitate collaboration- Have one face to the customer

Figure 3. Model of the Project Management Approach at MAGNA STEYR

Figure 2. MSPM as principal basis for guidelinesand project manuals


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organization who needs the project and is willingto spend the resources for a project, somebodyhas taken over the responsibility for and is able toreach the set targets for this projects, acting like aentrepreneur for a specified time, and those twopeople agreed upon the definition of the projectand signed a so called project definition sheet.

Definition of Project Management at MAGNA

STEYRAt MAGNA STEYR we defined project manage-ment [Fig. 2] as planning, controlling, assuring andimproving of coordinated activities with start andfinish dates, undertaken to achieve project-specificobjectives conforming to specific requirements, in-cluding the constraints of time, cost and resourcesas well as lessons learned for further projects.

This project management approach is based onthe cognition of the PhD theses of the author ofthis paper (Danzer, 2006) where the improvement-oriented management loop (planning, controlling,assuring, improving) is derived from the constitu-

ent parts of the superordinate concept of qual-ity management within the ISO 9000:2005 (ISO,2005), the Sheward-Circle (Deming, 2000), wellknown also as Plan-Do-Check-Act methodology(PDCA), as well as the constructivist (Maturana &Varela, 1987; Luhmann, 1987), and kyberneticalapproach (von Foerster, 1991).

The target of the improvement-oriented man-agement loop is to obtain legitimacy, effective-ness, and efficiency. Simplified legitimacy can beobtained by the fullfilment of project specificrequirements, which is measurable on the basisof the satisfaction of stakeholder of the project.Within the policy of MAGNA STEYR the mission

is stated to fulfill the requirements and expecta-tions of our stakholders (customers, employees,shareholders, suppliers and environment) recon-ceiving profitability and sustainability consideringbest possible fulfillment of the requirements inquality, environmental, health and safety as wellas security.

Effectiveness can be obtained by reaching theset targets, and efficiency means that the targetsare reached with minimized resources.

PlanningWithin MSPM planning means the agreeing of

the project targets derived from the specific re-quirements as well as the processes and resourcesnecessary for achieving the targets.

ControllingControlling includes the monitoring of theachievement of the targets and process implemen-tation, as well as the agreement and monitoringof the necessary counter measures for achievingthe targets.

Figure 5. Step Controlling of the improvement-oriented management loop

Assuring

Assuring covers documented releases of the re-sults and approvals (verification/monitoring ofthe achievement of the project targets, valida-tion/monitoring of the usability). The proof ifthe targets have been achieved focus on hardfacts that lead to releases. The approvals need aproof of fitness for use which is based on fulfill-ment of requirements and the satisfaction of thestakeholders. Therefore assuring needs a stronginteraction with the stakeholders and focus onsoft facts as well.

Figure 6. Step Assuring of the improvement-oriented management loop

ImprovingThe step improving contains the adjustment ofthe targets, processes and resources to meet the

requirements of the stakeholder. As an impact ofimproving the level of skills to fullfill requirementsincreases. While improving it has to be taken intoconsideration that every change of agreed speci-fications needs change management.

Figure 4. Step Planning of the improvement-oriented management loop

Figure 7. Step Improving of the improvement-oriented management loop


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Project Management Support

Decentral approachA general principle of MAGNA is the decentralapproach. Regarding project management thatmeans that MAGNA STEYR was not going the wayto have a hugh central PM office but to supportthe internal customer of projects and the projectmanagers local with so called MSPM assignees that

are linked to the MAGNA STEYR project manage-ment support department.

Support instead of orderAnother principle is to leave the responsibilityfor project management at the project manager.Instead of giving order how to work with specificmethodologies our project managers only get thesimple but common framework of MSPM and aresupported how to use it. For different types ofproject a more detailed guideline, containing thedocumented knowledge of the company to thistype of project, is given to the project manager.

This gives enough help for being better and fasterbut also leaves enough flexibility to adapt themethodologies to the requirements of specificprojects.

ConclusionM

ICB Re-perspectives 2009

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