Description
The primary challenge of project management is to achieve all of the project goals and objectives while honoring the preconceived constraints.
PAPERS
The Role of Project Management Maturity and Organizational Culture in Perceived Performance
Hulya Julie Yazici, Lutgert College of Business, Florida Gulf Coast University, Fort Myers, FL, USA
ABSTRACT ?
This study investigates whether project management maturity (PMM) relates to perceived organizational performance and how an organization’s cultural orientation is a contributing factor. Perceived organizational performance is defined as project effectiveness and efficiency followed by resulting business performance. A survey-based research was conducted with 86 project professionals from various U.S. service and manufacturing organizations. The study revealed that PMM is significantly related to business performance but not to project performance. Furthermore, while clan organizational culture is a sole contributing factor for project and business performances, PMM interacts with market culture in improving business performance. This study shows that in order to deal with project time, budget, and expectations issues, an organizational culture change toward sharing, collaboration, and empowerment is a must. Furthermore, an increasing project management maturity along with a results-oriented organizational culture improves an organization’s competitiveness, resulting in cost savings and increased sales. PMM efforts are therefore crucial. PMM accompanied by an understanding of cultural orientation is a best strategy for today’s project-based organizations.
INTRODUCTION ?
espite the developing tools and techniques in project scheduling, as well as the increasing number of heavyweight project organizations, projects fail in dealing with uncertainty. Projects also fail to meet time, cost, and expectation targets. Software development projects, for instance, are known for being completed way over budget and behind schedule (Gray & Larson, 2003). Furthermore, researchers reported that over 75% of all business transformation projects fail, and that only 16% of U.S. IT projects are completed on time and on budget (Collyer, 2000; Ives, 2005; Peled, 2000). According to the earlier Standish Group (1999) reports that were based on five years of research, 28% of the IT projects failed, and 46% were completed over budget. A recent Standish Group (2007) report indicates that a staggering 39% of projects with budgets over US $10 million failed. Similar findings have been reported for new product development projects: Belassi, Kondra, and Tukel (2007) referred to earlier studies that determined that new U.S. consumer products failed 95% of the time and that industrial product launches failed about 40% of the time (Clancy & Stone, 2005; Stevens & Burley, 2003). Jayaram and Narasimhan (2007) also described new product failures, referring to the studies of Booz Allen Hamilton (1982) and Cooper (1990), which found a 35% failure rate for new products. Project maturity, recently modeled as the Organizational Project Management Maturity Model (OPM3 ®) by the Project Management Institute (2004), aims to integrate, assess, and improve project management practices. The effects of a company’s project management system and management’s ability to execute projects successfully are recognized (Kerzner, 2005). A 2004 survey of 200 respondents in 30 countries conducted by Pricewaterhouse Coopers (PWC) concluded that the greater an organization’s project management maturity (PMM), the greater the positive impact on overall project performance. However, there is no one optimum level of maturity that is appropriate for every organization (Wheatley, 2007). Although we would expect that companies with more mature project management practices will have better project performance, the previous findings are conflicting. There is no evidence of PMM’s contribution on organization success as a means of competitive advantage (Grant & Pennypacker, 2006; Ibbs & Kwak, 2000; Jugdev & Thomas, 2002; Mullaly, 2006). These studies demonstrate the need for further research in project management maturity and how this relates to project performance. Additionally, the role of organizational factors in knowledge and technology transfer and work-team effectiveness has been recently studied by
D
KEYWORDS: project performance; project management maturity; organizational culture; clan
Project Management Journal, Vol. 40, No. 3, 14–33 © 2009 by the Project Management Institute Published online in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/pmj.20121
14 September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
several researchers (Belassi et al., 2007; Doolen, Hacker, & Van Aken, 2003; Gopalakrishnan & Santoro, 2004; Nahm, Vonderembse, & Koufteros, 2004). Firms with more flexible, change-oriented cultures were found to be associated with higher levels of technology transfer (Gopalakrishnan & Santoro, 2004). Furthermore, an organizational culture that supports communication and cooperation between teams was significantly found to be related to teamleader effectiveness and team-member satisfaction (Doolen et al., 2003). Belassi et al. (2007) found a significant relationship between a positive work environment with strong leadership and new product development project success. Although these findings are promising, there is very little research conducted on the role of organizational culture in project management. Despite the extensive research in project management processes and techniques, as well as in project leadership, organizational culture is largely underexamined in project management research. The purpose of this study is to fill these gaps and determine the relationship between project maturity and organizational culture and how this relates to project and resulting business performance. Organizations with higher maturity levels are expected to be successful in terms of project effectiveness and efficiency and also have a competitive advantage in the marketplace. Furthermore, a correct alignment of organizational culture and PMM may lead to higher project and business performance. Organizations that encourage collaboration and strong communication among project team members are expected to perform better. A correct alignment of organizational culture and project management maturity efforts may also lead to an improved performance. This article presents the results of a survey conducted with 86 project professionals from 75 U.S. organizations. Following the literature review on project performance, PMM, and organizational
culture, the research design and the questionnaire are described. In the last section, the results of the partial least squares analysis and findings are presented. Implications of the findings for today’s organizations are discussed.
Background
Project Performance Despite the common assumption that organizational project management maturity improves project management performance, current research offers little to support this argument. When project management performance or success was previously studied, several factors were found to be significantly influencing project success. These studies can be summarized in two streams: studies that emphasize project managers’ individual characteristics and leadership (Anantatmula, 2008; Dvir, Sadeh, & Malch-Pines, 2006; Frame, 1987; Prabhakar, 2005; Shenbar, 1998; Turner & Müller, 2005; Wellman, 2007), and the research stream that investigates the influence of organizational factors on project success (Bani Ali, Anbari, & Money, 2008; Doolen et al., 2003; Hyvari, 2006; Ives, 2005). As concerns the influence of leadership characteristics on project success, Dvir et al. (2006) studied the relationship between the project manager’s personality, project types, and project success. Project success was measured along four dimensions: (1) project efficiency (meeting project goals), (2) customer benefits, (3) benefits to the parent organization, and (4) benefit to the community and national infrastructure. Researchers found tentative support that project managers are more attracted to projects that fit their personality, and furthermore are more successful when their personality characteristics match their projects’ profiles (e.g., some project managers fare better with platform projects, others with lowtech, derivative projects, and still other project managers work best with hightech uncertainty projects). This finding
agrees with Turner and Müller’s review (2005), which demonstrated that a project manager’s personality and leadership may make a manager more competent and thus influence project success. These researchers also indicated the limitations of personality measures and the need for future research in measuring the impact of competence and leadership on performance. The influence of organizational factors is the topic of ongoing research in project management. Ives (2005), as a result of interviews conducted with managers, concluded that effective sponsorship and governance, definition of scope and success, structure and authority, availability of funding and resources, and even simply organizational context were important factors for project success. Hyvari (2006) studied the relationships between critical success factors and organizational variables. Organizational context, especially the size of the organization, was perceived to be an important factor for project success. Belassi, Kondra, and Tukel (2007) found significant relationships between positive work environment, strong leadership, and new product development and project success. Project Management Maturity Previous research on PMM’s contribution to project success presents conflicting results: Ibbs and Kwak (2000) demonstrated no statistically significant correlation between PMM and project success based on cost and schedule performance. Jugdev and Thomas (2002) could not find a correlation between process capability and the project success of many maturity models. Mullaly (2006) raised concerns regarding a lack of evidence of PMM’s contribution to organization success as a means of competitive advantage. Grant and Pennypacker (2006) found no significant difference in PMM among four major industries. Ibbs and Kwak (2000) found that 38 large international companies, in
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September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
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The Role of Project Management Maturity and Organizational Culture
sectors such as construction, telecommunications, IS, and high-tech manufacturing, averaged 3.26 on a relative scale, with 1 indicating the lowest maturity level and 5 indicating the highest maturity level. A recent PWC study based on 200 respondents reported that the average maturity score was 2.5, that more than 60% of the respondents wished to increase their maturity level, and that 71% of companies wanted to increase their level by more than one step (Bannan, 2005). Grant and Pennypacker (2006) revealed that as a result of a survey of 126 organizations from various industries, the median PMM level is 2 out of 5 with respect to 36 of the 42 components analyzed. Mullaly’s (2006) longitudinal study reveals that between 1998 and 2003, based on worldwide organizations ranging from 280 to 579, the number of Level 1 organizations increased, but there has been a decrease over time in organizations evaluated at Level 2 or above. The fact that Level 3 organizations declined to 0% is very disappointing. Furthermore, no significant relationship between PMM and performance was found. Organizational Culture Organizational culture is defined as the set of values, beliefs, and behavioral norms that guide how members of the organization get work done. Many organizational factors were attributed to team effectiveness. Organizational context is defined as management processes, organizational culture, and organizational systems that exist within an organization. Early studies have confirmed that companies that place emphasis on key managerial components, such as customers, stakeholders, employees, and leadership outperform those that do not have these cultural characteristics (Kotter & Heskett, 1992; Wagner & Spencer, 1996). Doolen et al. (2003), based on production teams of a Fortune 50 hightechnology company business unit, found a significant and positive linear relationship between team-leader effectiveness and team satisfaction and the organizational culture that supports communication and cooperation among teams. Variables used to define organizational culture were based on parameters such as the extent to which organizational culture supports the positive interteam interactions or the integration of the team into the rest of the organization, and the extent to which organizational culture values and supports the teams and teamwork. Janz and Prasarnphanich (2003) emphasized the importance of a knowledge-centered culture and found a significant relationship between organizational climate and cooperative learning. Nahm, Vonderembse, and Koufteros (2004) revisited the impact of organizational culture on time-based manufacturing and performance. Based on a sample of 224 firms, they determined what espoused values support a high level of time-based manufacturing performance. Based on Schein’s (1992) conceptualization of culture, positive relationships between customer orientation and beliefs, between beliefs and time-based manufacturing, and between time-based manufacturing and performance were found. Eskerod and Skriver (2007) found that the very basic assumptions of an organizational culture itself may restrain the knowledge-transfer processes. They claim that a project orientation, in fact, may restrain knowledge transfer, as it leads to knowledge silos. A case study is used to underline the restraining nature of organizational culture based on Schein’s hierarchy. Schein describes a hierarchy of artifacts, underlying assumptions, and espoused values to measure organizational culture. Schein’s measurement is based on risk, reward, warmth, and support dimensions. Risk is the orientation toward potentially innovative initiatives with uncertain outcomes. Reward is a measure of how employee performance is recognized. Warmth is a measure of friendliness of the atmosphere in the organization. Finally, support is a measure of the organization’s interest in the welfare of the employee (Koskinen, Pihlanto, & Vanharanta, 2003; Mikkelsen & Gronhaug, 2000). Ajmal and Koskinen (2008) studied the role of organizational culture on knowledge transfer in project-based organizations. They emphasized the importance of organizational culture awareness in the creation, sharing, and utilization of knowledge.
Research Design
Figure 1 shows the research model. PMM and organizational culture are expected to influence organizational performance, defined as project, and the resulting internal and external business performances of the organization. Project Management Maturity Measures Project management maturity is an important element of strategic planning, as it provides a methodology and a road map to determine and compress the gaps in resources and quality (Kerzner, 2005). PMM models provide a standardized approach to measurement and benchmarking, as well as a mapped-out strategy for improvement. As suggested, “you have to be pragmatic about what degree of maturity is actually required” (Wheatley, 2007). The PMM model, developed by PM Solutions, contains the nine Knowledge Areas as described in A Guide to the Project Management Body of Knowledge (PMBOK ® Guide)—Third Edition (PMI, 2004) shown below, and is patterned after the Software Engineering Institute (SEI)’s Capability Maturity Model (CMM; Crawford, 2002; Grant & Pennypacker, 2006; Ibbs & Kwak, 2000): • Project Integration Management, • Project Scope Management, • Project Time Management, • Project Cost Management, • Project Quality Management, • Project Human Resource Management, • Project Communications Management, • Project Risk Management, and • Project Procurement Management.
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are no established practices, or standards.
Organizational Culture Perceived Project Performance
Clan, Adhocracy, Hierarchy, Market Efficiency, Effectiveness
This model allows organizations to evaluate their relative strengths and weaknesses against a range of practices and to define their specific project management goals. Organizational Culture Assessment Instrument Although Schein’s hierarchy provides a meaningful framework for understanding the organizational culture, it lends itself more as a measure of organizational climate that is studied by the risk, reward, warmth, and support dimensions. This study uses the Organizational Culture Assessment Instrument (OCAI) developed by Cameron and Quinn (1999). OCAI is used to diagnose an organization’s culture and is helpful for determining ways to change the culture. OCAI is used by several researchers in management to assess organizational compatibility (Berrio, 2003; Ritchie & Eastwood, 2005; Zeitz, Johannesson, & Ritchie, 1997). OCAI is based on a theoretical model called the Competing Values Framework (CVF). CVF was developed initially from research conducted on the major indicators of effective organizations. Two major dimensions emerged from the study that organized the indicators into four main clusters. One dimension differentiates effectiveness criteria that emphasize flexibility, discretion, and dynamism from criteria that emphasize stability, order, and control. The second dimension differentiates effectiveness criteria that emphasize an internal orientation, integration, and unity from criteria that emphasize an external orientation, differentiation, and rivalry. Together these two dimensions form four quadrants, each representing a distinct set of organizational effectiveness indicators. These indicators represent what people value about an organization’s performance. Cameron and Quinn define these four quadrants as: clan, adhocracy, hierarchy,
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Project Management Maturity(PMM)
Perceived Internal Business Performance
PIM, PSM, PTM, PCM, PQM, PHRM, PCOMM, PRM, AVGKM
Savings, Sales growth, Overall business performance Perceived External Business Performance
Market share, Competitive position
Figure 1: Research model.
This study excluded Project Procurement Management, as participants from service organizations were in the majority and procurement management did not seem to apply to them. Therefore, PMM is measured by eight PMI Knowledge Areas. In addition to assessing PMM levels, participants are also asked to evaluate Knowledge Area maturity level in these eight areas. Five levels of maturity are used as descriptors of the Capability Maturity Model (Crawford, 2002; Humphreys, 1992; Mullaly, 2006). These levels are described below: • Level 5—Optimizing Process: A fully mature project organization with processes consistently applied throughout the organization as part of the overall management process. Processes are in place and actively used to improve project management activities. Lessons learned are regularly examined and used to improve project management processes, standards, and documentation. Management and the organization are focused on continuous improvement. • Level 4—Managed Process: A mature project management process applied consistently on all projects, with project management recognized as a
formal management discipline. Project management processes, standards, and supporting systems are integrated with other corporate processes and systems. Management uses efficiency and effectiveness metrics to make decisions regarding the projects. • Level 3—Organizational Standards and Institutionalized Process: An organization with a refined and integrated project management process that is consistently applied on each project. All project management processes are standard and repeatable for all projects. Management has institutionalized the processes and standards with formal documentation existing on all processes and standards. • Level 2—Structured Process and Standards: Some project management capabilities are defined but not consistently applied. Management supports the implementation of project management, but there is no consistent understanding, involvement, or organizational mandate to comply for all projects. • Level 1—Initial Process: A fully ad-hoc project management capability, with no consistent or repeatable processes. Although there is a recognition of project management processes, there
September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
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The Role of Project Management Maturity and Organizational Culture
and market. The clan culture stresses the importance of participation, cohesion, shared values, commitment, and high morale, while the adhocracy culture assumes that innovation and initiative lead to success and encourage entrepreneurial, creative, and visionary behavior. The hierarchical culture is characterized by a structured workplace with formal rules and policies and a focus on efficiency, timeliness, and control. The market culture perceives the external environment as hostile with choosy consumers and a need for the organization to be both results- and production-oriented. The OCAI consists of six questions pertaining to the six key dimensions of organizational culture. These dimensions are: • dominant characteristics of the organization: what the overall organization is like; • organizational leadership style and approach that permeate the organization; • management of employees: the style that characterizes how employees are treated and what the working environment is like; • organization “glue,” or bonding mechanisms, that hold the organization together; • strategic emphases: defining what areas of emphasis drive the organization’s strategy; and • criteria of success: determining how victory is defined and what gets rewarded and celebrated. These six dimensions are all meaningful, as they reveal what the organization and management values are, how success is defined, and what the leadership and work environment characteristics are. These are measures for diagnosing the existing culture environment. Participants were asked to rate their organizations in the questions. Each of the six questions has four alternatives. These alternatives describe the four cultural orientations—that is, clan, adhocracy, hierarchy, and market. Users were asked to divide 100 points among these four alternatives, depending on the extent to which each alternative is similar to their own organization. A total of 24 questions were answered to assess organizational culture. Organizational Perceived Performance Organizational perceived performance is measured by two constructs: project performance and business performance. Project Performance Project success traditionally has been measured as project completion on time, within budget, and according to specifications. Meeting customer expectations were added to these measures, as client satisfaction and customer welfare became important (Mullaly, 2006). As projects are accomplished by teams, one of the measures of success is how much the work team was satisfied in working together (Doolen et al., 2003). Efficiency is found to be loaded highest on meeting scheduled goals and on meeting budget goals. Effectiveness, on the other hand, is associated with satisfaction measures. (Bannan, 2005; Dvir et al., 2006). Based on these studies, project performance is measured by two constructs: project efficiency and project effectiveness as follows: Project efficiency: Meeting time and budget targets. Project effectiveness: Meeting customer expectations, team satisfaction. Business Performance Business performance measures adopted from Nahm et al.’s study (2004) measured an organization’s performance by sales growth, return on investment, market-share gain, and overall competitive position. Furthermore, Dvir et al. (2006) used similar measures for project success, such as whether a project resulted in a new line of products or services: • Internal organization success factors: Savings benefits of projects, projects resulting in sales growth, and overall business performance compared with the previous year. • External organization success factors: Increased market share, whether the organization improved its competitive position, and organization performance compared with the best worldwide competition. Research Methodology Surveys were distributed online to 400 project managers with a valid response return of 21.5% during a six-month data collection period. A contact list of a local PMI chapter, the PMI website, and a selected contact list from an American Society for Quality (ASQ) local chapter were targeted. The sample consisted of project managers, unit or program managers, or executives of information management projects and project groups. Surveys consisted of a four-part questionnaire: • Part 1: Demographics: five questions • Part 2: Organizational culture assessment: 24-item organizational culture questionnaire, where subjects are asked to distribute a score of 100 among four culture orientations • Part 3: PMM questions: 46 questions of project management maturity from eight Knowledge Areas with a 1 to 5 Likert scale, each representing a maturity level • Part 4: Project and business performance questions: 10 questions of project/business performance, where a score of 100 is distributed among four possible responses, ranging from “to a great extent” to “not at all.” Survey questions are shown in the Appendix. Research Hypotheses • H1: Project performance is associated with high levels of project maturity. • H2: Internal and external business performance is associated with project maturity. • H3: A significant relationship exists between organizational culture and project performance.
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• H4: A significant relationship exists between organizational culture and internal and external business performance. • H5: Project maturity and organizational culture have a combined influence on project performance. • H6: Project maturity and organizational culture have a combined influence on business internal and external performance.
Analysis Results
Eighty-six valid responses were collected from the web-based questionnaire. Considering the length of the overall survey, a 21.5% response rate was considered satisfactory. The demographic information shows that 56% of the respondents were from the service sector, 34% from the manufacturing sector, and only 10% from government or construction. Service-sector industries consisted of IT, banking, education, health care, consulting, retail, and utility. Project professionals consisted of project managers, program executives, project coordinators, system analysts, quality/continuous improvement managers, product or process managers, engineers, and consultants, with the following demographics: • Male (66%), Female (34%) • Age: 40–55 years (60%); 30–40 years (31%); younger than 30 years (8%) • Current job position: project, process, product, or IT manager (55%); project or IT executive/director (16%); project or system analyst, engineer, or consultant (29%) • Years of experience: 1–3 (24%); 3–10 (36%); 10–20 (11%); over 20 (29%), • Number of subordinates directly reporting: none (43%); 1–10 (42%); more than 12 (15%) Figure 2 shows the years of experience and position demographics. PMM Assessment The PMM questionnaire was based on eight Knowledge Areas of project management. Participants were asked to
assess their organization’s PMM level for each knowledge area and subareas based on a 1 to 5 Likert scale. An average score was calculated for each Knowledge Area and for the Knowledge Area maturity. Based on the responses collected from 86 project professionals from 75 U.S. organizations, the overall project management maturity was 2.27 (of a possible 5), indicating that there was a great opportunity to improve their project management practices. Project maturity ranged between 2.6 and 1.93. Looking closely to the sectors, in the case of manufacturing organizations, the highest project management maturity was found to be achieved at
the project quality management area, and for service organizations, the highest maturity was achieved at project time management. For both manufacturing and service organizations, the lowest project management maturity was in the area of project risk management, scoring between 1.93 and 2.00. Time management involves defining project activities, developing the schedule, and executing and controlling the plans. Service project managers perceived a structured process and standards throughout the organization for time management, in some cases an institutionalized process, but not applicable to all projects. This result agrees
Position
Analyst or Engineer 29% Manager 55%
Executive 16%
Years of Experience
More than 20 29%
1–3 24%
10–20 11%
3–5 18% 5–10 18%
Figure 2: Position and years of experience demographics.
September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
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with Grant and Pennypacker’s (2002) study where, in the professional services industry, a majority of the organizations adopted a Level 3 maturity in schedule development. In the case of manufacturing-based organizations, quality control was perceived by the project managers and executives to be achieved satisfactorily, encompassing procedures to ensure project deliverables to meet quality objectives and attributes. On the other hand, Project Risk Management seems to be one of the areas in which organizations need more training. Risk management is about understanding the risk events, assessing their impacts on the project, developing and executing a plan, and monitoring progress. As Besner and Hobbs’ study (2008) showed, project management tools related to risk management are among the least-used tools, demonstrating an urgent need for more training and education in risk analysis and management. Another Knowledge Area that was found to show poor maturity was Human Resource Management, indicating a lack of standardization. Table 1 shows the mean scores for PMM and the Knowledge Area maturity. In the study, nearly 54% of respondents indicated that their organizations were operating at Level 1: Initial Process (24%) or at Level 2: Structured Process and Standards (30%). Nineteen percent rated their organizations at Level 3: Organizational Standards and Institutionalized Process, almost 12% indicated operating at Level 4: Managed Process, and only 8.5% assessed their organizations to have achieved Level 5: Optimizing Process. These results agree with Grant and Pennypacker’s 2003 study (published in 2006) conducted with 126 organizations and yield similar percentages: 67% at Level 1 or 2, 19.4% at Level 3, 7.3% at Level 4, and 6.5% at Level 5. This study found higher percentages for Level 4 and 5, which is a promising indication that there is an improvement in the businesses’ efforts toward
PMM Areas
Project Integration Management Project Scope Management Project Time Management Project Cost Management Project Quality Management Project Human Resource Management Project Communications Management Project Risk Management Knowledge Management
Table 1: Project management maturity levels.
Mean
2.28 2.48 2.42 2.38 2.51 2.09 2.39 2.01 2.22
SD
1.09 1.10 1.23 1.19 1.39 1.27 1.12 1.27 0.12
more managed and optimized project management processes. The four PMM areas that respondents reported to be achieved at Level 3 and higher were Project Scope Management (46% of the respondents), Project Quality Management (44.8%), Project Time Management (43.7%), and Project Communication Management (41%). Specifically, Level 3 maturity achievement (i.e., organizational standards and institutionalization) was reported for requirements definition and deliverables identification, schedule development and control, and performance reporting and management tracking. Surprisingly, cost management is one of the areas that needs improvement, along with team and professional development, performance measurement, and risk management overall. It seems that organizations managed to standardize some of the control processes with respect to time and requirements but have not mastered planning, team development, and cost and risk management. Organizational Culture Assessment Based on Cameron and Quinn’s Competing Values Framework, the distribution of culture orientation collected from 86 valid responses is shown in Table 2. As shown, the most common culture is market orientation, a culture
in which goal achievement and market share are seen as essential and external environment is perceived as hostile. The second-most frequent culture orientation was perceived to be hierarchical culture, where a structured workplace with formal rules and policies exists and the focus is on efficiency, timeliness, and control. Organizational Culture, PMM, and Performance Relationship This study explores how PMM and organizational culture orientation affect project and business performance. A possible fit between organizational culture and PMM level and its influence on project, internal, and external business performances is sought. As mentioned earlier, previous research reports difficulties of correlating project success to project maturity. Furthermore, although
Culture Orientations
Clan Adhocracy Market Hierarchy
Mean
22.9 16.6 31.7 28.8
SD
14.27 10.51 18.79 18.94
Table 2: Organizational culture orientations summary.
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Constructs
Clan Adhocracy Market Hierarchical PMM (PIM, PRSC, PTM, PCM, PQM, PHRM, PCOM, PRM, KMAVG) Project performance Internal business performance External business performance
Average
0.581 0.644 0.706 0.548 0.746
Composite Reliability
0.893 0.915 0.935 0.878 0.963
0.651 0.569 0.723
0.882 0.798 0.886
Table 3: Construct reliability of organizational culture, PMM, and performance measures.
the significance of organizational culture is emphasized, very few studies actually analyze the effects of organizational culture on performance, and practically none examine these effects on project performance. Perceived organizational performance is measured by project performance (time, budget, customer, and team satisfaction), as well as resulting internal (saving benefits, sales growth, business performance compared to last year) and external business success (market share, competitive position, business performance compared to best worldwide competitor). PMM is composed of eight Knowledge Areas. Organizational culture is assessed using OCAI that focuses on four cultural orientations. All questionnaire responses were normalized by logarithmic transformation to reduce variation among scales. PLS Graph (Version 3.0) based on Partial Least Squared Method (PLS) is used for the analysis. PLS is an efficient structural equation modeling method and analysis when measurement scales are still being developed. PLS is considered better suited for explaining complex relationships, placing minimal demand on sample size and residual distribution. Thus, PLS is used in exploratory studies where theory development is primary focus. Compared to
the better-known factor-based covariance fitting approach for latent structural modeling (exemplified by software such as LISREL, EQS, Cosan, and EzPath™), the component-based PLS avoids two serious problems: inadmissible solutions and factor indeterminacy. The approach estimates the latent variables as exact linear combinations of the observed measures, therefore it avoids the indeterminacy problem and provides an exact definition of component scores (Barclay, Thompson, & Higgins, 1995; Chin & Newsted, 1999; Ritchie & Eastwood, 2005). Table 3 shows the average and construct reliabilities of organizational culture, PMM, and performance constructs. The average reliabilities or Cronbach’s alpha values are between 0.55 and 0.75, and composite values are between 0.88 and 0.96. These composite reliabilities (an intercorrelation among items in a group indicating the extent to which the group can be seen as measuring a single latent variable) are PLS measures calculated within the casual model, providing a superior gauge of internal consistency superior to that of the Cronbach’s alpha (Fornell & Larcker, 1981, in Ritchie & Eastwood, 2005; Hyvari, 2006). All PLS construct measures met or exceeded the minimally accepted level of 0.6 to 0.7 based on Nunnally (1978) and Hatcher (1994).
Hypothesis Testing PLS uses nonparametric methods such as bootstrap and jackknife for approximating the accuracy of the estimates. Bootstrap analysis provides the best possible statistical significance of the overall loadings and the standardized b’s (slope coefficients) (Chin, 1998). Table 4 shows the path coefficients and t values based on Student’s t distribution with levels of significance (p- values) for a relationship between performance, project maturity, and organizational culture. Path coefficients are standardized versions of linear regression weights that can be used in examining the possible causal linkage between statistical variables. The standardization involves multiplying the ordinary regression coefficient by the standard deviations of the corresponding explanatory variable; these can then be compared to assess the relative effects of the variables within the fitted regression model. A significant relationship is found between project management maturity and business performance (t ? 5.12, p ? 0.000002). Therefore, Hypothesis 2 is accepted. This shows that higher maturity is perceived to result in savings to the organization as well as to improve the competitiveness of the organization and help increase market share. However, Hypothesis 1 is not supported, as there is no significant relationship between project maturity and project performance (t ? 1.56, p ? 0.12). This indicates that organizational factors besides maturity influence project efficiency and effectiveness. The study shows that an organization’s cultural orientation is a contributing factor. Clan culture significantly relates to all performance categories: project, internal, and external business performances (t ? 2.90, p ? 0.005; t ? 2.79, p ? 0.006; t ? 2.38, p ? 0.02). Therefore, Hypotheses 3 and 4 are fully supported. The clan culture stresses the importance of participation, cohesion, shared values, commitment, and high morale. The clan culture orientation is found to
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September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
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Hypotheses
Clan–Project performance Clan–Internal business performance Clan–External business performance Market–Internal business performance Market–External business performance Market–PMM interaction PMM–Project performance PMM–Internal business performance PMM–External business performance R2 for project performance R2 for internal business performance R2 for external business performance R2 for PMM
*** p ? 0.01. ** p ? 0.05.
Path coefficient
0.490 0.415 0.381 0.392 0.43 –0.39 0.235 0.526 0.519 0.269 0.415 0.399 0.245
t-value
2.90*** 2.79*** 2.38** 2.72*** 3.43*** 3.34*** 1.56 5.12*** 5.70***
explained by the explanatory variable). Project management maturity along with organizational culture orientation explains 40% of the variance in internal and external business performance. When it comes to project performance, 27% of the variance in project efficiency and effectiveness is explained by organizational culture and PMM. Also, 24.5% of the variance in PMM is explained by organizational culture. All of these show that the organizational culture is a significant contributor to the performance measures.
Discussion of Results
This study reveals significant findings about the relationship of PMM, organizational culture, and organizational performance. Regarding maturity levels, an average of 2.27 (of a possible 5), ranging between 2.6 and 1.93, indicated that there is a great opportunity to improve project management practices. This average score shows that for most projects, structured processes and standards exist, but because the standardization is institutionalized only for some projects, and not for all, a Level 3 maturity is not fully achieved. Among the Knowledge Areas, although time and quality management
Table 4: Hypothesis testing of organizational culture, PMM, and perceived performance.
be related to project performance— that is, timely completion of the project, the extent to which the budget requirements and expectations are met, and project team satisfaction. Furthermore, perceived internal business success—that is, savings, sales growth, and overall performance of the organizational unit compared with the previous year—is significantly related to clan culture. Market share— improvement in the competitiveness of the organization, and unit performance improvement compared with its best worldwide competition—was also found to be related to clan culture. In addition to clan culture, the analysis shows the significance of market culture orientation for internal and external business performances. But this was mainly due to the combined influence of market culture orientation and project management maturity. The interaction of PMM and market culture is significant at p ? 0.001. Therefore, Hypothesis 6 is supported; however, Hypothesis 5 is not supported, as this combined influence does not relate to
perceived project performance. A summary of the hypothesis testing is shown in Table 5. The predictive power of the hypothesized model can be assessed by evaluating the R2, the coefficient of determination (i.e., the amount of variance
Hypothesis
H1: Project performance is associated with high levels of project maturity H2: Internal and external business performance is associated with project maturity H3: A significant relationship exists between organizational culture and project performance H4: A significant relationship exists between organizational culture and internal and external business performance H5: Project maturity and organizational culture have a combined influence on project performance H6: Project maturity and organizational culture have a combined influence on business internal and external performance
Table 5: Summary of hypotheses test results.
Test Result
Not supported Supported Supported Supported
p-value
0.15 0.0002 0.0008 0.0047
Not supported Supported
0.120 0.0012
22 September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
seem to reach better maturity, risk, cost, and human resource management areas show weaknesses and require more training and possible policy changes to increase standardization in these areas. These findings are in line with previous research studies. Furthermore, although a significant relationship between PMM and project effectiveness measures (meeting time and budget requirements) and efficiency (meeting client requirements and team satisfaction) is not determined, an important finding is made about the relationship of PMM and organizational competitiveness. Project professionals significantly perceived that PMM relates to an organization’s internal and external business performances. With higher project maturity, organizations can achieve substantial savings, increase sales growth, show better competitiveness compared with their competitors, and establish best practices in their industry or service sector. In addition to PMM and performance findings, incorporation of organizational culture orientation contributes significantly to project management research. So what is related to project performance and how it can be improved? This question is answered by the organizational culture assessment and its relation to performance. The 86 responses from various manufacturing and service organizations revealed that the majority perceived their current culture as being market-oriented, a results-based culture whose major concern is with getting the job done and competing and achieving goals and targets. The analysis showed a significant combined influence of market culture with project maturity on business performance (t ? 5.12, p ? 0.000002, t ? 5.7, p ? 0.0000001). In market culture, leaders are hard-driving producers and competitors. The glue that holds the organization together is an emphasis on winning. Success is defined in terms of market share and penetration. This study demonstrates that project professionals significantly perceive PMM as
an enabler of competitiveness. It seems that externally positioning characteristics of market culture, managing competitiveness, energizing employees, and managing customer service skills, along with PMM efforts to standardize and institutionalize processes, lead to better business performance. Moreover, clan is the only culture orientation that is related to perceived project performance along with business performance. Clan does not interact with PMM. This study shows that if an organization is inclined to have a clan culture, projects can be completed on time, on budget, and meeting expectations, with a higher team satisfaction, and consequently lead to higher business performance (t ? 2.79, p ? 0.006, t ? 2.38, p ? 0.02). This means that increased employee empowerment and participation and involvement of the teams, more cross-functional teamwork, more horizontal communication, a more caring climate, and more recognition for employees have a positive influence on how projects are successfully completed and how the organizations are put in a better competitive situation. Clan culture focuses on internal maintenance with flexibility, concern for people, and sensitivity for customers, while market culture focuses on external positioning with a need for stability and control. This study shows that in order to be successful, both of these cultures need to be dominant. For the clan type of culture, managers are competent in managing teams, interpersonal relationships, and the development of others. Managers should facilitate effective cohesive, smooth-functioning, high-performance teamwork. Managers should also facilitate effective interpersonal relationships, and help individuals improve their performance, expand their competencies, and obtain personal development opportunities. For market culture, managers need to foster competitive capabilities and an aggressive orientation toward exceeding competitors’ performance. Managers should
motivate and inspire individuals to be proactive and to work vigorously. Managers should also foster an orientation to serve customers, involving them and exceeding their expectations. Certainly, more of clan and market cultures, and less of hierarchical and adhocracy cultures, seems to be a good profile for improving project and business performances. It is deceiving that no relationship is found between adhocracy culture and perceived performance. Adhocracy cultures are characterized by innovation, aggressive strategies, and increasing boundary spanning and initiative. The managerial skills are managing innovation, managing the future, and promoting continuous improvement. It is, however, no surprise that adhocracy scores are generally rated the lowest (Cameron & Quinn, 1999). Future studies can investigate the role of adhocracy culture orientation and project types, specifically innovation projects on performance. Further implications of these findings are guidelines for project professionals in terms of strengthening some of the low-maturity Knowledge Areas with a proper fit of organizational culture changes. For instance, the human resources role in a clan culture is employee champion. Cohesion, commitment, and morale assessment will help project teams share and work together more effectively, and that is perceived to increase project performance. Improving an organization’s competitiveness following the completion of the projects, however, requires a strategic business partner role from human resources, so that human resources can be aligned with business strategy and general business skills, and strategic leadership can be practiced. Project leaders need to take these different roles to accommodate the organization’s need to survive, successfully complete the projects, and compete in the market. Clan culture leadership calls for a facilitator who is people- and process-oriented, and a mentor who is caring and empathic. Market culture leadership, on the
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The Role of Project Management Maturity and Organizational Culture
other hand, calls for an aggressive and decisive competitor, a task-oriented and work-focused producer. standardization of processes are enhanced by adopting a market culture to match the demands of the competitive environment. And organizations with strong clan culture can be successful internally as well as externally. Therefore, a culture profile where clan and market are dominant is a best strategy to reduce project uncertainty as well as external market challenges. 2009, from http://www.joe.org/joe/ 2003april/a3.shtml. Besner, C., & Hobbs, B. (2008). Project management practice, generic or contextual: A reality check. Project Management Journal, 39(1), 16–33. Booz Allen Hamilton. (1982). New product management for the 1980s. New York: Author. Cameron, K. S., & Quinn, R. E. (1999). Diagnosing and changing organizational culture. Reading, MA: AddisonWesley. Chin, W. W. (1998). The partial least squares approach to structural equation modeling. In G. A. Marcoulides (Ed.), Modern methods for business research (pp. 295–336). Mahwah, NJ: Lawrence Erlbaum and Associates. Chin, W., & Newsted, P. (1999). Structural equation modeling analysis with small samples using partial least squares. In R. Hoyle (Ed.), Strategies for small sample research (pp. 307–341). Beverly Hills, CA: Sage. Clancy, K. J., & Stone, R. L. (2005). Don’t blame the metrics. Harvard Business Review, 83(6), 26–28. Collyer, M. (2000). Communication— The route to successful change management: Lessons from the Guinness integrated business programme. Supply Chain Management: An International Journal, 5(5), 222–225. Cooper, R. G. (1990). Stage-gate systems: A new tool for managing new products. Business Horizons, 33(3), 44–54. Crawford, J. K. (2002). Project management maturity model. New York: Marcel Dekker, Inc. Doolen, T. L., Hacker, M. E., & Van Aken, E. M. (2003). Impact of organizational context on work team effectiveness: A study of production team. IEEE Transactions on Engineering Management, 50, 285–296. Dvir, D., Sadeh, A., & Malch-Pines, A. (2006). Projects and project managers: The relationship between project managers’ personality, project types, and
Conclusions
A survey-based research model was designed with project professionals to study the relationships of organizational culture orientations and project management maturity with perceived project and resulting business performance. Significant findings were reported for organizations’ project maturity, as well as change efforts driven by organizational culture orientations. First, organizations should continue investing in PMM to improve their maturity levels, as Level 3 and above standardization was not achieved at all 75 organizations surveyed. The Knowledge Areas of cost, risk, and human resource management are the target focus areas. Second, organizations need to assess their cultural orientation and make change efforts as a result of these assessments, rather than keep organizational culture as an invisible and nonmeasurable matter. This study shows that organizational culture has a significant influence on project performance and the long-term success of organizations. Specifically, two culture types based on OCAI were found to relate to perceived performance. Clan culture, which is characterized by high cohesion, collegiality in decision making, and a special sense of institutional identity, is perceived to be significantly influential in project effectiveness and efficiency, as well as in the internal and external business performance of these organizations. Market culture, which is characterized by aggressiveness and prospector strategies, is found to interact with project maturity to influence internal and external business performance. Organizations with market culture focus on external positioning with a need for stability and control. Therefore, market culture complements the purposes of project management maturity practices. The efforts to increase maturity levels for improved
Acknowledgments
This research is partially funded by FGCU internal research grant, 2006. The author would also like to thank the PMI chapter of La Crosse and ASQ Fort Myers chapter members for their efforts in the dissemination of the survey. ?
References
Ajmal, M. M., & Koskinen, K. U. (2008). Knowledge transfer in project-based organizations: An organizational culture perspective. Project Management Journal, 39(1), 7–15. Anantatmula, V. S. (2008). The role of technology in the project manager performance model. Project Management Journal, 39(1), 34–48. Bani Ali, A. S., Anbari, F. T., & Money, W. H. (2008). Impact of organizational and project factors on acceptance and usage of project management software and perceived project success. Project Management Journal, 39(2), 5–33. Bannan, K. J. (2005). Potential for greatness. PM Network, 19(5), 51–54. Barclay, D., Thompson, R., & Higgins, C. (1995). The partial least squares (PLS) approach to causal modeling: Personal computer adoption and use as an illustration. Technology Studies, 2, 315–319. Belassi, W., Kondra, A. Z., & Tukel, O. I. (2007). New product development projects: The effects of organizational culture. Project Management Journal, 38(4), 12–24. Berrio, A. A. (2003). An organizational culture assessment using the competing values framework: A profile of Ohio State University Extension. Journal of Extension, 41(2). Retrieved May 21,
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project success. Project Management Journal, 37(5), 36–48. Eskerod, P., & Skriver, P. (2007). Organizational culture restraining in-house knowledge transfer between project managers—A case study. Project Management Journal, 38(1), 110–122. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. Frame, J. D. (1987). Managing projects in organizations. San Francisco: Jossey-Bass. Gopalakrishnan, S., & Santoro, M. (2004). Distinguishing between knowledge transfer and technology transfer activities: The role of key organizational factors. IEEE Transactions on Engineering Management, 51, 57–69. Grant, K. P., & Pennypacker, J. S. (2006). Project management maturity: An assessment of project management capabilities among and between selected industries. IEEE Transactions of Engineering Management, 53, 59–68. Gray, C. F., & Larson, E.W. (2003). Project management. Burr Ridge, IL: Irwin/McGraw-Hill. Hatcher, L. (1994). A step-by-step approach to using the SAS system for factor analysis and structural equation modeling. Cary, NC: SAS Institute. Humphreys, W. (1992). Introduction to software process improvement. Pittsburgh, PA: Software Engineering Institute, Carnegie Mellon University. Hyvari, I. (2006). Success of projects in different organizational conditions. Project Management Journal, 37(4), 31–41. Ibbs, C. W., & Kwak, Y. H. (2000). Assessing project management maturity. Project Management Journal, 31(1), 32–43. Ives, M. (2005). Identifying the contextual elements of project management within organizations and their impact on project success. Project Management Journal, 36(1), 37–50.
Janz, B. D., & Prasarnphanich, P. (2003). Understanding the antecedents of effective knowledge management: The importance of a knowledgecentered culture. Decision Sciences, 34, 351–384. Jayaram, J., & Narasimhan, R. (2007). The influence of new product development competitive capabilities on project performance. IEEE Transactions on Engineering Management, 54, 241–256. Jugdev, K. & Thomas, J. (2002). Project management maturity models: The silver bullets of competitive advantage? Project Management Journal, 33(4), 4–14. Kerzner, H. (2005). Using the project management maturity model (2nd ed.). Hoboken, NJ: Wiley. Koskinen, K. U., Pihlanto, P., & Vanharanta, H. (2003). Tacit knowledge acquisition and sharing in a project work context. International Journal of Project Management, 21, 281–290. Kotter, J. P., & Heskett, J. L. (1992). Corporate culture and performance. New York: The Free Press. Mikkelsen, A., & Gronhaug, K. (2000). Measuring organizational learning climate: A cross-national replication and instrument validation study among public sector employees. Review of Public Personnel Administration, 19(4), 31–44. Mullaly, M. (2006). Longitudinal analysis of project management maturity. Project Management Journal, 36(3), 62–73. Nahm, A. Y., Vonderembse, M. A., & Koufteros, X. A. (2004). The impact of organizational culture on time-based manufacturing and performance. Decision Sciences, 35, 579–607. Nunnally, J. (1978). Psychometric theory (2nd ed.). New York: McGraw-Hill. Peled, A. (2000). Politicking for success: The missing skill. Leadership & Organization Development Journal, 21(1), 20–29. Prabhakar, G. P. (2005). An empirical study reflecting the importance of transformational leadership on project
success across twenty-eight nations. Project Management Journal, 36(4), 53–60. Project Management Institute. (2004). A guide to the project management body of knowledge (PMBOK® guide)— Third Edition. Newtown Square, PA: Author. Ritchie, W. J., & Eastwood, K. (2005). Finding the perfect partner: Comparing Hofstede’s dimensions with organizational culture for international joint venture compatibility. Journal of Global Business, 16(32), 67–75. Schein, E. H. (1992). Organizational culture and leadership (2nd ed.). San Francisco: Jossey-Bass. Shenbar, A. J. (1998). From theory to practice: Toward a typology of projectmanagement styles. IEEE Transactions on Engineering Management, 45(1), 33–48. The Standish Group. (1999). CHAOS: A recipe for success. Retrieved September 16, 2002, from http://www. standishgroup. com/chaos.html. The Standish Group. (2007). CHAOS 2007 REX: A Standish Group research exchange. Retrieved from http://pmi. org/BusinessSolutions/Pages/OPM3. aspx Stevens, G. A., & Burley, J. (2003). Piloting the rocket of radical innovation. Research Technology Management, 46(2), 16–25. Turner, J. R., & Müller, R. (2005). Project manager’s leadership style as a success factor on projects: A literature review. Project Management Journal, 36(1), 49–61. Wagner, D. B., & Spencer, J. L. (1996). The role of surveys in transforming culture: Data, knowledge, and action. In A. I. Kraut (Ed.), Organizational surveys: Tools for assessment and change (pp. 67–87). San Francisco: Jossey-Bass. Wellman, J. (2007). Leadership behaviors in matrix environments. Project Management Journal, 38(2), 62–74. Wheatley, M. (2007). Maturity matters. PM Network, 21(7), 49–53.
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Zeitz, G., Johannesson, R., & Ritchie, J. E., Jr. (1997). An employee survey measuring total quality management practices and culture. Group and Organization Management, 22, 414–444. Hulya Julie Yazici is currently an associate professor of information systems and operations management in the Lutgert College of Business at the Florida Gulf Coast University. She holds a BSc in mining engineering, and an MSc and PhD in engineering management from the University of Missouri-Rolla. She worked with the manufacturing and mining industry in North America and Europe for a decade. Her research interests include project management, knowledge management systems, supply-chain simulation, quality management, and organizational collaboration. Her papers have appeared in IEEE Transactions on Engineering Management, the Journal of Computer Information Systems, Information and Management, the Journal of Manufacturing Technology Management, and several conference proceedings, including Proceedings of Decision Sciences Institute, Industrial Engineering Research Conferences, the Hawaii International Conference on System Sciences, and Symposium on Human Factors in Information Systems. She is a member of the Institute of Industrial Engineers, Decision Sciences Institute, Project Management Institute, and Institute of Electrical and Electronics Engineers.
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APPENDIX. Survey Questions
DEMOGRAPHICS: 1. Years of service in the organization: a. 1–3 b. 3–5 c. 5–10 d. 10–20 e. More than 20 2. Current position: ————————————————————————————— 3. Sex: a. Female b. Male 4. Age a. b. c. d. e. f. g. 30 years or younger 31–35 years 36–40 years 41–45 years 46–50 years 51–55 years 56 years or older
5. Number of subordinates reporting directly to you a. 0 b. 1–3 c. 4–6 d. 7–9 e. 10–12 f. 13–15 g. 16–18 h. More than 19
Organizational Culture Survey
Instructions: Each question has four alternatives (A, B, C, D). Distribute 100 scores among these four alternatives depending on the extent to which each alternative is similar to your own organization. Give a higher number of scores to the alternative that is most similar to your organization. In the Now column, rate your organization as it is currently. 1. Dominant Characteristics A B C D The organization is a very personal place. It is like an extended family. People seem to share a lot of themselves. The organization is a very dynamic and entrepreneurial place. People are willing to stick their necks out and take risks. The organization is very results-oriented. A major concern is with getting the job done. People are very competitive and achievement-oriented. The organization is a very controlled and structured place. Formal procedures generally govern what people do. Total 100 NOW
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2. Organizational Leadership A B C D The leadership in the organization is generally considered to exemplify mentoring, facilitating, or nurturing. The leadership in the organization is generally considered to exemplify entrepreneurship, innovating, or risk taking. The leadership in the organization is generally considered to exemplify a no-nonsense, aggressive, results-oriented focus. The leadership in the organization is generally considered to exemplify coordinating, organizing, or smooth-running efficiency. Total 3. Management of Employees A B C D The management style in the organization is characterized by teamwork, consensus, and participation. The management style in the organization is characterized by individual risk taking, innovation, freedom, and uniqueness. The management style in the organization is characterized by hard-driving competitiveness, high demands, and achievement. The management style in the organization is characterized by security of employment, conformity, predictability, and stability in relationships. Total 4. Organization “Glue” A B C D The “glue” that holds the organization together is loyalty and mutual trust. Commitment to this organization runs high. The “glue” that holds the organization together is commitment to innovation and development. There is an emphasis on being on the cutting edge. The “glue” that holds the organization together is the emphasis on achievement and goal accomplishment. Aggressiveness and winning are common themes. The “glue” that holds the organization together is formal rules and policies. Maintaining a smoothrunning organization is important. Total 5. Strategic Emphases A B C D The organization emphasizes human development. High trust, openness, and participation persist. The organization emphasizes acquiring new resources and creating new challenges. Trying new things and prospecting for opportunities are valued. The organization emphasizes competitive actions and achievement. Hitting stretch targets and winning in the marketplace are dominant. The organization emphasizes permanence and stability. Efficiency, control, and smooth operations are important. Total
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100
100
100
100
6. Criteria of Success A B C D The organization defines success on the basis of the development of human resources, teamwork, employee commitment, and concern for people. The organization defines success on the basis of having the most unique or newest products. It is a product leader and innovator. The organization defines success on the basis of winning in the marketplace and outpacing the competition. Competitive market leadership is key. The organization defines success on the basis of efficiency. Dependable delivery, smooth scheduling, and low-cost production are critical. Total 100
Project Management Maturity Survey: Level 0: Not Able to Evaluate Level 1 Initial Process • Ad hoc processes • Management awareness Level 2 Structure Process and Standards • Basic processes; not standard on all projects; used on large, highly visible projects • Management supports and encourages use • Mix of intermediate and summary-level information • Estimates, schedules based on expert knowledge and generic tools • Mostly a project-centric focus Level 3 Organizational Standards and Institutionalized Process • All processes, standard for all projects, repeatable • Management has institutionalized processes • Summary and detailed information • Baseline and informal collection of actuals • Estimates, schedules may be based on industry standards and organizational specifics • More of an organizational focus • Informal analysis of project performance Level 4 Managed Process • Processes integrated with corporate processes • Management mandates compliance • Management takes an organizational entity view • Solid analysis of project performance • Estimates, schedules are normally based on organization specifics • Management uses data to make decisions
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Level 5 Optimizing Process • Processes to measure project effectiveness and efficiency • Processes in place to improve project performance • Management focuses on continuous improvement Based on the definition given above for each level, assess what level your organization is at for the following elements. When answering, think about all the projects that you are involved with. Project Management Maturity Levels 2 3 4
1 Project Integration Management Project Plan Development Project Plan Execution Change Control Project Information System Project Office Project Scope Management Requirements Definition (Business) Requirements Definition (Technical) Deliverables Identification Scope Definition Work-Breakdown Structure Scope Change Control Project Time Management Activity Definition Activity Sequencing Schedule Development Schedule Control Schedule Integration Project Cost Management Resource Planning Cost Estimating Cost Budgeting Performance Measurement Cost Control Project Quality Management Quality Planning Quality Assurance Quality Control Management Oversight Project Human Resource Management Organizing Planning Staff Acquisition Team Development Professional Development
5
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
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? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
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Project Communications Management Planning Information Distribution Performance Reporting Issues Tracking and Management Project Risk Management Risk Identification Risk Quantification Risk Response Development Risk Control Risk Documentation KNOWLEDGE AREA MATURITY LEVEL Project Integration Management Project Scope Management Project Time Management Project Cost Management Project Quality Management Project Human Resource Management Project Communications Management Project Risk Management Project Procurement Management ORGANIZATIONAL MATURITY LEVEL
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? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
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? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
PROJECT PERFORMANCE MEASURES: Distribute 100 scores among four alternatives (A, B, C, D) depending on the extent to which each alternative represents better the overall body of projects. As the assessment may vary among projects, give a higher number of scores to the alternative that most represents the majority of the projects.
1. Evaluate whether projects are completed on time A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (some expectations are met—with some overtime) Not at all (under expectation—overtime) Total 2. Evaluate whether projects met budget requirements A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (some expectations are met—with some over budget) Not at all (under expectation—completely over budget) Total 100 100
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3. Evaluate whether projects met expectations A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (not all expectations are met) Not at all (under expectations—disappointed) Total 4. Evaluate whether team members are satisfied to work together A B C D To a great extent—willing to work together for future projects To a moderate extent—somewhat satisfied with minor issues To a little extent—some conflicts and issues are present Not at all—conflicts are present; team members never want to work together Total 5. Upon completion, evaluate the savings ($) benefits of projects to the organization A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (some expectations are met) Not at all (under expectation) Total 6. Evaluate whether projects resulted in sales growth A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 7. Evaluate whether projects helped the organization to increase market share A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 8. Evaluate whether projects helped the organization improve its competitive position A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 100 100 100 100 100 100
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9. Evaluate whether as a result of the projects, overall performance of your organizational unit is improved compared to last year at this time A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 10. Evaluate whether as a result of the projects, your unit’s performance improved compared to your best worldwide competition? A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 100 100
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doc_829622622.pdf
The primary challenge of project management is to achieve all of the project goals and objectives while honoring the preconceived constraints.
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The Role of Project Management Maturity and Organizational Culture in Perceived Performance
Hulya Julie Yazici, Lutgert College of Business, Florida Gulf Coast University, Fort Myers, FL, USA
ABSTRACT ?
This study investigates whether project management maturity (PMM) relates to perceived organizational performance and how an organization’s cultural orientation is a contributing factor. Perceived organizational performance is defined as project effectiveness and efficiency followed by resulting business performance. A survey-based research was conducted with 86 project professionals from various U.S. service and manufacturing organizations. The study revealed that PMM is significantly related to business performance but not to project performance. Furthermore, while clan organizational culture is a sole contributing factor for project and business performances, PMM interacts with market culture in improving business performance. This study shows that in order to deal with project time, budget, and expectations issues, an organizational culture change toward sharing, collaboration, and empowerment is a must. Furthermore, an increasing project management maturity along with a results-oriented organizational culture improves an organization’s competitiveness, resulting in cost savings and increased sales. PMM efforts are therefore crucial. PMM accompanied by an understanding of cultural orientation is a best strategy for today’s project-based organizations.
INTRODUCTION ?
espite the developing tools and techniques in project scheduling, as well as the increasing number of heavyweight project organizations, projects fail in dealing with uncertainty. Projects also fail to meet time, cost, and expectation targets. Software development projects, for instance, are known for being completed way over budget and behind schedule (Gray & Larson, 2003). Furthermore, researchers reported that over 75% of all business transformation projects fail, and that only 16% of U.S. IT projects are completed on time and on budget (Collyer, 2000; Ives, 2005; Peled, 2000). According to the earlier Standish Group (1999) reports that were based on five years of research, 28% of the IT projects failed, and 46% were completed over budget. A recent Standish Group (2007) report indicates that a staggering 39% of projects with budgets over US $10 million failed. Similar findings have been reported for new product development projects: Belassi, Kondra, and Tukel (2007) referred to earlier studies that determined that new U.S. consumer products failed 95% of the time and that industrial product launches failed about 40% of the time (Clancy & Stone, 2005; Stevens & Burley, 2003). Jayaram and Narasimhan (2007) also described new product failures, referring to the studies of Booz Allen Hamilton (1982) and Cooper (1990), which found a 35% failure rate for new products. Project maturity, recently modeled as the Organizational Project Management Maturity Model (OPM3 ®) by the Project Management Institute (2004), aims to integrate, assess, and improve project management practices. The effects of a company’s project management system and management’s ability to execute projects successfully are recognized (Kerzner, 2005). A 2004 survey of 200 respondents in 30 countries conducted by Pricewaterhouse Coopers (PWC) concluded that the greater an organization’s project management maturity (PMM), the greater the positive impact on overall project performance. However, there is no one optimum level of maturity that is appropriate for every organization (Wheatley, 2007). Although we would expect that companies with more mature project management practices will have better project performance, the previous findings are conflicting. There is no evidence of PMM’s contribution on organization success as a means of competitive advantage (Grant & Pennypacker, 2006; Ibbs & Kwak, 2000; Jugdev & Thomas, 2002; Mullaly, 2006). These studies demonstrate the need for further research in project management maturity and how this relates to project performance. Additionally, the role of organizational factors in knowledge and technology transfer and work-team effectiveness has been recently studied by
D
KEYWORDS: project performance; project management maturity; organizational culture; clan
Project Management Journal, Vol. 40, No. 3, 14–33 © 2009 by the Project Management Institute Published online in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/pmj.20121
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several researchers (Belassi et al., 2007; Doolen, Hacker, & Van Aken, 2003; Gopalakrishnan & Santoro, 2004; Nahm, Vonderembse, & Koufteros, 2004). Firms with more flexible, change-oriented cultures were found to be associated with higher levels of technology transfer (Gopalakrishnan & Santoro, 2004). Furthermore, an organizational culture that supports communication and cooperation between teams was significantly found to be related to teamleader effectiveness and team-member satisfaction (Doolen et al., 2003). Belassi et al. (2007) found a significant relationship between a positive work environment with strong leadership and new product development project success. Although these findings are promising, there is very little research conducted on the role of organizational culture in project management. Despite the extensive research in project management processes and techniques, as well as in project leadership, organizational culture is largely underexamined in project management research. The purpose of this study is to fill these gaps and determine the relationship between project maturity and organizational culture and how this relates to project and resulting business performance. Organizations with higher maturity levels are expected to be successful in terms of project effectiveness and efficiency and also have a competitive advantage in the marketplace. Furthermore, a correct alignment of organizational culture and PMM may lead to higher project and business performance. Organizations that encourage collaboration and strong communication among project team members are expected to perform better. A correct alignment of organizational culture and project management maturity efforts may also lead to an improved performance. This article presents the results of a survey conducted with 86 project professionals from 75 U.S. organizations. Following the literature review on project performance, PMM, and organizational
culture, the research design and the questionnaire are described. In the last section, the results of the partial least squares analysis and findings are presented. Implications of the findings for today’s organizations are discussed.
Background
Project Performance Despite the common assumption that organizational project management maturity improves project management performance, current research offers little to support this argument. When project management performance or success was previously studied, several factors were found to be significantly influencing project success. These studies can be summarized in two streams: studies that emphasize project managers’ individual characteristics and leadership (Anantatmula, 2008; Dvir, Sadeh, & Malch-Pines, 2006; Frame, 1987; Prabhakar, 2005; Shenbar, 1998; Turner & Müller, 2005; Wellman, 2007), and the research stream that investigates the influence of organizational factors on project success (Bani Ali, Anbari, & Money, 2008; Doolen et al., 2003; Hyvari, 2006; Ives, 2005). As concerns the influence of leadership characteristics on project success, Dvir et al. (2006) studied the relationship between the project manager’s personality, project types, and project success. Project success was measured along four dimensions: (1) project efficiency (meeting project goals), (2) customer benefits, (3) benefits to the parent organization, and (4) benefit to the community and national infrastructure. Researchers found tentative support that project managers are more attracted to projects that fit their personality, and furthermore are more successful when their personality characteristics match their projects’ profiles (e.g., some project managers fare better with platform projects, others with lowtech, derivative projects, and still other project managers work best with hightech uncertainty projects). This finding
agrees with Turner and Müller’s review (2005), which demonstrated that a project manager’s personality and leadership may make a manager more competent and thus influence project success. These researchers also indicated the limitations of personality measures and the need for future research in measuring the impact of competence and leadership on performance. The influence of organizational factors is the topic of ongoing research in project management. Ives (2005), as a result of interviews conducted with managers, concluded that effective sponsorship and governance, definition of scope and success, structure and authority, availability of funding and resources, and even simply organizational context were important factors for project success. Hyvari (2006) studied the relationships between critical success factors and organizational variables. Organizational context, especially the size of the organization, was perceived to be an important factor for project success. Belassi, Kondra, and Tukel (2007) found significant relationships between positive work environment, strong leadership, and new product development and project success. Project Management Maturity Previous research on PMM’s contribution to project success presents conflicting results: Ibbs and Kwak (2000) demonstrated no statistically significant correlation between PMM and project success based on cost and schedule performance. Jugdev and Thomas (2002) could not find a correlation between process capability and the project success of many maturity models. Mullaly (2006) raised concerns regarding a lack of evidence of PMM’s contribution to organization success as a means of competitive advantage. Grant and Pennypacker (2006) found no significant difference in PMM among four major industries. Ibbs and Kwak (2000) found that 38 large international companies, in
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September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
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sectors such as construction, telecommunications, IS, and high-tech manufacturing, averaged 3.26 on a relative scale, with 1 indicating the lowest maturity level and 5 indicating the highest maturity level. A recent PWC study based on 200 respondents reported that the average maturity score was 2.5, that more than 60% of the respondents wished to increase their maturity level, and that 71% of companies wanted to increase their level by more than one step (Bannan, 2005). Grant and Pennypacker (2006) revealed that as a result of a survey of 126 organizations from various industries, the median PMM level is 2 out of 5 with respect to 36 of the 42 components analyzed. Mullaly’s (2006) longitudinal study reveals that between 1998 and 2003, based on worldwide organizations ranging from 280 to 579, the number of Level 1 organizations increased, but there has been a decrease over time in organizations evaluated at Level 2 or above. The fact that Level 3 organizations declined to 0% is very disappointing. Furthermore, no significant relationship between PMM and performance was found. Organizational Culture Organizational culture is defined as the set of values, beliefs, and behavioral norms that guide how members of the organization get work done. Many organizational factors were attributed to team effectiveness. Organizational context is defined as management processes, organizational culture, and organizational systems that exist within an organization. Early studies have confirmed that companies that place emphasis on key managerial components, such as customers, stakeholders, employees, and leadership outperform those that do not have these cultural characteristics (Kotter & Heskett, 1992; Wagner & Spencer, 1996). Doolen et al. (2003), based on production teams of a Fortune 50 hightechnology company business unit, found a significant and positive linear relationship between team-leader effectiveness and team satisfaction and the organizational culture that supports communication and cooperation among teams. Variables used to define organizational culture were based on parameters such as the extent to which organizational culture supports the positive interteam interactions or the integration of the team into the rest of the organization, and the extent to which organizational culture values and supports the teams and teamwork. Janz and Prasarnphanich (2003) emphasized the importance of a knowledge-centered culture and found a significant relationship between organizational climate and cooperative learning. Nahm, Vonderembse, and Koufteros (2004) revisited the impact of organizational culture on time-based manufacturing and performance. Based on a sample of 224 firms, they determined what espoused values support a high level of time-based manufacturing performance. Based on Schein’s (1992) conceptualization of culture, positive relationships between customer orientation and beliefs, between beliefs and time-based manufacturing, and between time-based manufacturing and performance were found. Eskerod and Skriver (2007) found that the very basic assumptions of an organizational culture itself may restrain the knowledge-transfer processes. They claim that a project orientation, in fact, may restrain knowledge transfer, as it leads to knowledge silos. A case study is used to underline the restraining nature of organizational culture based on Schein’s hierarchy. Schein describes a hierarchy of artifacts, underlying assumptions, and espoused values to measure organizational culture. Schein’s measurement is based on risk, reward, warmth, and support dimensions. Risk is the orientation toward potentially innovative initiatives with uncertain outcomes. Reward is a measure of how employee performance is recognized. Warmth is a measure of friendliness of the atmosphere in the organization. Finally, support is a measure of the organization’s interest in the welfare of the employee (Koskinen, Pihlanto, & Vanharanta, 2003; Mikkelsen & Gronhaug, 2000). Ajmal and Koskinen (2008) studied the role of organizational culture on knowledge transfer in project-based organizations. They emphasized the importance of organizational culture awareness in the creation, sharing, and utilization of knowledge.
Research Design
Figure 1 shows the research model. PMM and organizational culture are expected to influence organizational performance, defined as project, and the resulting internal and external business performances of the organization. Project Management Maturity Measures Project management maturity is an important element of strategic planning, as it provides a methodology and a road map to determine and compress the gaps in resources and quality (Kerzner, 2005). PMM models provide a standardized approach to measurement and benchmarking, as well as a mapped-out strategy for improvement. As suggested, “you have to be pragmatic about what degree of maturity is actually required” (Wheatley, 2007). The PMM model, developed by PM Solutions, contains the nine Knowledge Areas as described in A Guide to the Project Management Body of Knowledge (PMBOK ® Guide)—Third Edition (PMI, 2004) shown below, and is patterned after the Software Engineering Institute (SEI)’s Capability Maturity Model (CMM; Crawford, 2002; Grant & Pennypacker, 2006; Ibbs & Kwak, 2000): • Project Integration Management, • Project Scope Management, • Project Time Management, • Project Cost Management, • Project Quality Management, • Project Human Resource Management, • Project Communications Management, • Project Risk Management, and • Project Procurement Management.
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are no established practices, or standards.
Organizational Culture Perceived Project Performance
Clan, Adhocracy, Hierarchy, Market Efficiency, Effectiveness
This model allows organizations to evaluate their relative strengths and weaknesses against a range of practices and to define their specific project management goals. Organizational Culture Assessment Instrument Although Schein’s hierarchy provides a meaningful framework for understanding the organizational culture, it lends itself more as a measure of organizational climate that is studied by the risk, reward, warmth, and support dimensions. This study uses the Organizational Culture Assessment Instrument (OCAI) developed by Cameron and Quinn (1999). OCAI is used to diagnose an organization’s culture and is helpful for determining ways to change the culture. OCAI is used by several researchers in management to assess organizational compatibility (Berrio, 2003; Ritchie & Eastwood, 2005; Zeitz, Johannesson, & Ritchie, 1997). OCAI is based on a theoretical model called the Competing Values Framework (CVF). CVF was developed initially from research conducted on the major indicators of effective organizations. Two major dimensions emerged from the study that organized the indicators into four main clusters. One dimension differentiates effectiveness criteria that emphasize flexibility, discretion, and dynamism from criteria that emphasize stability, order, and control. The second dimension differentiates effectiveness criteria that emphasize an internal orientation, integration, and unity from criteria that emphasize an external orientation, differentiation, and rivalry. Together these two dimensions form four quadrants, each representing a distinct set of organizational effectiveness indicators. These indicators represent what people value about an organization’s performance. Cameron and Quinn define these four quadrants as: clan, adhocracy, hierarchy,
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Project Management Maturity(PMM)
Perceived Internal Business Performance
PIM, PSM, PTM, PCM, PQM, PHRM, PCOMM, PRM, AVGKM
Savings, Sales growth, Overall business performance Perceived External Business Performance
Market share, Competitive position
Figure 1: Research model.
This study excluded Project Procurement Management, as participants from service organizations were in the majority and procurement management did not seem to apply to them. Therefore, PMM is measured by eight PMI Knowledge Areas. In addition to assessing PMM levels, participants are also asked to evaluate Knowledge Area maturity level in these eight areas. Five levels of maturity are used as descriptors of the Capability Maturity Model (Crawford, 2002; Humphreys, 1992; Mullaly, 2006). These levels are described below: • Level 5—Optimizing Process: A fully mature project organization with processes consistently applied throughout the organization as part of the overall management process. Processes are in place and actively used to improve project management activities. Lessons learned are regularly examined and used to improve project management processes, standards, and documentation. Management and the organization are focused on continuous improvement. • Level 4—Managed Process: A mature project management process applied consistently on all projects, with project management recognized as a
formal management discipline. Project management processes, standards, and supporting systems are integrated with other corporate processes and systems. Management uses efficiency and effectiveness metrics to make decisions regarding the projects. • Level 3—Organizational Standards and Institutionalized Process: An organization with a refined and integrated project management process that is consistently applied on each project. All project management processes are standard and repeatable for all projects. Management has institutionalized the processes and standards with formal documentation existing on all processes and standards. • Level 2—Structured Process and Standards: Some project management capabilities are defined but not consistently applied. Management supports the implementation of project management, but there is no consistent understanding, involvement, or organizational mandate to comply for all projects. • Level 1—Initial Process: A fully ad-hoc project management capability, with no consistent or repeatable processes. Although there is a recognition of project management processes, there
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and market. The clan culture stresses the importance of participation, cohesion, shared values, commitment, and high morale, while the adhocracy culture assumes that innovation and initiative lead to success and encourage entrepreneurial, creative, and visionary behavior. The hierarchical culture is characterized by a structured workplace with formal rules and policies and a focus on efficiency, timeliness, and control. The market culture perceives the external environment as hostile with choosy consumers and a need for the organization to be both results- and production-oriented. The OCAI consists of six questions pertaining to the six key dimensions of organizational culture. These dimensions are: • dominant characteristics of the organization: what the overall organization is like; • organizational leadership style and approach that permeate the organization; • management of employees: the style that characterizes how employees are treated and what the working environment is like; • organization “glue,” or bonding mechanisms, that hold the organization together; • strategic emphases: defining what areas of emphasis drive the organization’s strategy; and • criteria of success: determining how victory is defined and what gets rewarded and celebrated. These six dimensions are all meaningful, as they reveal what the organization and management values are, how success is defined, and what the leadership and work environment characteristics are. These are measures for diagnosing the existing culture environment. Participants were asked to rate their organizations in the questions. Each of the six questions has four alternatives. These alternatives describe the four cultural orientations—that is, clan, adhocracy, hierarchy, and market. Users were asked to divide 100 points among these four alternatives, depending on the extent to which each alternative is similar to their own organization. A total of 24 questions were answered to assess organizational culture. Organizational Perceived Performance Organizational perceived performance is measured by two constructs: project performance and business performance. Project Performance Project success traditionally has been measured as project completion on time, within budget, and according to specifications. Meeting customer expectations were added to these measures, as client satisfaction and customer welfare became important (Mullaly, 2006). As projects are accomplished by teams, one of the measures of success is how much the work team was satisfied in working together (Doolen et al., 2003). Efficiency is found to be loaded highest on meeting scheduled goals and on meeting budget goals. Effectiveness, on the other hand, is associated with satisfaction measures. (Bannan, 2005; Dvir et al., 2006). Based on these studies, project performance is measured by two constructs: project efficiency and project effectiveness as follows: Project efficiency: Meeting time and budget targets. Project effectiveness: Meeting customer expectations, team satisfaction. Business Performance Business performance measures adopted from Nahm et al.’s study (2004) measured an organization’s performance by sales growth, return on investment, market-share gain, and overall competitive position. Furthermore, Dvir et al. (2006) used similar measures for project success, such as whether a project resulted in a new line of products or services: • Internal organization success factors: Savings benefits of projects, projects resulting in sales growth, and overall business performance compared with the previous year. • External organization success factors: Increased market share, whether the organization improved its competitive position, and organization performance compared with the best worldwide competition. Research Methodology Surveys were distributed online to 400 project managers with a valid response return of 21.5% during a six-month data collection period. A contact list of a local PMI chapter, the PMI website, and a selected contact list from an American Society for Quality (ASQ) local chapter were targeted. The sample consisted of project managers, unit or program managers, or executives of information management projects and project groups. Surveys consisted of a four-part questionnaire: • Part 1: Demographics: five questions • Part 2: Organizational culture assessment: 24-item organizational culture questionnaire, where subjects are asked to distribute a score of 100 among four culture orientations • Part 3: PMM questions: 46 questions of project management maturity from eight Knowledge Areas with a 1 to 5 Likert scale, each representing a maturity level • Part 4: Project and business performance questions: 10 questions of project/business performance, where a score of 100 is distributed among four possible responses, ranging from “to a great extent” to “not at all.” Survey questions are shown in the Appendix. Research Hypotheses • H1: Project performance is associated with high levels of project maturity. • H2: Internal and external business performance is associated with project maturity. • H3: A significant relationship exists between organizational culture and project performance.
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• H4: A significant relationship exists between organizational culture and internal and external business performance. • H5: Project maturity and organizational culture have a combined influence on project performance. • H6: Project maturity and organizational culture have a combined influence on business internal and external performance.
Analysis Results
Eighty-six valid responses were collected from the web-based questionnaire. Considering the length of the overall survey, a 21.5% response rate was considered satisfactory. The demographic information shows that 56% of the respondents were from the service sector, 34% from the manufacturing sector, and only 10% from government or construction. Service-sector industries consisted of IT, banking, education, health care, consulting, retail, and utility. Project professionals consisted of project managers, program executives, project coordinators, system analysts, quality/continuous improvement managers, product or process managers, engineers, and consultants, with the following demographics: • Male (66%), Female (34%) • Age: 40–55 years (60%); 30–40 years (31%); younger than 30 years (8%) • Current job position: project, process, product, or IT manager (55%); project or IT executive/director (16%); project or system analyst, engineer, or consultant (29%) • Years of experience: 1–3 (24%); 3–10 (36%); 10–20 (11%); over 20 (29%), • Number of subordinates directly reporting: none (43%); 1–10 (42%); more than 12 (15%) Figure 2 shows the years of experience and position demographics. PMM Assessment The PMM questionnaire was based on eight Knowledge Areas of project management. Participants were asked to
assess their organization’s PMM level for each knowledge area and subareas based on a 1 to 5 Likert scale. An average score was calculated for each Knowledge Area and for the Knowledge Area maturity. Based on the responses collected from 86 project professionals from 75 U.S. organizations, the overall project management maturity was 2.27 (of a possible 5), indicating that there was a great opportunity to improve their project management practices. Project maturity ranged between 2.6 and 1.93. Looking closely to the sectors, in the case of manufacturing organizations, the highest project management maturity was found to be achieved at
the project quality management area, and for service organizations, the highest maturity was achieved at project time management. For both manufacturing and service organizations, the lowest project management maturity was in the area of project risk management, scoring between 1.93 and 2.00. Time management involves defining project activities, developing the schedule, and executing and controlling the plans. Service project managers perceived a structured process and standards throughout the organization for time management, in some cases an institutionalized process, but not applicable to all projects. This result agrees
Position
Analyst or Engineer 29% Manager 55%
Executive 16%
Years of Experience
More than 20 29%
1–3 24%
10–20 11%
3–5 18% 5–10 18%
Figure 2: Position and years of experience demographics.
September 2009 ? Project Management Journal ? DOI: 10.1002/pmj
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with Grant and Pennypacker’s (2002) study where, in the professional services industry, a majority of the organizations adopted a Level 3 maturity in schedule development. In the case of manufacturing-based organizations, quality control was perceived by the project managers and executives to be achieved satisfactorily, encompassing procedures to ensure project deliverables to meet quality objectives and attributes. On the other hand, Project Risk Management seems to be one of the areas in which organizations need more training. Risk management is about understanding the risk events, assessing their impacts on the project, developing and executing a plan, and monitoring progress. As Besner and Hobbs’ study (2008) showed, project management tools related to risk management are among the least-used tools, demonstrating an urgent need for more training and education in risk analysis and management. Another Knowledge Area that was found to show poor maturity was Human Resource Management, indicating a lack of standardization. Table 1 shows the mean scores for PMM and the Knowledge Area maturity. In the study, nearly 54% of respondents indicated that their organizations were operating at Level 1: Initial Process (24%) or at Level 2: Structured Process and Standards (30%). Nineteen percent rated their organizations at Level 3: Organizational Standards and Institutionalized Process, almost 12% indicated operating at Level 4: Managed Process, and only 8.5% assessed their organizations to have achieved Level 5: Optimizing Process. These results agree with Grant and Pennypacker’s 2003 study (published in 2006) conducted with 126 organizations and yield similar percentages: 67% at Level 1 or 2, 19.4% at Level 3, 7.3% at Level 4, and 6.5% at Level 5. This study found higher percentages for Level 4 and 5, which is a promising indication that there is an improvement in the businesses’ efforts toward
PMM Areas
Project Integration Management Project Scope Management Project Time Management Project Cost Management Project Quality Management Project Human Resource Management Project Communications Management Project Risk Management Knowledge Management
Table 1: Project management maturity levels.
Mean
2.28 2.48 2.42 2.38 2.51 2.09 2.39 2.01 2.22
SD
1.09 1.10 1.23 1.19 1.39 1.27 1.12 1.27 0.12
more managed and optimized project management processes. The four PMM areas that respondents reported to be achieved at Level 3 and higher were Project Scope Management (46% of the respondents), Project Quality Management (44.8%), Project Time Management (43.7%), and Project Communication Management (41%). Specifically, Level 3 maturity achievement (i.e., organizational standards and institutionalization) was reported for requirements definition and deliverables identification, schedule development and control, and performance reporting and management tracking. Surprisingly, cost management is one of the areas that needs improvement, along with team and professional development, performance measurement, and risk management overall. It seems that organizations managed to standardize some of the control processes with respect to time and requirements but have not mastered planning, team development, and cost and risk management. Organizational Culture Assessment Based on Cameron and Quinn’s Competing Values Framework, the distribution of culture orientation collected from 86 valid responses is shown in Table 2. As shown, the most common culture is market orientation, a culture
in which goal achievement and market share are seen as essential and external environment is perceived as hostile. The second-most frequent culture orientation was perceived to be hierarchical culture, where a structured workplace with formal rules and policies exists and the focus is on efficiency, timeliness, and control. Organizational Culture, PMM, and Performance Relationship This study explores how PMM and organizational culture orientation affect project and business performance. A possible fit between organizational culture and PMM level and its influence on project, internal, and external business performances is sought. As mentioned earlier, previous research reports difficulties of correlating project success to project maturity. Furthermore, although
Culture Orientations
Clan Adhocracy Market Hierarchy
Mean
22.9 16.6 31.7 28.8
SD
14.27 10.51 18.79 18.94
Table 2: Organizational culture orientations summary.
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Constructs
Clan Adhocracy Market Hierarchical PMM (PIM, PRSC, PTM, PCM, PQM, PHRM, PCOM, PRM, KMAVG) Project performance Internal business performance External business performance
Average
0.581 0.644 0.706 0.548 0.746
Composite Reliability
0.893 0.915 0.935 0.878 0.963
0.651 0.569 0.723
0.882 0.798 0.886
Table 3: Construct reliability of organizational culture, PMM, and performance measures.
the significance of organizational culture is emphasized, very few studies actually analyze the effects of organizational culture on performance, and practically none examine these effects on project performance. Perceived organizational performance is measured by project performance (time, budget, customer, and team satisfaction), as well as resulting internal (saving benefits, sales growth, business performance compared to last year) and external business success (market share, competitive position, business performance compared to best worldwide competitor). PMM is composed of eight Knowledge Areas. Organizational culture is assessed using OCAI that focuses on four cultural orientations. All questionnaire responses were normalized by logarithmic transformation to reduce variation among scales. PLS Graph (Version 3.0) based on Partial Least Squared Method (PLS) is used for the analysis. PLS is an efficient structural equation modeling method and analysis when measurement scales are still being developed. PLS is considered better suited for explaining complex relationships, placing minimal demand on sample size and residual distribution. Thus, PLS is used in exploratory studies where theory development is primary focus. Compared to
the better-known factor-based covariance fitting approach for latent structural modeling (exemplified by software such as LISREL, EQS, Cosan, and EzPath™), the component-based PLS avoids two serious problems: inadmissible solutions and factor indeterminacy. The approach estimates the latent variables as exact linear combinations of the observed measures, therefore it avoids the indeterminacy problem and provides an exact definition of component scores (Barclay, Thompson, & Higgins, 1995; Chin & Newsted, 1999; Ritchie & Eastwood, 2005). Table 3 shows the average and construct reliabilities of organizational culture, PMM, and performance constructs. The average reliabilities or Cronbach’s alpha values are between 0.55 and 0.75, and composite values are between 0.88 and 0.96. These composite reliabilities (an intercorrelation among items in a group indicating the extent to which the group can be seen as measuring a single latent variable) are PLS measures calculated within the casual model, providing a superior gauge of internal consistency superior to that of the Cronbach’s alpha (Fornell & Larcker, 1981, in Ritchie & Eastwood, 2005; Hyvari, 2006). All PLS construct measures met or exceeded the minimally accepted level of 0.6 to 0.7 based on Nunnally (1978) and Hatcher (1994).
Hypothesis Testing PLS uses nonparametric methods such as bootstrap and jackknife for approximating the accuracy of the estimates. Bootstrap analysis provides the best possible statistical significance of the overall loadings and the standardized b’s (slope coefficients) (Chin, 1998). Table 4 shows the path coefficients and t values based on Student’s t distribution with levels of significance (p- values) for a relationship between performance, project maturity, and organizational culture. Path coefficients are standardized versions of linear regression weights that can be used in examining the possible causal linkage between statistical variables. The standardization involves multiplying the ordinary regression coefficient by the standard deviations of the corresponding explanatory variable; these can then be compared to assess the relative effects of the variables within the fitted regression model. A significant relationship is found between project management maturity and business performance (t ? 5.12, p ? 0.000002). Therefore, Hypothesis 2 is accepted. This shows that higher maturity is perceived to result in savings to the organization as well as to improve the competitiveness of the organization and help increase market share. However, Hypothesis 1 is not supported, as there is no significant relationship between project maturity and project performance (t ? 1.56, p ? 0.12). This indicates that organizational factors besides maturity influence project efficiency and effectiveness. The study shows that an organization’s cultural orientation is a contributing factor. Clan culture significantly relates to all performance categories: project, internal, and external business performances (t ? 2.90, p ? 0.005; t ? 2.79, p ? 0.006; t ? 2.38, p ? 0.02). Therefore, Hypotheses 3 and 4 are fully supported. The clan culture stresses the importance of participation, cohesion, shared values, commitment, and high morale. The clan culture orientation is found to
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Hypotheses
Clan–Project performance Clan–Internal business performance Clan–External business performance Market–Internal business performance Market–External business performance Market–PMM interaction PMM–Project performance PMM–Internal business performance PMM–External business performance R2 for project performance R2 for internal business performance R2 for external business performance R2 for PMM
*** p ? 0.01. ** p ? 0.05.
Path coefficient
0.490 0.415 0.381 0.392 0.43 –0.39 0.235 0.526 0.519 0.269 0.415 0.399 0.245
t-value
2.90*** 2.79*** 2.38** 2.72*** 3.43*** 3.34*** 1.56 5.12*** 5.70***
explained by the explanatory variable). Project management maturity along with organizational culture orientation explains 40% of the variance in internal and external business performance. When it comes to project performance, 27% of the variance in project efficiency and effectiveness is explained by organizational culture and PMM. Also, 24.5% of the variance in PMM is explained by organizational culture. All of these show that the organizational culture is a significant contributor to the performance measures.
Discussion of Results
This study reveals significant findings about the relationship of PMM, organizational culture, and organizational performance. Regarding maturity levels, an average of 2.27 (of a possible 5), ranging between 2.6 and 1.93, indicated that there is a great opportunity to improve project management practices. This average score shows that for most projects, structured processes and standards exist, but because the standardization is institutionalized only for some projects, and not for all, a Level 3 maturity is not fully achieved. Among the Knowledge Areas, although time and quality management
Table 4: Hypothesis testing of organizational culture, PMM, and perceived performance.
be related to project performance— that is, timely completion of the project, the extent to which the budget requirements and expectations are met, and project team satisfaction. Furthermore, perceived internal business success—that is, savings, sales growth, and overall performance of the organizational unit compared with the previous year—is significantly related to clan culture. Market share— improvement in the competitiveness of the organization, and unit performance improvement compared with its best worldwide competition—was also found to be related to clan culture. In addition to clan culture, the analysis shows the significance of market culture orientation for internal and external business performances. But this was mainly due to the combined influence of market culture orientation and project management maturity. The interaction of PMM and market culture is significant at p ? 0.001. Therefore, Hypothesis 6 is supported; however, Hypothesis 5 is not supported, as this combined influence does not relate to
perceived project performance. A summary of the hypothesis testing is shown in Table 5. The predictive power of the hypothesized model can be assessed by evaluating the R2, the coefficient of determination (i.e., the amount of variance
Hypothesis
H1: Project performance is associated with high levels of project maturity H2: Internal and external business performance is associated with project maturity H3: A significant relationship exists between organizational culture and project performance H4: A significant relationship exists between organizational culture and internal and external business performance H5: Project maturity and organizational culture have a combined influence on project performance H6: Project maturity and organizational culture have a combined influence on business internal and external performance
Table 5: Summary of hypotheses test results.
Test Result
Not supported Supported Supported Supported
p-value
0.15 0.0002 0.0008 0.0047
Not supported Supported
0.120 0.0012
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seem to reach better maturity, risk, cost, and human resource management areas show weaknesses and require more training and possible policy changes to increase standardization in these areas. These findings are in line with previous research studies. Furthermore, although a significant relationship between PMM and project effectiveness measures (meeting time and budget requirements) and efficiency (meeting client requirements and team satisfaction) is not determined, an important finding is made about the relationship of PMM and organizational competitiveness. Project professionals significantly perceived that PMM relates to an organization’s internal and external business performances. With higher project maturity, organizations can achieve substantial savings, increase sales growth, show better competitiveness compared with their competitors, and establish best practices in their industry or service sector. In addition to PMM and performance findings, incorporation of organizational culture orientation contributes significantly to project management research. So what is related to project performance and how it can be improved? This question is answered by the organizational culture assessment and its relation to performance. The 86 responses from various manufacturing and service organizations revealed that the majority perceived their current culture as being market-oriented, a results-based culture whose major concern is with getting the job done and competing and achieving goals and targets. The analysis showed a significant combined influence of market culture with project maturity on business performance (t ? 5.12, p ? 0.000002, t ? 5.7, p ? 0.0000001). In market culture, leaders are hard-driving producers and competitors. The glue that holds the organization together is an emphasis on winning. Success is defined in terms of market share and penetration. This study demonstrates that project professionals significantly perceive PMM as
an enabler of competitiveness. It seems that externally positioning characteristics of market culture, managing competitiveness, energizing employees, and managing customer service skills, along with PMM efforts to standardize and institutionalize processes, lead to better business performance. Moreover, clan is the only culture orientation that is related to perceived project performance along with business performance. Clan does not interact with PMM. This study shows that if an organization is inclined to have a clan culture, projects can be completed on time, on budget, and meeting expectations, with a higher team satisfaction, and consequently lead to higher business performance (t ? 2.79, p ? 0.006, t ? 2.38, p ? 0.02). This means that increased employee empowerment and participation and involvement of the teams, more cross-functional teamwork, more horizontal communication, a more caring climate, and more recognition for employees have a positive influence on how projects are successfully completed and how the organizations are put in a better competitive situation. Clan culture focuses on internal maintenance with flexibility, concern for people, and sensitivity for customers, while market culture focuses on external positioning with a need for stability and control. This study shows that in order to be successful, both of these cultures need to be dominant. For the clan type of culture, managers are competent in managing teams, interpersonal relationships, and the development of others. Managers should facilitate effective cohesive, smooth-functioning, high-performance teamwork. Managers should also facilitate effective interpersonal relationships, and help individuals improve their performance, expand their competencies, and obtain personal development opportunities. For market culture, managers need to foster competitive capabilities and an aggressive orientation toward exceeding competitors’ performance. Managers should
motivate and inspire individuals to be proactive and to work vigorously. Managers should also foster an orientation to serve customers, involving them and exceeding their expectations. Certainly, more of clan and market cultures, and less of hierarchical and adhocracy cultures, seems to be a good profile for improving project and business performances. It is deceiving that no relationship is found between adhocracy culture and perceived performance. Adhocracy cultures are characterized by innovation, aggressive strategies, and increasing boundary spanning and initiative. The managerial skills are managing innovation, managing the future, and promoting continuous improvement. It is, however, no surprise that adhocracy scores are generally rated the lowest (Cameron & Quinn, 1999). Future studies can investigate the role of adhocracy culture orientation and project types, specifically innovation projects on performance. Further implications of these findings are guidelines for project professionals in terms of strengthening some of the low-maturity Knowledge Areas with a proper fit of organizational culture changes. For instance, the human resources role in a clan culture is employee champion. Cohesion, commitment, and morale assessment will help project teams share and work together more effectively, and that is perceived to increase project performance. Improving an organization’s competitiveness following the completion of the projects, however, requires a strategic business partner role from human resources, so that human resources can be aligned with business strategy and general business skills, and strategic leadership can be practiced. Project leaders need to take these different roles to accommodate the organization’s need to survive, successfully complete the projects, and compete in the market. Clan culture leadership calls for a facilitator who is people- and process-oriented, and a mentor who is caring and empathic. Market culture leadership, on the
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other hand, calls for an aggressive and decisive competitor, a task-oriented and work-focused producer. standardization of processes are enhanced by adopting a market culture to match the demands of the competitive environment. And organizations with strong clan culture can be successful internally as well as externally. Therefore, a culture profile where clan and market are dominant is a best strategy to reduce project uncertainty as well as external market challenges. 2009, from http://www.joe.org/joe/ 2003april/a3.shtml. Besner, C., & Hobbs, B. (2008). Project management practice, generic or contextual: A reality check. Project Management Journal, 39(1), 16–33. Booz Allen Hamilton. (1982). New product management for the 1980s. New York: Author. Cameron, K. S., & Quinn, R. E. (1999). Diagnosing and changing organizational culture. Reading, MA: AddisonWesley. Chin, W. W. (1998). The partial least squares approach to structural equation modeling. In G. A. Marcoulides (Ed.), Modern methods for business research (pp. 295–336). Mahwah, NJ: Lawrence Erlbaum and Associates. Chin, W., & Newsted, P. (1999). Structural equation modeling analysis with small samples using partial least squares. In R. Hoyle (Ed.), Strategies for small sample research (pp. 307–341). Beverly Hills, CA: Sage. Clancy, K. J., & Stone, R. L. (2005). Don’t blame the metrics. Harvard Business Review, 83(6), 26–28. Collyer, M. (2000). Communication— The route to successful change management: Lessons from the Guinness integrated business programme. Supply Chain Management: An International Journal, 5(5), 222–225. Cooper, R. G. (1990). Stage-gate systems: A new tool for managing new products. Business Horizons, 33(3), 44–54. Crawford, J. K. (2002). Project management maturity model. New York: Marcel Dekker, Inc. Doolen, T. L., Hacker, M. E., & Van Aken, E. M. (2003). Impact of organizational context on work team effectiveness: A study of production team. IEEE Transactions on Engineering Management, 50, 285–296. Dvir, D., Sadeh, A., & Malch-Pines, A. (2006). Projects and project managers: The relationship between project managers’ personality, project types, and
Conclusions
A survey-based research model was designed with project professionals to study the relationships of organizational culture orientations and project management maturity with perceived project and resulting business performance. Significant findings were reported for organizations’ project maturity, as well as change efforts driven by organizational culture orientations. First, organizations should continue investing in PMM to improve their maturity levels, as Level 3 and above standardization was not achieved at all 75 organizations surveyed. The Knowledge Areas of cost, risk, and human resource management are the target focus areas. Second, organizations need to assess their cultural orientation and make change efforts as a result of these assessments, rather than keep organizational culture as an invisible and nonmeasurable matter. This study shows that organizational culture has a significant influence on project performance and the long-term success of organizations. Specifically, two culture types based on OCAI were found to relate to perceived performance. Clan culture, which is characterized by high cohesion, collegiality in decision making, and a special sense of institutional identity, is perceived to be significantly influential in project effectiveness and efficiency, as well as in the internal and external business performance of these organizations. Market culture, which is characterized by aggressiveness and prospector strategies, is found to interact with project maturity to influence internal and external business performance. Organizations with market culture focus on external positioning with a need for stability and control. Therefore, market culture complements the purposes of project management maturity practices. The efforts to increase maturity levels for improved
Acknowledgments
This research is partially funded by FGCU internal research grant, 2006. The author would also like to thank the PMI chapter of La Crosse and ASQ Fort Myers chapter members for their efforts in the dissemination of the survey. ?
References
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project success. Project Management Journal, 37(5), 36–48. Eskerod, P., & Skriver, P. (2007). Organizational culture restraining in-house knowledge transfer between project managers—A case study. Project Management Journal, 38(1), 110–122. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. Frame, J. D. (1987). Managing projects in organizations. San Francisco: Jossey-Bass. Gopalakrishnan, S., & Santoro, M. (2004). Distinguishing between knowledge transfer and technology transfer activities: The role of key organizational factors. IEEE Transactions on Engineering Management, 51, 57–69. Grant, K. P., & Pennypacker, J. S. (2006). Project management maturity: An assessment of project management capabilities among and between selected industries. IEEE Transactions of Engineering Management, 53, 59–68. Gray, C. F., & Larson, E.W. (2003). Project management. Burr Ridge, IL: Irwin/McGraw-Hill. Hatcher, L. (1994). A step-by-step approach to using the SAS system for factor analysis and structural equation modeling. Cary, NC: SAS Institute. Humphreys, W. (1992). Introduction to software process improvement. Pittsburgh, PA: Software Engineering Institute, Carnegie Mellon University. Hyvari, I. (2006). Success of projects in different organizational conditions. Project Management Journal, 37(4), 31–41. Ibbs, C. W., & Kwak, Y. H. (2000). Assessing project management maturity. Project Management Journal, 31(1), 32–43. Ives, M. (2005). Identifying the contextual elements of project management within organizations and their impact on project success. Project Management Journal, 36(1), 37–50.
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success across twenty-eight nations. Project Management Journal, 36(4), 53–60. Project Management Institute. (2004). A guide to the project management body of knowledge (PMBOK® guide)— Third Edition. Newtown Square, PA: Author. Ritchie, W. J., & Eastwood, K. (2005). Finding the perfect partner: Comparing Hofstede’s dimensions with organizational culture for international joint venture compatibility. Journal of Global Business, 16(32), 67–75. Schein, E. H. (1992). Organizational culture and leadership (2nd ed.). San Francisco: Jossey-Bass. Shenbar, A. J. (1998). From theory to practice: Toward a typology of projectmanagement styles. IEEE Transactions on Engineering Management, 45(1), 33–48. The Standish Group. (1999). CHAOS: A recipe for success. Retrieved September 16, 2002, from http://www. standishgroup. com/chaos.html. The Standish Group. (2007). CHAOS 2007 REX: A Standish Group research exchange. Retrieved from http://pmi. org/BusinessSolutions/Pages/OPM3. aspx Stevens, G. A., & Burley, J. (2003). Piloting the rocket of radical innovation. Research Technology Management, 46(2), 16–25. Turner, J. R., & Müller, R. (2005). Project manager’s leadership style as a success factor on projects: A literature review. Project Management Journal, 36(1), 49–61. Wagner, D. B., & Spencer, J. L. (1996). The role of surveys in transforming culture: Data, knowledge, and action. In A. I. Kraut (Ed.), Organizational surveys: Tools for assessment and change (pp. 67–87). San Francisco: Jossey-Bass. Wellman, J. (2007). Leadership behaviors in matrix environments. Project Management Journal, 38(2), 62–74. Wheatley, M. (2007). Maturity matters. PM Network, 21(7), 49–53.
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Zeitz, G., Johannesson, R., & Ritchie, J. E., Jr. (1997). An employee survey measuring total quality management practices and culture. Group and Organization Management, 22, 414–444. Hulya Julie Yazici is currently an associate professor of information systems and operations management in the Lutgert College of Business at the Florida Gulf Coast University. She holds a BSc in mining engineering, and an MSc and PhD in engineering management from the University of Missouri-Rolla. She worked with the manufacturing and mining industry in North America and Europe for a decade. Her research interests include project management, knowledge management systems, supply-chain simulation, quality management, and organizational collaboration. Her papers have appeared in IEEE Transactions on Engineering Management, the Journal of Computer Information Systems, Information and Management, the Journal of Manufacturing Technology Management, and several conference proceedings, including Proceedings of Decision Sciences Institute, Industrial Engineering Research Conferences, the Hawaii International Conference on System Sciences, and Symposium on Human Factors in Information Systems. She is a member of the Institute of Industrial Engineers, Decision Sciences Institute, Project Management Institute, and Institute of Electrical and Electronics Engineers.
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APPENDIX. Survey Questions
DEMOGRAPHICS: 1. Years of service in the organization: a. 1–3 b. 3–5 c. 5–10 d. 10–20 e. More than 20 2. Current position: ————————————————————————————— 3. Sex: a. Female b. Male 4. Age a. b. c. d. e. f. g. 30 years or younger 31–35 years 36–40 years 41–45 years 46–50 years 51–55 years 56 years or older
5. Number of subordinates reporting directly to you a. 0 b. 1–3 c. 4–6 d. 7–9 e. 10–12 f. 13–15 g. 16–18 h. More than 19
Organizational Culture Survey
Instructions: Each question has four alternatives (A, B, C, D). Distribute 100 scores among these four alternatives depending on the extent to which each alternative is similar to your own organization. Give a higher number of scores to the alternative that is most similar to your organization. In the Now column, rate your organization as it is currently. 1. Dominant Characteristics A B C D The organization is a very personal place. It is like an extended family. People seem to share a lot of themselves. The organization is a very dynamic and entrepreneurial place. People are willing to stick their necks out and take risks. The organization is very results-oriented. A major concern is with getting the job done. People are very competitive and achievement-oriented. The organization is a very controlled and structured place. Formal procedures generally govern what people do. Total 100 NOW
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2. Organizational Leadership A B C D The leadership in the organization is generally considered to exemplify mentoring, facilitating, or nurturing. The leadership in the organization is generally considered to exemplify entrepreneurship, innovating, or risk taking. The leadership in the organization is generally considered to exemplify a no-nonsense, aggressive, results-oriented focus. The leadership in the organization is generally considered to exemplify coordinating, organizing, or smooth-running efficiency. Total 3. Management of Employees A B C D The management style in the organization is characterized by teamwork, consensus, and participation. The management style in the organization is characterized by individual risk taking, innovation, freedom, and uniqueness. The management style in the organization is characterized by hard-driving competitiveness, high demands, and achievement. The management style in the organization is characterized by security of employment, conformity, predictability, and stability in relationships. Total 4. Organization “Glue” A B C D The “glue” that holds the organization together is loyalty and mutual trust. Commitment to this organization runs high. The “glue” that holds the organization together is commitment to innovation and development. There is an emphasis on being on the cutting edge. The “glue” that holds the organization together is the emphasis on achievement and goal accomplishment. Aggressiveness and winning are common themes. The “glue” that holds the organization together is formal rules and policies. Maintaining a smoothrunning organization is important. Total 5. Strategic Emphases A B C D The organization emphasizes human development. High trust, openness, and participation persist. The organization emphasizes acquiring new resources and creating new challenges. Trying new things and prospecting for opportunities are valued. The organization emphasizes competitive actions and achievement. Hitting stretch targets and winning in the marketplace are dominant. The organization emphasizes permanence and stability. Efficiency, control, and smooth operations are important. Total
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100
100
100
100
6. Criteria of Success A B C D The organization defines success on the basis of the development of human resources, teamwork, employee commitment, and concern for people. The organization defines success on the basis of having the most unique or newest products. It is a product leader and innovator. The organization defines success on the basis of winning in the marketplace and outpacing the competition. Competitive market leadership is key. The organization defines success on the basis of efficiency. Dependable delivery, smooth scheduling, and low-cost production are critical. Total 100
Project Management Maturity Survey: Level 0: Not Able to Evaluate Level 1 Initial Process • Ad hoc processes • Management awareness Level 2 Structure Process and Standards • Basic processes; not standard on all projects; used on large, highly visible projects • Management supports and encourages use • Mix of intermediate and summary-level information • Estimates, schedules based on expert knowledge and generic tools • Mostly a project-centric focus Level 3 Organizational Standards and Institutionalized Process • All processes, standard for all projects, repeatable • Management has institutionalized processes • Summary and detailed information • Baseline and informal collection of actuals • Estimates, schedules may be based on industry standards and organizational specifics • More of an organizational focus • Informal analysis of project performance Level 4 Managed Process • Processes integrated with corporate processes • Management mandates compliance • Management takes an organizational entity view • Solid analysis of project performance • Estimates, schedules are normally based on organization specifics • Management uses data to make decisions
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Level 5 Optimizing Process • Processes to measure project effectiveness and efficiency • Processes in place to improve project performance • Management focuses on continuous improvement Based on the definition given above for each level, assess what level your organization is at for the following elements. When answering, think about all the projects that you are involved with. Project Management Maturity Levels 2 3 4
1 Project Integration Management Project Plan Development Project Plan Execution Change Control Project Information System Project Office Project Scope Management Requirements Definition (Business) Requirements Definition (Technical) Deliverables Identification Scope Definition Work-Breakdown Structure Scope Change Control Project Time Management Activity Definition Activity Sequencing Schedule Development Schedule Control Schedule Integration Project Cost Management Resource Planning Cost Estimating Cost Budgeting Performance Measurement Cost Control Project Quality Management Quality Planning Quality Assurance Quality Control Management Oversight Project Human Resource Management Organizing Planning Staff Acquisition Team Development Professional Development
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Project Communications Management Planning Information Distribution Performance Reporting Issues Tracking and Management Project Risk Management Risk Identification Risk Quantification Risk Response Development Risk Control Risk Documentation KNOWLEDGE AREA MATURITY LEVEL Project Integration Management Project Scope Management Project Time Management Project Cost Management Project Quality Management Project Human Resource Management Project Communications Management Project Risk Management Project Procurement Management ORGANIZATIONAL MATURITY LEVEL
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PROJECT PERFORMANCE MEASURES: Distribute 100 scores among four alternatives (A, B, C, D) depending on the extent to which each alternative represents better the overall body of projects. As the assessment may vary among projects, give a higher number of scores to the alternative that most represents the majority of the projects.
1. Evaluate whether projects are completed on time A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (some expectations are met—with some overtime) Not at all (under expectation—overtime) Total 2. Evaluate whether projects met budget requirements A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (some expectations are met—with some over budget) Not at all (under expectation—completely over budget) Total 100 100
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3. Evaluate whether projects met expectations A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (not all expectations are met) Not at all (under expectations—disappointed) Total 4. Evaluate whether team members are satisfied to work together A B C D To a great extent—willing to work together for future projects To a moderate extent—somewhat satisfied with minor issues To a little extent—some conflicts and issues are present Not at all—conflicts are present; team members never want to work together Total 5. Upon completion, evaluate the savings ($) benefits of projects to the organization A B C D To a great extent (exceeds expectation) To a moderate extent (meets expectation) To a little extent (some expectations are met) Not at all (under expectation) Total 6. Evaluate whether projects resulted in sales growth A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 7. Evaluate whether projects helped the organization to increase market share A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 8. Evaluate whether projects helped the organization improve its competitive position A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 100 100 100 100 100 100
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9. Evaluate whether as a result of the projects, overall performance of your organizational unit is improved compared to last year at this time A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 10. Evaluate whether as a result of the projects, your unit’s performance improved compared to your best worldwide competition? A B C D To a great extent To a moderate extent To a little extent Not at all or not applicable Total 100 100
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