A critical review of the contribution of project portfolio management to project success

Butler, Martin (2006-12)

Thesis (MBA)--Stellenbosch University, 2006.

Thesis

ENGLISH ABSTRACT: Project success is essential for the survival of modern organizations that are increasingly turning towards project management to implement their strategy and make significant business changes. Evaluating the success of these projects is however not well understood and definitely not a precise science. Despite all the ambiguity surrounding project success there is at least agreement that the extent of project failure is much higher than it should be. The term project portfolio management is very vaguely defined and the contribution thereof to project success is not yet clearly understood. In order to establish the contribution of project portfolio management to project success, it is required to firstly - - - - - - -- distinguish. between pr"o-ject success and project management success. Project succ",.~ is essentially the contribution of the project deliverables to the organization's strategic intent. Project management success differs significantly from project success in that it measures the delivery of the project's objectives within the time, budget and resource allocation. In order to understand this difference the study first focuses on the factors contributing towards project success and project management success respectively. T~o _ key"_~~~ings_ are that (1) project management success is but a component of project success on the time dimension and (2) that alignment between project deliverables and organizational strategic intent is fundamental to project success. The various concepts of project management, program management, enterprise project management and project portfolio management are investigated in order to - obtain full understanding of the contribution of each concept to both project and project management success respectively. Project portfolio management, which is often confused with enterprise project management, is examined by tracing it back to its origin in portfolio management theory, as presented by Markowitz in 1960 and widely applied in financial markets. The m~in contribution of project portfolio management towards project success lies in aligning project objectives with organizational strategic intent. Project portfolio management also provides an analysis of project status, not project management status, and establishes project priorities which are essential for resource allocation. Allocating resources is however the role of enterprise project management, a management function complimentary to project portfolio management. By providing an independent view on the project status, as well the contribution of the project to strategic intent, project portfolio management becomes a catalyst to emphasise the correct projects on the one hand and annihilating incorrect projects on the other. The ro les of line, project, program, enterprise project, project portfolio and strategic management are shown to all contribute on diffe[ent dimensions towards project success and ultimately organisational success. It is argued that only when these different contributions are properly u~derstood , can it be appropriately assigned and will accountability for project succ~ss be tied down to specific organisational roles. A proposed framework -fo-r -p-ro-ject - success is finally presented. This proposed - - ~ framework could lead to further research and ultimately provide a synQPsis of all factors contributing to project success. An important component of this framework is project portfolio management that ensures alignment of project deliverables with organisational strategic intent.

AFRIKAANSE OPSOMMING: Projeksukses is noodsaaklik vir die voortbestaan van moderne organisasies wat toenemend projekbestuur gebruik om organisasie strategie te implementeer en wesenlike organisatoriese veranderinge te maak. EvaJuasie van die sukses van hierdie projekte word egter nie algemeen begryp nie en is beslis nie In presiese wetenskap nie. Ten spyle van al die teenstrydhede rakende projeksukses, is daar ten minste ooreenstemming dat die omvang van projekfalings veel hoer is as wat dit behoort te wees. Die beg rip projekportefeuljebestuur is baie vaag gedefinieer en die bydrae daarvan tot projeksukses word nie duidelik begryp nie. Ten einde die bydrae van projekportefeuljebestuur tot projeksukses te bepaal, is dit eerstens nodig om tussen projeksukses en projekbestuursukses te onderskei. Projeksukses is essensieel die bydrae van die projek se aflewerbares tot die organisasie se strategiese doelwiUe. Projekbestuursukses verskil wesenlik van projeksukses in die sin dat dit die aflewering van die projek S8 doelwitte binne die tydsraamwerk, begroting en hulpbrontoedeling meet. Ten einde die onderskeid te verstaan, fokus hierdie studie eerstens op die faktore wat tot onderskeidelik projeksukses en projekbestuursukses bydrae. Twee sleutelbevindinge is dat (1) projekbestuursukses bloot 'n komponent van projeksukses op die tyd dimensie is en (2) dat ondersteuning van die projek se aflewerbares vir die organisasie se strategiese doelwitte essensieel is vir projeksukses. Die verskillende aspekte van projekbestuur, programbestuur, ondernemingsprojekbestuur en projekportefeuljebestuur is ondersoek om die bydrae van elkeen tot onderskeidelik projeksukses en projekbestuursukses ten volle te begryp. Projekportefeuljebestuur, wat dikwels met ondernemingsprojekbestuur verwar word , is ondersoek deur dit terug te volg na portefeuljebestuurteorie. 5005 voorgestel deur Markowitz in 1960 en algemeen toegepas in finansiele markte. Die hoofbydrae van projekportefeuljebestuur tot projeksukses is gelee in die rig van van projek se doelwiUe op die strategie van die onderneming. Projekportefeuljebestuur verskaf ook 'n analise van die projek status, nie die projekbestuur status nie, en bepaal projek prioriteite wat noodsaaklik is vir hulpbrontoedeling. Die toedeling van hulpbronne is egter die rol van ondernemingsprojekbestuur, 'n bestuursfunksie wat projekportefeuljebestuur komplimenteer. Deur 'n onafhanklike siening van projekstatus, asook die bydrae van die projek tot die organisasie se strategie te verskaf, word projekportefeuljebestuur 'n katalisator om die korrekte projekte aan die een kant te beklemtoon en die beeindiging van verkeerde projelcte aan die ander kant mee t8 bring. Daar word aangetoon dat die rolle van Iyn-, projek-, program-, ondernemingsprojek-, projekportefeulje- en strategiese bestuur almal op verskillende vlakke bydra tot projeksukses en uiteindelik organisasie sukses. Daar word geredeneer dat slegs wanneer hierdie verskillende bydraes behoorlik verstaan word, kan dit toepaslik geallokeer word en sal toerekeningsvatbaarheid vir projeksukses aan spesifieke rolle binne die organisasie vasgepen kan word. 'n Voorgestelde raamwerk VIr projeksukses word laastens aangebied. Hierdie voorgestelde raamwerk kan tot verdere navorsing aanleiding gee en uiteindelik 'n oorsig verskaf van al die faktore wat bydra tot projeksuses. 'n Belangrike komponent van die raamwerk is projekportefeuljebestuur am te verseker dat die projek se doelwilte gerig is op die organisasie S8 strategiese doelwitte.

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