How to Translate Corporate Strategy into Project Strategy
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How to Translate Corporate Strategy into Project Strategy

A new method for implementing corporate strategy through projects and programs has been found. Based on case studies and surveys, this perspective may inform updates to the PMBOK® Guide. Let's keep improving our processes to achieve our goals more efficiently.

In the field of business, corporate strategy is a highly researched and taught subject. While projects and project management are recognized as important tools for implementing strategy, there is some confusion among scholars about how exactly this happens. Furthermore, the topic has not been thoroughly reviewed to date. This piece explores how corporate strategy is developed and executed through the management of portfolios, programs, and projects.

Developing Corporate Strategy

Corporate strategy is a critical aspect of achieving an organization's goals and objectives. It is typically implemented at the strategic business unit level, where strategic initiatives are clustered into portfolios of programs and projects. However, there is a dearth of writing about how corporate strategy gets translated into implementation, particularly at the program or project level. It is essential to understand how projects and programs connect with the corporate environment in which they evolve, as they are crucial ways for strategy to be implemented in the enterprise. While project management practitioners may think their function is central to the success of a company, it may have little meaning within the enterprise unless it is clearly established and embedded within the enterprise's structure and business management models and processes. Therefore, it is important for organizations to understand their business management model and the position of project or program management within it. This understanding will enable project management to see how they are perceived by business management functions and how they sit alongside them. It is also crucial to have senior management involvement if project management is to be successful in strategy implementation. Finally, a hierarchy of objectives and strategies can generally be formed as a result of using a strategy planning process, which can be a highly effective means of structuring and managing strategy, and communicating it to the organization.

According to Turner (2000), most projects are part of a larger portfolio or program. Project portfolio management involves applying knowledge, skills, tools, and techniques to a collection of projects or programs to meet an organization's investment strategy (Dye & Pennypacker, 1999). A project portfolio is a set of coordinated projects that deliver benefits that would not be possible if managed independently (Platje, Seidel, & Wadman, 1994; Artto, Martinsuo, & Aalto, 2001). Alternatively, a project portfolio can be a collection of related or independent projects managed concurrently under a single management umbrella (Thiry, 2004; Martinsuo & Dietrich, 2002). Portfolio management is primarily about selecting the best projects or programs to proceed with, while project management is about executing the project correctly (Cooke-Davies, 2002, 2004; Archer & Ghasemzadeh, 2004).

Archer and Ghasemzadeh (1999) propose a framework for project portfolio selection that emphasizes aligning resource demand with availability to achieve strategic goals. Knutson (2001) notes that project portfolio management provides a means of evaluating each proposed project objectively for effective strategic use of resources. It is critical to link company strategy to portfolio development, especially in cases of high innovation and growth (Wadlow, 1999).

Portfolio selection and management practices have been particularly strong in new product development (Archer & Ghasemzadeh, 2004; Cooper, Edgett, & Kleinschmidt, 2001). Top-performing businesses display strong management support for portfolio selection and management, utilizing formal methods to manage portfolio strategy in line with enterprise business strategy (Cooper, Edgett, & Kleinschmidt, 1999). Other examples of portfolio management practices employed by major companies are given in Cooper, Edgett, and Kleinschmidt (1998). Artto and Dietrich (2004) provide examples of portfolios of different project types and outline major types of methodologies used in portfolio selection.

Shenhar and Dvir (2004) propose a strategic portfolio classification framework based on selecting projects for their strategic impact and forming a policy for project selection. Archer and Ghasemzadeh (2004) identify risk and outsourcing as having a particularly strong impact on portfolio selection and management. They emphasize that uniformly applying risk assessment and quantification across all projects and teams is required for good governance (APM, 2004).

Programs

Effective coordination of projects with a shared business goal can be achieved through program management. According to Thiry (2004), this methodology is the most suitable for ensuring successful implementation of strategies as it is more subtle and can respond better to changing circumstances. Both portfolio management and program management prioritize resources and optimize business benefits (Bartlett, 1998; Partington, 2004; Reiss, 1996). Program management involves day-to-day implementation management while portfolio management is more periodic and analytical. Implementing strategy through program management involves continuous adjustment and re-formulation, according to Pellegrinelli, Partington, and Young (2003).

There is some confusion over what program management entails, with varying perspectives on the optimal ways to configure programs to achieve strategic objectives and deal with change (Murray-Webster & Thiry, 2000). Some emphasize the technology base, while others highlight the importance of business benefit. Pellegrinelli (1997) and Murray-Webster and Thiry (2000) have proposed more generic portfolio and program typologies.

Programs are often ongoing or long-term and are exposed to uncertainty and ambiguity (Thiry, 2004). Large organizations frequently use programs and program management to implement strategic initiatives. The UK Office of Government Commerce (OGC), for example, sees alignment between strategy and projects as a significant benefit of program management (OGC, 2003). However, recent guidance on good governance (APM, 2004) requires a decision management paradigm that considers the appropriate strategic perspective. Programs often have to strive for the achievement of multiple conflicting aims, while projects aim for a single predetermined result (Wijen & Kor, 2000). Projects are typically seen as more appropriate for implementing planned strategies, while programs are suitable for both deliberate and unplanned strategies. (However, in our research, we found this to be the case for the aerospace industry but not for drug development or construction cases.)

Projects

When it comes to projects, they have a specific goal and go through a single process of development, whereas programs may have multiple objectives and go through various cycles. The PMI's PMBOK® Guide (2004) does not thoroughly discuss the connection between a business's requirements and the project, only briefly mentioning it in the project's charter [4.1], project plan [4.3], and scope [4.2; 5.1.1]. Turner (1999) suggests creating a comprehensive definition of the project at the start, including aligning business plans with project plans that have key elements of project strategy. Simister (2000) includes business cases and strategic briefs in the project definition process. Gardiner (2005) offers authoritative texts and case studies on project strategy. Morris (1997) summarizes a project strategy based on an analysis of various projects in his historical account of project management development. The APM BOK (Dixon, 2000) recognizes the business context, portfolio and program management, and requirements management. Integrating the PMBOK® Guide and the APM BOK shows the significant role business and operating requirements play in shaping project strategy. Morris and Jamieson (2004) stress the importance of managing project strategy creation effectively, not only in the front end but throughout the entire project life cycle. The case studies below demonstrate structured approaches that many companies have developed to create and manage project (and program) strategy that covers the entire project life cycle and is integrated with the business strategy development processes.

Competencies, roles, responsibilities and accountabilities for moving strategy

The process of translating corporate strategy into project strategy requires more than just following a set of procedures. It requires a wide range of personal competencies and a clearly defined set of roles, responsibilities, and accountabilities. Competence and capability have been defined in various ways, such as by Hornby & Thomas (1989), who defined competency as the knowledge, skills, and qualities needed by effective managers to perform their jobs well. The UK Institution of Civil Engineers' competency framework (2000) includes 12 key management roles and about 140 associated competencies, with elements of strategy management covered in both corporate and business management roles, while project management is responsible for project strategy.

Project managers require a variety of knowledge, skills, and personal attributes, including strategic direction, as noted by Crawford (2000). However, senior managers do not always believe that project managers should be involved in project strategy, according to Crawford's later survey (Crawford, 2005). Morris, Jamieson, and Shepherd (2005) suggest that this may be due to Crawford's use of the PMBOK® Guide (Project Management Institute, 2004) for her conceptual definition of project management, which does not assume real involvement of project management in frontend definition, including strategy formulation. Core competencies related to project strategy are illustrated in the case studies in Morris & Jamieson (2004), which also show that project leadership is increasingly recognized as a key competence in shaping and implementing project strategy, as seen in the drug development and transportation case studies.

Four case studies of moving from corporate to project strategy

Aerospace company

The company operates as a Tier 2 supplier and mandates that all business activities are assigned to a program. Each program must have a client, and there is a hierarchical cascade of objectives from the corporate level down to projects. Orders progress through a stage-gated development process, with eleven key project management topics reviewed at each gate, including project strategy. Project teams meticulously manage project strategy throughout all stages and phases of the project management process, as illustrated in Figure 2. In addition, the company has a specific process for managing a rapid response to changes impacting strategy. Its highly integrated, structured approach to translating corporate and business strategies into project strategy and managing it through the entire project management process and project life cycle exemplifies the importance it places on project strategy and its management. This approach provides a useful model for others to follow.

Global financial services company

The company has a well-defined process for creating and approving its corporate plan. However, the role of project management in implementing the plan is not clearly stated. The program and project processes are independent and start by referencing the business unit's vision, mission, strategies and objectives. When a project is authorized, the business case is defined, which includes the program's operational vision, relationship with the business strategy plan, organization structure, risk and resource plans, delivery plan, project briefs, and WBS.

After the business case is approved, the project is prepared for execution using the "Mobilize Program" process, which incorporates the previous planning processes into the project management plan. Although "project strategy" is not mentioned from this point onward, the project management plan covers the way in which the project will be managed in great detail, including project objectives, schedule, budget, resource plan, risk management plan, and a complete set of project briefs.

The project's strategy is managed and maintained through the operational vision within the business case until the project is completed. However, the lack of a single coherent project strategy document that is clearly related to the business case can lead to a loss of business rationale in some cases. It is recognized that a tighter linkage between business strategy and project implementation could be beneficial.

Global drug development company

The process of drug development involves the progression of chemical entities discovered in the laboratory through a structured series of tests in animals and humans for clinical efficacy and commercial viability. In companies like the one studied here, there are several dozen chemical entities being developed simultaneously. The management of this development activity involves a complex matrix of functional lines and projects, clustered under therapeutic areas. Most compounds do not work in the way that was hoped, and the attrition rate is high in the earlier stages of the pipeline. However, large pharma companies have more compounds in hand than they have resources available to work on them. Therefore, there is an ongoing dialogue between senior management, who work at the therapeutic governance level, on portfolio prioritization and resource allocation, and project-level status and outlook.

Portfolios are essential and form the hand from which the future of the company is played. Programs are seen as constituting a technical platform, and projects have two meanings - developing a compound from discovery to regulatory approval and into the marketplace, and getting the compound to the next milestone review point in its development. The company uses a structured project management process to manage projects, geared to each phase of the life cycle, and linked to a series of project management methodologies. Project strategy is identified as one of the topics that need to be implemented by the project team, and there is a standard list of contents for the project strategy. Spending too much time detailing long-term project strategy is not seen to be useful because of the high rate of attrition. However, it is still essential to develop and maintain a flexible strategy for the success of the project. Most pharmaceutical project management organizations distinguish between a Project Leader and a Project Manager, with the former having a strong feeling for the science of development and the latter more concerned with the operational management of the project. The project leader/director typically assumes a more prominent role in shaping project strategy, but this is not always the case.

Transportation (construction) company

This company is known as one of the best airport operators in the world. They use the OGSM methodology, which was developed by Procter and Gamble, to define their objectives, goals, strategies, and measures in a sequential manner. This approach is cascaded down through various business units to programs and projects. The company's strategic business units, capital investment plans, business governance, project governance, and major and minor projects are all aligned with the corporate OGSMs. Each level determines the next level's objectives in a descending order.

The company evaluates its capital investments at the SBU levels based on their strategic contribution, uncertainty/complexity, and value-for-money. They have a process for evaluating, selecting, and prioritizing their programs and projects. Program management involves managing a group of projects with similar aims. Projects are managed using a stage gate process with a project board responsible for the project's day-to-day running. The project is split into two stages: development and project delivery. A development manager manages the former, and a project leader manages the latter. The company avoids using the term "project manager" as it seems too bureaucratic and does not emphasize the required level of leadership.

The gated review process ensures that projects are aligned with the business strategy and corporate strategy as they are set up, authorized, and executed. They use a project management process to develop the project definition and key project management plans. However, the company does not use the term "project strategy." The project team's performance is measured against the objectives of the project expressed in terms of business strategy.

Cross-cutting findings

Business models

Some companies prioritize project management in their business model while others do not. The aerospace company places a significant emphasis on program management and project strategy as part of their strong business process model. The international transportation company and construction owner also have a strong business process model, but project management is not as visibly prominent. The pharmaceutical company's process model is dominated by the drug development process, which is driven by regulatory requirements and is their major business process. Project and portfolio management play important roles in this process. The financial services company has a high-level business process, but it is not as visible as the aerospace and transportation business models.

Cascading corporate strategies into projects and strategy plans

Companies create corporate objectives, goals, and strategies through processes like strategic management, as described by Mintzberg and others. These are then passed down to SBUs and other organizational entities, which, in conjunction with corporate strategists, develop their own objectives, goals, and strategies. The SBUs then work with their respective program and project teams to develop objectives, goals, and strategies using interconnecting business and project management processes. All companies recognize the importance of project portfolio management.

In all cases, program and/or project teams align their project strategies with the SBU and corporate strategy using project strategy processes. The output of these processes includes strategy plans, business plans, deployment plans, and project plans. The hierarchy of these plans is similar to Archibald's hierarchy of objectives, strategies, and projects, as shown in Figure 2 of the aerospace case.

The pharmaceutical development company frequently reviews and rebalances its portfolios, taking into account emerging trial results data on the therapy area portfolio strategy. Project managers and directors take a leadership role in shaping the next phase of implementation, proposing new project or program strategies that influence portfolio strategy.

The aerospace company formally reviews project strategy at each "phase gate" review, alongside other prescribed aspects of project management, as recommended by good governance practice. Similarly, the drug development company reviews project strategy at major gate reviews going into Exploratory Development and Full Development.

Portfolio management

All companies recognize the importance of project portfolio management. The pharmaceutical company has a dedicated project portfolio management practice that plays a crucial role in project development. Portfolio management is primarily used within companies to select and prioritize programs and projects. Strategic portfolios of programs and projects are assembled by corporate and business units using various strategic and project management processes, tools, and techniques to measure their contributions. This information is then presented to company management boards or committees of senior managers who decide whether to adopt or reject projects. This process is similar to the one described in Artto & Dietrich (2004).

Program management

All companies engage in program management, which involves managing a group of high-value projects that share a common goal or provide regular benefits over a long period of time. In the aerospace industry, program management also includes managing operations and maintenance, as a significant portion of the company's profitability comes from these areas rather than just initial sales. Financial services companies focus more on managing multiple interrelated projects for business benefits, while in the pharmaceutical industry, program management focuses on managing an "asset" which represents a basic chemical entity that can be promoted as a brand. Similarly, transportation and construction industries use program management to manage multiple interrelated projects. All of these industries use a common set of processes, including integrated program management and project management. Program strategy development is achieved in a similar way to project strategy development, with program managers identifying the same practices as necessary for success.

Project strategy

In all companies, the business case played a crucial role in the interface between corporate and project management. Early on in projects, an outline project strategy was developed and aligned with corporate and business strategies. Later, in most companies, this was transformed into a comprehensive project strategy through project management processes and incorporating common project management practices. It's important to note that good governance requires projects and programs to have an approved implementation plan aligned with the overall business strategy, reviewed at specific authorization points. Many companies now follow this practice regularly.

Two companies followed a structured approach to create and manage project strategy. The aerospace company had a project strategy management practice similar to risk or technical management. The pharmaceutical company identified specific project strategy-related issues for each phase and stage of the project development life cycle. Both assigned roles and responsibilities for managing these processes. The other two companies followed a less structured approach, developing management plans without summarizing them or creating a single project strategy statement. These companies also didn't use the term "project strategy" in their project management processes, leaving open the question of whether managing project strategy as a formal, single document and process would be beneficial.

The aerospace and pharmaceutical companies managed project strategy during the entire project life cycle, not just at the front-end. The other two companies managed project strategy as part of managing the business case for the project.

Processes and procedures

The most consistently used processes were those that described the structure and content at a practical level, such as flowcharts with inputs and outputs for key processes. These processes also identified who was accountable and responsible for carrying out the activities. However, when procedures were described in too much detail, staff tended not to use them. The best examples of business models and associated processes were those that were fully documented and incorporated within the company's Quality Management System. They were also web-based and available online throughout the organization. Companies that did not follow this approach linked the activities of their business units and projects to ensure alignment of strategy.

The pharmaceutical company consciously and systematically "value managed" their strategy, while the transportation/construction company had a strong "value-for-money" orientation, but did not use it as a special practice. All companies integrated other key project development practices, such as risk management, technical and commercial management, and safety management, into their strategy development processes.

Roles, responsibilities and accountabilities

In the pharmaceutical and transportation/construction industries, project strategy is not solely determined by project management processes. Governance and project leadership teams utilize business-related procedures to establish and maintain project strategy. In the regulated development process of the pharmaceutical industry, governance reviews the emerging portfolio and individual project data to shape strategy. Project managers prioritize scheduling, follow-up, and general control tasks to support the strategy-shaping activities of project leaders. In the transportation/construction industry, the OGSM method is used to develop strategy in a classical "deliberate" manner, cascading down through Strategic Business Units (SBUs).

Competencies and frameworks

In order to create, deploy and maintain enterprise, portfolio, program and project strategies, project management resources and capabilities were identified as crucial. All companies outlined the roles, responsibilities and accountabilities of those involved in both business and project management processes. Some utilized detailed tables and matrices, such as "RACI" tables (Responsible, Accountable, Coordination/Consultation, Information), which were linked directly to the processes. These tables covered all phases and stages of project management, including those for creating and maintaining project strategy, or implementing enterprise strategy within the context of the project business case. The RACI tables identified "who" does "what" and "when" at any point along the process.

Roles, responsibilities and accountabilities

The companies used various techniques to determine the necessary skills, knowledge, behaviors, and experience to create and oversee project strategies. This involved establishing competencies for senior project managers, such as vision and strategy management, as well as functional competencies for project management that focused on areas like scope management.

Survey data on how companies move strategy from the corporate level to projects

The case studies provided a great opportunity to explore how companies move from corporate strategy to project strategy, but the data sample was quite small. To gather more evidence, we conducted a survey of members in various PMI Chapters in Europe. We developed 32 multiple-choice questions to examine the processes, practices, and people issues involved in moving strategy from the corporate level to projects. We received 75 responses from people at different levels of seniority in small, medium, and large enterprises in diverse business sectors, including academia and consultancy. Although the response rate was only 2%, the research can be taken as indicative since it is exploratory in nature. The results are as follows.

Business Management Models

67% used a generic business model. 50% of those believed they had extensive processes for moving corporate goals into project strategy. 90% had adequate or better interconnection between corporate, business, and project management processes. Over 53% recognized a hierarchy of objectives and strategies.

Program Management and Portfolio Management

50% used some form of portfolio management, of which 95% used some form of program management (with 75% including business benefit management as an explicit part of this).

Project Management and Project Strategy

85% used extensive or partial project management processes to manage project strategy. Most (75%+) had specific strategy inputs into project management, and 65% did this in an "emergent" manner. 85% used a gate review competencies defined, of which 75% included those for managing the strategy development process.

After conducting a combined analysis of the case studies and survey, we have come to the following findings and conclusions below.

Overall conclusions

Before delving into the research's overall conclusions, it is important to acknowledge certain limitations that may affect the reliability and generalizability of the findings. These limitations include the investigation's size and scale, the sample of case studies, the survey's size, the types of programs and projects, and the surveyed processes, practices, and competencies' effectiveness and performance. Additionally, the surveyed companies were in varying stages of developing, implementing, or improving their business models, making the information time-specific.

The survey's scope was broad, resulting in a relatively small number of questions per topic. Consequently, the coverage and depth of some topics, such as value management and competencies, were limited. A few respondents indicated that some questions were ambiguous and could be interpreted differently. Additionally, some terms used in the survey, such as value management, may not be well-known. Lastly, the survey's analysis did not account for different business sectors.

Despite these limitations, we believe that the research provides valuable insights. For instance, project and program management are widely used to implement corporate and business strategy, making them key business processes. It is expected that strategies are aligned and moved systematically and hierarchically from the corporate level through portfolios, programs, and projects to provide cohesion, visibility, and an effective means of communication. However, there is also emergence and iteration, and project strategy is managed dynamically.

Business management and strategy

Implementing transformation in organizations is facilitated through the use of enterprise-wide business models. These models are widely used and applied collectively by business units within organizations, varying in size and complexity. Project and program management processes are often incorporated as key business management processes in these models. Processes with high interconnectivity between corporate, business, and project levels are crucial in translating corporate goals, objectives, and strategy into programs and projects, ensuring continuity of strategy in a systematic and structured way. Hierarchies of objectives and strategies enable organizations to cascade strategy systematically. Although project and program strategy is not always managed as a formal process, it is often developed and maintained by project or program leadership teams and governance through business case processes, not exclusively through project management processes.

Portfolio management and program management

Many organizations implement some form of portfolio management, but according to a survey, most respondents perceive it as managing projects around a common theme rather than maintaining a balanced portfolio or selecting the right project. However, three case study companies implemented portfolio management mainly as a process for selecting and prioritizing "the right projects."

Programs are important for implementing corporate strategy and change. Most companies consider program management to emphasize the management of business benefits, as well as product, brand, or platform management. It is widely agreed that program management includes managing a portfolio or groups of projects using integrated project teams, managing resources in an integrated manner, and managing benefits and aggregated risks. Some organizations use a single, fully integrated project management process for managing both programs and projects.

Project management and project strategy

The practice of project strategy management is widely acknowledged as an important aspect of project management. It involves connecting project definition and development to corporate goals and strategies in a systematic manner. Various organizations now use project management approaches at all stages of the project life cycle, with project strategy development, review, and optimization taking place at specific points. To manage programs and projects, a combination of program or project plans and other management plans are commonly used, which highlight how the project will be executed, also known as its strategy. However, these parts may not be summarized in a single project strategy document. Value Management is frequently used in optimizing strategy, often combined with Risk Management.

Project resources and capabilities play a crucial role in creating, deploying, and maintaining program and project strategies. The project management roles, responsibilities, and accountabilities required for this are typically well-defined. In addition, many organizations define the personal project management competencies required to develop project strategy. Several organizations emphasize the importance of leadership qualities in shaping and delivering strategy, both at the project level and the corporate level.

In conclusion, project strategy management is an area that is not extensively explored or described in the business and project literature. However, it is, in fact, a relatively well-established area that deserves more recognition, formal study, and discussion.

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  • "Proposal, Initiation and Feasibility" by S. J. Simister (2000), also found in "The Gower Handbook of Project Management" (3rd ed.).
  • "Systems Engineering" by R. Stevens, P. Brook, K. Jackson, and S. Arnold (1997), published by Prentice Hall in Hemel Hempstead, UK.
  • "Combining Value and Project Management into an Effective Programme Management Model" by M. Thiry (2002), published in the "International Journal of Project Management" (20(3), 221-228).
  • "Program Management: A Strategic Decision Management Process" by M. Thiry (2004), also found in "The Wiley Guide to Managing Projects" edited by P. W. G. Morris and J. K. Pinto.
  • "Selling Project Management to Senior Executives: The Case for Avoiding Crisis Sales" by Thomas, Delisle, Jugdev, and Buckle (2002) from Project Management Journal
  • "Strategic Management" (4th edition) by Thompson (2001) from Thomson Learning
  • "The Handbook of Project-Based Management" by Turner (1999) from McGraw-Hill
  • "The Gower Handbook of Project Management" (3rd edition) edited by Turner and Simister (2000) from Gower Publishing
  • "Strategic Planning for Information Systems" by Ward and Peppard (1999) from John Wiley & Sons
  • "Revolutionizing New Product" by Wheelwright and Clark (1992)
  • Two books that may be helpful for development and managing unique assignments are "The Innovator's Dilemma" by Clayton Christensen and "Managing Corporate Lifecycles" by Ichak Adizes. These books can provide valuable insights and strategies for success in these areas.

The following are various publications authored or edited by P.W.G. Morris. In 2004, Morris published "Moving corporate strategy to project strategy: Processes, practices and leadership" in Innovations: Project management research 2004, edited by D.P. Slevin, D.I. Cleland, and J.K. Pinto. This work explores the transition from corporate strategy to project strategy.

In 2005, Morris published "Managing the front-end: How project managers shape business strategy and manage project definition" in the Proceedings of the 2005 Project Management Institute EMEA Symposium in Edinburgh. This publication discusses the role of project managers in shaping business strategy and project definition.

In 1987, Morris co-authored "The anatomy of major projects" with G.H. Hough. This book explores the in-depth details of major projects.

In 2004, Morris co-authored "Translating corporate strategy into project strategy: Achieving corporate strategy through project management" with H.A. Jamieson. This work discusses the importance of translating corporate strategy into project strategy to achieve corporate success through project management.

In 2005, Morris, Jamieson, and M.M. Shepherd submitted a manuscript for publication titled "Updating the APM Body of Knowledge."

In 2004, Morris and J.K. Pinto edited the "Wiley guide to managing projects." This guide provides helpful insights on managing projects and was published by John Wiley & Sons Inc. located in New York.

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