The influence of business strategy on project portfolio management and its success — A conceptual framework

Outline

• Abstract
• Keywords
• 1. Introduction
• 2. Influence of Project Portfolio Success on Business Success
• 2.1. Definition of Project Portfolio Success
• 2.1.1. Average Single Project Success
• 2.1.2. Use of Synergies
• 2.1.3. Strategic Fit
• 2.1.4. Portfolio Balance
• 2.2. Definition of Business Success
• 2.2.1. Economic Success
• 2.2.2. Preparing for the Future
• 2.3. Direct Influence of Project Portfolio Success on Business Success
• 3. Influence of Project Portfolio Structuring on Project Portfolio Success
• 3.1. Definition of Project Portfolio Structuring
• 3.1.1. Consistency
• 3.1.2. Formalization
• 3.1.3. Integration
• 3.1.4. Diligence
• 3.2. Direct Influence of Project Portfolio Structuring Onproject Portfolio Success
• 4. Influence of Strategic Orientation
• 4.1. Definition of Strategic Orientation
• 4.1.1. Analytic Posture
• 4.1.2. Risk-Taking Posture
• 4.1.3. Aggressive Posture
• 4.2. Direct Influence of Strategic Orientation on Project Portfolio Structuring
• 4.3. Moderating Influence of Strategic Orientation on the Relationship Between Project Portfolio Structuring and Project Portfolio Success
• 5. Conclusion and Discussion
• References

Conclusions

This paper explores the influence of business strategy on project portfolio management and its success. Hence, the strategic orientation concept was applied to the project portfolio management literature and merged in a general framework. Based on this, the three dimensions strategic orientation, project portfolio structuring, project portfolio success, as well as business success and their direct relationships and the moderating effect of strategic orientation on the project portfolio structuring-project portfolio success relation were analysed and outlined in four propositions. An overall comprehensive conceptual model on the relationship between strategic orientation, project portfolio management, and business success was introduced.

The study has certain implications for research and practice of project portfolio management. The developed conceptual model expands existing theories in project portfolio management and contributes to close the gap between strategy formulation and strategy implementation. The strategic orientation approach, originally suggested by Venkatraman (1989), was adapted to the project portfolio perspective. The theoretical factors for project portfolio structuring were derived from the existing project management literature and extended by findings from contiguous disciplines. Furthermore, the objectives of project portfolio management proposed by Cooper et al. (2002) were extended and combined to an overall project portfolio success factor covering average single project success, portfolio balance, strategic fit, and use of synergies. Finally, a business success construct to evaluate the immediate and long-term impact of project portfolio success on the business level was developed by adopting the concept of Shenhar et al. (2001) to the portfolio level. These well-elaborated theoretical factors can be used and further refined by future research in this area.

Although the managerial implications are limited as long as the conceptual model is not empirically validated, some conclusion affecting practice can be drawn. Based on the propositions, firms can apply the suggested factors of the model to design a strategy conform project portfolio selection process. The proposed success factors can be used to evaluate and benchmark their project portfolio management. The findings further support firm’s acceptance of project portfolio management as a holistic approach with strong strategic impact.

This study has some strength and limitations that need to be considered. It presents a comprehensive model covering the whole cycle from strategic planning to project portfolio management and business success. Therefore, not only extracts are taken into account but also the effects of project portfolio management on the business level. Additionally, the model’s design is not limited to a specific project type or industry and consequently allows the broad application to any project portfolio with internal project sponsors. This is also a limitation of the study as portfolios with external – customer sponsored and contracted – projects have different characteristics and can scarcely be captured by this model. Furthermore, the process of project portfolios steering beyond the periodical structuring activities is not subject to the study.

Two tracks for future research based on this paper are the empirical validation and the further development of the conceptual model. The propositions should be tested by a quantitative empirical study. To ensure an understanding of the research topic, analysed firms should have a project portfolio with several simultaneous internally sponsored projects. Furthermore, a multiple informant design for project management and success measures from different management levels should be considered to get a broad picture of strategic orientation, portfolio management activities, and business success as well as to avoid biased results. Additionally, further research could extent the model to the project portfolio steering perspective as well as to various contingencies. Moreover, the conceptual model could be adapted to project portfolios with external sponsorship