THE NEED FOR STRATEGIC

PLANNING FOR PROJECT

MANAGEMENT

STRATEGIC PROJECT MANAGEMENT

LECTURE 2
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 LEARNING OBJECTIVES
The need for Strategic Planning for Project Management

1.Introduction

2.Misconception

3.Benefits

4.Stakeholders

5.Gap Analysis

6.Economic Conditions for project management

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INTRODUCTION
Projects are a means of organizing activities that cannot be

addressed within the organization’s normal operational limits.

Projects are often utilized as a means of achieving an

organization’s strategic plan.

Strategic planning lays the groundwork for successful project

implementation
Projects are typically authorized as a result of one or
more strategic considerations. 3
 MISCONCEPTIONS ABOUT PROJECT AND STRATEGIC PLANNING

Companies have been using the principles of project

management to get work accomplished.

Yet many firms have made very few attempts to recognize

project management as a core competency for the company.

The reasons for this resistance to project management were;

First, project management was viewed as simply a scheduling

tool for the workers.

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 MISCONCEPTION (CONT’)
Second, since this scheduling tool was thought to belong at

the worker level, executives saw no reason to look more

closely at project management, and thus failed to recognize
the true benefits it could bring.
Third, executives were fearful that project management, if

viewed as a core competency, would require them to

decentralize authority, to delegate decision-making to the
project managers, and thus to diminish the executives’ power
and authority base. 5
 MISCONCEPTION (CONT’)
As the 1990s approached, project management began to mature in

virtually all types of organizations, including those firms that were

project-driven, those that were non–project-driven, and hybrids.

This new knowledge on the benefits of project management made

people to dispel the illusions and misconceptions that were held.

These misconceptions or past views are detailed below, together

with current views:

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MISCONCEPTION (CONT’)
Cost of Project Management
Misconception: Project management will require more people and

increase our overhead costs.

Present view: Project management allows us to lower our cost of

operations by accomplishing more work in less time and with fewer

resources without any sacrifice in quality.
Profitability
Misconception: Profitability may decrease.

Present view: Profitability will increase.

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MISCONCEPTION (CONT’)
Scope Changes
 Misconception: Project management will increase the number of scope
changes on projects, perhaps due to the project manager’s desire for
creativity.
 Present view: Project management provides us with better control of
scope changes. Good project managers try to avoid scope changes.
Organizational Performance
 Misconception: Because of multiple-boss reporting, project
management will create organizational instability and increase the
potential for conflicts.
 Present view: Project management makes the organization more
efficient and effective through better organizational behavior principles.

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MISCONCEPTION (CONT’)

Problems
Misconception: Project management will end up creating more

problems than usual.

Present view: Project management provides us with a structured

process for effectively solving problems.

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MISCONCEPTION (CONT’)
Applicability
Misconception: Project management is applicable only to large,
long-term projects such as in aerospace, defense, and construction.
Present view: Virtually all projects in all industries can benefit
from the principles of project management.
Competitiveness
Misconception: The cost of project management may make us
noncompetitive.
Present view: Project management will increase our business (and
even enhance our reputation).
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MISCONCEPTION (CONT’)
Quality
Misconception: Project management will increase the
potential for quality problems.
Present view: Project management will increase the quality of
our products and services.

Power/Authority
Misconception: Multiple-boss reporting will increase power
and authority problems.
Present view: Project management will reduce the majority of
the power/authority problems.
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MISCONCEPTION (CONT’)
Focus
Misconception: Project management focuses on sub
optimization by looking at the project only.
Present view: Project management allows us to make better
decisions for the best interest of the company.
End Result
Misconception: Project management delivers products to a
customer.
Present view: Project management delivers solutions to a
customer. 12
 HOW PROJECT MANAGEMENT COMPLEMENTS
STRATEGIC PLANNING

Strategic Planning provides ideas

Project Management achieves results

Projects drive strategic changes

Feedback loop for continuous change

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STRATEGIC PLANNING – IDEAS

Projects are based on ideas and objectives

Strategic planning creates them

SWOT (Strengths Weaknesses Opportunities Threats)

Competitive Analysis and other studies

Vision statements

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PROJECT MANAGEMENT ACHIEVES RESULTS

How to execute strategic goals?

Project management provides a robust way to execute change

Assign project manager, defining accountability and

responsibility
Avoid creating strategic goals that is never realized or even

attempted

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PROJECT RESULTS DRIVE CHANGE

Each project advances one or more strategic goal

Some projects create new strategic goals at the end

Some projects fail, but all are relevant

Failure often uncovers key information 16

CONTINUOUS FEEDBACK LOOP

Staff
Organizational Feedback and
Plan Updates Ideas
Strategy Ideas

Change Projects

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BENEFITS
The benefits recognized by the present views of project
management are now seen to be strategic initiatives designed
to enhance shareholder value.

Good project management practices has a positive effect on

stock prices

This is as a result of management’s ability to execute

projects within time, cost, and quality constraints and to the
customer’s satisfaction 18
BENEFITS (CONT’)

Increased project communication

Part of strategic planning is opening a dialogue that flows

from top to bottom, and back up to the top. Some of

organizations have strategies that are not in line with the

overall organizational strategy, due to a lack of

communication.
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BENEFITS (CONT’)

Reducing resource misallocation

strategic planning also project resources to be managed

more effectively. Strategic planning goes in-depth in

evaluating the given resources a project has available, and
helps project managers make informed decisions by
evaluating, monitoring, and adjusting project resource
allocation to where they are needed most to propel the
project forward. 20
EVENTS THAT JOIN STRATEGY AND PROJECTS

Project start-up

Project closure

Budget and resource authorization

Resource conflicts and priorities

Organizational crisis and strategic change

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PROJECT START-UP

The strategic moment of a project is how it was authorized

Strategy helps answer, “Why should we do this?” or “What

is the goal?”

PM helps you climb the ladder, strategy helps make sure it
is on the right wall

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PROJECT CLOSURE

A time to gather new ideas

Teams see unsolved problems and issues

These ideas become new project proposals

Ensure that good ideas are not lost

A gift to the strategic planner

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BUDGET AND RESOURCE AUTHORIZATION

Projects constantly fight for resources and funding

Tying projects to strategy allows PMs to explain their

need in strategic terms

Examining all project resource requests in terms of

strategy helps achieve firm’s objective

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 PROJECT PRIORITIZATION

Often project conflicts arise, requiring a decision

Organizational strategy can provide a more relevant way to

score and rank projects

Strategic planners are accustomed to scoring systems to set

priorities, and can help design an appropriate system

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CRISIS AND STRATEGIC CHANGE

Any crisis or critical event causes project uncertainty

Strategic planners face uncertainty as well

These times call for coordination

Practical, tactical ideas from project managers

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 PROJECT STAKEHOLDERS

Given the fact that project management is no longer seen as just

a quantitative tool for the employees, but is recognized as a

source of benefits to the whole corporation, project management

must satisfy the needs of its stakeholders

Stakeholders are individuals or groups that either directly or

indirectly are affected by the performance of the organization.

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PROJECT STAKEHOLDERS (CONT’)
Stakeholders are persons and organizations such as

customers, sponsors, performing organization and the

public, who are actively involved in the project or those
whose interests may be positively or negatively affected
by the execution, completion, or cancellation of the
project.
Stakeholders may also exert influence over the project

and its deliverables

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PROJECT STAKEHOLDERS
 Although there are several ways to classify stakeholders, the most
common method is as follows:
Financial Stakeholders
 Stockholders
 Financial institutions (suppliers of capital)
 Creditors

The Product/Market Stakeholders

 Customers
 Suppliers
 Competitors
 Unions

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STAKEHOLDERS
Government agencies
Local government committees

Organizational Stakeholders
Executive officers

Board of Directors

Employees in general

Managers

PMO

Any strategic planning efforts must focus on the best interests

of all of an organization’s stakeholders, not merely a few.
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STAKEHOLDERS

The project management team must identify both internal

and external stakeholders in order to determine the

requirements and expectations of all parties involved.

They must also manage the influence of the various

stakeholders in relation to the project requirements to ensure

a successful outcome.
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GAP ANALYSIS
There are two primary reasons for wanting to perform

strategic planning for project management;

The desire to secure a competitive advantage.

The second reason is to minimize the competition’s

competitive advantage or to strengthen your own competitive

advantage.
The key to reducing any disadvantage that may exist between

you and your competitors is the process known as gap

analysis. 32
GAP ANALYSIS
It is an evaluation of the difference between desired outcome
and actual outcome, and what must be done to achieve a
desired goal.
Strategic gap analysis attempts to determine what a company
should do differently to achieve a particular goal by looking at
the time frame, management, budget and other factors to
determine where shortcomings lie.
It identifies the gap between the application of resources and
the best possible result from that application of those resources

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 GAP ANALYSIS

According to the figure,

the gap between your
firm and your major
competitor is significant
and appears to be
increasing. The gap
between your
organization
and the industry
average is also
increasing, but not as
greatly as the gap
between
you and your major
competitor.
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GAP ANALYSIS (TIME)
Comparison in gap analysis can either be done against

industry averages or to another company

For a company aspiring to perform strategic planning for

project management, there are three critical gaps to analyze:

 Speed to market

 Competitiveness on cost

 Competitiveness on quality

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GAP ANALYSIS (TIME)

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GAP ANALYSIS (TIME)

Figure 1–3 in the previous slide shows the gap on speed to market

or new product development times.

If the gap is large between you and either the industry average or

your major competitor, then to win the battle you must develop a

project management methodology that allows for the overlapping

of life cycle phases combined with appreciable risk-taking.

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GAP ANALYSIS (TIME)

The larger the gap, the greater the risks to be taken.

If the gap cannot be closed, then your organization must

decide if its future should rest on the shoulders of a “first-to-

market” approach or if a less critical “me-too” product
approach is best.
The firm must consider its ability to meet customer’s future

expectations.

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GAP ANALYSIS (COST)

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GAP ANALYSIS (COST)

To close the cost gap, strategic planning for project

management can provide for;

Better estimating techniques

The creation of lessons learned files on previous costing.

Purchasing of historical databases for cost estimating.

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GAP ANALYSIS (COST)

 Good project management methodologies allow work to be

accomplished in less time, at lower cost, with fewer resources, and

without any sacrifice in quality.

 But if a cost/pricing gap still persists despite good project management,

then the organization may either have to be more selective about which

projects it accepts or choose to compete on quality rather than on cost.

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GAP ANALYSIS (QUALITY)

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GAP ANALYSIS (QUALITY)

Gaps on time and cost may not necessarily limit the markets

in which you compete.

However, gaps on quality can severely hinder your firm’s

ability to compete.

The critical gap is the difference between the customer’s

expectations of quality and what you can deliver

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GAP ANALYSIS (QUALITY)

Good project management methodologies can include policies,

procedures, and guidelines for improving quality.

However, the gap on quality takes a lot longer to compress than

the gaps on time and cost.

Strategic planning combined with a good project management

methodology, can compress the gaps on time, cost, and quality.

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IMPACT OF ECONOMIC CONDITIONS ON PROJECT
MANAGEMENT

Economic conditions can be favorable or unfavorable. Yet in

either case, an astute company can convert someone else’s

misfortune into its own good fortune.
To take advantage of economic conditions, management must

have a repeatable process predicated upon speed and quality

of execution.

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ECONOMIC CONDITIONS

The problem with most companies is that setting strategic

targets can occur quickly, but developing implementation

plans and executing them are much slower processes.

What is needed is a plan expressed in terms of three broad,

critical success factors: qualitative factors, organizational

factors, and quantitative factors.

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 CONCLUSION

Strategic planning for excellence in project management

needs to consider all aspects of the company: from the

working relationships among employees and managers and
between staff and management, to the roles of the various
players (especially the role of executive project sponsors), to
the company’s corporate structure and culture.

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CONCLUSION

Other aspects of project management must also be planned.

Strategic planning is vital for every company’s health.

Effective strategic planning can mean the difference between
long-term success and failure.

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END OF LECTURE 2